Document:

Reed’s
Inc. Incentive Compensation Plan

 

1.
Purpose of the Plan

 

This
Plan is intended to promote the interests of the Company (as defined below) and its shareholders by providing employees, non-employee
directors, consultants, and other selected service providers of the Company, who are largely responsible for the management, growth,
and protection of the business of the Company, with incentives and rewards to encourage them to continue in the service of the
Company.

 

2.
Definitions

 

As
used in the Plan or in any instrument governing the terms of any award granted under the Plan, the following definitions apply
to the terms indicated below:

 

(a)
“Award Agreement” means a written agreement, in a form determined by the Committee from time to time, entered into
by each Participant and the Company, evidencing the grant of a Stock Incentive Award under the Plan.

 

(b)
“Board of Directors” means the Board of Directors of Reed’s Inc., a Delaware corporation.

 

(c)
“Change-in-Control”: “Change-in-Control” means (i) any one person, or more than one person acting as a
group (as defined under Treasury Regulation § 1.409A-3(i)(5)(v)(B)) other than the Company or any employee benefit plan sponsored
by the Company acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes
more than fifty percent of the total fair market value or total Voting Power of the stock of the Company; or (ii) any one person,
or more than one person acting as a group (as defined under Treasury Regulation § 1.409A-3(i)(5)(v)(B)) other than the Company
or any employee benefit plan sponsored by the Company acquires (or has acquired during the twelve-month period ending on the date
of the most recent acquisition by such person or persons) ownership of stock of the Company possessing thirty percent or more
of the total Voting Power of the stock of the Company; or (iii) a majority of members of the Board of Directors is replaced during
any twelve-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board of
Directors before the date of each appointment or election; or (iv) any one person, or more than one person acting as a group (as
defined in Treasury Regulation § 1.409A-3(i)(5)(v)(B)) acquires (or has acquired during the twelve-month period ending on
the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market
value equal to or more than forty percent of the total gross fair market value of all of the assets of the Company immediately
before such acquisition or acquisitions. For purposes of subsection (iv), gross fair market value means the value of the assets
of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such
assets. The foregoing subsections (i) through (iv) shall be interpreted in a manner that is consistent with the Treasury Regulations
promulgated pursuant to section 409A of the Code so that all, and only, such transactions or events that could qualify as a “change-in-control
event” within the meaning of Treasury Regulation §1.409A-3(i)(5)(i) will be deemed to be a Change-in-Control for purposes
of this Plan.

 

(d)
“Code” means the Internal Revenue Code of 1986, as amended from time to time, and all regulations, interpretations,
and administrative guidance issued thereunder.

 

    	 

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(e)
“Committee” means the Compensation Committee of the Board of Directors, a sub-committee of the Compensation Committee,
or such other committee as the Board of Directors shall appoint from time to time to administer the Plan and to otherwise exercise
and perform the authority and functions assigned to the Committee under the terms of the Plan.

 

(f)
“Common Stock” means the Company’s common stock, $0.0001 par value per share, or any other security into which
the common stock shall be changed pursuant to the adjustment provisions of Section 9 of the Plan.

 

(g)
“Company” means Reed’s Inc., a Delaware corporation, and all of its Subsidiaries, collectively.

 

(h)
“Covered Employee” means each Participant who is an executive officer (within the meaning of Rule 3b-7 under the Exchange
Act) of the Company.

 

(i)
“Deferred Compensation Plan” means any plan, agreement, or arrangement maintained by the Company from time to time
that provides opportunities for deferral of compensation.

 

(j)
“Effective Date” means the date the Plan is approved by shareholders of the Company.

 

(k)
“Employment” means the period during which an individual is classified or treated by the Company as an employee, non-employee
director, consultant, or other service provider of the Company, as applicable.

 

(l)
“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(m)
“Fair Market Value” means, with respect to a share of Common Stock, as of the applicable date of determination or
if the market is not open for trading on such date, the immediately preceding day on which the market is open for trading, the
closing price as reported on the date of determination on the principal securities exchange on which shares of Common Stock are
then listed or admitted to trading (or if shares of Common Stock are then principally traded on a national securities exchange,
in the reported “composite transactions” for such exchange). In the event that the price of a share of Common Stock
shall not be so reported, the Fair Market Value of a share of Common Stock shall be determined by the Committee in its sole discretion.

 

(n)
“Option” means a stock option to purchase shares of Common Stock granted to a Participant pursuant to Section 6.

 

(o)
“Other Stock-Based Award” means an award granted to a Participant pursuant to Section 7.

 

(p)
“Participant” means an employee, consultant or director of the Company who is eligible to participate in the Plan
and to whom one or more Stock Incentive Awards have been granted pursuant to the Plan and have not been fully settled or cancelled
and, following the death of any such Person, his successors, heirs, executors, and administrators, as the case may be.

 

(q)
“Performance-Based Award” means any Stock Incentive Award pursuant to which any compensation paid is intended to be
Performance-Based Compensation.

 

(r)
“Performance-Based Compensation” means compensation that satisfies the requirements of section 162(m) of the Code
for “qualified performance-based compensation.”

 

(s)
“Performance Measures” means such measures as are described in Section 8 on which performance goals are based in order
to qualify certain awards granted hereunder as Performance-Based Compensation.

 

(t)
“Performance Percentage” means the factor determined pursuant to a Performance Schedule that is to be applied to a
Target Award and that reflects actual performance compared to the Performance Target.

 

(u)
“Performance Period” means the period of time during which the performance goals must be met in order to determine
the degree of payout and/or vesting with respect to a Stock Incentive Award that is intended to qualify as Performance-Based Compensation.
Performance Periods may be overlapping.

 

    	 

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(v)
“Performance Schedule” means a schedule or other objective method for determining the applicable Performance Percentage
to be applied to each Target Award.

 

(w)
“Performance Target” means performance goals and objectives with respect to a Performance Period.

 

(x)
“Person” means a “person” as such term is used in section 13(d) and 14(d) of the Exchange Act, including
any “group” within the meaning of section 13(d)(3) under the Exchange Act.

 

(y)
“Plan” means the 2017 Reed’s Inc. Incentive Compensation Plan, as it may be amended from time to time.

 

(z)
“Securities Act” means the Securities Act of 1933, as amended.

 

(aa)
“Stock Incentive Award” means an Option or Other Stock-Based Award granted pursuant to the terms of the Plan.

 

(bb)
“Subsidiary” means any “subsidiary” within the meaning of Rule 405 under the Securities Act.

 

(cc)
“Target Award” means target payout amount for a Stock Incentive Award.

 

(dd)
“Voting Power” means the number of votes available to be cast (determined by reference to the maximum number of votes
entitled to be cast by the holders of Voting Securities, or by the holders of any Voting Securities for which other Voting Securities
may be convertible, exercisable, or exchangeable, upon any matter submitted to shareholders where the holders of all Voting Securities
vote together as a single class) by the holders of Voting Securities.

 

(ee)
“Voting Securities” means any securities or other ownership interests of an entity entitled, or which may be entitled,
to matters submitted to Persons holding such securities or other ownership interests in such entity generally (whether or not
entitled to vote in the general election of directors), or securities or other ownership interests which are convertible into,
or exercisable in exchange for, such Voting Securities, whether or not subject to the passage of time or any contingency.

 

(ff)
“Reed’s” means Reed’s, Inc., a Delaware corporation (and any successor thereto).

 

3.
Stock Subject to the Plan

 

(a)
Stock Subject to the Plan

 

The
maximum number of shares of Common Stock that may be covered by Stock Incentive Awards granted under the Plan shall not exceed
3,000,000 shares of Common Stock in the aggregate. Out of such aggregate, the maximum number of shares of Common Stock that may
be covered by Options that are designated as “incentive stock options” within the meaning of section 422 of the Code
shall not exceed 3,000,000 shares of Common Stock. The maximum number of shares referred to in the preceding sentences of this
Section 3(a) shall in each case be subject to adjustment as provided in Section 9 and the following provisions of this Section
3. Of the shares described, one hundred percent may be delivered in connection with “full-value Awards,” meaning Stock
Incentive Awards other than Options or stock appreciation rights; provided, however, that any shares granted under Options or
stock appreciation rights shall be counted against the share limit on a one-for-one basis and any shares granted as full-value
Stock Incentive Awards shall be counted against the share limit as one share for every one share subject to such Stock Incentive
Award. Shares of Common Stock issued under the Plan may be authorized and unissued shares, treasury shares, shares purchased by
the Company in the open market, or any combination of the preceding categories as the Committee determines in its sole discretion.

 

For
purposes of the preceding paragraph, shares of Common Stock covered by Stock Incentive Awards shall only be counted as used to
the extent they are actually issued and delivered to a Participant (or such Participant’s permitted transferees as described
in the Plan) pursuant to the Plan; provided, however, that if a Stock Incentive Award is settled for cash or if shares of Common
Stock are withheld to pay the exercise price of an Option or to satisfy any tax withholding requirement in connection with a Stock
Incentive Award, the shares issued (if any) in connection with such settlement, the shares in respect of which the Stock Incentive
Award was cash-settled, and the shares withheld, will be deemed delivered for purposes of determining the number of shares of
Common Stock that are available for delivery under the Plan. In addition, if shares of Common Stock are issued subject to conditions
which may result in the forfeiture, cancellation, or return of such shares to the Company, any portion of the shares forfeited,
cancelled or returned shall be treated as not issued pursuant to the Plan. In addition, if shares of Common Stock owned by a Participant
(or such Participant’s permitted transferees as described in the Plan) are tendered (either actually or through attestation)
to the Company in payment of any obligation in connection with a Stock Incentive Award, the number of shares tendered shall be
added to the number of shares of Common Stock that are available for delivery under the Plan.

 

    	 

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Shares
of Common Stock covered by Stock Incentive Awards granted pursuant to the Plan in connection with the assumption, replacement,
conversion, or adjustment of outstanding equity-based awards in the context of a corporate acquisition or merger (within the meaning
of section 303A.08 of the NYSE Listed Company Manual) shall not count as used under the Plan for purposes of this Section 3.

 

(b)
Individual Award Limits

 

Subject
to adjustment as provided in Section 9, the maximum number of shares of Common Stock that may be covered by Stock Incentive Awards
granted under the Plan to any Covered Employee in any calendar year shall not exceed Fair Market Value of $1,000,000. For purposes
of the preceding sentences, the phrase “amount payable with respect to any calendar year” means the amount of cash,
or value of other property, required to be paid based on the achievement of applicable Performance Measures during a Performance
Period that ends in such calendar year, disregarding any deferral pursuant to the terms of a Deferred Compensation Plan unless
the terms of the deferral are intended to comply with the requirements for qualified performance-based compensation under section
162(m) of the Code.

 

4.
Administration of the Plan

 

The
Plan shall be administered by a Committee consisting of two or more persons, each of whom qualifies as a “non-employee director”
(within the meaning of Rule 16b-3 promulgated under section 16 of the Exchange Act), an “outside director” within
the meaning of Treasury Regulation section 1.162-27(e)(3) and as “independent” as required by NYSE or any security
exchange on which the Common Stock is listed, in each case if and to the extent required by applicable law or necessary to meet
the requirements of such rule, section or listing requirement at the time of determination. The Committee shall, consistent with
the terms of the Plan, from time to time designate those individuals who shall be granted Stock Incentive Awards under the Plan
and the amount, type, and other terms and conditions of such Stock Incentive Awards. All of the powers and responsibilities of
the Committee under the Plan may be delegated by the Committee, in writing, to any subcommittee thereof, in which case the acts
of such subcommittee shall be deemed to be acts of the Committee hereunder. The Committee may also from time to time authorize
a subcommittee consisting of one or more members of the Board of Directors (including members who are employees of the Company)
or employees of the Company to grant Stock Incentive Awards to persons who are not “executive officers” of the Company
(within the meaning of Rule 16a-1 under the Exchange Act), subject to such restrictions and limitations as the Committee may specify
and to the requirements of section 157 of the Delaware General Corporation Law.

 

The
Committee shall have full discretionary authority to administer the Plan, including discretionary authority to interpret and construe
any and all provisions of the Plan and any Award Agreement thereunder, and to adopt, amend, and rescind from time to time such
rules and regulations for the administration of the Plan, including rules and regulations related to sub-plans established for
the purpose of satisfying applicable foreign laws and/or qualifying for preferred tax treatment under applicable foreign tax laws,
as the Committee may deem necessary or appropriate. Decisions of the Committee shall be final, binding, and conclusive on all
parties. For the avoidance of doubt, the Committee may exercise all discretion granted to it under the Plan in a non-uniform manner
among Participants.

 

    	 

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The
Committee may delegate the administration of the Plan to one or more officers or employees of the Company, and such administrator(s)
may have the authority to execute and distribute Award Agreements, to maintain records relating to Stock Incentive Awards, to
process or oversee the issuance of Common Stock under Stock Incentive Awards, to interpret and administer the terms of Stock Incentive
Awards, and to take such other actions as may be necessary or appropriate for the administration of the Plan and of Stock Incentive
Awards under the Plan, provided that in no case shall any such administrator be authorized (i) to grant Stock Incentive Awards
under the Plan (except in connection with any delegation made by the Committee pursuant to the first paragraph of this Section
4), (ii) to take any action that would cause Stock Incentive Awards intended to qualify as Performance-Based Compensation to fail
to so qualify, (iii) to take any action inconsistent with section 409A of the Code, or (iv) to take any action inconsistent with
applicable provisions of the Delaware General Corporation Law. Any action by any such administrator within the scope of its delegation
shall be deemed for all purposes to have been taken by the Committee and, except as otherwise specifically provided, references
in this Plan to the Committee shall include any such administrator. The Committee and, to the extent it so provides, any subcommittee,
shall have sole authority to determine whether to review any actions and/or interpretations of any such administrator, and if
the Committee shall decide to conduct such a review, any such actions and/or interpretations of any such administrator shall be
subject to approval, disapproval, or modification by the Committee.

 

On
or after the date of grant of a Stock Incentive Award under the Plan, the Committee may (i) accelerate the date on which any such
Stock Incentive Award becomes vested, exercisable, or transferable, as the case may be, (ii) extend the term of any such Stock
Incentive Award, including, without limitation, extending the period following a termination of a Participant’s Employment
during which any such Stock Incentive Award may remain outstanding, (iii) waive any conditions to the vesting, exercisability,
or transferability, as the case may be, of any such Stock Incentive Award or (iv) provide for the payment of dividends or dividend
equivalents with respect to any such Stock Incentive Award; provided, that the Committee shall not have any such authority
to the extent that the grant of such authority would cause any tax to become due under section 409A of the Code. Notwithstanding
anything herein to the contrary, the Company shall not reprice any stock option (within the meaning of Section 711 of the NYSE
American Company

Guide and any other formal or informal guidance issued by the NYSE) without the approval of the shareholders of the Company.

 

No
member of the Committee shall be liable for any action, omission, or determination relating to the Plan, and the Company shall
indemnify and hold harmless each member of the Committee and each other director or employee of the Company to whom any duty or
power relating to the administration or interpretation of the Plan has been delegated, against any cost or expense (including
counsel fees) or liability (including any sum paid in settlement of a claim with the approval of the Committee) arising out of
any action, omission, or determination relating to the Plan, unless, in either case, such action, omission, or determination was
taken or made by such member, director, or employee in bad faith and without reasonable belief that it was in the best interests
of the Company.

 

5.
Eligibility

 

The
Persons who shall be eligible to receive Stock Incentive Awards pursuant to the Plan shall be those employees, non-employee directors,
consultants, and other selected service providers of the Company whom the Committee shall select from time to time, including
officers of the Company, whether or not they are directors. Each Stock Incentive Award granted under the Plan shall be evidenced
by an Award Agreement.

 

    	 

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6.
Options

 

The
Committee may from time to time grant Options on such terms as it shall determine, subject to the terms and conditions set forth
in the Plan. The Award Agreement shall clearly identify such Option as either an “incentive stock option” within the
meaning of section 422 of the Code or as a non-qualified stock option.

 

(a)
Exercise Price

 

The
exercise price per share of Common Stock covered by any Option shall be not less than one hundred percent of the Fair Market Value
of a share of Common Stock on the date on which such Option is granted, other than assumptions in accordance with a corporate
acquisition or merger as described in Section 3.

 

(b)
Term and Exercise of Options

 

(1)
Each Option shall become vested and exercisable on such date or dates, during such period and for such number of shares of Common
Stock as shall be determined by the Committee on or after the date such Option is granted; provided, however that
no Option shall be exercisable after the expiration of ten years from the date such Option is granted; and, provided, further,
that each Option shall be subject to earlier termination, expiration, or cancellation as provided in the Plan or the Award Agreement.

 

(2)
Each Option shall be exercisable in whole or in part; provided, however that no partial exercise of an Option shall
be for an aggregate exercise price of less than $1,000 (unless waived by the Committee). The partial exercise of an Option shall
not cause the expiration, termination, or cancellation of the remaining portion thereof.

 

(3)
An Option shall be exercised by such methods and procedures as the Committee determines from time to time, including without limitation
through net physical settlement or other method of cashless exercise.

 

(c)
Special Rules for Incentive Stock Options

 

(1)
The aggregate Fair Market Value of shares of Common Stock with respect to which “incentive stock options” (within
the meaning of section 422 of the Code) are exercisable for the first time by a Participant during any calendar year under the
Plan and any other stock option plan of the Company or any of its “subsidiaries” (within the meaning of section 424
of the Code) shall not exceed $100,000. Such Fair Market Value shall be determined as of the date on which each such stock option
is granted. In the event that the aggregate Fair Market Value of shares of Common Stock with respect to such incentive stock options
exceeds $100,000, then incentive stock options granted hereunder to such Participant shall, to the extent and in the order required
by regulations promulgated under the Code (or any other authority having the force of regulations), automatically be deemed to
be non-qualified stock options, but all other terms and provisions of such stock options shall remain unchanged. In the absence
of such regulations (and authority), or in the event such regulations (or authority) require or permit a designation of the Options
which shall cease to constitute incentive stock options, incentive stock options granted hereunder shall, to the extent of such
excess and in the order in which they were granted, automatically be deemed to be non-qualified stock options, but all other terms
and provisions of such stock options shall remain unchanged.

 

(2)
Incentive stock options may only be granted to individuals who are employees of the Company. No incentive stock option may be
granted to an individual if, at the time of the proposed grant, such individual owns stock possessing more than ten percent of
the total combined Voting Power of all classes of stock of the Company or any of its “subsidiaries” (within the meaning
of section 424 of the Code), unless (i) the exercise price of such incentive stock option is at least 110 percent of the Fair
Market Value of a share of Common Stock at the time such incentive stock option is granted and (ii) such incentive stock option
is not exercisable after the expiration of five years from the date such incentive stock option is granted.

 

    	 

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7.
Other Stock-Based Awards

 

The
Committee may from time to time grant equity-based or equity-related awards not otherwise described herein in such amounts and
on such terms as it shall determine, subject to the terms and conditions set forth in the Plan. Without limiting the generality
of the preceding sentence, each such Other Stock-Based Award may (i) involve the transfer of actual shares of Common Stock to
Participants, either at the time of grant or thereafter, or payment in cash or otherwise of amounts based on the value of shares
of Common Stock, (ii) be subject to performance-based and/or service-based conditions, (iii) be in the form of stock appreciation
rights, phantom stock, restricted stock, restricted stock units, performance shares, deferred share units, or share-denominated
performance units, (iv) be designed to comply with applicable laws of jurisdictions other than the United States, and (v) be designed
to qualify as Performance-Based Compensation; provided, that each Other Stock-Based Award shall be denominated in, or shall
have a value determined by reference to, a number of shares of Common Stock that is specified at the time of the grant of such
Stock Incentive Award.

 

8.
Performance-Based Compensation

 

(a)
Calculation

 

The
amount payable with respect to a Stock Incentive Award that is intended to qualify as Performance-Based Compensation shall be
determined in any manner permitted by section 162(m) of the Code.

 

(b)
Discretionary Reduction

 

Unless
otherwise specified in the Award Agreement, the Committee may, in its discretion, reduce or eliminate the amount payable to any
Participant with respect to the Stock Incentive Award, based on such factors as the Committee may deem relevant, but the Committee
may not increase any such amount above the amount established in accordance with the relevant Performance Schedule. For purposes
of clarity, the Committee may exercise the discretion provided for by the foregoing sentence in a non-uniform manner among Participants.

 

(c)
Performance Measures

 

The
performance goals upon which the payment or vesting of any Stock Incentive Award (other than Options and stock appreciation rights)
that is intended to qualify as Performance-Based Compensation depends shall (a) be objective business criteria and shall otherwise
meet the requirements of section 162(m) of the Code, including the requirement that the level or levels of performance targeted
by the Committee result in the achievement of performance goals being “substantially uncertain” at the time of grant
and (b) relate to one or more of the following Performance Measures: market price of the Common Stock, net earnings, earnings
before or after any or all of interest, taxes, depreciation, and amortization, net income (including, net income or operating
income), cash flow (including, operating cash flow, free cash flow, and cash flow return on capital), cash position, cash valued
added, customer satisfaction or growth measures, safety, revenues (including net revenues, net revenue growth or gross revenue),
enterprise value, financial return ratios, market performance, margins (including gross margins or operating margins), productivity
or efficiency ratios, costs, profits (including net profits, net operating profits, gross profit, gross profit growth, and profit
returns or margins), earnings per share, stock price, working capital turnover and targets, total shareholder return, economic
value added or other value added measurements, return on assets, return on capital or invested capital, return on equity, return
on sales, new product innovation, product release schedules or ship targets, product cost reduction, inventory or supply chain
management activities, and budget and expense management.

 

    	 

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A
Performance Measure (i) may relate to the performance of the Participant, the Company, a Subsidiary, any business group, business
unit, or other subdivision of the Company, or any combination of the foregoing, as the Committee deems appropriate and (ii) may
be expressed as an amount, as an increase or decrease over a specified period, as a relative comparison to the performance of
a group of comparator companies or a published or special index, or any other measure of the selected performance criteria, as
the Committee deems appropriate. The measurement of any Performance Measure shall exclude the impact positive and/or negative
of unusual and/or infrequently occurring items or expenses; charges for restructurings; discontinued operations; acquisitions
or divestitures; the cumulative effect of changes in accounting treatment; changes in tax laws, accounting standards or principles
or other laws or regulatory rules affecting reporting results; any impact of impairment of tangible or intangible assets; any
impact of the issuance or repurchase of equity securities and/or other changes in the number of outstanding shares of any class
of the Company’s equity securities; any gain, loss, income, or expense attributable to acquisitions or dispositions of stock
or assets; stock-based compensation expense; asset write-downs, in-process research and development expense; gain or loss from
all or certain claims and/or litigation and insurance recoveries; foreign exchange gains and losses; any impact of changes in
foreign exchange rates and any changes in currency; a change in the Company’s fiscal year; and any other items, each determined
in accordance with United States generally accepted accounting principles and as identified in the Company’s audited financial
statements, including the notes thereto.

 

(d)
Performance Schedules

 

Within
ninety days after the beginning of a Performance Period, and in any case before twenty-five percent of the Performance Period
has elapsed, the Committee shall establish (a) Performance Targets for such Performance Period, (b) Target Awards for each Participant,
and (c) Performance Schedules for such Performance Period.

 

(e)
Committee Discretion

 

Nothing
in this Plan is intended to limit the Committee’s discretion to adopt conditions with respect to any Stock Incentive Award
that is not intended to qualify as Performance-Based Compensation that relate to performance other than the Performance Measures.
Furthermore, nothing in this Plan shall be construed to require the Committee to grant any Award intended to qualify as Performance-Based
Compensation. The Committee may, subject to the terms of the Plan, amend previously granted Stock Incentive Awards in a way that
disqualifies them as Performance-Based Compensation.

 

(f)
Committee Determinations

 

Determinations
by the Committee as to the establishment of Performance Measures, the level of actual achievement of Performance Targets, and
the amount payable with respect to a Stock Incentive Award intended to qualify as Performance-Based Compensation shall be recorded
in writing. Specifically, the Committee shall certify in writing, in a manner conforming to applicable regulations under section
162(m) of the Code, prior to settlement of each such Stock Incentive Award granted to a Covered Employee, that the Performance
Targets and other material terms upon which settlement of the Stock Incentive Award was conditioned have been satisfied.

 

    	 

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9.
Adjustment upon Certain Changes

 

Subject
to any action by the shareholders of the Company required by law, applicable tax rules or the rules of any exchange on which shares
of common stock of the Company are listed for trading:

 

(a)
Shares Available for Grants

 

In
the event of any change in the number of shares of Common Stock outstanding by reason of any stock dividend or split, recapitalization,
merger, consolidation, combination, or exchange of shares or similar corporate change, the maximum aggregate number or type of
shares of Common Stock with respect to which the Committee may grant Stock Incentive Awards, the maximum number of shares of Common
Stock that may be covered by Options that are designated as “incentive stock options” within the meaning of section
422 of the Code and the maximum aggregate number of shares of Common Stock with respect to which the Committee may grant Stock
Incentive Awards to any individual Participant in any year and to any non-employee director shall be appropriately adjusted or
substituted by the Committee. In the event of any change in the type or number of shares of Common Stock of the Company outstanding
by reason of any other event or transaction, the Committee shall, to the extent deemed appropriate by the Committee, make such
adjustments to the type or number of shares of Common Stock with respect to which Stock Incentive Awards may be granted.

 

(b)
Increase or Decrease in Issued Shares Without Consideration

 

In
the event of any increase or decrease in the number of issued shares of Common Stock resulting from a subdivision or consolidation
of shares of Common Stock or the payment of a stock dividend (but only on the shares of Common Stock), or any other increase or
decrease in the number of such shares effected without receipt or payment of consideration by the Company, the Committee shall,
to the extent deemed appropriate by the Committee, adjust the type or number of shares of Common Stock subject to each outstanding
Stock Incentive Award and the exercise price per share of Common Stock of each such Stock Incentive Award.

 

(c)
Certain Mergers and Other Transactions

 

In
the event of any merger, consolidation, or similar transaction as a result of which the holders of shares of Common Stock receive
consideration consisting exclusively of securities of the surviving corporation in such transaction, the Committee shall, to the
extent deemed appropriate by the Committee, adjust each Stock Incentive Award outstanding on the date of such merger or consolidation
so that it pertains and applies to the securities which a holder of the number of shares of Common Stock subject to such Stock
Incentive Award would have received in such merger or consolidation.

 

In
the event of (i) a dissolution or liquidation of the Company, (ii) a sale of all or substantially all of the Company’s assets
(on a consolidated basis), (iii) a merger, consolidation, or similar transaction involving the Company in which the holders of
shares of Common Stock receive securities and/or other property, including cash, other than shares of the surviving corporation
in such transaction, the Committee shall, to the extent deemed appropriate by the Committee, have the power to:

 

(i)
cancel, effective immediately prior to the occurrence of such event, each Stock Incentive Award (whether or not then exercisable
or vested), and, in full consideration of such cancellation, pay to the Participant to whom such Stock Incentive Award was granted
an amount in cash, for each share of Common Stock subject to such Stock Incentive Award, equal to the value, as determined by
the Committee, of such Stock Incentive Award, provided that with respect to any outstanding Option such value shall be equal to
the excess of (A) the value, as determined by the Committee, of the property (including cash) received by the holder of a share
of Common Stock as a result of such event over (B) the exercise price of such Option; or

 

    	 

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(ii)
provide for the exchange of each Stock Incentive Award (whether or not then exercisable or vested) for a Stock Incentive Award
with respect to (A) some or all of the property which a holder of the number of shares of Common Stock subject to such Stock Incentive
Award would have received in such transaction or (B) securities of the acquiror or surviving entity and, incident thereto, make
an equitable adjustment as determined by the Committee in the exercise price of the Stock Incentive Award, or the number of shares
or amount of property subject to the Stock Incentive Award or provide for a payment (in cash or other property) to the Participant
to whom such Stock Incentive Award was granted in partial consideration for the exchange of the Stock Incentive Award.

 

(d)
Other Changes

 

In
the event of any change in the capitalization of the Company, corporate change, corporate transaction or other event other than
those specifically referred to in Sections 9(a), (b) or (c), the Committee shall, to the extent deemed appropriate by the Committee,
make such adjustments in the number and class of shares subject to Stock Incentive Awards outstanding on the date on which such
change occurs and in such other terms of such Stock Incentive Awards as the Committee deems appropriate.

 

(e)
No Other Rights

 

Except
as expressly provided in the Plan or any Award Agreement, no Participant shall have any rights by reason of any subdivision or
consolidation of shares of stock of any class, the payment of any dividends or dividend equivalents, any increase or decrease
in the number of shares of stock of any class or any dissolution, liquidation, merger, or consolidation of the Company or any
other corporation. Except as expressly provided in the Plan, no issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to,
the number of shares or amount of other property subject to, or the terms related to, any Stock Incentive Award.

 

(f)
Savings Clause

 

No
provision of this Section 9 shall be given effect to the extent that such provision would cause any tax to become due under section
409A of the Code.

 

With
respect to Stock Incentive Awards which are granted to Covered Employees and are intended to qualify as Performance-Based Compensation,
no provision of this Section 9 shall be given effect to the extent that such provision would cause such Stock Incentive Award
to fail to so qualify as Performance-Based Compensation under section 162(m) of the Code unless the Committee expressly acknowledges
and affirms such consequences.

 

10.
Change-in-Control; Termination of Employment

 

(a)
Change-in-Control

 

The
consequences of a Change-in-Control, if any, will be set forth in the Award Agreement in addition to what is provided in Section
10 hereof.

 

(b)
Termination of Employment

 

(1)
Except as to any awards constituting stock rights subject to section 409A of the Code, termination of Employment shall mean a
separation from service within the meaning of section 409A of the Code, unless the Participant is retained as a consultant pursuant
to a written agreement and such agreement provides otherwise. Without limiting the generality of the foregoing, the Committee
shall determine whether an authorized leave of absence, or absence in military or government service, shall constitute termination
of Employment, provided that a Participant who is an employee will not be deemed to cease employment in the case of any leave
of absence approved by the Company. Furthermore, no payment shall be made with respect to any Stock Incentive Awards under the
Plan that are subject to section 409A of the Code as a result of any such authorized leave of absence or absence in military or
government service unless such authorized leave or absence constitutes a separation from service for purposes of section 409A
of the Code and the regulations promulgated thereunder.

 

    	 

    	Page 11

    

 

(2)
Unless otherwise specified in the Award Agreement, no Stock Incentive Award will continue to vest after termination of Employment
and the consequences with respect to any Option of the termination of Employment of the Participant holding the Option shall be
as follows:

 

(i)       If
the Participant’s termination of Employment occurs prior to the Option’s expiration date, for any reason whatsoever
other than death or authorized retirement (as defined in subparagraph (ii) below), any unexercised portion of the Award shall
terminate automatically.

 

(ii)
       If a Participant retires upon reaching the Company’s normal retirement age or
earlier, with the written consent of the Company, because of physical or mental disability (collectively, “authorized retirement”),
any unexercised or unvested portion of the Option shall expire three months after the effective date of such authorized retirement.
The Participant may exercise all or any vested portion of a Option from the date of his or her authorized retirement to three
months thereafter.

 

(iii)
       If prior to the expiration date of the Option, the Participant dies while employed by
the Company or its subsidiary or within three months of his or her authorized retirement, the Participant’s estate, heirs
or legatees shall have the privilege of exercising all or part of the unexercised Option within six months after the Participant’s
death.

 

Nothing
contained in this Section shall extend the time for exercising all or any part of the then unexercised portion of an Option.

 

11.
Rights Under the Plan

 

No
Person shall have any rights as a shareholder with respect to any shares of Common Stock covered by or relating to any Stock Incentive
Award until the date of the issuance of such shares on the books and records of the Company. Except as otherwise expressly provided
in Section 9 hereof, no adjustment of any Stock Incentive Award shall be made for dividends or other rights for which the record
date occurs prior to the date of such issuance. Nothing in this Section 11 is intended, or should be construed, to limit authority
of the Committee to cause the Company to make payments based on the dividends that would be payable with respect to any share
of Common Stock if it were issued or outstanding, or from granting rights related to such dividends.

 

The
Company shall not have any obligation to establish any separate fund or trust or other segregation of assets to provide for payments
under the Plan. To the extent any person acquires any rights to receive payments hereunder from the Company, such rights shall
be no greater than those of an unsecured creditor.

 

12.
No Special Employment Rights; No Right to Stock Incentive Awards

 

(a)
Nothing contained in the Plan or any Award Agreement shall confer upon any Participant any right with respect to the continuation
of his or her Employment by the Company or interfere in any way with the right of the Company at any time to terminate such Employment
or to increase or decrease the compensation of the Participant from the rate in existence at the time of the grant of a Stock
Incentive Award.

 

(b)
No person shall have any claim or right to receive a Stock Incentive Award hereunder. The Committee’s granting of a Stock
Incentive Award to a Participant at any time shall neither require the Committee to grant a Stock Incentive Award to such Participant
or any other Participant or other person at any time nor preclude the Committee from making subsequent grants to such Participant
or any other Participant or other person.

 

    	 

    	Page 12

    

 

13.
Securities Matters

 

(a)
The Company shall be under no obligation to affect the registration pursuant to the Securities Act of any shares of Common Stock
to be issued hereunder or to effect similar compliance under any state or local laws. Notwithstanding anything herein to the contrary,
the Company shall not be obligated to cause to be issued shares of Common Stock pursuant to the Plan unless and until the Company
is advised by its counsel that the issuance is in compliance with all applicable laws, regulations of governmental authority,
and the requirements of any securities exchange on which shares of Common Stock are traded. The Committee may require, as a condition
to the issuance of shares of Common Stock pursuant to the terms hereof, that the recipient of such shares make such covenants,
agreements, and representations, and that any related certificates representing such shares bear such legends, as the Committee,
in its sole discretion, deems necessary or desirable.

 

(b)
The exercise or settlement of any Stock Incentive Award (including, without limitation, any Option) granted hereunder shall only
be effective at such time as counsel to the Company shall have determined that the issuance and delivery of shares of Common Stock
pursuant to such exercise is in compliance with all applicable laws, regulations of governmental authority, and the requirements
of any securities exchange on which shares of Common Stock are traded. The Company may, in its sole discretion, defer the effectiveness
of any exercise or settlement of a Stock Incentive Award granted hereunder in order to allow the issuance of shares pursuant thereto
to be made pursuant to registration or an exemption from registration or other methods for compliance available under federal
or state or local securities laws. The Company shall inform the Participant in writing of its decision to defer the effectiveness
of the exercise or settlement of a Stock Incentive Award granted hereunder. During the period that the effectiveness of the exercise
of a Stock Incentive Award has been deferred, the Participant may, by written notice, withdraw such exercise and obtain the refund
of any amount paid with respect thereto.

 

14.
Withholding Taxes

 

(a)
Cash Remittance

 

Whenever
withholding tax obligations are incurred in connection with any Stock Incentive Award, the Company shall have the right to require
the Participant to remit to the Company in cash an amount sufficient to satisfy federal, state, and local withholding tax requirements,
if any, attributable to such event. In addition, upon the exercise or settlement of any Stock Incentive Award in cash, or the
making of any other payment with respect to any Stock Incentive Award (other than in shares of Common Stock), the Company shall
have the right to withhold from any payment required to be made pursuant thereto an amount sufficient to satisfy the federal,
state, and local withholding tax requirements, if any, attributable to such exercise, settlement, or payment.

 

(b)
Stock Remittance

 

At
the election of the Participant, subject to the approval of the Committee, whenever withholding tax obligations are incurred in
connection with any Stock Incentive Award, the Participant may tender to the Company (including by attestation) a number of shares
of Common Stock having a Fair Market Value at the tender date determined by the Committee to be sufficient to satisfy the minimum
federal, state, and local withholding tax requirements, if any, attributable to such event. Such election shall satisfy the Participant’s
obligations under Section 14(a) hereof, if any.

 

    	 

    	Page 13

    

 

(c)
Stock Withholding

 

At
the election of the Participant, subject to the approval of the Committee, whenever withholding tax obligations are incurred in
connection with any Stock Incentive Award, the Company shall withhold a number of such shares having a Fair Market Value determined
by the Committee to be sufficient to satisfy the minimum federal, state, and local withholding tax requirements, if any, attributable
to such event. Such election shall satisfy the Participant’s obligations under Section 14(a) hereof, if any.

 

15.
No Obligation to Exercise

 

The
grant to a Participant of a Stock Incentive Award shall impose no obligation upon such Participant to exercise such Stock Incentive
Award.

 

16.
Transfers

 

Stock
Incentive Awards may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will
or by the laws of descent or distribution and may be exercised, during the lifetime of a Participant, only by the Participant;
provided, however that the Committee may permit Options or other Stock Incentive Awards that are not incentive stock
options to be sold, pledged, assigned, hypothecated, transferred, or disposed of, on a general or specific basis, subject to such
conditions and limitations as the Committee may determine. Upon the death of a Participant, outstanding Stock Incentive Awards
granted to such Participant may be exercised only by the executors or administrators of the Participant’s estate or by any
person or persons who shall have acquired such right to exercise by will or by the laws of descent and distribution. No transfer
by will or the laws of descent and distribution of any Stock Incentive Award, or the right to exercise any Stock Incentive Award,
shall be effective to bind the Company unless the Committee shall have been furnished with (a) written notice thereof and with
a copy of the will and/or such evidence as the Committee may deem necessary to establish the validity of the transfer and (b)
an agreement by the transferee to comply with all the terms and conditions of the Stock Incentive Award that are or would have
been applicable to the Participant and to be bound by the acknowledgements made by the Participant in connection with the grant
of the Stock Incentive Award.

 

17.
Expenses and Receipts

 

The
expenses of the Plan shall be paid by the Company. Any proceeds received by the Company in connection with any Stock Incentive
Award will be used for general corporate purposes.

 

18.
Failure to Comply

 

In
addition to the remedies of the Company elsewhere provided for herein, failure by a Participant to comply with any of the terms
and conditions of the Plan or any Award Agreement, unless such failure is remedied by such Participant within ten days after having
been notified of such failure by the Committee, shall be grounds for the cancellation and forfeiture of such Stock Incentive Award,
in whole or in part, as the Committee, in its absolute discretion, may determine.

 

19.
Relationship to Other Benefits

 

No
payment with respect to any Stock Incentive Awards under the Plan shall be taken into account in determining any benefits under
any pension, retirement, profit sharing, group insurance, or other benefit plan of the Company except as otherwise specifically
provided in such other plan.

 

    	 

    	Page 14

    

 

20.
Governing Law

 

The
Plan and the rights of all persons under the Plan shall be construed and administered in accordance with the laws of the State
of Delaware without regard to its conflict of law principles.

 

21.
Severability

 

If
all or any part of this Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not serve to invalidate any portion of this Plan not declared to be unlawful or invalid. Any Section or part
of a Section so declared to be unlawful or invalid shall, if possible, be construed in a manner that will give effect to the terms
of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.

 

22.
Effective Date and Term of Plan

 

The
Effective Date of the Plan is September 30, 2017, subject to the approval of the Plan by the shareholders of the Company. No grants
of Stock Incentive Awards may be made under the Plan after September 30, 2027.

 

23.
Amendment or Termination of the Plan

 

The
Board of Directors may at any time suspend or discontinue the Plan or revise or amend it or any Stock Incentive Award in any respect
whatsoever; provided, however, that to the extent that any applicable law, tax requirement, or rule of a stock exchange
requires shareholder approval in order for any such revision or amendment to be effective, such revision or amendment shall not
be effective without such approval. The preceding sentence shall not restrict the Committee’s ability to exercise its discretionary
authority hereunder pursuant to Section 4 hereof, which discretion may be exercised without amendment to the Plan. No provision
of this Section 23 shall be given effect to the extent that such provision would cause any tax to become due under section 409A
of the Code. Except as expressly provided in the Plan, no action hereunder may, without the consent of a Participant, adversely
affect the Participant’s rights under any previously granted and outstanding Stock Incentive Award. Nothing herein shall
cause a Performance-Based Award to cease to qualify under section 162(m) of the Code unless the Committee expressly acknowledges
and affirms such consequences in connection with this Section 23. Nothing in the Plan shall limit the right of the Company to
pay compensation of any kind outside the terms of the Plan.Exhibit 4.1

 

EXHIBIT A

 

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

 

COMMON STOCK PURCHASE WARRANT

 

BIOPHARMX CORPORATION

 

	
Warrant Shares:                  
    	
 
    	
Initial Exercise Date:   October   , 2017
    
	
 
    	
Issue   Date: October   , 2017
    

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received,               or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after October   , 2017 (the “Initial Exercise Date”) and on or prior to the close of business on the five year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from BioPharmX Corporation, a Delaware corporation (the “Company”), up to        shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock.  The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section 1.              Definitions.  Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Warrant Exercise Agreement (the “Warrant Exercise Agreement”), dated October 23, 2017, between the Company and the Holder.

 

Section 2.              Exercise.

 

a)            Exercise of Warrant.  Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to 

 

1

 

the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”).  Within the earlier of (i) two (2) Trading Days (as defined below) and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise.  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.  Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.  The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Trading Day of receipt of such notice. As used herein, “Trading Day” means a day on which the principal Trading Market (as defined below) is open for trading. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

b)            Exercise Price.  The exercise price per share of the Common Stock under this Warrant shall be $0.30, subject to adjustment hereunder (the “Exercise Price”).

 

c)             Cashless Exercise.  If at any time after the six-month anniversary of the  Closing Date, there is no effective registration statement registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

(A) =  as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of 

 

2

 

the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day;

 

(B) = the Exercise Price of this Warrant, as adjusted hereunder; and

 

(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrant Shares being issued may be tacked on to the holding period of this Warrant.  The Company agrees not to take any position contrary to this Section 2(c).

 

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

 

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

 

“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 

 

3

 

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

 

Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).

 

d)                                     Mechanics of Exercise.

 

i.      Delivery of Warrant Shares Upon Exercise.  The Company shall cause the Warrant Shares purchased hereunder to be transmitted by Computershare Trust Company, N.A. or any successor transfer agent of the Company (the “Transfer Agent”) to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144 promulgated 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 144”), and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earlier of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise and (ii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise; provided that payment of the aggregate Exercise Price is received within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise 

 

4

 

(such date, the “Warrant  Share Delivery Date”).   Upon delivery of the Notice of Exercise, 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 of delivery of the Warrant Shares, provided  that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise.  If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.

 

ii.           Delivery of New Warrants Upon Exercise.  If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

iii.        Rescission Rights.  If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

iv.        Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise.  In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of 

 

5

 

Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder.  For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss.  Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

 

v.         No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.  As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

vi.        Charges, Taxes and Expenses.  Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a 

 

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condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.  The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

 

vii.       Closing of Books.  The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

e)             Holder’s Exercise Limitations.  The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates (as defined below), and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other  Common Stock Equivalents (as defined below)) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties.  Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith.   To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the 

 

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accuracy of such determination.   In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing 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 or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported.  The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant.  The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply.  Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company.  The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) 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. The limitations contained in this paragraph shall apply to a successor holder of this Warrant. As used herein, “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; and “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.

 

Section 3.              Certain Adjustments.

 

a)            Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or 

 

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distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged.  Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

b)            [RESERVED]

 

c)             Subsequent Rights Offerings.  In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares 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 exercise hereof, including without limitation, the Beneficial Ownership Limitation) 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 (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

d)            Pro Rata Distributions.  During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be 

 

9

 

entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

e)             Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group 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 or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant).  For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on

 

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the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.  Notwithstanding anything to the contrary, in the event of a Fundamental Transaction,  the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder an amount equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction; provided, however, that the payment of the Black Scholes Value shall be made by the Company or any Successor Entity, as of the date of consummation of such Fundamental Transaction, using the same type or form of consideration (and in the same proportion) that is being offered and paid to the holders of Common Stock of the Company in connection with the Fundamental Transaction, whether that consideration be in the form of cash, stock or any combination thereof, or whether the holders of Common Stock are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction.  “Black Scholes Value” means the value of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date.  The payment of the Black Scholes Value will be made within five Business Days of the Holder’s election (or, if later, on the effective date of the Fundamental Transaction).  The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the Warrant Exercise Agreement in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor 

 

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Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such 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 and the Warrant Exercise Agreement referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the Warrant Exercise Agreement with the same effect as if such Successor Entity had been named as the Company herein.

 

f)                                       Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

g)                                      Notice to Holder.

 

i.                  Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

ii.               Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last 

 

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facsimile number or email address as it shall appear upon the Warrant Register (as defined below) of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice.  To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.  The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice  except as may otherwise be expressly set forth herein.

 

Section 4.                                           Transfer of Warrant.

 

a)                                     Transferability.  Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of Section 2.3 of the Warrant Exercise Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.  Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date the Holder delivers an assignment form to the Company assigning this Warrant in full.  The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

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b)                                     New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney.  Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

c)                                      Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

d)                                     Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, agree to be bound by provisions of Section 2.3 of the Warrant Exercise Agreement.

 

e)                                      Representation by the Holder.  The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.

 

Section 5.                                           Miscellaneous.

 

a)                                     No Rights as Stockholder Until Exercise.  This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.

 

b)                                     Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock 

 

14

 

certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

c)                                      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 Trading Day, then, such action may be taken or such right may be exercised on the next succeeding Trading Day.

 

d)                                     Authorized Shares.

 

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.  The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant.  The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.  The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, 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, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.  Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

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Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

(e)                                  Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant 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 Warrant (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, and hereby irrevocably waives, and agrees not to assert in any action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such action or proceeding is improper or is an inconvenient venue for such proceeding.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant 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.

 

f)                                       Restrictions.  The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

 

g)                                      Nonwaiver and Expenses.  No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that all rights to exercise this Warrant hereunder terminate on the Termination Date, subject to the provisions of 5(c) above.  If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

h)             Notices.  Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Warrant Exercise Agreement.

 

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i)                 Limitation of Liability.  No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

j)                Remedies.  The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

k)             Successors and Assigns.  Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder.  The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

l)                 Amendment.  This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

 

m)         Severability.  Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

n)             Headings.  The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

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

 

(Signature Page Follows)

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

 

	
 
    	
BIOPHARMX   CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

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NOTICE OF EXERCISE

 

TO:         BIOPHARMX CORPORATION

 

(1)   The undersigned hereby elects to purchase          Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2)   Payment shall take the form of (check applicable box):

 

o in lawful money of the United States; or

 

o [if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

 

(3)   Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

 

The Warrant Shares shall be delivered to the following DWAC Account Number:

 

 

(4)  Accredited Investor.  The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

 

	
[SIGNATURE OF HOLDER]
    
	
 
    
	
Name of Investing   Entity:
    	
 
    
	
Signature of Authorized   Signatory of Investing Entity:
    	
 
    
	
Name of Authorized   Signatory:
    	
 
    
	
Title of Authorized   Signatory:
    	
 
    
	
Date:
    	
 
    
						

 

 

EXHIBIT B

 

ASSIGNMENT FORM

(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)
    
	
 
    	
 
    
	
Phone Number:
    	
 
    
	
 
    	
 
    
	
Email Address:
    	
 
    
	
 
    	
 
    
	
Dated:                       ,
    	
 
    
	
 
    	
 
    
	
Holder’s Signature:
    	
 
    	
 
    
	
 
    	
 
    
	
Holder’s Address:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00275-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00275-of-00352.parquet"}]]