Document:

BPMX Exh Merger_4.1 Warrant form

		
			Exhibit 4.1
		

		
			 
		

		
			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.
		

		
			 
		

		
			BIOPHARMX CORPORATION
		

		
			 
		

		
			WARRANT TO PURCHASE COMMON STOCK
		

		
			 
		

		
			Warrant No.: Bridge Warrant 1
		

		
			Number of Shares of Common Stock: 2,255,336
		

		
			Date of Issuance:  January 28, 2020 (“Issuance Date”)
		

		
			 
		

		
			BioPharmX Corporation, a company organized under the laws of Delaware (the “Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Timber Pharmaceuticals LLC, the registered holder hereof or its permitted assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect, at any time or times during the Exercise Period, but not after 11:59 p.m., New York time, on the Expiration Date, (as defined below), two million two hundred fifty five thousand three hundred thirty six (2,255,336) fully paid non-assessable shares of Common Stock (as defined below), subject to adjustment as provided herein (the “Warrant Shares”).  Except as otherwise defined herein, capitalized terms in this Warrant to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, this “Warrant”), shall have the meanings set forth in Section 16.  This Warrant is being issued pursuant to that certain Credit Agreement and that certain Agreement and Plan of Merger and Reorganization, both dated as of January 28, 2020 (the “Subscription Date”).
		

			
	
			
				 1.
			EXERCISE OF WARRANT.

			
	
			
				 (a)
			Mechanics of Exercise.  Subject to the terms and conditions hereof (including, without limitation, the limitations set forth in Section 1(f)), this Warrant may be exercised by the Holder at any time or times during the Exercise Period, in whole or in part (but not as to fractional shares), by delivery (whether via facsimile, electronic mail or otherwise) of a 

		 

	written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election to exercise this Warrant.  Within one (1) Trading Day following the delivery of the Exercise Notice, the Holder shall make payment to the Company of an amount equal to the Exercise Price in effect on the date of such exercise multiplied by the number of Warrant Shares as to which this Warrant is being exercised (the “Aggregate Exercise Price”) in cash by wire transfer of immediately available funds (a “Cash Exercise”) or, if the provisions of Section 1(d) are applicable, by notifying the Company that this Warrant is being exercised pursuant to a Cashless Exercise (as defined in Section 1(d)).  The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder, nor shall any ink-original signature or medallion guarantee (or other type of guarantee or notarization) with respect to any Exercise Notice be required, provided, that in the event of an exercise of this Warrant for all Warrant Shares then issuable hereunder, this Warrant is surrendered to the Company by the fifth  (5th) Trading Day following the date on which the Company has received each of the Exercise Notice and, if this Warrant is being exercise pursuant to a Cash Exercise, the Aggregate Exercise Price.  Execution and delivery of the Exercise Notice with respect to less than all of the Warrant Shares shall have the same effect as cancellation of the original Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number of Warrant Shares.  On or before the first (1st) Trading Day following the date on which the Holder has delivered the applicable Exercise Notice, the Company shall transmit by facsimile or electronic mail an acknowledgment of confirmation of receipt of the Exercise Notice, in the form attached to the Exercise Notice, to the Holder and the Company’s transfer agent (the “Transfer Agent”).  So long as the Holder delivers the Aggregate Exercise Price (or notice of a Cashless Exercise) on or prior to the first (1st) Trading Day following the date on which the Exercise Notice has been delivered to the Company, then on or prior to the earlier of (i) the second (2nd) Trading Day  and (ii) the number of Trading Days comprising the Standard Settlement Period, in each case following the date on which the Exercise Notice has been delivered to the Company, or, if the Holder does not deliver the Aggregate Exercise Price (or notice of a Cashless Exercise) on or prior to the first (1st) Trading Day following the date on which the Exercise Notice has been delivered to the Company, then on or prior to the first (1st) Trading Day following the date on which the Aggregate Exercise Price (or notice of a Cashless Exercise) is delivered (such earlier date, the “Share Delivery Date”), the Company shall (X) if the Warrant Shares have been registered for resale under the Securities Act of 1933, and provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program, credit such aggregate number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit / Withdrawal At Custodian system, or (Y) if the Warrant Shares have not been registered for resale under the Securities Act of 1933 or the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered 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.  The Company shall be responsible for all fees and expenses of the Transfer Agent and all fees and expenses with respect to the issuance of Warrant Shares via DTC, if any, including without limitation for same day processing.  Upon delivery of the Exercise Notice, the Holder shall be deemed for all corporate purposes to have become the holder of record and beneficial owner of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date such Warrant Shares are credited to the Holder’s DTC account or the date of delivery of the certificates evidencing such Warrant Shares, as the case may be, provided that 

		 

		

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	the Holder delivers the Aggregate Exercise Price (or notice of a Cashless Exercise) within one (1) Trading Day of delivery of the Exercise Notice.  If this Warrant is physically delivered to the Company in connection with any exercise pursuant to this Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later than three (3) Trading Days after any exercise and at its own expense, issue and deliver to the Holder (or its designee) a new Warrant (in accordance with Section 7(d)) representing the right to purchase the number of Warrant Shares issuable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised.  No fractional Warrant Shares are to be issued upon the exercise of this Warrant, but rather the number of Warrant Shares to be issued shall be rounded to the nearest whole number.  The Company shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including, without limitation, fees and expenses of the Transfer Agent) which may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant, provided,  however, that the Company shall not be required to pay any tax which may be payable based on the income of the Holder or in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder or an affiliate thereof.  The Holder shall be responsible for any tax which may be payable based on the income of the Holder or in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder or an affiliate thereof.  The Company’s obligations to issue and deliver Warrant Shares in accordance with the terms and subject to the conditions hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination; provided, however, that the Company shall not be required to deliver Warrant Shares with respect to an exercise prior to the Holder’s delivery of the Aggregate Exercise Price (or notice of a Cashless Exercise) with respect to such exercise.

			
	
			
				 (b)
			Exercise Price.  For purposes of this Warrant, “Exercise Price” means $0.01 per share, subject to adjustment as provided herein.

			
	
			
				 (c)
			Company’s Failure to Timely Deliver Securities.  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 1(a) above pursuant to an exercise on or before the 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 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 

		 

		

			-3-

		

	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.

		
			In addition to the foregoing rights, if a registration statement covering the resale of the Warrant Shares that are subject to an Exercise Notice (the “Exercise Notice Warrant Shares”) is not available for the resale of such Exercise Notice Warrant Shares and the Holder has submitted an Exercise Notice prior to receiving notice of the non-availability of such registration statement and the Company has not already delivered the Warrant Shares underlying such Exercise Notice electronically without any restrictive legend by crediting such aggregate number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit / Withdrawal At Custodian system, the Holder shall have the option, by delivery of notice to the Company, to switch some or all of such Exercise Notice from a cash exercise to a Cashless Exercise.
		

			
	
			
				 (d)
			Cashless Exercise.  Notwithstanding anything contained herein to the contrary, the Holder may, in its sole discretion, exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise the “Net Number” of shares of Common Stock determined according to the following formula (a “Cashless Exercise”):

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

					
					
						 

				
	
					
						                                      B

					
					
						 

				

		
			 
		

		
			For purposes of the foregoing formula:
		

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

		
			B=as applicable:  (i) the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the date of the applicable Exercise Notice if such Exercise Notice is (1) both executed and delivered pursuant to Section 1(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 1(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) the Bid Price of the Common Stock as of the time of the Holder’s execution of the applicable Exercise Notice if such Exercise 

		 

		

			-4-

		

Notice is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 1(a) hereof, or (iii) the Closing Sale Price of the Common Stock on the date of the applicable Exercise Notice if the date of such Exercise Notice is a Trading Day and such Exercise Notice is both executed and delivered pursuant to Section 1(a) hereof after the close of “regular trading hours” on such Trading Day.
		

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

		
			If Warrant Shares are issued in such a cashless exercise, the Company acknowledges and agrees that in accordance with Section 3(a)(9) of the Securities Act of 1933, as amended, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrants being exercised may be tacked on to the holding period of the Warrant Shares.  The Company agrees not to take any position contrary to this Section 1(d). 
		

			
	
			
				 (e)
			Disputes.  In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed and resolve such dispute in accordance with Section 11.

			
	
			
				 (f)
			Required Reserve Amount.  So long as this Warrant remains outstanding, the Company shall at all times keep reserved for issuance under this Warrant a number of shares of Common Stock at least equal to 100% of the maximum number of shares of Common Stock as shall be necessary to satisfy the Company’s obligation to issue shares of Common Stock under the Warrants then outstanding (without regard to any limitations on exercise) (the “Required Reserve Amount”); provided that at no time shall the number of shares of Common Stock reserved pursuant to this Section 1(g) be reduced other than in connection with any exercise of Warrants or such other event covered by Section 2(b) below.  The Required Reserve Amount (including, without limitation, each increase in the number of shares so reserved) shall be allocated pro rata among the holders of the Warrants based on the number of shares of Common Stock issuable upon exercise of Warrants held by each holder thereof on the Issuance Date (without regard to any limitations on exercise) (the “Authorized Share Allocation”).  In the event that a holder shall sell or otherwise transfer any of such holder’s Warrants, each transferee shall be allocated a pro rata portion of such holder’s Authorized Share Allocation.  Any shares of Common Stock reserved and allocated to any Person which ceases to hold any Warrants shall be allocated to the remaining holders of Warrants, pro rata based on the number of shares of Common Stock issuable upon exercise of the Warrants then held by such holders thereof (without regard to any limitations on exercise).

			
	
			
				 (g)
			Insufficient Authorized Shares.  If at any time while this Warrant remains outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance the Required Reserve Amount (an “Authorized Share Failure”), then the Company shall promptly take all action reasonably necessary to increase the Company’s authorized shares of Common Stock to an amount 

		 

		

			-5-

		

	sufficient to allow the Company to reserve the Required Reserve Amount for this Warrant then outstanding.  Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than ninety (90) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock.  In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its reasonable best efforts to solicit its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal.  Notwithstanding the foregoing, if any such time of an Authorized Share Failure, the Company is able to obtain the written consent of a majority of the shares of its issued and outstanding shares of Common Stock to approve the increase in the number of authorized shares of Common Stock, the Company may satisfy this obligation by obtaining such consent and submitting for filing with the SEC an Information Statement on Schedule 14C.

			
	
			
				 2.
			ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES

		
			The Exercise Price and the number of Warrant Shares shall be adjusted from time to time as follows: 
		

			
	
			
				 (a)
			New Issuances.  If at any time between the date hereof and the closing of the merger (the “Merger”) contemplated by the Merger Agreement dated as of January 28, 2020 between the Company, a wholly-owned subsidiary of the Company and the Holder (“Merger Agreement”), the Company issues (a “Subsequent Issuance”) any shares of Common Stock, then, upon the consummation of each such Subsequent Issuance, the number of Warrant Shares issued or issuable, in the aggregate, as of immediately prior to such Subsequent Issuance shall be increased (but never decreased) so that the number of Warrant Shares issued or issuable, in the aggregate, as of immediately after such Subsequent Issuance (which number of Warrant Shares, for the avoidance of doubt, shall give effect to any prior exercises of this Warrant) represents 12.9% of the issued and outstanding shares of Common Stock as of such time; provided,  however, that the aggregate number of Warrant Shares issued or issuable at any point in time (which number of Warrant Shares, for the avoidance of doubt, shall give effect to any prior exercises of this Warrant) shall never exceed 19.9% of the issued and outstanding shares of Common Stock as of the date hereof.

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

		
			

		 

		

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

			
	
			
				 3.
			RIGHTS UPON DISTRIBUTION OF ASSETS.  In addition to any adjustments pursuant to Section 2 above, if, on or after the Subscription Date and on or prior to the Expiration Date, 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, options, evidence of indebtedness or any other assets 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 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 or restrictions on exercise of this Warrant, including without limitation, the Maximum Percentage) immediately before the date on 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, that to the extent that the Holder’s right to participate in any such Distribution would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution to such extent (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time or times as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such Distribution (and any Distributions declared or made on such initial Distribution or on any subsequent Distribution held similarly in abeyance) to the same extent as if there had been no such limitation).

			
	
			
				 4.
			PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

			
	
			
				 (a)
			Purchase Rights.  In addition to any adjustments pursuant to Section 2 above, if at any time on or after the Subscription Date and on or prior to the Expiration Date the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant, including without limitation, the Maximum Percentage) 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 

		 

		

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	as of which the record holders of Common Stock are to be determined for the grant, issuance or sale of such Purchase Rights (provided,  however, that to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Purchase Right to such extent (and shall not be entitled to beneficial ownership of such Common Stock as a result of such Purchase Right (and beneficial ownership) to such extent) and such Purchase Right to such extent shall be held in abeyance for the benefit of the Holder until such time or times as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such right (and any Purchase Right granted, issued or sold on such initial Purchase Right or on any subsequent Purchase Right to be held similarly in abeyance) to the same extent as if there had been no such limitation).

			
	
			
				 (b)
			Fundamental Transaction.  The Company shall not enter into or be party to a Fundamental Transaction unless the Successor Entity assumes in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 4(b), including agreements to 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, including, without limitation, which is exercisable for a corresponding number of shares of capital stock equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and 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 adjustments to the 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).  Upon the consummation of each Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for the Company (so that from and after the date of the applicable Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein. Upon consummation of each Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be issued upon exercise of this Warrant, if this Warrant is then exercisable, at any time after the consummation of the applicable Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of this Warrant prior to the applicable Fundamental Transaction, such shares of common stock (or its equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this Warrant), as adjusted in accordance with the provisions of this Warrant.  Notwithstanding the foregoing, and without limiting Section 1(f) hereof, the Holder may elect, at its sole option, by delivery of written notice to the Company to waive this Section 4(b) to permit the Fundamental Transaction without the assumption of this Warrant.  In addition to and not in substitution for any other rights hereunder, prior to the consummation of each Fundamental Transaction pursuant to 

		 

		

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	which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to ensure that the Holder will thereafter have the right to receive upon an exercise of this Warrant, if this Warrant is then exercisable, after the consummation of the applicable Fundamental Transaction but prior to the Expiration Date, in lieu of the shares of the Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of the Warrant prior to such Fundamental Transaction, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) (collectively, the “Corporate Event Consideration”) which the Holder would have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this Warrant). The provision made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to the Holder. The provisions of this Section 4(b) shall apply similarly and equally to successive Fundamental Transactions and Corporate Events. 

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

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

		 

		

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	notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.

			
	
			
				 7.
			REISSUANCE OF WARRANTS.

			
	
			
				 (a)
			Transfer of Warrant.  If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)), registered as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less than the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in accordance with Section 7(d)) to the Holder representing the right to purchase the number of Warrant Shares not being transferred. The acceptance of the new Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations in respect of the new Warrant that the Holder has in respect of this Warrant.

			
	
			
				 (b)
			Lost, Stolen or Mutilated Warrant.  Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form (but without the obligation to post a bond) and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall execute and deliver to the Holder a new Warrant (in accordance with Section 7(d)) representing the right to purchase the Warrant Shares then underlying this Warrant.

			
	
			
				 (c)
			Exchangeable for Multiple Warrants.  This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate the right to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion of such Warrant Shares as is designated by the Holder at the time of such surrender, provided, however, that the Company shall not be required to issue Warrants for fractional shares of Common Stock hereunder.

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

			
	
			
				 8.
			NOTICES.  Whenever notice is required to be given under this Warrant, including, without limitation, an Exercise Notice, unless otherwise provided herein, such notice shall be given in writing, (i) if delivered (a) from within the domestic United States, by first-class registered or certified airmail, or nationally recognized overnight express courier, postage prepaid, electronic mail or by facsimile or (b) from outside the United States, by International Federal 

		 

		

			-10-

		

	Express, electronic mail or facsimile, and (ii) will be deemed given (A) if delivered by first-class registered or certified mail domestic, three (3) Trading Days after so mailed, (B) if delivered by nationally recognized overnight carrier, one (1) Trading Day after so mailed, (C) if delivered by International Federal Express, two  (2) Trading Days after so mailed and (D) at the time of transmission, if delivered by electronic mail to the email address specified in this Section 8 prior to 5:00 p.m. (New York time) on a Trading Day, (E) the next Trading Day after the date of transmission, if delivered by electronic mail to each of the email address specified in this Section 8 on a day that is not a Trading Day or later than 5:00 p.m. (New York time) on any Trading Day and (E) if delivered by facsimile, upon electronic confirmation of receipt of such facsimile, and will be delivered and addressed as follows:

			
	
			
				 (i)
			

			
	
			
			if to the Company, to:

		
			BioPharmX Corporation
		

		
			115 Nicholson Lane
		

		
			San Jose, CA 95134
		

		
			Attention: Chief Executive Officer
		

		
			Facsimile: 305-349-4833
		

			
	
			
				 (ii)
			

			
	
			
			if to the Holder, at such address or other contact information delivered by the Holder to Company or as is on the books and records of the Company.

		
			The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Warrant, including in reasonable detail a description of such action and the reason therefor.  Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) reasonably promptly upon any adjustment of the Exercise Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least ten (10) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any grants, issuances or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to holders of any class of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation; provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.  It is expressly understood and agreed that the time of exercise specified by the Holder in each Exercise Notice shall be definitive and may not be disputed or challenged by the Company.
		

			
	
			
				 9.
			AMENDMENT AND WAIVER.  Except as otherwise provided herein, the provisions of this Warrant may be amended or waived and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Holder.

			
	
			
				 10.
			GOVERNING LAW; JURISDICTION; JURY TRIAL.  This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would 

		 

		

			-11-

		

	cause the application of the laws of any jurisdictions other than the State of New York. The Company 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 suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  The Company hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to the Company at the address set forth in Section 8(i) above or such other address as the Company subsequently delivers to the Holder and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder.  If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.  THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.

			
	
			
				 11.
			DISPUTE RESOLUTION.  In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall submit the disputed determinations or arithmetic calculations via facsimile or electronic mail within two (2) Trading Days of receipt of the Exercise Notice or other event giving rise to such dispute, as the case may be, to the Holder.  If the Holder and the Company are unable to agree upon such determination or calculation of the Exercise Price or the Warrant Shares within five (5) Trading Days of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within two (2) Trading Days submit via facsimile or electronic mail (a) the disputed determination of the Exercise Price to an independent, reputable investment bank selected by the Company and approved by the Holder  or (b) the disputed arithmetic calculation of the Warrant Shares to the Company’s independent, outside accountant.  The Company shall cause the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than ten (10) Trading Days from the time it receives the disputed determinations or calculations.  Such investment bank’s or accountant’s determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error. The expenses of the investment bank and accountant will be borne by the Company unless the investment bank or accountant determines that the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares by the Company was correct, in which case the expenses of the investment bank and accountant will be borne by the Holder.

			
	
			
				 12.
			REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  The remedies provided in this Warrant shall be cumulative and in addition to all other 

		 

		

			-12-

		

	remedies available under this Warrant, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual damages for any failure by the Company to comply with the terms of this Warrant.  The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate.  The Company therefore agrees that, in the event of any such breach or threatened breach, the holder of this Warrant shall be entitled, in addition to all other available remedies, to seek an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required. Notwithstanding the foregoing or anything else herein to the contrary, but without limiting the Holder’s rights to cashless exercise under Section 1(d) or the right to cash payments pursuant to Section 1(c), if the Company is for any reason unable to issue and deliver Warrant Shares upon exercise of this Warrant as required pursuant to the terms hereof, the Company shall have no obligation to pay to the Holder any cash or other consideration or otherwise “net cash settle” this Warrant.

			
	
			
				 13.
			TRANSFER.  This Warrant and the Warrant Shares may be offered for sale, sold, transferred, pledged or assigned without the consent of the Company. 

			
	
			
				 14.
			SEVERABILITY; CONSTRUCTION; HEADINGS.  If any provision of this Warrant is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Warrant so long as this Warrant as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.  The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).  This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any Person as the drafter hereof.  The headings of this Warrant are for convenience of reference and shall not form part of, or affect the interpretation of, this Warrant.

			
	
			
				 15.
			DISCLOSURE.  Upon receipt or delivery by the Company of any notice in accordance with the terms of this Warrant, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, nonpublic information relating to the Company or its subsidiaries, the Company shall contemporaneously with any such receipt or delivery publicly disclose such material, nonpublic information on a Current Report on Form 8-K or otherwise.  In the event that the Company believes that a notice contains material, nonpublic information relating to the Company or its subsidiaries, the Company so shall indicate to such Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed to presume that all matters relating to such notice do not constitute material, nonpublic information relating to the Company or its subsidiaries.

		
			

		 

		

			-13-

		

		

			
	
			
				 16.
			CERTAIN DEFINITIONS.  For purposes of this Warrant, the following terms shall have the following meanings:

			
	
			
				 (a)
			“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person, it being understood for purposes of this definition that “control” of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

			
	
			
				 (b)
			“Attribution Parties” means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder funds or managed accounts, currently, or from time to time after the Subscription Date, directly or indirectly managed or advised by the Holder’s investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of th Holder or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together with the Holder or any of the foregoing and (iv) any other Persons whose beneficial ownership of the Company’s Common Stock would or could be aggregated with the Holder’s and the other Attribution Parties for purposes of Section 13(d) of the 1934 Act.  For clarity, the purpose of the foregoing is to subject collectively the Holder and all other Attribution Parties to the Maximum Percentage.

			
	
			
				 (c)
			“Bid Price”  means, for any security as of the particular time of determination, the bid price for such security on the Principal Market as reported by Bloomberg as of such time of determination, or, if the Principal Market is not the principal securities exchange or trading market for such security, the bid price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg as of such time of determination, or if the foregoing does not apply, the bid price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg as of such time of determination, or, if no bid price is reported for such security by Bloomberg as of such time of determination, the average of the bid prices of any market makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC) as of such time of determination.  If the Bid Price cannot be calculated for a security as of the particular time of determination on any of the foregoing bases, the Bid Price of such security as of such time of determination shall be the fair market value as mutually determined by the Company and the Holder.  If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 11. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.

			
	
			
				 (d)
			“Bloomberg” means Bloomberg Financial Markets.

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

			
	
			
				 (f)
			“Closing Sale Price” means, for any security as of any date, the last closing trade price for such security on the Principal Market, as reported by Bloomberg, or, if the 

		 

		

			-14-

		

	Principal Market begins to operate on an extended hours basis and does not designate the closing trade price then the last trade price of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last trade price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no last trade price is reported for such security by Bloomberg, the average of the ask prices of any market makers for such security as reported in the OTC Link or “pink sheets” by OTC Markets Group Inc. (formerly Pink OTC Markets Inc.).  If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder.  If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Section 11.  All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or other similar transaction during the applicable calculation period.

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

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

			
	
			
				 (i)
			“Eligible Market” means The NASDAQ Capital Market, the NYSE American LLC, The NASDAQ Global Select Market, The NASDAQ Global Market or The New York Stock Exchange, Inc.

			
	
			
				 (j)
			“Expiration Date” means the thirty-month anniversary of the Issuance Date or, if such date falls on a day other than a Trading Day, the next day that is a Trading Day.

			
	
			
				 (k)
			“Exercise Period” means any time during the term of the Warrant, but not after 11:59 p.m. on the Expiration Date.

			
	
			
				 (l)
			“Fundamental Transaction” means (A) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject to or have its shares of Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with any Subject 

		 

		

			-15-

		

	Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire, either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its shares of Common Stock, (B) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock not held by all such Subject Entities as of the Subscription Date calculated as if any shares of Common Stock held by all such Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger or other transaction requiring other stockholders of the Company to surrender their Common Stock without approval of the stockholders of the Company or (C) directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.    

			
	
			
				 (m)
			“Group” means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.

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

			
	
			
				 (o)
			“Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person, including such entity whose common stock or equivalent equity security is quoted or listed on an Eligible Market (or, if so elected by the Holder, any other 

		 

		

			-16-

		

	market, exchange or quotation system), or, if there is more than one such Person or such entity, the Person or such entity designated by the Holder or in the absence of such designation, such Person or entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.

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

			
	
			
				 (q)
			“Principal Market” means (i) the NYSE American LLC, or (ii) if the NYSE American LLC is not the principal trading market for the Common Stock, then the principal securities exchange or securities market on which the Common Stock is then traded.

			
	
			
				 (r)
			“Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, for the Company’s primary trading market or quotation system with respect to the Common Stock that is in effect on the date of receipt of an applicable Exercise Notice.

			
	
			
				 (s)
			“Subject Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.

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

			
	
			
				 (u)
			“Trading Day” means any day on which the Common Stock is traded on the Principal Market.

		
			 
		

		
			[Signature Page Follows]
		

		
			 
		

		
			

		 

		

			-17-

		

		

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

			
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						BIOPHARMX CORPORATION

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						/s/ David S. Tierney

				
	
					
						 

					
					
						Name:

					
					
						David S. Tierney, M.D.

				
	
					
						 

					
					
						Title:

					
					
						President and CEO

				

		
			 
		

		
			 
		

		
			

		 

		

			-18-

		

		

		
			EXHIBIT A
		

		
			EXERCISE NOTICE
		

		
			TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK
		

		
			BIOPHARMX CORPORATION
		

		
			The undersigned holder hereby exercises the right to purchase                   shares of Common Stock (“Warrant Shares”) of BioPharmX Corporation, a company organized under the laws of Delaware (the “Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”).  Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.
		

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

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

		
			a “Cashless Exercise” with respect to                 Warrant Shares. 
		

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

			
	
			
				 3.
			Delivery of Warrant Shares.  The Company shall deliver to the holder Warrant Shares in accordance with the terms of the Warrant.

			
	
			
				 4.
			Representations and Warranties. By its delivery of this Exercise Notice, the undersigned represents and warrants to the Company that in giving effect to the exercise evidenced hereby the Holder will not beneficially own in excess of the number of shares of Common Stock (determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended) permitted to be owned under Section 1(f) of this Warrant to which this notice relates.

		
			 
		

		
			Date:                        ,        
		

		
			 
		

			
					
						______________________________________

					
					
						 

				
	
					
						Name of Registered Holder

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						By:

					
					
						________________________________

					
					
						 

				
	
					
						 

					
					
						Name:

					
					
						 

				
	
					
						 

					
					
						Title

					
					
						 

				

		
			 
		

		
			

		 

		

			-19-

		

		

		
			ACKNOWLEDGEMENT
		

		
			 
		

		
			The Company hereby acknowledges this Exercise Notice and hereby directs Computershare Trust Company, N.A. to issue the above indicated number of shares of Common Stock on or prior to the applicable Share Delivery Date.
		

		
			 
		

			
					
						 

					
					
						BIOPHARMX CORPORATION

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						____________________________

				
	
					
						 

					
					
						Name:

					
					
						 

				
	
					
						 

					
					
						Title:

					
					
						 

				

		
			 
		

		
			 
		

		 

		

			-20-BPMX Exh Merger_10.1 Credit agmt

		

			Exhibit 10.1

		

		
			CREDIT AGREEMENT
		

		
			Dated as of January 28, 2020
		

		
			among
		

		
			BIOPHARMX CORPORATION

as Borrower
		

		
			and
		

		
			TIMBER PHARMACEUTICALS LLC

as Lender
		

		
			 
		

		
			 
		

		
			

		 

		

			 

		

		

			 

		

		

		
			TABLE OF CONTENTS
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE I DEFINITIONS

					
1
				
	
					
						1.1

					
					
						Definitions

					
1
				
	
					
						1.2

					
					
						UCC Defined Terms

					
8
				
	
					
						1.3

					
					
						Other Interpretive Provisions

					
8
				
	
					
						1.4

					
					
						Accounting Principles

					
9
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE II THE CREDITS

					
9
				
	
					
						2.1

					
					
						Commitments

					
9
				
	
					
						2.2

					
					
						Loans

					
9
				
	
					
						2.3

					
					
						Closing Date Advance

					
9
				
	
					
						2.4

					
					
						Second Advance

					
9
				
	
					
						2.5

					
					
						Final Advance

					
9
				
	
					
						2.6

					
					
						Delivery of Funds

					
9
				
	
					
						2.7

					
					
						Optional Principal Payments

					
9
				
	
					
						2.8

					
					
						Mandatory Principal Payments

					
10
				
	
					
						2.9

					
					
						Interest Rate

					
10
				
	
					
						2.10

					
					
						Method of Payment

					
10
				
	
					
						2.11

					
					
						Note

					
10
				
	
					
						2.12

					
					
						Repayments

					
10
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE III [RESERVED]

					
10
				
	
					
						3.1

					
					
						[Reserved] 

					
10
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE IV CONDITIONS PRECEDENT

					
10
				
	
					
						4.1

					
					
						Initial Advance

					
10
				
	
					
						4.2

					
					
						Second Advance

					
11
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE V REPRESENTATIONS AND WARRANTIES

					
11
				
	
					
						5.1

					
					
						Merger Agreement Representations and Warranties

					
11
				
	
					
						5.2

					
					
						Corporate Existence and Standing

					
11
				
	
					
						5.3

					
					
						Authorization and Validity

					
11
				
	
					
						5.4

					
					
						No Conflict; Government Consent

					
12
				
	
					
						5.5

					
					
						Margin Stock

					
12
				
	
					
						5.6

					
					
						Anti-Money Laundering

					
12
				
	
					
						5.7

					
					
						Embargoed Person

					
12
				
	
					
						5.8

					
					
						Representations Continuing

					
13
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE VI COVENANTS

					
13
				
	
					
						6.1

					
					
						Notice of Default

					
13
				
	
					
						6.2

					
					
						Use of Proceeds

					
14
				
	
					
						6.3

					
					
						Notice of Adverse Development

					
14
				
	
					
						6.4

					
					
						Conduct of Business

					
14
				
	
					
						6.5

					
					
						Taxes

					
14
				
	
					
						6.6

					
					
						Insurance

					
14
				
	
					
						 

					
					
						 

					
					
						 

				

		
			 
		

		
			
		

		

		 

		

			i

		

		

			 

		

	
					
						

					
						6.7

					
					
						Compliance with Laws

					
14
				
	
					
						6.8

					
					
						Maintenance of Properties

					
14
				
	
					
						6.9

					
					
						Inspection

					
14
				
	
					
						6.10

					
					
						Approval of Expenditures

					
15
				
	
					
						6.11

					
					
						Indebtedness

					
15
				
	
					
						6.12

					
					
						Merger

					
15
				
	
					
						6.13

					
					
						Sale of Assets

					
15
				
	
					
						6.14

					
					
						Investments and Acquisitions

					
15
				
	
					
						6.15

					
					
						Liens

					
15
				
	
					
						6.16

					
					
						Affiliates

					
15
				
	
					
						6.17

					
					
						Subsidiary Dividends

					
16
				
	
					
						6.18

					
					
						Restricted Payments

					
16
				
	
					
						6.19

					
					
						Borrower Compliance with Anti‐Money Laundering Laws

					
16
				
	
					
						6.20

					
					
						Amendments to Agreements

					
16
				
	
					
						6.21

					
					
						Repayment of Indebtedness

					
16
				
	
					
						6.22

					
					
						Further Assurances

					
16
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE VII SECURITY INTEREST

					
16
				
	
					
						7.1

					
					
						Grant of Security Interest

					
16
				
	
					
						7.2

					
					
						Priority of Security Interest

					
16
				
	
					
						7.3

					
					
						Authorization to File Financing Statements

					
17
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE VIII EVENTS OF DEFAULT

					
17
				
	
					
						 

					
					
						 

				
	
					
						ARTICLE IX ACCELERATION AND REMEDIES

					
18
				
	
					
						9.1

					
					
						Acceleration

					
18
				
	
					
						9.2

					
					
						Remedies

					
19
				
	
					
						9.3

					
					
						Preservation of Rights

					
19
				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE X GENERAL PROVISIONS

					
19
				
	
					
						10.1

					
					
						Survival of Representations

					
19
				
	
					
						10.2

					
					
						Governmental Regulation

					
19
				
	
					
						10.3

					
					
						Taxes

					
19
				
	
					
						10.4

					
					
						Headings

					
19
				
	
					
						10.5

					
					
						Entire Agreement

					
19
				
	
					
						10.6

					
					
						Benefits of this Agreement

					
19
				
	
					
						10.7

					
					
						Costs and Expenses; Indemnification

					
20
				
	
					
						10.8

					
					
						Accounting

					
20
				
	
					
						10.9

					
					
						Severability of Provisions

					
20
				
	
					
						10.10

					
					
						Nonliability of Lender

					
20
				
	
					
						10.11

					
					
						Amendment and Waiver

					
20
				
	
					
						10.12

					
					
						Notices

					
21
				
	
					
						10.13

					
					
						Change of Address

					
21
				
	
					
						10.14

					
					
						Counterparts

					
21
				
	
					
						10.15

					
					
						Waiver of Suretyship and other Defenses

					
21
				
	
					
						10.16

					
					
						GOVERNING LAW

					
22
				
	
					
						10.17

					
					
						CONSENT TO JURISDICTION

					
22
				
	
					
						10.18

					
					
						WAIVER OF JURY TRIAL

					
22
				
	
					
						10.19

					
					
						WAIVER OF DEFENSES

					
22
				
	
					
						10.20

					
					
						Release of Claims Against Lender

					
23
				
	
					
						10.21

					
					
						Revival and Reinstatement of Obligations

					
23
				

		
			
		

		

		 

		

			ii

		

		

			 

		

	
					
						

					
						10.22

					
					
						Customer Identification - USA Patriot Act Notice

					
23
				
	
					
						10.23

					
					
						Inconsistencies

					
23
				
	
					
						10.24

					
					
						Successors and Assigns

					
23
				
	
					
						10.25

					
					
						Warrant Allocation

					
24
				

		
			 
		

		
			 
		

		
			 
		

		
			

		 

		

			iii

		

		

			 

		

		

		
			CREDIT AGREEMENT
		

		
			This Credit Agreement (as it may be amended, restated, supplemented, or modified and in effect from time to time, this “Agreement”), dated as of January 28, 2020 is entered into by and between BioPharmX Corporation, a Delaware corporation (together with its successors and permitted assigns, “Borrower”) and Timber Pharmaceuticals, LLC, a Delaware limited liability company (“Lender”).
		

		
			WHEREAS, Borrower has requested that Lender make certain credit facilities available to it and Lender is willing to do so, upon the terms and subject to the conditions hereof.
		

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

		
			ARTICLE I
DEFINITIONS
		

		
			1.1        Definitions.  As used in this Agreement, the following terms shall have the meanings herein specified unless the context otherwise requires:
		

		
			“Acquisition” means any transaction, or any series of related transactions, consummated on or after the date of this Agreement, by which Borrower (i) acquires any going concern business or all or substantially all of the assets of any firm, corporation or division thereof, whether through the purchase of assets, merger, amalgamation or otherwise or (ii) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency) or a majority (by percentage or voting power) of the outstanding partnership interests of a partnership or membership interests in a limited liability company.
		

		
			“Advance” means each of the Initial Advance and each Subsequent Advance.
		

		
			“Affiliate” means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, membership interests, by contract, or otherwise.
		

		
			“Agreement” has the meaning set forth in the preamble to this Agreement.
		

		
			“Anti-Money Laundering Laws” means the Bank Secrecy Act, 31 U.S.C. §§ 5311 et seq., and all applicable laws, regulations and government guidance on Bank Secrecy Act compliance and on the prevention and detection of money laundering violations under 18 U.S.C. §§ 1956 and 1957, and all similar laws of any non-U.S. jurisdiction.
		

		
			“Article” means an article of this Agreement unless another document is specifically referenced.
		

		
			“Authorized Officer” means any of the chief executive officer, president, vice president, chief financial officer, secretary or treasurer of Borrower, or any other senior officer of Borrower designated as such in writing to Lender by Borrower, in each case acting singly.
		

		
			“Borrower” has the meaning set forth in the preamble to this Agreement.
		

		
			 
		

		
			 “Borrowing Date” has the meaning set forth in Section 2.2.
		

		
			

		 

		

			1

		

		

			 

		

		

		
			“Business Day” means with respect to any borrowing, payment and for all other purposes, a day (other than a Saturday or Sunday) on which banks generally are open in New York, New York for the conduct of substantially all of their commercial lending activities.
		

		
			“Borrowing Notice” has the meaning set forth in Section 2.5.
		

		
			“Capitalized Lease” of a Person means any lease of Property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with GAAP.
		

		
			“Capitalized Lease Obligations” of a Person means the amount of the obligations of such Person under Capitalized Leases which would be shown as a liability on a balance sheet of such Person prepared in accordance with GAAP.
		

		
			“Change”  means any adoption of or change in any law, governmental or quasi-governmental rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force of law) after the date of this Agreement which affects the amount of capital required or expected to be maintained by Lender or any corporation controlling Lender.
		

		
			“Change of Control” means the occurrence of either of the following:
		

		
			(1) the sale, lease or transfer (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all the assets of Borrower and its Subsidiaries, taken as a whole, to any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision); or
		

		
			(2) the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), in a single transaction or in a related series of transactions, by way of merger, consolidation, amalgamation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision), of more than 50% of the total voting power of the Voting Stock of Borrower, in each case, other (i) than an acquisition where the holders of the Voting Stock of Borrower as of immediately prior to such acquisition hold 50% or more of the Voting Stock of the ultimate parent of Borrower or successor thereto immediately after such acquisition (provided no holder of the Voting Stock of Borrower as of immediately prior to such acquisition owns, directly or indirectly, more than 50% of the voting power of the Voting Stock of Borrower immediately after such acquisition) and (ii) the Merger (as defined in the Merger Agreement).
		

		
			“Closing Date” means January 28, 2020.
		

		
			“Code” means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time.
		

		
			“Collateral” means of all of Borrower’s right, title and interest in and to the following personal property: all goods, Accounts (including health-care receivables), Equipment, Inventory, contract rights or rights to payment of money, leases, license agreements, franchise agreements, General Intangibles, Intellectual Property, commercial tort claims, documents, instruments (including any promissory notes), chattel paper (whether tangible or electronic), cash, deposit accounts, certificates of deposit, fixtures, letters of credit rights (whether or not the letter of credit is evidenced by a writing), securities, and all other investment property, supporting obligations, and financial assets, whether now owned or hereafter acquired, wherever located; and all Borrower’s Books relating to the foregoing, and any and all claims, rights and 

		 

		

			2

		

		

			 

		

interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing.
		

		
			 
		

		
			“Commitment” means an amount up to $2,500,000 with regard to the Loans, continuing until the Commitment Termination Date.
		

		
			 
		

		
			“Commitment Termination Date” means the earliest of (a) the Maturity Date, (b) the “Closing Date” as defined in the Merger Agreement or (c) the date either party gives notice of the termination of the Merger Agreement in accordance with its terms.
		

		
			“Contingent Obligation” of a Person means, without duplication, any agreement, undertaking or arrangement by which such Person directly or indirectly assumes guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any operating agreement, comfort letter, take-or-pay contract or application but excluding any endorsement of instruments for deposit or collection in the ordinary course of business.
		

		
			“Contractual Obligation” means, with respect to any Person, any contract, agreement, deed, mortgage, lease, license, commitment, promise, undertaking, arrangement, performance bond, warranty obligation or understanding, whether written or oral and whether express or implied, or other document or instrument (including any document or instrument evidencing or otherwise relating to any Indebtedness), to which or by which such Person is a party or otherwise subject or bound or to which or by which any property, business, operation or right of such Person is subject or bound.
		

		
			“Copyrights” are any and all copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret.
		

		
			“Default” means an event which but for the lapse of time or the giving of notice, or both, would constitute an Event of Default.
		

		
			“Dollars”,  “U.S. Dollars” and “$” mean dollars in lawful currency of the United States of America.
		

		
			  “EDGAR” means the SEC’s Electronic Data Gathering, Analysis and Retrieval system.
		

		
			“Embargoed Person” shall have the meaning set forth in Section 5.7(a).
		

		
			“Environmental Laws”  means any and all federal, state, provincial, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, injunctions, permits, grants, franchises, licenses, agreements and other governmental restrictions relating to (i) the protection of the environment, (ii) the effect of the environment on human health, (iii) emissions, discharges or releases of pollutants, contaminants, hazardous substances or wastes into surface water, ground water or land, or (iv) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous substances or wastes or the clean-up or other remediation thereof.
		

		
			“Environmental Liability” means any written claim, demand, obligation, cause of action, accusation or allegation, or any order, violation, damage (including, without limitation, to any Person, property or natural resources), injury, judgment, penalty or fine, cost of enforcement, cost of remedial action, cleanup, restoration or any other cost or expense whatsoever, including reasonable attorneys’ fees and disbursements resulting from the violation or alleged violation of any Environmental Law or the imposition of any Environmental Lien or otherwise arising under any Environmental Law or resulting from any common law cause of action asserted by any Person.
		

		
			

		 

		

			3

		

		

			 

		

		

		
			“Environmental Lien” means a Lien in favor of any Governmental Authority:  (a) under any Environmental Law; or (b) for any liability or damages arising from, or costs incurred by, any Governmental Authority in response to the release or threatened release of any Hazardous Material.
		

		
			“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any rule or regulation issued thereunder.
		

		
			“Event of Default” has the meaning set forth in Article VIII.
		

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

		
			“FATF” has the meaning set forth in Section 5.7(b).
		

		
			“Final Advances” has the meaning set forth in Section 2.5.
		

		
			  “Fiscal Year” means February 1 through January 31.
		

		
			“GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time.
		

		
			“Governmental Authority” means any governmental, regulatory or administrative authority, agency, commission, department, bureau, instrumentality, tribunal, board, court or any judicial or arbitral body, any public regulatory authority, in each case whether international, national, federal, state, provincial or local, and any entity or official exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any Laws.
		

		
			“Hazardous Material” means any substance, material, or waste which is or becomes regulated, under any Environmental Law, as hazardous to public health or safety or to the environment, including, but not limited to: (a) any substance or material designated as a “hazardous substance” pursuant to Section 311 of the Clean Water Act, as amended, 33 U.S.C. §1251 et seq., or listed pursuant to Section 307 of the Clean Water Act, as amended; (b) any substance or material defined as “hazardous waste” pursuant to Section 1004 of the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §6901 et seq.; (c) any substance or material defined as a “hazardous substance” pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C. §9601 et seq.; or (d) petroleum, petroleum products and petroleum waste materials.
		

		
			“Indebtedness” of a Person means, without duplication, (i) such Person’s obligations for borrowed money, (ii) such Person’s obligations representing the deferred purchase price of Property or services (other than accounts payable arising in the ordinary course of such Person’s business payable on terms customary in the trade and not more than 60 days past due), (iii) obligations of another Person, whether or not assumed, secured by Liens, or payable out of the proceeds or production from property now or hereafter owned or acquired by such Person, (iv) such Person’s obligations which are evidenced by notes, acceptances, or other instruments, (v) such Person’s Capitalized Lease Obligations, and (vi) such Person’s Contingent Obligations. For avoidance of doubt, accounts payable and accrued expenses previously incurred and set forth in the Parent Budget shall not be considered Indebtedness despite being more than 60 days past due.
		

		
			 
		

		
			“Initial Advance” shall have the meaning set forth in Section 2.3.
		

		
			 
		

		
			“Intellectual Property” means, with respect to any Person, all of such Person’s right, title, and interest in and to the following:
		

		
			(a)         its Copyrights, Trademarks and Patents;
		

		
			

		 

		

			4

		

		

			 

		

		

		
			(b)         any and all trade secrets and trade secret rights, including, without limitation, any rights to unpatented inventions, know-how, and operating manuals;
		

		
			(c)         any and all design rights which may be available to such Person;
		

		
			(d)         any and all claims for damages by way of past, present and future infringement of any of the foregoing, with the right, but not the obligation, to sue for and collect such damages for said use or infringement of the Intellectual Property rights identified above; and
		

		
			(e)         all amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents.
		

		
			“Investment” of a Person means any loan, advance (other than travel and similar advances to officers and employees made in the ordinary course of business), extension of credit (other than accounts receivable arising in the ordinary course of business on terms customary in the trade) or contribution of capital by such Person, stocks, bonds, mutual funds, partnership interests, notes, debentures or other securities owned by such Person.
		

		
			“Law” means any statute, law, ordinance, regulation, rule, code, injunction, judgment, decree or Order of any Governmental Authority.
		

		
			“Lender” has the meaning set forth in the preamble to this Agreement.
		

		
			“Lien” means any lien (statutory or other), mortgage, pledge, hypothecation, filed financing statement, assignment, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement).
		

		
			“Liquidity Event” means, any of the following (i) a merger, consolidation or other corporate or similar reorganization or combination, (ii) the sale, lease, license, transfer or other disposal, by Borrower, in a single transaction or a series of related transactions, of a majority of Borrower’s assets, (iii) the occurrence of any Change of Control, or (iv) an Event of Default.
		

		
			“Loan” or “Loans” have the meanings set forth in Section 2.2.
		

		
			“Loan Documents” means this Agreement, the Note, the Intellectual Property Security Agreement, the Warrant and any other documents and agreements contemplated hereby and executed by Borrower in favor of Lender.
		

		
			“Material Adverse Effect” means any circumstances or events described in the definition of Parent Material Adverse Effect in the Merger Agreement.
		

		
			“Maturity Date” means the earliest of (i) the End Date (as defined in the Merger Agreement and as may be extended in accordance with the terms thereof), (ii) the date on which the Merger Agreement shall have been terminated in accordance with its terms, (iii) the occurrence of a Liquidity Event.
		

		
			“Merger Agreement” means that certain Agreement and Plan of Merger and Reorganization, dated as of the date hereof, by and among Lender, Borrower and a newly formed Subsidiary of Borrower, as may be amended, supplemented or modified in accordance with its terms.
		

		
			

		 

		

			5

		

		

			 

		

		

		
			“Note” means the promissory note, duly executed and delivered to Lender by Borrower on the Closing Date payable to the order of Lender in an amount equal to the Commitment, including any amendment, modification, renewal or replacement of such note.
		

		
			“Obligations” means all of the obligations, Indebtedness and liabilities of Borrower to Lender, now existing or hereinafter arising of whatever nature including, without limitation, all unpaid principal of and accrued and unpaid interest on the Loans, all accrued and unpaid obligations and fees arising under all other Loan Documents, and all expenses, reimbursements, indemnities and other obligations of Borrower to Lender or any indemnified party hereunder arising under the Loan Documents and including any and all interest and fees that accrue after the commencement by or against Borrower of any proceeding under any bankruptcy, insolvency, receivership or similar laws, regardless of whether such interest and fees are allowed claims in such proceeding.
		

		
			“OFAC” has the meaning set forth in Section 5.7(a).
		

		
			“Order” means any writ, judgment, injunction, determination, consent, order, decree, stipulation, award or executive order of or by any Governmental Authority.
		

		
			“Patents” means all patents, patent applications and like protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same.
		

		
			“Permitted Encumbrances” has the meaning set forth in the Merger Agreement.
		

		
			“Person” means any natural person, corporation, limited liability company, firm, joint venture, partnership, association, enterprise, trust or other entity or organization, or any Governmental Authority, political subdivision or any agency, department or instrumentality thereof.
		

		
			“Property” of a Person means any and all property, whether real, personal, tangible, intangible, or mixed, of such Person, or other assets owned, leased or operated by such Person.
		

		
			“Representative” means, with respect to any Person, such Person’s and each of its Subsidiaries’ and controlled Affiliates’ respective directors, officers, employees, investment bankers, financial advisors, attorneys, accountants or other advisors, agents or representatives.
		

		
			“Restricted Payment” means, with respect to any Person (a) the declaration or payment of any dividend or the incurrence of any liability to make any other payment or distribution of cash or other property or assets in respect of Stock (other than non-cash dividends or other non-cash distributions in the form of additional stock issued by Borrower to the extent such issuance is not prohibited hereunder); (b) any payment on account of the purchase, redemption, defeasance, sinking fund or other retirement of such Person’s Stock or any other payment or distribution made in respect thereof, either directly or indirectly; (c) any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire Stock of such Person now or hereafter outstanding; (d) any payment of a claim for the rescission of the purchase or sale of, or for material damages arising from the purchase or sale of, any shares of such Person’s Stock or of a claim for reimbursement, indemnification or contribution arising out of or related to any such claim for damages or rescission; and (e) any payment, loan, contribution, or other transfer of funds or other property to any stockholder (or other equity holder) of such Person other than payment of compensation in the ordinary course of business.
		

		
			“SEC” means the U.S. Securities and Exchange Commission.
		

		
			“Second Advances” has the meaning set forth in Section 2.4.
		

		
			

		 

		

			6

		

		

			 

		

		

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

		
			“Stock” means all shares, options, warrants, general or limited partnership interests, membership interests or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity, whether voting or nonvoting, including common stock, preferred stock or any other “equity security” (as such term is defined in Rule 3a11-1 promulgated under the Exchange Act).
		

		
			  “Subsidiary” means, with respect to any Person, (1) any corporation, association or other business entity (other than a partnership, joint venture or limited liability company) of which more than 50% of the total voting power of shares of Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, and (2) any partnership, joint venture or limited liability company of which (x) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general and limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, whether in the form of membership, general, special or limited partnership interests or otherwise, and (y) such Person or any Subsidiary of such Person is a controlling general partner or otherwise controls such entity.
		

		
			“Taxes” means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and any and all liabilities with respect to the foregoing, including interest, penalties and additions.
		

		
			“Trademarks” means any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks.
		

		
			“UCC” means the Uniform Commercial Code as in effect from time to time in the State of Delaware; provided, however, to the extent the law of any other state or other jurisdiction applies to the attachment, perfection, priority or enforcement of any Lien granted to Lender in any of the Collateral, “UCC” means the Uniform Commercial Code as in effect in such other state or jurisdiction for purposes of the provisions hereof relating to such attachment, perfection, priority or enforcement of a Lien in such Collateral.  To the extent this Agreement defines the term “Collateral” by reference to terms used in the UCC, each of such terms shall have the broadest meaning given to such terms under the UCC as in effect in any state or other jurisdiction.
		

		
			“Voidable Transfer” shall have the meaning set forth in Section 10.21.
		

		
			“Voting Stock” of any Person as of any date means the Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.
		

		
			“Warrant”  means the warrant to purchase shares of common stock of Borrower, in the form attached hereto as Exhibit A.
		

		
			1.2        UCC Defined Terms.
		

		
			The following terms used in this Agreement shall have the respective meanings provided for in the UCC:  “Accounts”, “Commercial Tort Claim”, “Equipment”, “General Intangibles”, and “Inventory”.
		

		
			

		 

		

			7

		

		

			 

		

		

		
			1.3        Other Interpretive Provisions.
		

		
			(a)         The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.  All references to Persons shall include such Person’s successors and assigns, as applicable.
		

		
			(b)         The words “hereof”, “herein”, “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement.  The terms subsection, Section, Schedule and Exhibit refer to subsections, Sections, Schedules and Exhibits to this Agreement unless otherwise specified.  The term “documents” includes any and all instruments, documents, agreements, certificates, indentures, notices and other writings, however evidenced.  The term “including” is not limiting and means “including without limitation.” In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”, and the word “through” means “to and including.”  The term “property” includes any kind of property or asset, real, personal or mixed, tangible or intangible.
		

		
			(c)         Unless otherwise expressly provided herein, (i) references to agreements (including this Agreement) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation.
		

		
			(d)         This Agreement and other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters.  All such limitations, tests and measurements are cumulative and shall each be performed in accordance with their terms.  Unless otherwise expressly provided, any reference to any action of Lender by way of consent, approval or waiver shall be deemed modified by the phrase “in its sole discretion.”
		

		
			(e)         This Agreement and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to Lender and Borrower, and are the products of both parties. Accordingly, they shall not be construed against Lender merely because of Lender’s involvement in their preparation.
		

		
			 
		

		
			(f)         If Borrower is required to deliver any amount, document, notice or information on a day which is not a Business Day, the Borrower shall make such delivery on the immediately following Business Day.
		

		
			1.4        Accounting Principles.
		

		
			(a)         Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed, and all financial computations required under this Agreement shall be made, in accordance with GAAP, consistently applied.
		

		
			(b)         References herein to “fiscal year” and “fiscal quarter” refer to such fiscal periods for Borrower.
		

		
			ARTICLE II
THE CREDITS
		

		
			2.1        Commitments.  On and subject to the terms and conditions of this Agreement, Lender agrees to make loans to Borrower as follows:
		

		
			

		 

		

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			2.2        Loans. Subject to the conditions contained in this Agreement (including this Section 2.1), Lender agrees to make loans to Borrower (each, a “Loan”, and collectively, the “Loans”) from time to time on or after the Closing Date and prior to the Commitment Termination Date (each such date, a “Borrowing Date”) as set forth in this Article II.  The parties to this Agreement acknowledge and agree that the aggregate gross amount of the Loan is being issued with a ten percent (10.0%) original issue discount (“OID”), as set forth in Sections 2.3,  2.4 and 2.5 below.
		

		
			2.3        Closing Date Advance. On the Closing Date, Lender shall provide to Borrower a single Advance (the "Initial Advance") in the aggregate principal amount equal to $700,000 less $75,000 of OID (net $625,000). The Initial Advance shall constitute a Loan hereunder and shall be deemed to utilize the Commitment by an amount equal to the Initial Advance.
		

		
			2.4        Second Advance. On the date that is 30 days after the Closing Date, Lender shall provide to Borrower a single Advance (the "Second Advance") in the aggregate principal amount equal to $700,000 less $75,000 of OID (net $625,000). The Second Advance shall constitute a Loan hereunder and shall be deemed to utilize the Commitment by an amount equal to the Second Advance.
		

		
			2.5        Final Advance.  Subject to the conditions set forth in this Agreement, (a) on  the Closing Date of the merger contemplated by the Merger Agreement, Lender shall provide to Borrower a single Advance (the "Final Advance") in the aggregate principal amount equal to $1,100,000 less $100,000 of OID (net $1,000,000). The Final Advance shall constitute a Loan hereunder and shall be deemed to utilize the balance of the Commitment by an amount equal to the Final Advance.
		

		
			2.6        Delivery of Funds.  Lender shall deliver to Borrower, by wire transfer to a bank account designated by the Borrower, Loan proceeds to be funded to Borrower hereunder, in immediately available funds, not later than 5 p.m. (New York time) on each Borrowing Date.
		

		
			2.7        Optional Principal Payments.  Borrower may from time to time prepay the Loans in whole or in part.
		

		
			 
		

		
			2.8        Mandatory Principal Payments.  Promptly upon the receipt by Borrower or any of its Subsidiaries of proceeds from (i) the issuance of any equity securities or debt securities constituting Indebtedness (other than amounts permitted hereunder Section 6.11), or (ii) the disposition, whether by sale, lease, transfer, loss, damage, destruction, condemnation or otherwise, of the Collateral, the Borrower shall prepay the Loans in an amount equal to such proceeds.
		

		
			2.9        Interest Rate.  Upon the occurrence and during the continuance of an Event of Default, each outstanding Advance and each other accrued and unpaid Obligation shall bear interest at a rate per annum equal to the lesser of (i) 12.0% and (ii) the highest rate of interest permitted by applicable Law.  All such interest shall be payable on the Maturity Date or earlier on an Event of Default.
		

		
			2.10      Method of Payment.  All payments of the Obligations hereunder shall be made, without setoff, deduction, or counterclaim, in immediately available funds to Lender at such account as Lender may designate to Borrower in writing from time to time, by noon (New York time) on the date when due.
		

		
			2.11      Note.  The Loans shall be evidenced by the Note payable to the order of Lender.  Lender is hereby authorized to record the principal amount of each of the Loans and each repayment on a schedule attached to the Note or otherwise in Lender’s records, and such entries shall be prima facie evidence of the existence and the amounts of the Obligations therein recorded; provided, however, that neither the failure to so record nor any error in such recordation shall affect Borrower’s obligations under the Note or this Agreement.
		

		
			

		 

		

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			2.12      Repayments.  The commitment of Lender to lend hereunder shall expire on the Commitment Termination Date.  Unless sooner paid in full, all outstanding Loans, together with all accrued and unpaid interest thereon, if any, shall be paid in full in cash by Borrower on the Maturity Date.  Each payment set forth in this Section 2.12 shall be in addition to and without limitation of each other payment requirement set forth herein and in the other Loan Documents.
		

		
			ARTICLE III
[RESERVED]
		

		
			3.1        [Reserved].
		

		
			ARTICLE IV
CONDITIONS PRECEDENT
		

		
			4.1        Initial Advance.  Lender shall not be required to make the Initial Advance hereunder unless Borrower has furnished and delivered to Lender, and Lender has received and approved the items specified in this Section 4.1, each dated as of the Closing Date (or such earlier date as shall be acceptable to Lender) and fully executed, where applicable and all submissions which are not originals must be true and complete copies of these items and if requested by Lender, must be so certified by Borrower:
		

		
			(a)         Copies, certified by the secretary of Borrower, of the certificate of incorporation of Borrower, together with all amendments thereto, as in effect on the Closing Date, and a certificate of good standing of Borrower from the State of Delaware.
		

		
			(b)         A certificate executed by the secretary of Borrower, certifying (i) Borrower’s bylaws, as in effect on the Closing Date, (ii) resolutions of Borrower’s board of directors authorizing the execution, delivery and performance by Borrower of each of the Loan Documents and (iii) the name, title and signature of each officer executing the Loan Documents on behalf of Borrower.
		

		
			 
		

		
			(c)         This Agreement, the Note and each other Loan Document, in each case, fully executed and in form and substance acceptable to Lender.
		

		
			(d)The Warrant, issued to Lender.
		

		
			(e)         Such other documents and instruments as Lender or its counsel may have reasonably requested, in each case, in form and substance acceptable to Lender.
		

		
			4.2        Second Advance and Final Advance.  Lender shall not be required to make the Second Advance and the Final Advance unless on the Borrowing Date:
		

		
			(a)         No Event of Default of Default shall have occurred and be continuing or would result from the Second Advance or the Final Advance, as the case may be;
		

		
			(b)         With respect to the Second Advance, the Borrower's Form S-4 Registration Statement regarding the merger contemplated by the Merger Agreement shall have been filed and shall not have been withdrawn (unless the Borrower's failure to file the Form S-4 was caused by the Lender); and
		

		
			(c)         With respect to the Final Advance, the Borrower's Form S-4 Registration Statement regarding the merger contemplated by the Merger Agreement shall have become effective and shall not have been withdraw; and
		

		
			

		 

		

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			(d)         With respect to the Final Advance, the merger contemplated by the Merger Agreement has closed.
		

		
			At the time of the Second Advance and the Final Advance, Borrower shall represent that all of the conditions contained in this Section 4.2 have been satisfied.
		

		
			ARTICLE V
REPRESENTATIONS AND WARRANTIES
		

		
			To induce Lender to make the Loans hereunder, Borrower hereby represents and warrants to Lender as follows:
		

		
			5.1        Merger Agreement Representations and Warranties. All of Borrower’s representations and warranties contained in the Merger Agreement are true and correct in all material respects, and such representation and warranty is incorporated by reference and a part hereof.
		

		
			5.2        Corporate Existence and Standing.  Borrower is a corporation duly formed, validly existing and in good standing under the laws of the State of Delaware.  Borrower is duly qualified and in good standing as a foreign corporation authorized to do business in each jurisdiction where such qualification is required under applicable Law except where the failure to be so qualified would not, individually or in the aggregate, result in a Material Adverse Effect.
		

		
			5.3        Authorization and Validity.  Borrower has the power and authority and legal right to execute and deliver this Agreement and the other Loan Documents to which it is a party and to perform its obligations hereunder and thereunder.  The execution and delivery by Borrower of this Agreement and the other Loan Documents and the performance of its obligations hereunder and thereunder have been duly authorized by proper corporate proceedings, and the Loan Documents constitute legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws or general principles of equity relating to remedies affecting or relating to the enforcement of creditors’ rights generally.
		

		
			 
		

		
			5.4        No Conflict; Government Consent.  Neither the execution and delivery by Borrower of the Loan Documents, nor the consummation of the transactions therein contemplated, nor compliance with the provisions thereof will violate any Law applicable to Borrower or any of its Subsidiaries, or violate Borrower’s certificate of incorporation or other governing documents, or the provisions of any loan agreement, note, indenture, instrument or other agreement to which Borrower is a party or is subject, or by which any of its Property is bound, or conflict with or constitute a default thereunder, or result in the creation or imposition of any Lien in, of or on the Property of Borrower pursuant to the terms of any such loan agreement, note, indenture, instrument or other agreement.  No order, consent, approval, license authorization, or validation of, or filing, recording or registration with, or exemption by, or other action in respect of any Governmental Authority, or any subdivision thereof, is required to authorize, or is required in connection with the execution, delivery and performance of, or the legality, validity, binding effect of, any of the Loan Documents.
		

		
			5.5        Margin Stock.  Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock, and no proceeds of any Loan will be used: (a) to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock; (b) to reduce or retire any indebtedness which was originally incurred to purchase or carry any such Margin Stock; or (c) for any other purpose which might constitute this transaction a “purpose credit” within the meaning of Regulation T, U, or X.  Neither Borrower, nor any person acting on behalf of Borrower, has taken or will take any action which might cause any Loan Document to violate Regulation T, U or X or any 

		 

		

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other regulation of the Board of Governors of the Federal Reserve System or to violate Section 7 of the Securities Exchange Act, in each case as now in effect or as the same may hereafter be in effect.
		

		
			5.6        Anti-Money Laundering.  At all times throughout the term of this Agreement, including after giving effect to any transfers permitted pursuant to the Loan Documents, none of the funds of Borrower that are used to repay any Loan shall be derived from or are the proceeds of any unlawful activity, with the result that the investment in Borrower, whether directly or indirectly, is prohibited by Law or any Loan is in violation of Law.  Neither Borrower nor any shareholder or member of Borrower (a) is under investigation by any Governmental Authority for, or has been charged with, or convicted of, money laundering under 18 U.S.C. §§ 1956 and 1957, drug trafficking, terrorist‐related activities or other money laundering predicate crimes, or any violation of Anti-Money Laundering Laws, (ii) has been assessed civil penalties under any Anti‐Money Laundering Laws, or (iii) has had any of its funds seized or forfeited in an action under any Anti‐Money Laundering Laws.
		

		
			5.7        Embargoed Person.
		

		
			(a)         At all times throughout the term of this Agreement, including after giving effect to any transfers permitted pursuant to the Loan Documents, (i) none of the funds or assets of Borrower, whether or not used to repay the Loans, shall constitute property of, or shall be beneficially owned directly or indirectly, by any Person subject to sanctions or trade restrictions under United States Law (“Embargoed Person” or “Embargoed Persons”) that are identified on (A) the “List of Specially Designated Nationals and Blocked Persons” maintained by the Office of Foreign Assets Control (“OFAC”), U.S. Department of the Treasury’s FINCEN list, and/or to Borrower’s best knowledge, as of the date thereof, based upon reasonable inquiry by Borrower, on any other similar list maintained by OFAC or FINCEN pursuant to any authorizing statute including, but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Order or regulation promulgated thereunder, with the result that the investment in Borrower (whether directly or indirectly), is prohibited by Law, or the Loans made by Lender would be in violation of Law, or (B) Executive Order 13224 (September 23, 2001) issued by the President of the United States, any related enabling legislation or any other similar Executive Orders, and (ii) no Embargoed Person shall have any direct interest or, to Borrower’s best knowledge, indirect interest, of any nature whatsoever in Borrower, with the result that the investment in Borrower (whether directly or indirectly), is prohibited by Law or any Loan is in violation of Law.
		

		
			 
		

		
			(b)         At all times throughout the term of this Agreement, Borrower is not, nor is any Person controlling, controlled by or under common control with Borrower, nor any Person having a beneficial interest in, or for whom Borrower, is acting as agent or nominee in connection with the investment, (a) a country, territory, person or entity named on an OFAC or FINCEN list, or is a Person that resides in or has a place of business in a country or territory named on such lists; (b) a Person resident in, or organized or chartered under the Laws of a jurisdiction identified as non-cooperative by the Financial Action Task Force (“FATF”); or (c) a Person whose funds originate from or will be routed through, an account maintained at a foreign shell bank or “offshore bank”.
		

		
			(c)         Borrower is not, nor is any Person controlling, controlled by or under common control with Borrower, a “senior political figure” or an “immediate family” member or “close associate” (as all such terms are defined below) of a senior foreign political figure within the meaning of the USA PATRIOT ACT (i.e., the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, H.R. 3162, Public Law 107-56, as may be amended).  For the purposes of this subsection (c), (i) “senior foreign political figure” means a senior official in the executive, legislative, administrative, military or judicial branches of a foreign government (whether elected or not), a senior official of a major foreign political party or a senior executive of a foreign government-owned corporation, and such term also includes any corporation, business or other entity that has been formed by, or 

		 

		

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for the benefit of, a senior political figure, (ii) “immediate family” of a senior foreign political figure includes the figure’s parents, siblings, spouse, children and in-laws, and (iii) “close associate” of a senior foreign political figure means a person who is widely and publicly known to maintain an unusually close relationship with the senior foreign political figure, and includes a person who is in a position to conduct substantial domestic and international financial transactions on behalf of the senior foreign political figure.
		

		
			5.8        Representations Continuing.  Each of the representations and warranties set out in this Article V (including those representations and warranties incorporated by reference from the Merger Agreement and remade herein) is true and correct and Borrower makes each such representation and warranty and will cause each to be true and correct on and as of each Borrowing Date.
		

		
			ARTICLE VI
COVENANTS
		

		
			Borrower covenants and agrees that, until the Obligations and all other amounts owing to Lender under the Loan Documents have been paid in full in cash  and all Commitments have been terminated, Borrower shall perform or cause to be performed all of the covenants in this Article VI, unless Lender shall otherwise consent in writing, which consent Lender may withhold in its sole discretion:
		

		
			6.1        Notice of Default.  Borrower shall furnish to Lender:
		

		
			(a)         Promptly (and, in any event, within three (3) Business Days) after the occurrence of an Event of Default or Default, written notice describing in detail such Event of Default and the plan and steps Borrower intends to take to cure or otherwise remedy such Event of Default.
		

		
			(b)         Such other information (including non-financial information) as Lender may from time to time reasonably request.
		

		
			 
		

		
			6.2        Use of Proceeds.  Borrower shall use the proceeds of the Loans solely for payment of expenses as set forth in the Parent Budget (as referenced in Section 4.1 of the Merger Agreement); provided, that, Borrower shall not use or permit any proceeds of any Loan to be used, either directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of “purchasing or carrying” any “margin stock” (as defined in Regulation U) or (ii) the prepayment of any real estate lease obligation unless such payment is made in connection with the resolving of any residual payments in connection with a sublease of such real estate.
		

		
			6.3        Notice of Adverse Development.  Promptly upon becoming aware of any development, financial or otherwise, which could reasonably be expected to have a Material Adverse Effect, Borrower shall provide prompt (and, in any event, within three (3) Business Days) written notice to Lender of the occurrence of such development.
		

		
			6.4        Conduct of Business.  Borrower shall (and shall cause each of its Subsidiaries to) carry on and conduct its business in substantially the same manner and in substantially the same fields of enterprise as it is presently conducted and to do all things necessary to remain duly incorporated, validly existing and in good standing as a domestic corporation or other business entity, as applicable, in its jurisdiction of incorporation and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted.
		

		
			6.5        Taxes.  Borrower shall (and shall cause each of its Subsidiaries to) timely file (or join in the filing of) complete and correct United States federal and applicable foreign, state, provincial and local tax returns required by Law and pay when due all taxes, assessments and governmental charges and levies upon 

		 

		

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it or its income, profits or Property, except those which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been set aside in accordance with GAAP.
		

		
			6.6        Insurance.  Borrower shall (and shall cause each of its Subsidiaries to) maintain with financially sound and reputable independent insurers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons, including workers’ compensation insurance, public liability and property and casualty insurance.
		

		
			6.7        Compliance with Laws.  Borrower shall (and shall cause each of its Subsidiaries to) comply in all material respects with all Laws to which it may be subject.
		

		
			6.8        Maintenance of Properties.  Borrower shall (and shall cause each of its Subsidiaries to) maintain, preserve, protect and keep its tangible Property in good repair, working order and condition, ordinary wear and tear excepted, and make all necessary and proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times.
		

		
			6.9        Inspection.  Until all Obligations hereunder shall have been satisfied in full, upon reasonable notice and subject to applicable Law, Borrower shall, and shall cause each of its Subsidiaries to, afford Lender and its Representatives reasonable access to all of Borrower’s properties, books, contracts, personnel and records, and Borrower shall, and shall cause each of its Subsidiaries to, furnish promptly to Lender all information concerning Borrower’s business, finances, properties and personnel as Lender may reasonably request; provided that Borrower may withhold any document or information (a) that is subject to the terms of a confidentiality agreement with a third party entered into prior to the date of this Agreement or entered into after the date of this Agreement in the ordinary course of business, and in accordance with the Merger Agreement (provided that, in any case, Borrower shall use its reasonable best efforts to obtain the required consent of such third party to such access or disclosure), (b) the disclosure of which would violate any Law (provided that Borrower shall use its reasonable best efforts to make appropriate substitute arrangements to permit reasonable disclosure not in violation of any Law) or (c) that is subject to any attorney-client privilege (provided that Borrower shall use its reasonable best efforts to allow for such access or disclosure to the maximum extent that does not result in a loss of attorney-client privilege).  Subject to the foregoing sentence, Borrower shall authorize all necessary third parties to grant access to and full disclosure of all information relating to Borrower and each of its Subsidiaries to Lender and its Representatives.  If any material is withheld by Borrower as permitted by the immediately preceding sentence, then Borrower shall inform Lender as to the general nature of what is being withheld.
		

		
			 
		

		
			6.10      Approval of Expenditures.  Prior to making any expenditure of the proceeds of any borrowing hereunder other than payments made in conformity with the Parent Budget, Borrower shall give Lender at least three (3) days prior written notice of the intended use of proceeds, and shall receive the approval of Lender prior to making such expenditure.
		

		
			 
		

		
			6.11      Indebtedness.  Borrower shall not (nor permit any of its Subsidiaries to) create, incur or suffer to exist any Indebtedness, except:
		

		
			 
		

		
			(a)         Borrower’s Indebtedness to Lender, including, but not limited to, Indebtedness under this Agreement and the Note; and
		

		
			 
		

		
			(b)         Indebtedness incurred in accordance with, and as permitted by, the Merger Agreement.
		

		
			 
		

		
			

		 

		

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			6.12      Merger.  Except pursuant to and in accordance with the Merger Agreement, Borrower shall not (nor shall it permit any of its Subsidiaries to) merge, amalgamate or consolidate with or into any other Person or sell, transfer, lease or otherwise dispose of (in one transaction or a series of transactions) all or substantially all of its assets or liquidate or dissolve.
		

		
			 
		

		
			6.13      Sale of Assets.  Except as permitted by the Merger Agreement, Borrower shall not (nor shall it permit any of its Subsidiaries to) lease, sell or otherwise dispose of or transfer any Property, to any other Person.
		

		
			6.14      Investments and Acquisitions.  Except as permitted by the Merger Agreement, Borrower shall not (nor shall it permit any of its Subsidiaries to) make or suffer to exist any Investments (including without limitation, loans and advances to, and other Investments in, Subsidiaries or any other Person), or commitments therefor, or to become or remain a partner in any partnership or joint venture, or member in a limited liability company, or to make any Acquisition of any Person.
		

		
			6.15      Liens.  Borrower shall not (nor shall it permit any of its Subsidiaries to) create, incur, or suffer to exist any Lien in, of or on the Property of Borrower (or any such Subsidiary), except as permitted by the Merger Agreement.
		

		
			6.16      Affiliates.  Borrower shall not (nor shall it permit any of its Subsidiaries to) sell, lease or otherwise transfer any Property to, or purchase, lease or otherwise acquire any Property from, or otherwise enter into any transaction (including, without limitation, the purchase or sale of any service) with, or make any payment or transfer to any Affiliate, except in the ordinary course of business pursuant to the reasonable requirements of Borrower’s business and upon fair and reasonable terms no less favorable to Borrower than Borrower would obtain in a comparable arms‐length transaction from unrelated third parties, and fully disclosed in writing to Lender prior to any such transaction.
		

		
			6.17      Subsidiary Dividends.  No Subsidiary of Borrower shall in any manner either directly or indirectly incur or be bound by any restrictions on dividends from such Subsidiary to Borrower, other than those restrictions required by applicable Law.
		

		
			6.18      Restricted Payments.  Except as permitted by the Merger Agreement, Borrower shall not (nor shall it permit any of its Subsidiaries to) directly or indirectly declare, order, pay, make or set apart any sum for any Restricted Payment, except that any directly or indirectly owned Subsidiary of Borrower may make Restricted Payments to the Person that directly owns the equity of such Subsidiary.
		

		
			6.19      Borrower Compliance with Anti‐Money Laundering Laws.  Borrower has taken, and agrees that it shall continue to take, reasonable measures appropriate to the circumstances (in any event as required by Law), to ensure that each shareholder of Borrower is and shall be in compliance with all current and future Anti‐Money Laundering Laws and laws, regulations and government guidance, to the extent such laws, regulations and guidance apply to such shareholder, for the prevention of terrorism, terrorist financing and drug trafficking.
		

		
			6.20      Amendments to Agreements.  Borrower shall not (nor shall it permit any of its Subsidiaries to) amend, supplement, or otherwise modify or consent to any waiver of any term or provision of any of (i) its organizational or charter documents (except as permitted by the Merger Agreement) or (ii) any material contract or agreement (except (x) as permitted by the Merger Agreement or (y) any such modifications that are not materially adverse to Lender and do not in any way limit, impair or adversely affect Borrower’s ability to pay and otherwise satisfy its Obligations under the Loan Documents) except with the prior written consent of Lender, as determined by Lender in its sole discretion.  Borrower shall deliver to Lender all such modifications (other than those which are omitted in the previous sentence) within ten (10) days prior to the intended effective date of such modification.
		

		
			

		 

		

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			6.21      Repayment of Indebtedness.  Borrower shall not (nor shall permit any of its Subsidiaries to) pay (or purchase, redeem, retire or otherwise acquire for value) any amounts on any Indebtedness (other than the Obligations) except, with respect to any Indebtedness, regularly scheduled payments of principal, interest or fees required in accordance with the terms governing such Indebtedness and in accordance with the Parent Budget.
		

		
			6.22      Further Assurances.  Borrower shall, from time to time, execute such documents, agreements and reports as Lender at any time may request to evidence or otherwise implement the provisions and the transactions contemplated by this Agreement and the other Loan Documents.
		

		
			ARTICLE VII
SECURITY INTEREST
		

		
			7.1        Grant of Security Interest.  To secure the payment and performance in full of all of the Obligations, Borrower hereby grants Lender a continuing security interest in, and pledges to Lender, the Collateral, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof.
		

		
			7.2        Priority of Security Interest.  Borrower represents, warrants, and covenants that the security interest granted herein is and shall at all times continue to be a first priority perfected security interest in the Collateral.  If Borrower shall acquire a commercial tort claim, Borrower shall promptly notify Lender in a writing signed by Borrower of the general details thereof and grant to Lender in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to Lender.
		

		
			 
		

		
			7.3        Authorization to File Financing Statements.  Borrower hereby authorizes Lender to file financing statements, without notice to Borrower, with all appropriate jurisdictions to perfect or protect Lender’s interest or rights hereunder, including a notice that any disposition of the Collateral, by either Borrower or any other Person, shall be deemed to violate the rights of Lender under the Code. Borrower also agrees to execute such documents as are required under the Intellectual Property Security Agreement to perfect Lender's security interest in the Collateral.
		

		
			ARTICLE VIII
EVENTS OF DEFAULT
		

		
			An “Event of Default” means the occurrence of any one or more of the following events:
		

		
			8.1        Any representation or warranty made by or on behalf of Borrower to Lender, under or in connection with this Agreement, any Loan or any certificate or information delivered in connection with this Agreement or any other Loan Document shall be false in any material respect on the date as of which made.
		

		
			8.2        Borrower shall fail to pay (x) any principal of any Loan when the same shall become due and payable, whether at the due date thereof (including due to the acceleration thereof) or at a date fixed for prepayment thereof or otherwise or (y) any interest on any Loan, any fee or any other amount payable under this Agreement or under any other Loan Document or with respect to the Obligations.
		

		
			8.3        The breach or failure to perform or observe by Borrower of any of the terms or provisions of the covenants set forth in Article VI.
		

		
			8.4        The breach or failure to perform or observe by Borrower (other than a breach which constitutes an Event of Default under Section 8.1 or Section 8.3) of any of the terms or provisions of this 

		 

		

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Agreement or any other Loan Document which is not remedied within five (5) days after the earlier of (i) written notice from Lender and (ii) actual knowledge by Borrower of such breach or failure.
		

		
			8.5        Failure of Borrower or any of its Subsidiaries to pay when due any Indebtedness (other than the Obligations); or the default by Borrower or any of its Subsidiaries in the performance of any term, provision or condition contained in any agreement under which any such Indebtedness was created or is governed, or any other event shall occur or condition exist, the effect of which is to cause (or permit the holder or holders of such Indebtedness to cause, and such holder or holders in fact cause) such Indebtedness to become due prior to its stated maturity or Borrower or any of its Subsidiaries shall not pay, or admit in writing its inability to pay, its debts generally as they become due.
		

		
			8.6        Borrower or any of its Subsidiaries shall (a) have an order for relief entered with respect to it under the federal bankruptcy Laws or the Laws of any other jurisdiction relating to bankruptcy, insolvency, reorganization or relief of debtors as now or hereafter in effect that is not discharged within 30 days, (b) make an assignment for the benefit of creditors, (c) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any of its Property, (d) institute any proceeding seeking an order for relief under the Federal bankruptcy Laws or the Laws of any other jurisdiction relating to bankruptcy, insolvency, reorganization or relief of debtors as now or hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any Law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (e) take any corporate action to authorize or effect any of the foregoing actions set forth in this Section 8.6 or (f) fail to contest in good faith any appointment or proceeding described in Section 8.7.
		

		
			 
		

		
			8.7        Without the application, approval or consent of Borrower, a receiver, trustee, examiner, liquidator or similar official shall be appointed for Borrower or any of its Subsidiaries or any of its/their Property, or a proceeding described in clause (d) of Section 8.6 shall be instituted against Borrower or any of its Subsidiaries and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of 60 consecutive days.
		

		
			8.8        Any court, government or governmental agency shall condemn, seize or otherwise appropriate, or take custody or control of all or any portion of the Property of Borrower or any of its Subsidiaries.
		

		
			8.9        Borrower or any of its Subsidiaries fail to pay, bond or otherwise discharge within thirty (30) days any judgment or order for the payment of money in excess of singly or in the aggregate, $50,000, which is not stayed on appeal or otherwise being appropriately contested in good faith and as to which no enforcement actions have been commenced.
		

		
			8.10      Borrower or any of its Subsidiaries shall be the subject of any proceeding pertaining to the release by Borrower, or any other Person of any toxic or hazardous waste or substance into the environment, or any violation of any federal, state, provincial or local environmental, health or safety Law or regulation, which, in either case, could reasonably be expected to have a Material Adverse Effect.
		

		
			8.11      Other than as contemplated under the Merger Agreement, any Change of Control shall occur.
		

		
			8.12      Any material provision of any Loan Document shall for any reason cease to be valid and binding on or enforceable against Borrower or any party thereto, or Borrower shall so state in writing or bring an action to limit its obligations or liabilities thereunder.
		

		
			

		 

		

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			8.13      Any party to the Merger Agreement gives notice of the termination of the Merger Agreement in accordance with its terms.
		

		
			 
		

		
			ARTICLE IX
ACCELERATION AND REMEDIES
		

		
			9.1        Acceleration. If any Event of Default described in Section 8.6 or Section 8.7 occurs with respect to Borrower or any of its Subsidiaries, the Commitment and the obligation of Lender to make any Loans hereunder shall automatically terminate and the Obligations, including, without limitation, all accrued and unpaid interest, shall immediately become due and payable without any election or action on the part of Lender.  If any Event of Default occurs (other than an Event of Default described in Section 8.6 or Section 8.7), Lender may terminate or suspend its obligation to make any Loans hereunder and/or declare the Obligations to be due and payable, whereupon the Obligations shall become immediately due and payable without presentment, demand, protest or notice of any kind, all of which Borrower hereby expressly waives.
		

		
			9.2        Remedies.  Without derogating Section 9.1, if an Event of Default occurs, Lender may (x) immediately if any Event of Default described in Section 8.6 or Section 8.7 occurs or (y) after 10 days have elapsed since the occurrence of any other Event of Default, in its discretion, exercise all rights and remedies available to Lender under the Loan Documents or applicable Law, including all remedies provided under the Uniform Commercial Code.
		

		
			 
		

		
			9.3        Preservation of Rights.  No delay or omission of Lender, to exercise any right under any Loan Document shall impair such right or be construed to be a waiver of any Event of Default or an acquiescence therein, and the making of a Loan notwithstanding the existence of an Event of Default or the inability of Borrower to satisfy the conditions precedent to such Loan shall not constitute any waiver or acquiescence.  Any single or partial exercise of any such right shall not preclude other or further exercise thereof or the exercise of any other right, and no waiver, amendment or other variation of the terms, conditions or provisions of the Loan Documents whatsoever shall be valid unless in writing signed by Lender, and then only to the extent in such writing specifically set forth.  All remedies contained in the Loan Documents or by Law afforded shall be cumulative and all shall be available to Lender until the Obligations have been paid in full.  Borrower hereby expressly waives, to the fullest extent permitted by applicable Law, any and all notices, advertisements, hearings or process of law in connection with Lender’s exercise of any of its rights and remedies upon an Event of Default.
		

		
			ARTICLE X
GENERAL PROVISIONS
		

		
			10.1      Survival of Representations.  All representations and warranties of Borrower contained in this Agreement shall survive the execution and delivery of this Agreement and the Note and the making of the Loans herein contemplated.
		

		
			10.2      Governmental Regulation.  Anything contained in this Agreement to the contrary notwithstanding, Lender shall not be obligated to extend credit (including the making of any Loans) to Borrower in violation of any limitation or prohibition provided by any applicable statute or regulation.
		

		
			10.3      Taxes.  Any Taxes or other similar assessments or charges made by any governmental or revenue authority in respect of the Loan Documents (other than Taxes imposed on Lender’s income or revenue) shall be paid by Borrower, together with interest and penalties, if any.  All payments by Borrower to or for the account of Lender hereunder or under the Note shall be made free and clear of and without deduction for any and all Taxes.
		

		
			

		 

		

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			10.4      Headings.  Section headings in the Loan Documents are for convenience of reference only, and shall not govern the interpretation of any of the provisions of the Loan Documents.
		

		
			10.5      Entire Agreement.  The Loan Documents embody the entire agreement and understanding between Borrower and Lender and supersede all prior agreements and understandings between Borrower, and Lender relating to the subject matter thereof.
		

		
			10.6      Benefits of this Agreement.  This Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and permitted assigns.
		

		
			10.7      Costs and Expenses; Indemnification.
		

		
			(a)         Borrower shall pay or, as applicable, reimburse Lender for all reasonable out-of-pocket fees, costs and expenses (including fees, charges and disbursements of counsel) paid or obligations incurred by Lender, in connection with, arising out of, or related to: (i) the review, negotiation, preparation, documentation, execution, and administration of the Loan Documents, the Loans, and any amendments, waivers, consents, forbearances and other modifications relating thereto (which amount shall not exceed $20,000), (ii) Lender attempting to or enforcing any of Lender’s rights or remedies against Borrower or any guarantor of Borrower’s Obligations; (iii) any refinancing or restructuring of the credit arrangements provided under the Loan Documents in the nature of a “work-out” or in any insolvency or bankruptcy proceeding; (iv) commencing, defending or intervening in any litigation or in filing a petition, complaint, answer, motion or other pleadings in any legal proceeding related to Borrower and related to or arising out of the transactions contemplated by the Loan Document, and (v) taking any other action in or with respect to any suit or proceeding (whether in bankruptcy or otherwise) with respect to any of the foregoing.  Any and all such fees, costs and expenses are part of the Obligations, payable upon receipt by Borrower of the invoices received by Lender therefor.
		

		
			 
		

		
			(b)         Borrower further agrees to indemnify Lender and its directors, officers, agents, attorneys, affiliates, advisors, partners and employees against all losses, claims, damages, penalties, judgments, liabilities and expenses (including, without limitation, all expenses of litigation or preparation therefor whether or not Lender is a party thereto) which any of them may pay or incur arising out of or relating to this Agreement, the other Loan Documents, the transactions contemplated hereby or thereby or the direct or indirect application or proposed application of the proceeds of any Loan, except to the extent that they have resulted from the gross negligence or willful misconduct of the party seeking indemnification.
		

		
			10.8      Accounting.  Except as provided to the contrary herein, all accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with GAAP, consistently applied for all periods presented.
		

		
			10.9      Severability of Provisions.  Any provision in any Loan Document that is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction, and to this end the provisions of all Loan Documents are declared to be severable.
		

		
			10.10    Nonliability of Lender.  The relationship between Borrower and Lender shall be solely that of borrower and lender.  Lender shall not have any fiduciary responsibilities to Borrower.  The negotiations between the Borrower and Lender are arm’s-length in nature.  Lender undertakes no responsibility to Borrower to review or inform Borrower of any matter in connection with any phase of Borrower’s business or operations.  Borrower agrees that Lender and each of its Affiliates, agents, attorneys partners, directors, officers, employees and advisors shall have no liability to Borrower (whether sounding in tort, contract or 

		 

		

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otherwise) for losses suffered by Borrower in connection with, arising out of, or in any way related to, the transactions contemplated and the relationship established by the Loan Documents, or any act, omission or event occurring in connection therewith, unless it is determined by a court of competent jurisdiction in a final and non‐appealable order that such losses resulted from the gross negligence or willful misconduct of the party from which recovery is sought.
		

		
			10.11    Amendment and Waiver.  No amendment or waiver of any provision of this Agreement or any other Loan Document shall be valid and binding unless it is in writing and signed, in the case of an amendment, by Lender and Borrower, or in the case of a waiver, by the party or parties against whom the waiver is to be effective.  No waiver by Lender of any Default, Event of Default, breach or violation of, or inaccuracy in, any representation, warranty or covenant hereunder, whether intentional or not, will be deemed to extend to any prior or subsequent Default, Event of Default breach, violation, default of, or inaccuracy in, any such representation, warranty or covenant hereunder or affect in any way any of Lender’s rights arising by virtue of any prior or subsequent such occurrence.  Nothing contained in this Section 10.11 shall limit or modify Lender’s rights contained in Article IX.
		

		
			 
		

		
			10.12    Notices.  All notices, requests and other communications to any party hereunder shall be in writing (including email transmission) and shall be given to such party at such party’s address, email address set forth on such party’s signature page hereto.  Each such notice, request or other communication shall be effective (i) if given by email transmission, when sent (provided that such sent e-mail is kept on file (whether electronically or otherwise) by the sending party and the sending party does not receive an automatically generated message from the recipient’s e-mail server that such e-mail was not or could not be delivered to such recipient), (ii) if given by mail, three (3) Business Days after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid, (iii) if given by overnight delivery by a national recognized courier service, on the Business Day after being deposited with such courier service or (iv) if given by any other means, when delivered at the address specified in this Section 10.12;  provided that notices to Lender under Article II shall not be effective until received.  Notwithstanding the foregoing, with respect to any electronic notice provided on a Saturday or Sunday, such notice will be effective as of the next Business Day.  Lender or Borrower may, in its/their discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.
		

		
			10.13    Change of Address.  Borrower and Lender may each change the address for service of notice upon it by a notice in writing to the other party hereto in accordance with Section 10.12.
		

		
			10.14    Counterparts.  This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Agreement.  Receipt of an executed signature page to this Agreement by facsimile or other electronic transmission, including by email attachment, shall constitute effective delivery thereof.  Electronic records of executed Loan Documents maintained by Lender shall deemed to be originals thereof.
		

		
			10.15    Waiver of Suretyship and other Defenses.  The obligations of Borrower under this Agreement and the Loan Documents shall be absolute and unconditional and shall remain in full force and effect until all Obligations shall have been paid in full in cash and, until such payment has been made, shall not be discharged, affected, modified or impaired on the happening from time to time of any event, including, without limitation, any of the following, whether or not with notice to or the consent of any of the undersigned:  (a) the waiver, compromise, settlement, release, termination or amendment (including, without limitation, any extension or postponement of the time for payment or performance or renewal or refinancing) of any or all of the obligations or agreements of any of the undersigned under this Agreement or any other Loan Documents; (b) the failure to give notice to Borrower of the occurrence of an Event of Default under the terms and provisions of this Agreement or any other Loan Documents; (c) the release of any Person 

		 

		

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primarily or secondarily liable for all or any part of the Obligations in connection with any voluntary or involuntary liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors or similar event or proceeding affecting any or all of the undersigned or any other person or entity who, or any of whose property, shall at the time in question be obligated in respect of the obligations or any part thereof; or (d) to the extent permitted by Law, any other event, occurrence, action or circumstance that would, in the absence of this clause, result in the release or discharge of any or all of Borrower from the performance or observance of any obligation, covenant or agreement contained in this Agreement or any other Loan Documents.
		

		
			10.16    GOVERNING LAW.  This Agreement the other Loan Documents and any dispute, controversy or claim arising out of, relating to or in connection with this Agreement and the other Loan Documents, the negotiation, execution, existence, validity, enforceability or performance hereof and thereof, or for the breach or alleged breach hereof or thereof (whether in contract, in tort or otherwise) shall be governed by and construed and enforced in accordance with the Laws of THE STATE OF DELAWARE, UNITED STATES OF AMERICA, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR OTHERWISE) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.
		

		
			 
		

		
			10.17    CONSENT TO JURISDICTION.  Each of the parties hereto hereby (a) agrees that any claim, suit, action or other proceeding, directly or indirectly, arising out of, under or relating to this Agreement or the other Loan Documents, will be heard and determined in the Chancery Court of the State of Delaware (and each agrees that no such claim, action, suit or other proceeding relating to this Agreement or the other Loan Documents will be brought by it or any of its Affiliates except in such court), subject to any appeal, provided that if jurisdiction is not then available in the Chancery Court of the State of Delaware, then any such claim, suit, action or other proceeding may be brought in any Delaware state court or any federal court located in the State of Delaware and (b) irrevocably and unconditionally submits to the exclusive jurisdiction of any such court in any such claim, suit, action or other proceeding and irrevocably and unconditionally waives the defense of an inconvenient forum to the maintenance of any such claim, suit, action or other proceeding.  Each of the parties hereto further agrees that, to the fullest extent permitted by applicable Law, service of any process, summons, notice or document by U.S. registered mail to such Person’s respective address set forth in Section 10.12 will be effective service of process for any claim, action, suit or other proceeding in Delaware with respect to any matters to which it has submitted to jurisdiction as set forth above in the immediately preceding sentence.  The parties hereto hereby agree that a final judgment in any such claim, suit, action or other proceeding will be conclusive, subject to any appeal, and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law.
		

		
			 
		

		
			10.18    WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR OTHER PROCEEDING, DIRECTLY OR INDIRECTLY, ARISING OUT OF, UNDER OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, THEIR NEGOTIATION, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 10.18.
		

		
			 
		

		
			10.19    WAIVER OF DEFENSES.  BORROWER WAIVES EVERY PRESENT AND FUTURE DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH BORROWER MAY NOW 

		 

		

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HAVE OR HEREAFTER MAY HAVE TO ANY ACTION BY LENDER IN ENFORCING THIS AGREEMENT, EXCEPT FOR THE DEFENSE OF PAYMENT.  PROVIDED LENDER ACTS IN GOOD FAITH, BORROWER RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO PURSUANT TO THE TERMS OF THIS AGREEMENT.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER GRANTING ANY FINANCIAL ACCOMMODATION TO BORROWER.
		

		
			 
		

		
			10.20    Release of Claims Against Lender.  In consideration of Lender making the Loans, Borrower does each hereby release and discharge Lender of and from any and all claims, harm, injury, and damage of any and every kind, known or unknown, legal or equitable, arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby (other than the Merger Agreement), the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby or (ii) any Loan or the use or proposed use of the proceeds therefrom. Borrower confirms to Lender that it has reviewed the effect of this release with competent legal counsel of its choice, or has been afforded the opportunity to do so, prior to execution of this Agreement and the Loan Documents and acknowledges and agrees that Lender is relying upon this release in extending the Loans to Borrower.
		

		
			 
		

		
			10.21    Revival and Reinstatement of Obligations.  If the incurrence or payment of the Obligations by any obligor or the transfer to Lender of any property should for any reason subsequently be declared to be void or voidable under any state, provincial or federal Law relating to creditors’ rights, including provisions of the Bankruptcy Code relating to fraudulent conveyances, preferences, or other voidable or recoverable payments of money or transfers of property (collectively, a “Voidable Transfer”), and if Lender is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof that Lender is required or elects to repay or restore, and as to all reasonable costs, expenses, and attorneys’ fees of Lender, the Obligations shall automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made.
		

		
			 
		

		
			10.22    Customer Identification - USA Patriot Act Notice .  Lender hereby notifies Borrower that pursuant to the requirements of the Patriot Act, Lender may be required to obtain, verify and record certain information and documentation that identifies Borrower, which information includes the name and address of Borrower and such other information that will allow Lender to identify Borrower in accordance with the Patriot Act.
		

		
			10.23    Inconsistencies.  All provisions of the Loan Documents shall be construed as being supplementary and complementary to, and cumulative with, the provisions of the other Loan Documents.  However, if there should be an irreconcilable inconsistency between provisions of the Loan Documents, the terms and provisions of this Agreement shall control over any irreconcilably inconsistent term of any other Loan Document except for the Note, whose provisions shall govern and control over any irreconcilably inconsistent provision of this Agreement or any other Loan Document.
		

		
			10.24    Successors and Assigns.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that (i) Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of Lender, which consent may be withheld in Lender’s sole discretion (and any attempted assignment or transfer by Borrower without such consent shall be null and void) and (ii) Lender may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of Borrower, which consent may be withheld in Borrower’s sole discretion (and any attempted assignment or transfer by Lender without such consent shall be null and void); provided,  that, if an Event of Default shall have occurred, then Lender may assign or otherwise transfer any or all of its rights or obligations hereunder without Borrower’s consent.
		

		
			

		 

		

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			10.25    Warrant Allocation.  The parties acknowledge that under the regulations of the United States Department of the Treasury, the issuance of the Loan and the Warrant for an aggregate, combined amount will require the Initial Advance to be allocated among the Loan and Warrant based on their relative fair market values.  Except to the extent required by generally accepted accounting principles, after taking into account all relevant factors (including the fact that no public market for the Warrant currently exists, the general condition of the financial markets at this time and all other matters concerning the transactions contemplated by this Agreement), the parties hereto agree to allocate the entire Closing Date Advance to the Loan issued on the Closing Date and $0 to the Warrant issued on the Closing Date.
		

		
			
		

		
			

		 

		

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			[signature pages follow]
		

		
			 
		

		
			 
		

		
			

		 

		

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			IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement as of the date first above written.
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						BORROWER:

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						BIOPHARMX CORPORATION

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						/s/ David S. Tierney

				
	
					
						 

					
					
						Name:

					
					
						David S. Tierney, M.D.

				
	
					
						 

					
					
						Title:

					
					
						President and Chief Executive Officer

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						Address for Notices:

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						BioPharmX Corporation

				
	
					
						 

					
					
						115 Nicholson Lane

				
	
					
						 

					
					
						San Jose, CA 95134

				
	
					
						 

					
					
						Attention: Chief Executive Officer

				
	
					
						 

					
					
						Facsimile:  305-349-4833

				
	
					
						 

					
					
						 

				
	
					
						 

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

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						Akerman LLP

				
	
					
						 

					
					
						350 East Las Olas Blvd.

				
	
					
						 

					
					
						Suite 1600

				
	
					
						 

					
					
						Fort Lauderdale, FL 33131

				
	
					
						 

					
					
						Facsimile: 305-349-4833

				
	
					
						 

					
					
						Attention: Philip B. Schwartz, Esq.

				

		
			 
		

		
			
		

		
			

		 

		

			 

		

		

			 

		

		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						LENDER:

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						TIMBER PHARMACEUTICALS LLC

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						/s/ John Koconis

				
	
					
						 

					
					
						Name:

					
					
						John Koconis

				
	
					
						 

					
					
						Title:

					
					
						Chief Executive Officer

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						Address for Notices:

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						Timber Pharmaceuticals LLC

				
	
					
						 

					
					
						50 Tice Blvd, Suite A26

				
	
					
						 

					
					
						Woodcliff Lake, NJ 07677

				
	
					
						 

					
					
						Attention: John Koconis, Chief Executive Officer

				
	
					
						 

					
					
						Email: jkoconis@timberpharma.com

				
	
					
						 

					
					
						 

				
	
					
						 

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

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						Lowenstein Sandler LLP

				
	
					
						 

					
					
						One Lowenstein Drive

				
	
					
						 

					
					
						Roseland, NJ 07068

				
	
					
						 

					
					
						Attn: Steven Skolnick, Esq.

				
	
					
						 

					
					
						Facsimile: (973) 597-2477

				
	
					
						 

					
					
						Email: sskolnick@lowenstein.com

				

		
			 
		

		
			
		

		
			

		 

		

			 

		

		

			 

		

		

		
			Exhibit A
		

		
			 
		

		
			See attached.

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