Document:

SECURITY AGREEMENT

Exhibit 10.2

SECURITY AGREEMENT

This Security Agreement (the “Agreement”) is entered into as of this 29th day of February, 2016 by and between Ecosphere Technologies, Inc., a Delaware corporation (“Ecosphere”), and Brisben Water Solutions LLC (the “Lender” and together with Ecosphere, the “Parties”). The Parties hereby agree as follows:

1.

Creation of Security Interest.  Ecosphere hereby grants to the Lender a security interest in the Collateral described in Section 2 to secure the performance or payment of all of the Obligations of Ecosphere under Section 3. The Parties agree that notwithstanding any provision to the contrary contained in: (i) the Security Agreement between the Parties, dated as of January 18, 2016, (ii) the Security Agreement between the Parties, dated as of June 18, 2015, (iii) the Ecosphere Mining, LLC Collateral Assignment of Limited Liability Company Interest Proceeds, dated as of June 18, 2015, (iv) the Fidelity National Environmental Solutions, LLC Amended and Restated Collateral Assignment of Limited Liability Company Interest Proceeds, dated as of June 18, 2015, (v) the Security Agreement between the Parties, dated as of May 8, 2015, (vi) the Security Agreement between the Parties, dated as of March 19, 2015, (vii) or the Amended and Restated Security Agreement between the Parties, dated as of February 9, 2015 (together, the “Prior Security Agreements”), the entry into each of this Agreement and the Amended, Restated and Consolidated Convertible Note, dated as of the date hereof, in the amount of $2,475,000.00 (the “Note”), attached hereto as Exhibit B, do not constitute a default or violation of any covenant under the Prior Security Agreements or related transaction documents. 

2.

Collateral.  The collateral of this Agreement (the “Collateral”) consists of the items described on attached Exhibit A, including the Physical Collateral and the Additional February 2016 Advance Collateral, as defined in Exhibit A. 

3.

Ecosphere's Obligations.

(a)

Obligation to Pay.  Ecosphere shall pay to the Lender $200,000 and accrued interest thereon representing the February 2016 Advance  in accordance with the terms of the Note, which shall be in addition to Ecosphere’s obligation to pay $2,275,000 which exists as of the date hereof in accordance with: (i) that certain Amended and Restated Convertible Note of the Company, dated as of August 25, 2015, with a current principal balance of $2,125,000 and having a maturity date of September 12, 2016; and (ii) that certain Convertible Note of the Company, dated as of January 18, 2016, in the amount of $150,000 and having a maturity date of 90 days from the issuance date (collectively, the “Prior Notes”), which obligations are secured by the Prior Security Agreements, and all of which Prior Notes were amended, restated, consolidated, replaced and superseded by the Note (payment obligations under the Note and the Prior Notes, the “Obligations”). 

(b)

Additional Obligations.

(i)

Protection of Collateral.  The Physical Collateral:

(A)

will not be misused or abused, but will be maintained in good and operable condition, reasonable wear and tear excepted (except for any loss, damage or destruction which is fully covered by insurance proceeds) and will be repaired, renewed and replaced by Ecosphere, in the exercise of reasonable discretion, shall deem necessary;

(B)

will be insured by Ecosphere until this Agreement is terminated against all expected risks to which it is exposed, including fire, theft, wind and flood, and those which the Lender may designate, with the policies acceptable to the Lender, payable to both Ecosphere and the Lender, as their interests appear, and providing for 30 days' minimum cancellation notice to the Lender, and with certificates evidencing such insurance deposited with the Lender; and

(ii)

Protection of Security Interest.

(A)

The Collateral will not be sold, licensed, transferred, encumbered, pledged, or disposed of or be subjected to any unpaid charge, including taxes, or to any subsequent interest of a third person created or suffered by Ecosphere voluntarily or involuntarily, unless the Lender consents in advance in writing to such charge, transfer, disposition or subsequent interest, and

(B)

The Lender has filed Financing Statements and may file additional Financing Statements it deems necessary in places it deems appropriate to protect the security interest under this Agreement against the rights or interests of third persons.

(C)

Any proceeds received by Ecosphere upon the sale, lease, license, assignment, transfer, encumbrance, pledge or other disposition of any of the Collateral or any part thereof shall be paid to Lender when received to fully discharge principal, accrued interest and attorneys’ fees due under the Note.  All additional proceeds, if any, from such sale or other disposition shall be retained by Ecosphere.

(iii)

Sale of FNES Interest.  In addition to the Lender’s rights and remedies with respect to the Collateral, to secure the performance or payment of the Obligations, Ecosphere agrees as follows:

(A)

Ecosphere shall not sell, assign, transfer or encumber in any manner Ecosphere’s 30.6% limited liability company ownership interest in Fidelity National Environmental Solutions, LLC (“FNES”, and such 30.6% interest, the “FNES Interest”); and

(B)

In the event Ecosphere is in default of the Note and Lender declares the Note to be immediately due and payable, Ecosphere shall sell the FNES Interest or any part thereof for cash at public or private sale, subject to full compliance with the provisions, including tag-along rights and rights of first refusal, of the Amended and Restated Limited Liability Company Agreement of FNES, as in effect on the date hereof, a copy of which is appended to this Agreement as Exhibit C.  To facilitate the sale process, Lender may solicit offers to purchase the FNES Interest.  Such public or private sale shall take place no later than 90 days after the date of default by non-payment.  Ecosphere shall give Lender at least 30 days’ notice of the time and place of any public sale or the time at which any private sale is to be made.  At any sale of the FNES Interest the Lender 

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may be the purchaser of the FNES Interest or any part thereof and shall be entitled to use and apply any sums due it under the Note as a credit on account of the purchase price of the FNES Interest or any part thereof payable at such sale.  Any proceeds received by Ecosphere upon sale of the FNES Interest or any part thereof shall be applied and paid to Lender to fully discharge principal, accrued interest and attorneys’ fees due under the Note, if any.  All additional proceeds, if any, from the sale shall be retained by Ecosphere.

(iv)

Sale of EM Interest.  In addition to the Lender’s rights and remedies with respect to the Collateral, to secure the performance or payment of the Obligations, Ecosphere agrees as follows:

(A)

Ecosphere shall not sell, assign, transfer or encumber in any manner the 25% limited liability company ownership interest in Ecosphere Mining, LLC (“EM”) which Ecosphere owns and has pledged to the Lender under this Agreement (the “EM Interest”); and

(B)

In the event Ecosphere is in default of the Note and Lender declares the Note to be immediately due and payable, Ecosphere shall sell the EM Interest or any part thereof for cash at public or private sale.  To facilitate the sale process, Lender may solicit offers to purchase the EM Interest.  Such public or private sale shall take place no later than 90 days after the date of default by non-payment.  Ecosphere shall give Lender at least 30 days’ notice of the time and place of any public sale or the time at which any private sale is to be made.  At any sale of the EM Interest, the Lender may be the purchaser of the EM Interest or any part thereof and shall be entitled to use and apply any sums due it under the Note as a credit on account of the purchase price of the EM Interest or any part thereof payable at such sale.  Any proceeds received by Ecosphere upon sale of the EM Interest or any part thereof shall be applied and paid to Lender to fully discharge principal, accrued interest and attorneys’ fees due under the Note.  All additional proceeds, if any, from the sale shall be retained by Ecosphere.

(v)

Allocation of Ecosphere Revenues.  In addition to the Lender’s rights and remedies with respect to the Collateral, to secure the performance or payment of the Obligations, Ecosphere and its subsidiaries agree that so long as any amounts payable under the Note remain outstanding, Ecosphere and its subsidiaries shall allocate and pay to Lender 5% of all revenues actually received by Ecosphere or its subsidiaries from equipment sales, licensing fees, services and other sources (regardless of whether such revenues are received directly from customers or are received by Ecosphere from its subsidiaries) to payment of the Obligations; provided, however, that for the purposes of such calculations, management fees payable to Ecosphere from Sea of Green Systems, Inc., (“SOGS”) which have been accruing at the rate of $25,000 monthly since January 1, 2015 and remain unpaid as of the date hereof (the “Management Fees”), shall not be considered revenues under this Section 3(b)(v).  Provided, further, that SOGS shall not be deemed to be a subsidiary within the meaning of the first sentence of this Section 3(b)(v). Equipment sales from Ecosphere to SOGS, and distributions from SOGS to Ecosphere, shall be deemed to be revenues of Ecosphere. To the extent that Ecosphere pays the Lender $200,000 resulting from its receipt of at least $450,000 under the Note, the sum received from SOGS as a result of the financing transaction referred to in Section (b) on page 2 of the Note shall not be deemed to be revenues within the meaning of the first sentence of this Section 3(b)(v).

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(vi)

Allocation of Initial Public Offering Proceeds.  In addition to the Lender’s rights and remedies with respect to the Collateral, to secure the performance or payment of the Obligations, Ecosphere and its subsidiaries agree that so long as any amounts payable under the Note remain outstanding, Ecosphere and its subsidiaries shall allocate and pay to Lender 10% of all net proceeds actually received by Ecosphere or its subsidiaries in connection with the closing of an initial public offering of any of its present subsidiaries to payment of the Obligations; provided, however, that for the purposes of such calculations, the Management Fees shall not be considered net proceeds under this Section 3(b)(vi).  For avoidance of doubt, financing proceeds received in connection with a reverse merger shall not be deemed to be an initial public offering.  For purposes of this Section 3(b)(vi), “reverse merger” means a merger, consolidation or share exchange between an Ecosphere subsidiary and another entity which is treated as a reverse merger for accounting purposes.

4.

Representations, Warranties and Covenants.  Ecosphere represents, warrants and covenants to Lender that:

(a)

Ecosphere has good and sufficient title to the Collateral, the FNES Interest and the EM Interest, free and clear of all security interests, liens, encumbrances and claims whatsoever, other than those created under (i) the Securities Purchase Agreement dated as of August 25, 2015, (ii) the Securities Purchase Agreement dated May 8, 2015, (iii) the Securities Purchase Agreement dated March 19, 2015 and (iv) the Securities Purchase Agreement dated September 12, 2014, as amended February 9, 2015 (collectively, the “Prior SPAs”) and (vi) the Prior Security Agreements.

(b)

No financing statement, notice of lien, security agreement or any other agreement or instrument creating or giving notice of an encumbrance or charge against any of the Collateral, the FNES Interest and the EM Interest is in existence or on file in any public office, except those in favor of Lender.

(c)

Ecosphere will at all times hereafter keep the Collateral, the FNES Interest and the EM Interest free of all security interests, liens and claims whatsoever, except the security interests, liens and claims in favor of Lender.

(d)

Ecosphere (i) will, from time to time, on request of Lender, execute such financing statements, statements of assignment, notices and other documents and pay the costs of filing or recording the same in all public offices deemed necessary by Lender and do such other acts as Lender may request to establish and maintain a valid security interest in the Collateral, the FNES Interest and the EM Interest and (ii) authorizes  Lender at Ecosphere’s expense to file any financing statements, or any notices or assignments with the Patent and Trademark Office, relating to the Collateral (without Ecosphere’s signature thereon) which Lender deems appropriate and Ecosphere irrevocably appoints Lender as Ecosphere’s attorney-in-fact to execute any such financing statements and notices or assignments in Ecosphere’s name and to perform all other acts which Lender deems appropriate to perfect and to continue perfection of the security interest created herein.

(e)

Ecosphere will account fully and faithfully for and promptly pay or turn over to Lender proceeds in whatever form received in disposition in any manner of any of the 

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Collateral, the FNES Interest and the EM Interest as provided herein.

(f)

All information now or hereafter furnished by Ecosphere to Lender relating in any way to the Collateral, the FNES Interest or the EM Interest is and will be true and correct in all material respects as of the date furnished.

(g)

The FNES Interest and the EM Interest are not represented by a certificate and are “uncertificated securities” under the Uniform Commercial Code as in effect in Delaware.  Ecosphere will, if the FNES Interest or the EM Interest are represented by a certificate, promptly deliver possession of such certificate to Lender.

5.

Default.  Any misrepresentation or misstatement in connection with, or non-compliance with or non-performance of the Note or this Agreement shall constitute default under this Agreement.  In addition, Ecosphere shall be in default if (i) bankruptcy or insolvency proceedings are instituted by or against Ecosphere, which proceedings are not dismissed within 30 days; (ii) if Ecosphere makes any assignment for the benefit of creditors, or (iii) if Ecosphere shall default in performance of any agreement with the Lender.  

6.

The Lender's Rights and Remedies.

(a)

The Lender may assign this Agreement, with notice to Ecosphere, and, if the Lender does assign this Agreement, the assignee shall be entitled, upon notifying Ecosphere, to performance of all of Ecosphere's obligations under this Agreement.

(b)

Upon Ecosphere's default, the Lender may exercise its rights of enforcement under the Uniform Commercial Code in force in Delaware and any notice of lien filed with the United States Patent Office and, in conjunction with, addition to or substitution for those rights, at the Lender's discretion, it may:

(i)

To the extent permitted by law, enter upon Ecosphere's premises to take possession of, assemble and collect the Physical Collateral or to render it unuseable.

(ii)

Require Ecosphere to assemble the Physical Collateral and make it available at a place the Lender designates which is mutually convenient, to allow the Lender to take possession or dispose of the Collateral.

(iii)

Waive any default or remedy any default in any reasonable manner without waiving the default remedied and without waiving any other prior or subsequent default.

(iv)

Ecosphere understands that to the extent permitted by law, if Ecosphere fails to meet any of Ecosphere's obligations under this Agreement, the Lender has a right to take possession of the Collateral by all lawful means.

(c) 

Upon default of the Note, the Lender shall have rights to a sale of the EM Interest and/or FNES Interest by Ecosphere, including a right to solicit purchasers, in accordance with Sections 3(b)(iii) and 3(b)(iv).

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(d)

With regards to only non-monetary defaults, the Lender will give notice to Ecosphere that Ecosphere is in default hereunder, and Ecosphere shall have 30 days from the date of such notice to cure the non-monetary defaults.  

(e)

The Lender’s remedies are subject to the Prior SPAs, which limit the Lender to recovering its outstanding principal and accrued interest under the Prior Notes, attorneys’ fees and costs incurred in the sale of the Collateral.

7. 

Other Lienholders.  Any person or entity taking a junior encumbrance, or other lien upon the Collateral or any part thereof or any interest therein, shall take said lien subject to the rights of the Lender to amend, modify, extend, renew, enlarge or release the Note, this  Agreement or any other document or instrument evidencing, securing or guaranteeing the Note, including, but not limited to, any amendments, modifications, extensions or renewals that increase the amount outstanding under the Note, in each and every case without obtaining the consent of the holder of such junior lien and without the lien of this Agreement losing its priority over the rights of any such junior lien.  Accordingly, any person or entity taking a junior encumbrance, or other lien upon the Collateral or any part therein or any interest therein, shall take said lien subject to the provisions of the Note and this Agreement, including, but not limited to, the above provision.  Nothing in this Section shall be deemed to authorize any such junior encumbrance or other liens on the Collateral, the FNES Interest and the EM Interest.

 

8.

Severability.  In the event any parts of this Agreement are found to be void, the remaining provisions of this Agreement shall nevertheless be binding with the same effect as though the void parts were deleted.

9.

Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.  The execution of this Agreement may be by actual or facsimile signature.

10.

Benefit.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their legal representatives, successors and assigns.

11.

Notices and Addresses.  All notices, offers, acceptance and any other acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by FedEx or similar receipted next business day delivery, or by email followed by overnight next business day delivery as follows:

Lender:

Brisben Water Solutions LLC

23 N. Beach Road

Jupiter Island, FL 33455

Attn:  William Brisben

Email:  wbrisben@hotmail.com

with a copy to:

Dinsmore & Shohl LLP

Fifth Third Center

One South Main Street, Suite 1300

Dayton, OH 45402

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Attn: Steven R. Watts, Esq.

Email: steve.watts@dinsmore.com

Ecosphere:

3515 SE Lionel Terrace

Stuart, Florida 34997

Attention: Dennis McGuire

Email: dennismcguire1@mac.com

with a copy to:

Nason, Yeager, Gerson, White

& Lioce, P.A.

3001 PGA Boulevard, Suite 305

Palm Beach Gardens, Florida 33410

Attention:  Michael D. Harris

Email:  mharris@nasonyeager.com

or to such other address as any of them, by notice to the other may designate from time to time.  Time shall be counted to, or from, as the case may be, the date of delivery.

12.

Attorneys’ Fees.  In the event that there is any controversy or claim arising out of or relating to this Agreement, or to the interpretation, breach or enforcement thereof, and any action or proceeding is commenced to enforce the provisions of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and expenses (including such fees and costs on appeal).

13.

Oral Evidence.  This Agreement constitutes the entire Agreement between the parties and supersedes all prior oral and written agreements between the parties hereto with respect to the subject matter hereof.  Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally, except by a statement in writing signed by the party or parties against which enforcement or the change, waiver, discharge or termination is sought.

14.

Additional Documents.  The parties hereto shall execute such additional instruments as may be reasonably required by their counsel in order to carry out the purpose and intent of this Agreement and to fulfill the obligations of the parties hereunder.

15.

Governing Law.  All claims relating to or arising out of this Agreement, or the breach thereof, whether sounding in contract, tort, or otherwise, shall also be governed by the laws of the State of Delaware without regard to choice of law considerations.

16.

Section or Paragraph Headings.  Section headings herein have been inserted for reference only and shall not be deemed to limit or otherwise affect, in any matter, or be deemed to interpret in whole or in part any of the terms or provisions of this Agreement.

(Signature Page Follows)

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IN WITNESS WHEREOF the parties hereto have set their hand as of the date first above written.

			
	 
	ECOSPHERE:  

	 
	ECOSPHERE TECHNOLOGIES, INC.

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	By:  

	 

	 
	 
	Dennis McGuire, Chief Executive Officer

	 
	 
	 

	 
	 
	 

	 
	BRISBEN WATER SOLUTIONS LLC

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	By:  

	 

	 
	 
	William Brisben, Manager

THE UNDERSIGNED subsidiaries of Ecosphere Technologies, Inc. have executed this Agreement solely to acknowledge their obligations under Section 3(b)(v) and (vi).

			
	 
	ECOSPHERE MINING, LLC

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	By:  

	 

	 
	 
	Dennis McGuire, Chief Executive Officer

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EXHIBIT A

COLLATERAL

This Security Agreement covers all of the following property of Ecosphere Technologies, Inc. (“Ecosphere”), whether now or hereafter owned, existing, acquired or arising and wherever now or hereafter located (capitalized terms used herein shall have the meaning ascribed to such term under the Uniform Commercial Code as in effect in the State of Delaware and/or as otherwise set forth herein):

(a)

The Ecos PowerCube® unit (with the Ecos GrowCube® unit, the “Physical Collateral”) located in Stuart, Florida.

(b)

One completed Ecos GrowCube® unit (with the Ecos PowerCube® unit, the “Physical Collateral”) located in Stuart, Florida.

(c)

United States Patent #8,593,102, filed November 26, 2013.

(d)

United States Patent #8,999,154, issued April 7, 2015.

(e)

All warranties, increases, parts, renewals, additions and accessions to, substitutions for, and replacements, products and Proceeds of the foregoing property, and all of Ecosphere's books and records relating to any of the foregoing. Provided, however, that if Ecosphere manufactures any additional Ecos PowerCube® units or Ecos GrowCube® units, they shall not be deemed to be Physical Collateral or subject to this Agreement.

(f)

25% of the limited liability company interests in Ecosphere Mining, LLC, a Delaware limited liability company and Ecosphere’s subsidiary (the “EM Interest”). 

(g)

All Proceeds received, directly or indirectly, by Ecosphere from Ecosphere’s OzonixÒ intellectual properties in the mining-related global field of use, provided that the Lender maintains all agreements with licensees operating in such field of use in compliance with the terms of their agreements at the time the Lender exercises its rights. 

(h)

The patents and patent applications listed on Schedule A-1 solely to the extent that such patents and patent applications are used in the global field of use for commercial mining wastewater treatment other than from oil and gas and other minerals listed in the Field of Use on Schedule A-1.

(i)

The Additional February 2016 Advance Collateral as defined on Schedule A-1.

Proceeds shall mean and include all proceeds of, and all other profits, products, rents or receipts, in whatever form, arising from the collection, sale, lease, exchange, assignment, licensing or other disposition of, or other realization upon collateral, including, without limitation, all licenses, permits, authorizations and applications, all claims of Ecosphere against third parties for loss of, 

damage to or destruction of, or for proceeds payable under, or unearned premiums with respect to, policies of insurance in respect of, any collateral, and any condemnation or requisition payments with respect to any collateral, in each case whether now existing or hereafter arising.

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Schedule A-1

1.

Approved U.S. Patent No’s. 7,699,994; 7,699,988; 7,785,470; 7,943,087; 8,318,027; 8,721,898; 8,858,064; 8,936,392; 8,906,242; 8,968,577; 8,999,154; 9,034,180; and 9,169,146

2.

The following items are excluded from the lien:

The Energy Field of Use, which means the field of treating any products, waste, by-product or other items (including, without limitation, produced waters, frac flowback waters and various industrial waste waters) generated during the exploration, production, refining and distribution of energy from natural resources (including, without limitation, oil, natural gas, hydrocarbons, coal, coal bed methane, tar sands and any other natural resource) that now are, or that in the future may be determined to be, capable of remediation by the Ozonix Process, EcosFrac Process or EcosBrine. 

3.

The Additional February 2016 Advance Collateral includes only, with regard to the global fields of use referenced below, all letters patent of the United States, all registrations and recordings thereof, and all applications for letters patent of the United States in or to which Ecosphere now or hereafter has any right, title or interest therein, including registrations, recordings and pending applications in the USPTO, and all reissues, continuations, divisions, continuations-in-part, renewals, improvements or extensions thereof only to the extent that such patents and patent applications are used in the “Industrial Field of Use” and “Municipal Waters Field of Use”, as those terms are defined below.

a.

For purposes hereof, “Municipal Waters Field of Use” means and refers to the field of treating municipal waters through municipal water management, chemical-free sewage treatment and drinking water treatment. 

b.

For purposes hereof, “Industrial Field of Use” means and refers to the field of treating industrial wastewater caused by manufacturing in the following areas: automotive manufacturing; pharmaceuticals; pulp and paper; textiles; manufacturing process water treatment; microelectronics water and wastewater treatment; and waste management.  Industrial Field of Use also refers to the field of treating water at leisure and water parks.Exhibit 4.3

 

NEITHER THIS WARRANT NOR THE SECURITIES
ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUBJECT TO SECTION 6
BELOW, NO SALE OR DISPOSITION MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH RULE 144 UNDER SAID ACT OR WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL FOR HOLDER, SATISFACTORY TO COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.

WARRANT TO PURCHASE SHARES OF COMMON
STOCK

 

December 31, 2007

 

Reissue Date: November 30, 2015

 

THIS CERTIFIES THAT,
for value received, Healthcare Equity Holdings, LLC (“Holder”) is entitled to subscribe for and purchase THIRTY-FOUR
THOUSAND, SIX HUNDRED FORTY-SEVEN (34,647) shares of fully paid and nonassessable Common Stock of Endocyte, Inc., a Delaware corporation
(the “Company”), at the Warrant Price (as hereinafter defined), subject to the provisions and upon the terms and conditions
hereinafter set forth. As used herein, the term “Common Stock” shall mean Company’s presently authorized Common
Stock, $0.001 par value per share, and any stock into which such Common Stock may hereafter be converted or exchanged and the term
“Warrant Shares” shall mean the shares of Common Stock which Holder may acquire pursuant to this Warrant and any other
shares of stock into which such shares of Common Stock may hereafter be converted or exchanged.

 

1.          Warrant
Price. The “Warrant Price” shall initially be eight and 12/100 dollars ($8.12) per share, subject to adjustment
as provided in Section 7 below.

 

2.          Conditions
to Exercise, The purchase right represented by this Warrant may be exercised at any time, or from time to time, in whole or
in part during the term commencing on the date hereof and ending at 5:00 P.M. Pacific time on the tenth anniversary of the date
of this Warrant (the “Expiration Date”).

 

3.          Method
of Exercise or Conversion; Payment; Issuance of Shares; Issuance of New Warrant.

 

(a)          Cash
Exercise. Subject to Section 2 hereof, the purchase right represented by this Warrant may be exercised by Holder hereof, in
whole or in part, by the surrender of the original of this Warrant (together with a duly executed Notice of Exercise in substantially
the form attached hereto) at the principal office of Company (as set forth in Section 17 below) and by payment to Company, by certified
or bank check, or wire transfer of immediately available funds, of an amount equal to the then applicable Warrant Price per share
multiplied by the number of Warrant Shares then being purchased. In the event of any exercise of the rights represented by this
Warrant, certificates for the shares of stock so purchased shall be in the name of, and delivered to, Holder hereof, or as such
Holder may direct (subject to the terms of transfer contained herein and upon payment by such Holder hereof of any applicable transfer
taxes). Such delivery shall be made within 30 days after exercise of this Warrant and at Company’s expense and, unless this
Warrant has been fully exercised or expired, a new Warrant having terms and conditions substantially identical to this Warrant
and representing the portion of the Warrant Shares, if any, with respect to which this Warrant shall not have been exercised, shall
also be issued to Holder hereof within 30 days after exercise of this Warrant,

 

(b)          Conversion.
In lieu of exercising this Warrant as specified in Section 3(a), Holder may from time to time convert this Warrant, in whole or
in part, into Warrant Shares by surrender of the original of this Warrant (together with a duly executed Notice of Exercise in
substantially the form attached hereto) at the principal office of Company, in which event Company shall issue to Holder the number
of Warrant Shares computed using the following formula:

 

     

     

    

 

X = Y (A-B)

 

A

 

Where:

 

X = the number of Warrant Shares to be issued to
Holder.

 

Y = the number of Warrant Shares purchasable under
this Warrant (at the date of such calculation).

 

A = the Fair Market Value of one share of Company’s
Common Stock (at the date of such calculation).

 

B = Warrant Price (as adjusted to the date of such
calculation).

 

(c)          Fair
Market Value. For purposes of this Section 3, Fair Market Value of one share of Company’s Common Stock shall mean:

 

(i)          Reserved.

 

(ii)         The
average of the closing bid and asked prices of Common Stock quoted in the Over-The-Counter Market Summary, the last reported sale
price quoted on the Nasdaq Stock Market or on any other exchange on which the Common Stock is listed, whichever is applicable,
as published in the Western Edition of the Wall Street Journal for the three (3) trading days prior to the date of determination
of Fair Market Value; or

 

(iii)        In
the event of an exercise in connection with a merger, acquisition or other consolidation in which Company is not the surviving
entity, the per share Fair Market Value for the Common Stock shall be the value to be received per share of Common Stock by all
holders of the Common Stock in such transaction as determined by the Board of Directors; or

 

(iv)        In
any other instance, the per share Fair Market Value for the Common Stock shall be as determined in the reasonable good faith judgment
of Company’s Board of Directors.

 

In the event of Sections 3(c)(iii)
or 3(c)(iv), above, Company’s Board of Directors shall prepare a certificate, to be signed by an authorized officer of Company,
setting forth in reasonable detail the basis for and method of determination of the per share Fair Market Value of the Common Stock.
The Board of Directors will also certify to Holder that this per share Fair Market Value will be applicable to all holders of Company’s
Common Stock. Such certification must be made to Holder at least thirty (30) business days prior to the proposed effective date
of the merger, consolidation, sale, or other triggering event as defined in Sections 3(c)(iii) or 3(c)(iv).

 

(d)          Automatic
Exercise. To the extent this Warrant is not previously exercised, it shall be deemed to have been automatically exercised in
accordance with Sections 3(b) and 3(c) hereof (even if not surrendered) as of immediately before its expiration, involuntary termination
or cancellation if the then-Fair Market Value of a Warrant Share exceeds the then-Warrant Price, unless Holder notifies Company
in writing to the contrary prior to such automatic exercise.

 

     

     

    

 

(e)          Treatment
of Warrant Upon Acquisition of Company.

 

(i)          Certain
Definitions. For the purpose of this Warrant, “Acquisition” means any sale, license, or other disposition of all
or substantially all of the assets of Company, or any reorganization, consolidation, or merger of Company, or sale of outstanding
Company securities by holders thereof, where the holders of Company’s securities before the transaction beneficially own
less than a majority of the outstanding voting securities of the successor or surviving entity after the transaction. For purposes
of this Section 3(e), “Affiliate” shall mean any person or entity that owns or controls directly or indirectly ten
percent (10%) or more of the voting capital stock of Company, any person or entity that controls or is controlled by or is under
common control with such persons or entities, and each of such person’s or entity’s officers, directors, joint venturers
or partners, as applicable.

 

(ii)         Cash
Acquisition. In the event of an Acquisition in which the sole consideration is cash, Holder may either (a) exercise its conversion
or purchase right under this Warrant and such exercise will be deemed effective immediately prior to the consummation of such Acquisition
or (b) permit the Warrant to expire upon the consummation of such Acquisition. Company shall provide Holder with written notice
of any proposed Acquisition together with such reasonable information as Holder may request in connection with such contemplated
Acquisition giving rise to such notice, which is to be delivered to Holder not less than ten (10) business days prior to the closing
of the proposed Acquisition.

 

(iii)        Asset
Sale. In the event of an Acquisition that is an arms length sale of all or substantially all of Company’s assets (and
only its assets) to a third party that is not an Affiliate of Company (a “True Asset Sale”), Holder may either (a)
exercise its conversion or purchase right under this Warrant and such exercise will be deemed effective immediately prior to the
consummation of such Acquisition or (b) permit the Warrant to continue until the Expiration Date if Company continues as a going
concern following the closing of any such True Asset Sale. Company shall provide Holder with written notice of any proposed asset
sale together with such reasonable information as Holder may request in connection with such asset sale giving rise to such notice,
which is to be delivered to Holder not less than ten (10) business days prior to the closing of the proposed asset sale.

 

(iv)        Public
Acquisition, Except with respect to an Acquisition subject to the terms and conditions of either Section 3(e)(ii) or Section
3(e)(iii) above, Holder agrees that, in the event of an Acquisition of the Company by a publicly traded acquirer if the acquirer
in the Acquisition does not agree to assume this Warrant at and as of the closing thereof, the Company may require this Warrant
to be deemed automatically exercised and Holder shall participate in the Acquisition as a holder of the Shares (or other securities
issuable upon exercise of this Warrant) on the same terms as other holders of the same class of securities of the Company.

 

(v)         Assumption
of Warrant. Upon the closing of any Acquisition other than those particularly described in subsections (ii) and (iii) above,
the successor entity shall assume the obligations of this Warrant, and this Warrant shall be exercisable for the same securities,
cash, and property as would be payable for the Warrant Shares issuable upon exercise of the unexercised portion of this Warrant
as if such Warrant Shares were outstanding on the record date for the Acquisition and subsequent closing. The Warrant Price and/or
number of Warrant Shares shall be adjusted accordingly.

 

4.          Representations
and Warranties of Holder and Company.

 

(a)          Representations
and Warranties by Holder. As of the Original Issue Date, Holder represents and warrants to Company with respect to this purchase
as follows:

 

(i)          Evaluation.
Holder has substantial experience in evaluating and investing in private placement transactions of securities of companies similar
to Company so that Holder is capable of evaluating the merits and risks of its investment in Company and has the capacity to protect
its interests.

 

     

     

    

 

(ii)         Resale.
Except for transfers to an affiliate of Holder, Holder is acquiring this Warrant and the Warrant Shares issuable upon exercise
of this Warrant (collectively the “Securities”) for investment for its own account and not with a view to, or for resale
in connection with, any distribution thereof. The Holder understands that the Securities have not been registered under the Securities
Act of 1933, as amended (the “Act”) by reason of a specific exemption from the registration provisions of the Act which
depends upon, among other things, the bona fide nature of the investment intent as expressed herein.

 

(iii)        Rule
144. The Holder acknowledges that the Securities must be held indefinitely unless subsequently registered under the Act or
an exemption from such registration is available. The Holder is aware of the provisions of Rule 144 promulgated under the Act.

 

(iv)        Accredited
Investor. The Holder is an “accredited investor” within the meaning of Regulation D promulgated under the Act.

 

(v)         Opportunity
To Discuss. The Holder has had an opportunity to discuss Company’s business, management and financial affairs with its
management and an opportunity to review Company’s facilities. The Holder understands that such discussions, as well as the
written information issued by Company, were intended to describe the aspects of Company’s business and prospects which Company
believes to be material but were not necessarily a thorough or exhaustive description.

 

(b)          Representations
and Warranties by Company. Company hereby represents and warrants to Holder that the statements in the following paragraphs
of this Section 4(b) are true and correct as of the Original Issue Date.

 

(i)          Corporate
Organization and Authority. Company (a) is a corporation duly organized, validly existing, and in good standing in its jurisdiction
of incorporation, (b) has the corporate power and authority to own and operate its properties and to carry on its business as now
conducted and as proposed to be conducted; and (c) is qualified as a foreign corporation in all jurisdictions where such qualification
is required.

 

(ii)         Corporate
Power  . Company has all requisite legal and corporate power and authority to execute, issue and deliver this Warrant, to issue
the Warrant Shares issuable upon exercise or conversion of this Warrant, and to carry out and perform its obligations under this
Warrant.

 

(iii)        Authorization;
Enforceability. All corporate action on the part of Company, its officers, directors and shareholders necessary for the authorization,
execution, delivery and performance of its obligations under this Warrant and for the authorization, issuance and delivery of this
Warrant and the Warrant Shares issuable upon exercise of this Warrant has been taken and this Warrant constitutes the legally binding
and valid obligation of Company enforceable in accordance with its terms.

 

(iv)        Valid
Issuance of Warrant and Warrant Shares. This Warrant has been validly issued and is free of restrictions on transfer other
than restrictions on transfer set forth herein and under applicable state and federal securities laws. The Warrant Shares issuable
upon exercise of this Warrant, when issued, sold and delivered in accordance with the terms of this Warrant for the consideration
expressed herein, will be duly and validly issued, fully paid and nonassessable, and will be free of restrictions on transfer other
than restrictions on transfer under this Warrant and under applicable state and federal securities laws. Subject to applicable
restrictions on transfer, the issuance and delivery of this Warrant and the Warrant Shares issuable upon exercise or conversion
of this Warrant are not subject to any preemptive or other similar rights or any liens or encumbrances except as specifically set
forth in Company’s Certificate of Incorporation or this Warrant. The offer, sale and issuance of the Warrant Shares, as contemplated
by this Warrant, are exempt from the prospectus and registration requirements of applicable United States federal and state security
laws, and neither Company nor any authorized agent acting on its behalf has or will take any action hereafter that would cause
the loss of such exemption.

 

     

     

    

 

(v)         No
Conflict. The execution, delivery, and performance of this Warrant will not result in (a) any violation of, be in conflict
with, or constitute a default under, with or without the passage of time or the giving of notice (1) any provision of Company’s
Certificate of Incorporation or by-laws; (2) any provision of any judgment, decree, or order to which Company is a party, by which
it is bound, or to which any of its material assets are subject; (3) any contract, obligation, or commitment to which Company is
a party or by which it is bound; or (4) any statute, rule, or governmental regulation applicable to Company, or (b) the creation
of any lien, charge or encumbrance upon any assets of Company.

 

(vi)        Capitalization.
The capitalization table of Company attached hereto as Annex A is complete and accurate as of the Original Issue Date (after giving
effect to the issuance of this Warrant) and reflects (a) all outstanding capital stock of Company and (b) all outstanding warrants,
options, conversion privileges, preemptive rights or other rights or agreements to purchase or otherwise acquire or issue any equity
securities or convertible securities of Company. Company has reserved all shares of Common Stock for issuance upon conversion of
the Preferred Stock.

 

(vii)       Warrant
Price. The original Warrant Price of $4.25 is no greater than the lowest price at which Company has issued Series C-3 Preferred
Stock to an unrelated third party in an arm’s length transaction.

 

5.          Legends.

 

(a)          Legend.
Each certificate representing the Warrant Shares shall be endorsed with substantially the following legend:

 

THESE SECURITIES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED (UNLESS SUCH TRANSFER IS TO AN AFFILIATE OF HOLDER) UNLESS
COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT, A “NO ACTION” LETTER FROM THE SECURITIES AND EXCHANGE
COMMISSION WITH RESPECT TO SUCH TRANSFER, A TRANSFER MEETING THE REQUIREMENTS OF RULE 144 OF THE SECURITIES AND EXCHANGE COMMISSION,
OR (IF REASONABLY REQUIRED BY COMPANY) AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY SUCH TRANSFER IS
EXEMPT FROM SUCH REGISTRATION.

 

Company need not enter into its
stock records a transfer of Warrant Shares unless the conditions specified in the foregoing legend are satisfied. Company may also
instruct its transfer agent not to allow the transfer of any of the Warrant Shares unless the conditions specified in the foregoing
legend are satisfied.

 

     

     

    

 

(b)          Removal
of Legend and Transfer Restrictions. The legend relating to the Act endorsed on a certificate pursuant to paragraph 5(a) of
this Warrant shall be removed and Company shall issue a certificate without such legend to Holder if (i) the Securities are registered
under the Act and a prospectus meeting the requirements of Section 10 of the Act is available or (ii) Holder provides to Company
an opinion of counsel for Holder reasonably satisfactory to Company, a no-action letter or interpretive opinion of the staff of
the Securities and Exchange Commission (“SEC”) reasonably satisfactory to Company, or other evidence reasonably satisfactory
to Company, to the effect that sale, transfer or assignment of the Securities may be made without registration and without compliance
with any restriction such as Rule 144.

 

(c)          
“Market Stand-Off’ Agreement. Holder (and its affiliates) hereby agrees that it shall bound by the same “Market
Standoff Provision” contained in the Third Amended and Restated Investors’ Rights Agreement dated as of March 9, 2007,
of Company (the “Registration Rights Agreement”), and that the Warrant Shares shall be similarly bound under the Registration
Rights Agreement.

 

6.          Condition
of Transfer or Exercise of Warrant. It shall be a condition to any transfer or exercise of this Warrant that at the time of
such transfer or exercise, Holder shall provide Company with a representation in writing that Holder or transferee is acquiring
this Warrant and the shares of Common Stock to be issued upon exercise for investment purposes only and not with a view to any
sale or distribution, or will provide Company with a statement of pertinent facts covering any proposed distribution. As a further
condition to any transfer of this Warrant or any or all of the shares of Common Stock issuable upon exercise of this Warrant, other
than a transfer registered under the Act, Company may request a legal opinion, in form and substance satisfactory to Company and
its counsel, reciting the pertinent circumstances surrounding the proposed transfer and stating that such transfer is exempt from
the registration and prospectus delivery requirements of the Act. Company shall not require Holder to provide an opinion of counsel
if the transfer is to an affiliate of Holder. Each certificate evidencing the Warrant Shares issued upon exercise of this Warrant
or upon any transfer of the Warrant Shares (other than a transfer registered under the Act or any subsequent transfer of shares
so registered) shall, at Company’s option, if the Warrant Shares are not freely saleable under Rule 144(k) under the Act,
contain a legend in form and substance satisfactory to Company and its counsel, restricting the transfer of the Warrant Shares
to sales or other dispositions exempt from the requirements of the Act. As further condition to each transfer, at the request of
Company, Holder shall surrender this Warrant to Company and the transferee shall receive and accept a Warrant, of like tenor and
date, executed by Company.

 

7.          Adjustment
for Certain Events. The number and kind of securities purchasable upon the exercise of this Warrant and the Warrant Price shall
be subject to adjustment from time to time upon the occurrence of certain events, as follows:

 

(a)          Reclassification
or Merger. In case of (i) any reclassification or change of securities of the class issuable upon exercise of this Warrant
(other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision
or combination), (ii) any merger of Company with or into another corporation (other than a merger with another corporation in which
Company is the acquiring and the surviving corporation and which does not result in any reclassification or change of outstanding
securities issuable upon exercise of this Warrant), or (iii) any sale of all or substantially all of the assets of Company, Company,
or such successor or purchasing corporation, as the case may be, shall duly execute and deliver to Holder a new Warrant (in form
and substance satisfactory to Holder of this Warrant), or Company shall make appropriate provision without the issuance of a new
Warrant, so that Holder shall have the right to receive, at a total purchase price not to exceed that payable upon the exercise
of the unexercised portion of this Warrant, and in lieu of the Warrant Shares theretofore issuable upon exercise or conversion
of this Warrant, the kind and amount of shares of stock, other securities, money and property receivable upon such reclassification,
change, merger or sale by a holder of the number of shares of Common Stock then purchasable under this Warrant, or in the case
of such a merger or sale in which the consideration paid consists all or in part of assets other than securities of the successor
or purchasing corporation, at the option of Holder, the securities of the successor or purchasing corporation having a value at
the time of the transaction equivalent to the value of the Warrant Shares purchasable upon exercise of this Warrant at the time
of the transaction. Any new Warrant shall provide for adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 7. The provisions of this subparagraph (a) shall similarly apply to successive reclassifications,
changes, mergers and transfers.

 

     

     

    

 

(b)          Subdivision
or Combination of Shares. If Company at any time while this Warrant remains outstanding and unexpired shall subdivide or combine
its outstanding shares of Common Stock, the Warrant Price shall be proportionately decreased and the number of Warrant Shares issuable
hereunder shall be proportionately increased in the case of a subdivision and the Warrant Price shall be proportionately increased
and the number of Warrant Shares issuable hereunder shall be proportionately decreased in the case of a combination.

 

(c)          Stock
Dividends and Other Distributions. If Company at any time while this Warrant is outstanding and unexpired shall (i) pay a dividend
with respect to Common Stock payable in Common Stock, then the Warrant Price shall be adjusted, from and after the date of determination
of shareholders entitled to receive such dividend or distribution, to that price determined by multiplying the Warrant Price in
effect immediately prior to such date of determination by a fraction (A) the numerator of which shall be the total number of shares
of Common Stock outstanding immediately prior to such dividend or distribution, and (B) the denominator of which shall be the total
number of shares of Common Stock outstanding immediately after such dividend or distribution; or (ii) make any other distribution
with respect to Common Stock (except any distribution specifically provided for in Sections 7(a) and 7(b)), then, in each such
case, provision shall be made by Company such that Holder shall receive upon exercise of this Warrant a proportionate share of
any such dividend or distribution as though it were Holder of the Warrant Shares as of the record date fixed for the determination
of the shareholders of Company entitled to receive such dividend or distribution.

 

(d)          Adjustment
of Number of Shares. Upon each adjustment in the Warrant Price, the number of Warrant Shares purchasable hereunder shall be
adjusted, to the nearest whole share, to the product obtained by multiplying the number of Warrant Shares purchasable immediately
prior to such adjustment in the Warrant Price by a fraction, the numerator of which shall be the Warrant Price immediately prior
to such adjustment and the denominator of which shall be the Warrant Price immediately thereafter.

 

8.          Notice
of Adjustments. Whenever any Warrant Price or the kind or number of securities issuable under this Warrant shall be adjusted
pursuant to Section 7 hereof, Company shall prepare a certificate signed by an officer of Company setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and
the Warrant Price and number or kind of shares issuable upon exercise of this Warrant after giving effect to such adjustment, and
shall cause copies of such certificate to be mailed (by certified or registered mail, return receipt required, postage prepaid)
within thirty (30) days of such adjustment to Holder as set forth in Section 17 hereof.

 

9.          Financial
and Other Reports. From time to time up to the earlier of the Expiration Date, the complete exercise of this Warrant, or the
date upon which Company becomes subject to the reporting requirements of the Securities and Exchange Act of 1934, as amended, Company
shall furnish to Holder (a) unaudited consolidated and, if available, consolidating balance sheets, statements of operations and
cash flow statements within 45 days of each month end, in a form acceptable to Holder and certified by Company’s president
or chief financial officer, and (b) Company’s complete annual audited consolidated and, if available, consolidating balance
sheets, statements of operations and cash flow statements certified by an independent certified public accountant selected by Company
and satisfactory to Holder within 120 days of the fiscal year end or, if sooner, at such time as Company’s Board of Directors
receives the audit.

 

10.         Transferability
of Warrant. This Warrant is transferable on the books of Company at its principal office by the registered Holder hereof upon
surrender of this Warrant properly endorsed, subject to compliance with Section 6 and applicable federal and state securities laws.
Company shall issue and deliver to the transferee a new Warrant representing the Warrant so transferred. Upon any partial transfer,
Company will issue and deliver to Holder a new Warrant with respect to the Warrant not so transferred. Holder shall not have any
right to transfer any portion of this Warrant to any direct competitor of Company, as determined by the Board of Directors.

 

     

     

    

 

11.         Registration
Rights. Company grants registration rights to Holder of this Warrant for any Common Stock of Company obtained by Holder upon
exercise or conversion of this Warrant, or subsequent conversion of the Common Stock, in parity to the registration rights granted
to other holders of the Series C-3 Preferred Stock and agrees that Holder shall be added as a party to the Registration Rights
Agreement, and that the Warrant Shares shall be “Registrable Securities” under the Registration Rights Agreement.

 

12.         No
Fractional Shares. No fractional share of Common Stock will be issued in connection with any exercise or conversion hereunder,
but in lieu of such fractional share Company shall make a cash payment therefor upon the basis of the Warrant Price then in effect.

 

13.         Charges,
Taxes and Expenses. Issuance of certificates for shares of Common Stock upon the exercise or conversion of this Warrant shall
be made without charge to Holder for any United States or state of the United States documentary stamp tax or other incidental
expense with respect to the issuance of such certificate, all of which taxes and expenses shall be paid by Company, and such certificates
shall be issued in the name of Holder.

 

14.         No
Shareholder Rights Until Exercise. Except as expressly provided herein, this Warrant does not entitle Holder to any voting
rights or other rights as a shareholder of Company prior to the exercise hereof.

 

15.         Registry
of Warrant. Company shall maintain a registry showing the name and address of the registered Holder of this Warrant. This Warrant
may be surrendered for exchange or exercise, in accordance with its terms, at such office or agency of Company, and Company and
Holder shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.

 

16.         Loss,
Theft, Destruction or Mutilation of Warrant. Upon receipt by Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant, and, in the case of loss, theft, or destruction, of indemnity reasonably satisfactory
to it, and, if mutilated, upon surrender and cancellation of this Warrant, Company will execute and deliver a new Warrant, having
terms and conditions substantially identical to this Warrant, in lieu hereof.

 

17.         Miscellaneous.

 

(a)          Issue
Date. The provisions of this Warrant shall be construed and shall be given effect in all respect as if it had been issued and
delivered by Company on the date hereof.

 

(b)          Successors.
This Warrant shall be binding upon any successors or assigns of Company.

 

(c)          Headings.
The headings used in this Warrant are used for convenience only and axe not to be considered in construing or interpreting this
Warrant.

 

(d)          Saturdays.
Sundays Holidays. If the last or appointed day for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday in the State of California, then such action may be taken or
such right may be exercised on the next succeeding day not a legal holiday.

 

(e)          Attorney’s
Fees. In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing
in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorney’s
fees.

 

18.         Addresses.
Any notice required or permitted hereunder shall be in writing and shall be mailed by overnight courier, registered or certified
mail, return receipt requested, and postage prepaid, or otherwise delivered by hand or by messenger, addressed as set forth below,
or at such other address as Company or Holder hereof shall have furnished to the other party in accordance with the delivery instructions
set forth in this Section 17.

 

	If to Company:	Endocyte, Inc.
	 	3000 Kent Avenue
	 	
Suite A1-100
	 	
West Lafayette, Indiana 47906
	 	
Attn: Sue Lasater, Director Finance

 

     

     

    

 

	If to Holder:	Healthcare Equity Holdings, LLC
	 	
Two Bethesda Metro Center, Suite 600

	 	Bethesda, Maryland 20814

	 	Attn: Senior Vice President of Risk – Life Science
Finance

 

If mailed by registered or certified
mail, return receipt requested, and postage prepaid, notice shall be deemed to be given five (5) days after being sent, and if
sent by overnight courier, by hand or by messenger, notice shall be deemed to be given when delivered (if on a business day, and
if not, on the next business day).

 

19.         No
Impairment. Company will not, by amendment of its Certificate of Incorporation or any other voluntary action, avoid or seek
to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying
out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of
Holder hereof against impairment.

 

20.         WAIVER
OF JURY TRIAL. EACH OF THE PARTIES 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 LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS WARRANT
OR THE WARRANT SHARES.

 

21.         GOVERNING
LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.

 

22.         Replacement
of Prior Warrant. This Warrant replaces and supersedes in its entirety the warrant to purchase 66,177 shares of Series C-3
Preferred Stock issued by Company to General Electric Capital Corporation on December 31, 2007 (the “Original Issue Date”).
Any reference to the “date” of this Warrant made herein shall refer to the Original Issue Date.

 

[Remainder of page intentionally left blank]

 

     

     

    

 

IN WITNESS WHEREOF,
Company has caused this Warrant to be executed by its officer thereunto duly authorized.

 

	ENDOCYTE, INC.
	 
	By:	/s/ P. Ron Ellis	 
	 	 	 
	 	Name: P. Ron Ellis	 
	 	 	 
	 	Title: CEO, President	 

 

     

     

    

 

NOTICE OF EXERCISE

 

To:

 

Endocyte, Inc.
3000 Kent Avenue
Suite Al-100

West Lafayette, Indiana 47906

Attn: Sue Lasater, Director Finance

 

1.          The
undersigned Warrantholder (“Holder”) elects to acquire shares of the Common Stock (the “Common Stock”)
of Endocyte, Inc. (the “Company”), pursuant to the terms of the Stock Purchase Warrant originally dated December ___,
2007 (the “Warrant”).

 

2.          Holder
exercises its rights under the Warrant as set forth below:

 

(           )               Holder
elects to purchase ____________ shares of Common Stock as provided in Section 3(a) and tenders herewith a check in the amount of
$_________________ as payment of the purchase price.

 

(           )               Holder
elects to convert the purchase rights into shares of Common Stock as provided in Section 3(b) of the Warrant.

 

3.          Holder
surrenders the Warrant with this Notice of Exercise.

 

Holder represents that it is acquiring
the aforesaid shares of Common Stock for investment and not with a view to or for resale in connection with distribution and that
Holder has no present intention of distributing or reselling the shares.

 

Please issue a certificate representing
the shares of the Common Stock in the name of Holder or in such other name as is specified below:

 

	 	Name: 	 	 
	 	 	 	 
	 	Address:	 	 
	 	 	 	 
	 	Taxpayer I.D.:	 	 

 

	 	[NAME OF HOLDER]
	 	 
	 	By: 	 	 
	 	 	Name:	 
	 	 	Title:	 

 

Date: ______ ______, 20__

 

     

     

    

 

ANNEX A

 

CAPITALIZATION TABLE

 

[See Attached]

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