Document:

Exhibit 4.2

 

 

UNANIMOUS
WRITTEN CONSENT OF THE BOARD OF DIRECTORS MCTC HOLDINGS, INC.

A
Delaware Corporation

 

The
undersigned, being all of the Directors of MCTC Holdings, Inc., a Delaware Corporation (the "Company"), hereby adopt
the following recitals and resolutions by their unanimous written consent thereto, effective as of December 16, 2019, hereby waiving
all notice of, and the holding of, a meeting of the directors to act upon such matters and resolutions, pursuant to Sections 3.10
and 3.16 of the Company's By-Laws, and Section 141(f) of the General Delaware Corporation Law.

		RECITALS	

WHEREAS,
the Certificate of Incorporation of the Company (the "Certificate of Incorporation") authorizes the issuance of up to
ten million (10,000,000) shares of preferred stock, par value $0.0001 per share, of the Company ("Preferred Stock") in
one or more series, and expressly authorizes the Board of Directors of the Company (the "Board"), subject to limitations
prescribed by law, to provide, out of the unissued shares of Preferred Stock, for series of Preferred Stock, and, with respect
to each such series, to establish and fix the number of shares to be included in any series of Preferred Stock and the designation,
rights, preferences, powers, restrictions, and limitations of the shares of such series; and,

WHEREAS,
it is the desire of the Board to establish and fix the number of shares to be included in a new series of Preferred Stock and the
designation, rights, preferences, and limitations of the shares of such new series, and so,

NOW,
THEREFORE, BE IT RESOLVED, that the Board does hereby provide for the issue of a Series A of Preferred Stock and does hereby
in this Certificate of Designation (the "Certificate of Designation") establish and fix and herein state and express
the designation, rights, preferences, powers, restrictions, and limitations of such series of Preferred Stock as described in the
attached CERTIFICATE OF DESIGNATION OF SERIES A PREFERRED STOCK OF MCTC HOLDINGS, INC.

RESOLVED
FURTHER, that the appropriate Officers of the Company be, and they hereby are, authorized and empowered to execute such documents,
take such steps and perform such acts as, in their judgment, may be necessary or convenient in carrying out the foregoing resolutions
consistent with the Company's By Laws, including placing this Unanimous Written Consent in the appropriate Books and Records of
the Company, and that any such documents executed or acts taken by them shall be conclusive evidence of authority in so doing.

IN WITNESS WHEREOF,
the undersigned have executed this Unanimous Written

Consent
as of date first referenced above:

Page 1 of 2

    	 	1	 

    	 

    

ALL
DIRECTORS OF MCTC HOLDINGS, INC.

		__________________________________/s/_	

/s/
Robert L. Hymers, III

Robert
L. Hymers, III

 

		___________________________________	

/s/ Edward
Manolos

Edward
Manolos

 

		___________________________________	

/s/ Dan
Van Nguyen

Dan
Van Nguyen

 

		/s/ Arman
Tabatabaei_	

Arman
Tabatabaei, Chairman of the Board

Page
2 of 2Blueprint

 

Exhibit
10.1

 

SECURITIES PURCHASE AGREEMENT

 

This
SECURITIES PURCHASE
AGREEMENT (this “Agreement”), dated as of January
24, 2020, is by and among VistaGen Therapeutics, Inc., a Nevada
corporation with headquarters located at 343 Allerton Avenue, Suite
B, San Diego, CA 92121 (the ”Company”), Lincoln Park Capital
Fund, LLC, an Illinois limited liability company (
“Lead Buyer”)
and each buyer identified on the signature pages hereto (each,
including its successors and assigns, a “Buyer” and collectively the
“Buyers”).

 

RECITAL

 

The
Buyers wish to purchase, and the Company wishes to sell, upon the
terms and subject conditions stated in this Agreement, up to (i)
3,870,077 shares of Common Stock (as defined herein) (collectively,
the “Common
Shares”) pursuant to the Company’s shelf
registration statement on Form S-3 (Registration Number 333-234025)
(the “Registration
Statement”), which has been declared effective in
accordance with the Securities Act of 1933, as amended (the
“1933 Act”), by
the United States Securities and Exchange Commission (the
“SEC”), and (ii)
warrants, in the form attached hereto as Exhibit A (the
“Warrant”), to
initially purchase an aggregate of up to 3,870,077 shares of Common
Stock (collectively, the “Warrant Shares”, and together with
the Warrant, the “Securities”), at an exercise price
of $0.73 per share, in reliance upon the exemption from securities
registration afforded by Section 4(a)(2) of the 1933 Act, and Rule
506(b) of Regulation D (“Regulation D”) as promulgated
by the SEC under the 1933 Act.

 

AGREEMENT

 

NOW,
THEREFORE, in consideration of the premises and the mutual
covenants contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and each Buyer hereby agree as
follows:

 

1.

PURCHASE
AND SALE OF COMMON SHARES AND WARRANTS.

 

(a) Purchase of Common Shares and
Warrants. Subject to the satisfaction (or waiver) of the
conditions set forth in Sections 6 and 7 below, the Company shall
issue and sell to each Buyer, and each Buyer agrees to purchase
from the Company on the Closing Date (as defined below), that
number of Common Shares, and a Warrant to initially acquire that
number of Warrant Shares, each as set forth opposite such
Buyer’s signature on the signature page hereto.

 

(b) Closing. The closing (the
“Closing”) of
the purchase of the Common Shares and the Warrants shall occur at
the offices of K&L Gates, LLP, 200 S. Biscayne Blvd., Ste 3900,
Miami, FL 33131. The date and time of the Closing (the
“Closing Date”)
shall be 10:00 a.m., New York time, on the first (1st) Business Day
(as defined below) on which the conditions to the Closing set forth
in Sections 6 and 7 below are satisfied or waived (or such other
date as is mutually agreed to by the Company and the Buyers). As
used herein “Business
Day” means any day other than a Saturday, Sunday or
other day on which commercial banks in New York, New York are
authorized or required by law to remain closed.

 

(c) Purchase Price. The aggregate
gross purchase price for the Common Shares and the Warrants to be
purchased by each Buyer hereunder shall be set forth opposite each
Buyer’s signature on the signature page attached hereto (with
respect to each Buyer, the “Purchase Price”).

 

 

 

-1-

 

 

(d) Form of Payment; Deliveries. On
the Closing Date, (i) each Buyer shall pay the Purchase Price to
the Company for the Common Shares and the Warrants to be issued and
sold to each such Buyer at the Closing, by wire transfer of
immediately available funds in accordance with the Flow of Funds
Letter (as defined below), and (ii) the Company shall (A)
cause Computershare Trust Company, N.A. (together with any
subsequent transfer agent, the “Transfer Agent”) through the
Depository Trust Company (“DTC”) Fast Automated Securities
Transfer Program, to credit each Buyer or its designee’s
balance account with DTC through its Deposit/Withdrawal at
Custodian system the Common Shares purchased set forth opposite
each Buyer’s signature on the signature page attached hereto,
and (B) deliver to each Buyer the Warrant pursuant to which each
such Buyer shall have the right to initially acquire the Warrant
Shares set forth opposite each Buyer’s signature on the
signature page attached hereto, duly executed on behalf of the
Company and registered in the name of the Buyer or its
designee.

 

2.

BUYER’S
REPRESENTATIONS AND WARRANTIES.

 

Each
Buyer represents and warrants to the Company severally, and not
jointly, that, as of the date hereof and as of the Closing
Date:

 

(a) Organization; Authority. The
Buyer is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization
with the requisite power and authority to enter into and to
consummate the transactions contemplated by this Agreement and
otherwise to carry out its obligations hereunder.

 

(b) Validity; Enforcement. This
Agreement has been duly and validly authorized, executed and
delivered on behalf of the Buyer and shall constitute the legal,
valid and binding obligations of the Buyer enforceable against the
Buyer in accordance with its terms, except as such enforceability
may be limited by general principles of equity or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the
enforcement of applicable creditors’ rights and
remedies. 

 

(c) No Public Sale or Distribution of
Securities. The Buyer is acquiring the Securities for its
own account and not with a view towards, or for resale in
connection with, the public sale or distribution thereof in
violation of applicable securities laws, except pursuant to sales
registered or exempted under the 1933 Act; provided, however, by
making the representations herein, the Buyer does not agree, or
make any representation or warranty, to hold any of the Securities
for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or
pursuant to a registration statement or an exemption under the 1933
Act. The Buyer is acquiring the Securities hereunder in the
ordinary course of its business. The Buyer does not presently have
any agreement or understanding, directly or indirectly, with any
Person to distribute any of the Securities in violation of
applicable securities laws.

 

(d) Accredited Investor Status. At
the time the Buyer was offered the Securities, it was, and as of
the date hereof it is, an “accredited investor” as
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under
the 1933 Act.

 

(e) Experience of Buyer. The Buyer,
either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated
the merits and risks of such investment. The Buyer is able to bear
the economic risk of an investment in the Securities and, at the
present time, is able to afford a complete loss of such
investment.

 

 

 

-2-

 

 

(f) Reliance on Exemptions. The
Buyer understands that the Warrants are being offered and sold to
it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of,
and the Buyer’s compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the
Buyer set forth herein in order to determine the availability of
such exemptions and the eligibility of such Buyer to acquire the
Securities.

 

(g) Information. The Buyer and its
advisors, if any, have been furnished with all materials relating
to the business, finances and operations of the Company and
materials relating to the offer and sale of the Securities which
have been requested by the Buyer. The Buyer and its advisors, if
any, have been afforded the opportunity to ask questions of the
Company. Neither such inquiries nor any other due diligence
investigations conducted by the Buyer or its advisors, if any, or
its representatives shall modify, amend or affect the Buyer’s
right to rely on the Company’s representations and warranties
contained herein or any representations and warranties contained in
any other Transaction Document or any other document or instrument
executed and/or delivered in connection with this Agreement or the
consummation of the transaction contemplated hereby. The Buyer has
sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to
its acquisition of the Securities.

 

(h) No Governmental Review. The
Buyer understands that no United States federal or state agency or
any other government or governmental agency has passed on or made
any recommendation or endorsement of the Securities or the fairness
or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of
the Securities.

 

(i) Transfer or Resale. The Buyer
understands: (i) the Warrants have not been and are not being
registered under the 1933 Act or any state securities laws, and may
not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, (B) the Buyer shall have
delivered to the Company (if requested by the Company) an opinion
of counsel to the Buyer, in a form reasonably acceptable to the
Company, to the effect that the Warrant or the Warrant Shares to be
sold, assigned or transferred may be sold, assigned or transferred
pursuant to an exemption from such registration, or (C) the Buyer
provides the Company with reasonable assurance that the Warrant or
Warrant Shares can be sold, assigned or transferred pursuant to
Rule 144 or Rule 144A promulgated under the 1933 Act (or a
successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the
Warrant or Warrant Shares made in reliance on Rule 144 may be made
only in accordance with the terms of Rule 144, and further, if Rule
144 is not applicable, any resale of the Warrant or Warrant Shares
under circumstances in which the seller (or the Person (as defined
below) through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 1933 Act) may require
compliance with some other exemption under the 1933 Act or the
rules and regulations of the SEC promulgated thereunder; and (iii)
neither the Company nor any other Person is under any obligation to
register the Warrant or any of the Warrant Shares under the 1933
Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.

 

(j) Residency. The Buyer is a
resident of the state set forth opposite such Buyer’s
signature on the signature page attached hereto.

 

(k) Certain Trading Activities. The
Buyer represents and warrants to the Company that at no time prior
to the date of this Agreement has any of the Buyer, its agents,
representatives or affiliates engaged in or effected, in any manner
whatsoever, directly or indirectly, any (i) “short
sale” (as such term is defined in Rule 200 of Regulation SHO
of the Securities Exchange Act of 1934, as amended (the
“1934 Act”)) of
the Common Stock, or (ii) hedging transaction, which establishes a
net short position with respect to the Common Stock.

 

 

 

-3-

 

 

(l) General Solicitation. The Buyer
is not purchasing the Securities as a result of any advertisement,
article, notice or other communication regarding the Securities
published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar.

 

(m) Manipulation of Price. Since
the time that such Buyer was first contacted by the Company or its
agent regarding the investment in the Company contemplated herein,
the Buyer has not, and, to the knowledge of the Buyer, no Person
acting on its behalf has, directly or indirectly, (i) taken any
action designed to cause or to result in the stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Securities, (ii) sold,
bid for, purchased, or paid any compensation for soliciting
purchases of, any of the Securities, or (iii) paid or agreed to pay
to any Person any compensation for soliciting another to purchase
any other securities of the Company.

 

3.

REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.

 

The
Company represents and warrants to each Buyer that, except as set
forth in the Disclosure Schedules attached hereto, or as disclosed
in the Registration Statement, Prospectus Supplement or SEC
Documents, as defined below, the disclosure from which shall be
deemed a part hereof and shall qualify any representation or
warranty otherwise made herein, as of the date hereof and as of the
Closing Date:

 

(a) Organization and Qualification.
Each of the Company and each of its Subsidiaries are entities duly
organized and validly existing and in good standing under the laws
of the jurisdiction in which they are formed, and have the
requisite power and authority to own their properties and to carry
on their business as now being conducted and as presently proposed
to be conducted. Each of the Company and each of its Subsidiaries
is duly qualified as a foreign entity to do business and is in good
standing in every jurisdiction in which its ownership of property
or the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to
be so qualified or be in good standing would not reasonably be
expected to have a Material Adverse Effect (as defined below). As
used in this Agreement, “Material Adverse Effect” means any
material adverse effect on (i) the business, properties, assets,
liabilities, operations (including results thereof), condition
(financial or otherwise) or prospects of the Company or any
Subsidiary, individually or taken as a whole, (ii) the transactions
contemplated hereby or in any of the other Transaction Documents
(as defined below) or any other agreements or instruments to be
entered into in connection herewith or therewith, or (iii) the
authority or ability of the Company to perform any of their
respective obligations under any of the Transaction Documents. All
of the direct and indirect Subsidiaries of the Company are set
forth in the SEC Documents. The Company owns, directly or
indirectly, all of the capital stock or other equity interests of
each Subsidiary free and clear of any Liens, and all of the issued
and outstanding shares of capital stock of each Subsidiary are
validly issued and are fully paid, non-assessable and free of
preemptive and similar rights to subscribe for or purchase
securities. If the Company has no Subsidiaries, all other
references to the Subsidiaries or any of them in the Transaction
Documents shall be disregarded. “Subsidiaries” means any Person in
which the Company, directly or indirectly, (A) owns fifty percent
(50%) or more of any of the outstanding capital stock or holds
fifty percent (50%) or more of any equity or similar interest of
such Person, or (B) controls or operates all or any part of the
business, operations or administration of such Person, and each of
the foregoing, is individually referred to herein as a
“Subsidiary”.

 

 

 

-4-

 

 

(b) Authorization; Enforcement;
Validity. The Company has the requisite power and authority
to enter into and perform its obligations under this Agreement and
the other Transaction Documents and to issue the Securities in
accordance with the terms hereof and thereof. The execution and
delivery of this Agreement and the other Transaction Documents by
the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the
offer and sale of the Common Shares and the offer and sale of the
Securities and the reservation for issuance and issuance of the
Warrant Shares issuable upon exercise of the Warrants) have been
duly authorized by the Company’s board of directors and
(other than (i) the filing with the SEC of the prospectus
supplement relating to the offer and sale of the Common Shares
pursuant to Rule 424(b) under the 1933 Act (the “Prospectus Supplement”)
supplementing the base prospectus forming part of the Registration
Statement (the “Prospectus”), (ii) the filing of a
Form D with the SEC relating to the offer and sale of the Warrants
pursuant to Regulation D, (iii) the filing of a Notice of
Additional Listing with The Nasdaq Capital Market (the
“Principal
Market”), and (iv) any other filings as may be
required by any state securities authorities, no further filing,
consent or authorization is required by the Company, its board of
directors or its stockholders or other governing body. This
Agreement has been, and the other Transaction Documents will be
prior to the Closing, duly executed and delivered by the Company,
and each constitutes the legal, valid and binding obligations of
the Company, enforceable against the Company in accordance with its
respective terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies and except as rights to
indemnification and to contribution may be limited by federal or
state securities law. “Transaction Documents” means,
collectively, this Agreement, the Warrants, the Irrevocable
Transfer Agent Instructions (as defined below) and each of the
other agreements and instruments entered into or delivered by any
of the parties hereto in connection with the transactions
contemplated hereby and thereby, as may be amended from time to
time.

 

 

 

-5-

 

 

(c) Issuance of Securities; Registration
Statement. The issuance of the Common Shares and the
Warrants are duly authorized and, upon issuance and payment in
accordance with the terms of the Transaction Documents shall be
validly issued, fully paid and non-assessable and free from all
preemptive or similar rights, mortgages, defects, claims, liens,
pledges, charges, taxes, rights of first refusal, encumbrances,
security interests and other encumbrances (collectively
“Liens”) with
respect to the issuance thereof. As of the Closing, the Company
shall have reserved from its duly authorized capital stock not less
than 100% of the maximum number of shares of Common Stock issuable
upon exercise of the Warrants (without taking into account any
limitations on the exercise of the Warrants set forth in the
Warrants). Upon exercise in accordance with the terms of the
Warrants, the Warrant Shares, when issued, will be validly issued,
fully paid and nonassessable and free from all preemptive or
similar rights or Liens with respect to the issue thereof, with the
holders being entitled to all rights accorded to a holder of Common
Stock. Upon receipt of the Common Shares and the Warrants at the
Closing and upon receipt of Warrant Shares upon exercise of the
Warrants, each Buyer will have good and marketable title to such
Common Shares, Warrants, and Warrant Shares, respectively. Subject
to the accuracy of the representations and warranties of such Buyer
in this Agreement, the offer and sale of the Warrants to the Buyers
under this Agreement is exempt from registration under the 1933 Act
under Section 4(a)(2) of the 1933 Act and Rule 506(b) of Regulation
D. The offer and sale of all of the Common Shares, as applicable,
is registered under the 1933 Act pursuant to the Registration
Statement, and all of the Common Shares are freely transferable and
freely tradable by each Buyer without restriction. The Registration
Statement was declared effective under the 1933 Act by the SEC on
October 7, 2019, and any post-effective amendment thereto has also
been declared effective by the SEC under the 1933 Act. The Company
has not received from the SEC any notice pursuant to
Rule 401(g)(1) under the 1933 Act objecting to the use of the
shelf registration statement form. No stop order suspending the
effectiveness of the Registration Statement or any related
registration statement filed by the Company with the SEC under Rule
462(b) under the 1933 Act is in effect and no proceedings for such
purpose have been instituted or are pending or, to the knowledge of
the Company, are contemplated or threatened by the SEC. At the time
of (i) the initial filing of the Registration Statement with
the SEC and (ii) the most recent amendment thereto for the
purposes of complying with Section 10(a)(3) of the 1933 Act
(whether such amendment was by post-effective amendment,
incorporated report filed pursuant to Section 13 or 15(d) of
the 1934 Act or form of prospectus), the Company met the then
applicable requirements for use of Form S-3 under the 1933 Act. The
Company and the offer, issuance and sale of the Common Shares, as
applicable, meet the requirements for and comply with the
applicable conditions set forth in Form S-3 under the 1933 Act,
including compliance with General Instructions I.A and I.B.6. of
Form S-3. The Registration Statement and the offer, issuance and
sale of the Common Shares, as applicable, meet the requirements of
Rule 415(a)(1)(x) under the 1933 Act and comply in all material
respects with said Rule. The Registration Statement is effective
and available for the offer, issuance and sale of all of the Common
Shares, and the Company has not received any notice that the SEC
has issued or intends to issue a stop-order with respect to the
Registration Statement or that the SEC otherwise has suspended or
withdrawn the effectiveness of the Registration Statement, either
temporarily or permanently, or intends or has threatened in writing
to do so. The “Plan of Distribution” section under the
Registration Statement permits the issuance and sale of the Common
Shares. At the time the Registration Statement and any amendment
thereto became effective and on the date of this Agreement, the
Registration Statement and any amendment thereto complied and
complies in all material respects with the requirements of the 1933
Act and did not and does not contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading. The Prospectus and any amendment or supplements thereto
(including, without limitation the Prospectus Supplement), at the
time the Prospectus or any amendment or supplement thereto was
issued and on the date of this Agreement, complied and complies in
all material respects with the requirements of the 1933 Act and did
not and does not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading. At the earliest time after the filing of
the Registration Statement that the Company or another offering
participant made a bona fide offer (within the meaning of Rule
164(h)(2) under the 1933 Act) relating to the Common Shares, the
Company was not and is not an “Ineligible Issuer” (as
defined in Rule 405 under the 1933 Act). The Company has not
distributed any offering material in connection with the offer or
sale of the Common Shares, other than the Registration Statement,
the Prospectus and the Prospectus Supplement.

 

 

 

-6-

 

 

(d) No Conflicts. The execution,
delivery and performance of the Transaction Documents by the
Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the
offer and sale of the Common Shares and the offer and sale of the
Securities and the reservation for issuance and issuance of the
Warrant Shares issuable upon exercise of the Warrant) will not (i)
result in a violation of the Articles of Incorporation, as amended
and as in effect on the date hereof (the “Articles of Incorporation”) (including,
without limitation, any certificate of designation contained
therein), its bylaws, as amended and as in effect on the date
hereof (the “Bylaws”), or the certificate or
articles of incorporation, certificate of formation, memorandum of
association, articles of association, bylaws or other
organizational documents of any of the Company’s
Subsidiaries, or any capital stock or other securities of the
Company or any of its Subsidiaries, (ii) conflict with, or
constitute a default (or an event which with notice or lapse of
time or both would become a default) in any respect under, or give
to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which
the Company or any of its Subsidiaries is a party, or (iii) result
in a violation of any law, rule, regulation, order, judgment or
decree (including, without limitation, foreign, federal and state
securities laws and regulations and the rules and regulations of
the Principal Market and including all applicable foreign, federal
and state laws, rules and regulations) applicable to the Company or
any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or
affected.

 

(e) Consents. Neither the Company
nor any Subsidiary is required to obtain any consent from,
authorization or order of, or make any filing or registration with
(other than (i) the filing with the SEC of a Form D relating to the
offer, issuance and sale of the Warrants to the Buyers pursuant to
Regulation D, (ii) the filing of a Notice of Additional Listing
with the Principal Market, and (iii) any other filings as may be
required by any state securities authorities), any Governmental
Entity (as defined below) or any regulatory or self-regulatory
agency or any other Person in order for it to execute, deliver or
perform any of its respective obligations under or contemplated by
the Transaction Documents, in each case, in accordance with the
terms hereof or thereof. All consents, authorizations, orders,
filings and registrations which the Company or any Subsidiary is
required to obtain pursuant to the preceding sentence have been or
will be obtained or effected on or prior to the Closing Date, and
neither the Company nor any of its Subsidiaries are aware of any
facts or circumstances which might prevent the Company or any of
its Subsidiaries from obtaining or effecting any of the
registration, application or filings contemplated by the
Transaction Documents. The Company is not currently in violation of
the requirements of the Principal Market and has no knowledge of
any facts or circumstances which could reasonably lead to delisting
or suspension of the Common Stock in the foreseeable future.
“Governmental
Entity” means any nation, state, county, city, town,
village, district, or other political jurisdiction of any nature,
federal, state, local, municipal, foreign, or other government,
governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official,
or entity and any court or other tribunal), multi-national
organization or body; or body exercising, or entitled to exercise,
any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature or
instrumentality of any of the foregoing, including any entity or
enterprise owned or controlled by a government or a public
international organization or any of the foregoing.

 

(f) Acknowledgment Regarding Buyer’s
Purchase of Securities. The Company acknowledges and agrees
that each Buyer is acting solely in the capacity of an arm’s
length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that the Buyer is
not (i) an officer or director of the Company or any of its
Subsidiaries, (ii) an “affiliate” (as defined in Rule
144) of the Company or any of its Subsidiaries, or (iii) to its
knowledge, a “beneficial owner” of more than 10% of the
shares of Common Stock (as defined for purposes of Rule 13d-3 of
the 1934 Act). The Company further acknowledges that no Buyer is
acting as a financial advisor or fiduciary of the Company or any of
its Subsidiaries (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated hereby and
thereby, and any advice given by a Buyer or any of its
representatives or agents in connection with the Transaction
Documents and the transactions contemplated hereby and thereby is
merely incidental to such Buyer’s purchase of the Securities.
The Company further represents to each Buyer that the
Company’s decision to enter into the Transaction Documents
has been based solely on the independent evaluation by the Company
and its representatives.

 

 

 

-7-

 

 

(g) No General Solicitation; Placement
Agent’s Fees. Neither the Company, nor any of its
Subsidiaries or affiliates, nor any Person acting on its or their
behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with
the offer, issuance and sale of the Securities. The Company shall
be responsible for the payment of any placement agent’s fees,
financial advisory fees, or brokers’ commissions relating to
or arising out of the transactions contemplated by the Transaction
Documents. The Company shall pay, and hold each Buyer harmless
against, any liability, loss or expense (including, without
limitation, attorney's fees and out-of-pocket expenses) arising in
connection with any such claim. Neither the Company nor any of its
Subsidiaries has engaged any placement agent or other agent in
connection with the offer and sale of any of the Securities
contemplated by the Transaction Documents.

 

(h) No Aggregated or Integrated
Offering. None of the Company, its Subsidiaries or any of
their affiliates, nor any Person acting on their behalf has,
directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that
would cause the issuance of any of the Securities to require the
approval of stockholders of the Company under the rules of the
Principal Market. None of the Company, its Subsidiaries or any of
their affiliates, nor any Person acting on their behalf has,
directly or indirectly, made any offers, issuances or sales of any
security (including, without limitation, the offer, issuance and
sale of the Common Shares, the Warrants and the Warrant Shares to
an Investor hereunder, as applicable) or solicited any offers to
buy any security (including, without limitation, the Common Shares,
the Warrants or the Warrant Shares, as applicable), under
circumstances that would require registration of the offer,
issuance or sale of any of such Securities under the 1933 Act,
whether through integration with the offering of the Common Shares,
the Warrants or the Warrant Shares to each Investor
hereunder.

 

(i) Dilutive Effect. The Company
understands and acknowledges that the number of Warrant Shares will
increase in certain circumstances. The Company further acknowledges
that its obligation to issue the Warrant Shares upon exercise of
the Warrants in accordance with this Agreement and the Warrant, in
each case is absolute and unconditional regardless of the dilutive
effect that such issuance may have on the ownership interests of
other stockholders of the Company.

 

(j) Application of Takeover Protections;
Rights Agreement. The Company and its board of directors
have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, interested stockholder,
business combination, poison pill (including, without limitation,
any distribution under a rights agreement), stockholder rights plan
or other similar anti-takeover provision under the Articles of
Incorporation, Bylaws or other organizational documents or the laws
of the jurisdiction of its incorporation or otherwise which is or
could become applicable to any Buyer as a result of the
transactions contemplated by this Agreement, including, without
limitation, the Company’s issuance of the Securities and each
Buyer’s ownership of the Securities. The Company and its
board of directors have taken all necessary action, if any, in
order to render inapplicable any stockholder rights plan or similar
arrangement relating to accumulations of beneficial ownership of
shares of Common Stock or a change in control of the Company or any
of its Subsidiaries.

 

 

 

 

 

-8-

 

 

(k) SEC Documents; Financial
Statements. During the two (2) years prior to the date
hereof, the Company has timely filed all reports, schedules, forms,
proxy statements, statements and other documents required to be
filed by it with the SEC pursuant to the reporting requirements of
the 1934 Act (all of the foregoing filed prior to the date hereof
and all exhibits and appendices included therein and financial
statements, notes and schedules thereto and documents incorporated
by reference therein being hereinafter referred to as the
“SEC
Documents”). The Company has delivered or has made
available to each Buyer or its representatives true, correct and
complete copies of each of the SEC Documents not available on the
EDGAR system. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the 1934
Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at
the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading. As of their respective dates, the
financial statements of the Company included in the SEC Documents
complied in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC
with respect thereto as in effect as of the time of filing. Such
financial statements have been prepared in accordance with
generally accepted accounting principles (“GAAP”), consistently applied,
during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent
they may exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the
financial position of the Company as of the dates thereof and the
results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end
audit adjustments which will not be material, either individually
or in the aggregate). The reserves, if any, established by the
Company or the lack of reserves, if applicable, are reasonable
based upon facts and circumstances known by the Company on the date
hereof and there are no loss contingencies that are required to be
accrued by the Statement of Financial Accounting Standard No. 5 of
the Financial Accounting Standards Board which are not provided for
by the Company in its financial statements or otherwise. No other
information provided by or on behalf of the Company to any Buyer
which is not included in the SEC Documents (including, without
limitation, information in the disclosure schedules to this
Agreement) contains any untrue statement of a material fact or
omits to state any material fact necessary in order to make the
statements therein not misleading, in the light of the circumstance
under which they are or were made. The Company is not currently
contemplating to amend or restate any of the financial statements
(including, without limitation, any notes or any letter of the
independent accountants of the Company with respect thereto)
included in the SEC Documents (the “Financial Statements”), nor is the
Company currently aware of facts or circumstances which would
require the Company to amend or restate any of the Financial
Statements, in each case, in order for any of the Financials
Statements to be in compliance with GAAP and the rules and
regulations of the SEC. The Company has not been informed by its
independent accountants that they recommend that the Company amend
or restate any of the Financial Statements or that there is any
need for the Company to amend or restate any of the Financial
Statements.

 

 

 

-9-

 

 

(l) Absence of Certain Changes.
Since the date of the Company’s most recent audited financial
statements contained in a Form 10-K, other than as set forth in the
SEC Documents, there has been no material adverse change and no
material adverse development in the business, assets, liabilities,
properties, operations (including results thereof), condition
(financial or otherwise) or prospects of the Company or any of its
Subsidiaries. Since the date of the Company’s most recent
audited financial statements contained in a Form 10-K, neither the
Company nor any of its Subsidiaries has (i) declared or paid any
dividends, (ii) sold any assets, individually or in the aggregate,
outside of the ordinary course of business, or (iii) made any
capital expenditures, individually or in the aggregate, outside of
the ordinary course of business. Neither the Company nor any of its
Subsidiaries has taken any steps to seek protection pursuant to any
law or statute relating to bankruptcy, insolvency, reorganization,
receivership, liquidation or winding up, nor does the Company or
any Subsidiary have any knowledge or reason to believe that any of
their respective creditors intend to initiate involuntary
bankruptcy proceedings or any actual knowledge of any fact which
would reasonably lead a creditor to do so. The Company and its
Subsidiaries, individually and on a consolidated basis, are not as
of the date hereof, and after giving effect to the transactions
contemplated hereby to occur at the Closing, will not be Insolvent
(as defined below). For purposes of this Section ‎3(l),
“Insolvent”
means, (i) with respect to the Company and its Subsidiaries, on a
consolidated basis, (A) the present fair saleable value of the
Company’s and its Subsidiaries’ assets is less than the
amount required to pay the Company’s and its
Subsidiaries’ total Indebtedness (as defined below), (B) the
Company and its Subsidiaries are unable to pay their debts and
liabilities, subordinated, contingent or otherwise, as such debts
and liabilities become absolute and matured, or (C) the Company and
its Subsidiaries intend to incur or believe that they will incur
debts that would be beyond their ability to pay as such debts
mature; and (ii) with respect to the Company and each Subsidiary,
individually, (A) the present fair saleable value of the
Company’s or such Subsidiary’s (as the case may be)
assets is less than the amount required to pay its respective total
Indebtedness, (B) the Company or such Subsidiary (as the case may
be) is unable to pay its respective debts and liabilities,
subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured, or (C) the Company or such
Subsidiary (as the case may be) intends to incur or believes that
it will incur debts that would be beyond its respective ability to
pay as such debts mature. Neither the Company nor any of its
Subsidiaries has engaged in any business or in any transaction, and
is not about to engage in any business or in any transaction, for
which the Company’s or such Subsidiary’s remaining
assets constitute unreasonably small capital with which to conduct
the business in which it is engaged as such business is now
conducted and is proposed to be conducted.

 

(m) No Undisclosed Events, Liabilities,
Developments or Circumstances. No event, liability,
development or circumstance has occurred or exists, or is
reasonably expected to exist or occur with respect to the Company,
any of its Subsidiaries or any of their respective businesses,
properties, liabilities, prospects, operations (including results
thereof) or condition (financial or otherwise), that (i) would be
required to be disclosed by the Company under the 1934 Act and
which has not been publicly announced, (ii) could have a material
adverse effect on any Buyer’s investment hereunder, or (iii)
could have a Material Adverse Effect.

 

 

 

-10-

 

 

(n) Conduct of Business; Regulatory
Permits. Neither the Company nor any of its Subsidiaries is
in violation of any term of or in default under the Company’s
Articles of Incorporation, any certificate of designation,
preferences or rights of any other outstanding series of preferred
stock of the Company, or any organizational charter, certificate of
formation, memorandum of association, articles of association,
certificate or articles of incorporation or bylaws of any of the
Subsidiaries. Neither the Company nor any of its Subsidiaries is in
violation of any judgment, decree or order or any statute,
ordinance, rule or regulation applicable to the Company or any of
its Subsidiaries, and neither the Company nor any of its
Subsidiaries will conduct its business in violation of any of the
foregoing, except in all cases for possible violations which could
not, individually or in the aggregate, have a Material Adverse
Effect. The Company and each of its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate
regulatory authorities necessary to conduct their respective
businesses, except where the failure to possess such certificates,
authorizations or permits would not have, individually or in the
aggregate, a Material Adverse Effect, and neither the Company nor
any such Subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificate,
authorization or permit. There is no agreement, commitment,
judgment, injunction, order or decree binding upon the Company or
any of its Subsidiaries or to which the Company or any of its
Subsidiaries is a party which has or would reasonably be expected
to have the effect of prohibiting or materially impairing any
business practice of the Company or any of its Subsidiaries, any
acquisition of property by the Company or any of its Subsidiaries
or the conduct of business by the Company or any of its
Subsidiaries as currently conducted other than such effects,
individually or in the aggregate, which have not had and would not
reasonably be expected to have a Material Adverse Effect on the
Company or any of its Subsidiaries.

 

(o) Foreign Corrupt Practices.
Neither the Company, any of its Subsidiaries or to the knowledge of
the Company, any director, officer, agent, employee, nor any other
person acting for or on behalf of the foregoing (individually and
collectively, a “Company
Affiliate”) have violated the U.S. Foreign Corrupt
Practices Act (the “FCPA”) or any other applicable
anti-bribery or anti-corruption laws, nor has any Company Affiliate
offered, paid, promised to pay, or authorized the payment of any
money, or offered, given, promised to give, or authorized the
giving of anything of value, to any officer, employee or any other
person acting in an official capacity for any Governmental Entity
to any political party or official thereof or to any candidate for
political office (individually and collectively, a
“Government
Official”) or to any person under circumstances where
such Company Affiliate knew or was aware of a high probability that
all or a portion of such money or thing of value would be offered,
given or promised, directly or indirectly, to any Government
Official, for the purpose of:

 

(i) (A) influencing any
act or decision of such Government Official in his/her official
capacity, (B) inducing such Government Official to do or omit to do
any act in violation of his/her lawful duty, (C) securing any
improper advantage, or (D) inducing such Government Official to
influence or affect any act or decision of any Governmental Entity,
or

 

(ii) assisting
the Company or its Subsidiaries in obtaining or retaining business
for or with, or directing business to, the Company or its
Subsidiaries.

 

(p) Sarbanes-Oxley Act. The Company
and each Subsidiary is in compliance in all material respects with
any and all applicable requirements of the Sarbanes-Oxley Act of
2002, as amended, and any and all applicable rules and regulations
promulgated by the SEC thereunder.

 

 

 

-11-

 

 

(q) Transactions with Affiliates.
Except as disclosed in the SEC Documents, no current or former
director or officer (direct or indirect) of the Company or its
Subsidiaries, or any associate, or, to the knowledge of the
Company, any affiliate of any thereof, or any relative with a
relationship no more remote than first cousin of any of the
foregoing, is presently, or has ever been, (i) a party to any
transaction with the Company or its Subsidiaries (including any
contract, agreement or other arrangement providing for the
furnishing of services by, or rental of real or personal property
from, or otherwise requiring payments to, any such director,
officer or stockholder or such associate or affiliate or relative
Subsidiaries (other than for ordinary course services as employees,
officers or directors of the Company or any of its Subsidiaries)),
or (ii) the direct or indirect owner of an interest in any
corporation, firm, association or business organization which is a
competitor, supplier or customer of the Company or its Subsidiaries
(except for a passive investment (direct or indirect) in less than
5% of the common stock of a company whose securities are traded on
or quoted through an Eligible Market (as defined below)), nor does
any such Person receive income from any source other than the
Company or its Subsidiaries which relates to the business of the
Company or its Subsidiaries or should properly accrue to the
Company or its Subsidiaries. No employee, officer, stockholder or
director of the Company or any of its Subsidiaries or member of his
or her immediate family is indebted to the Company or its
Subsidiaries, as the case may be, nor is the Company or any of its
Subsidiaries indebted (or committed to make loans or extend or
guarantee credit) to any of them, other than (i) for payment of
salary for services rendered, (ii) reimbursement for reasonable
expenses incurred on behalf of the Company, and (iii) for other
standard employee benefits made generally available to all
employees or executives (including stock option agreements
outstanding under any stock option plan approved by the Board of
Directors of the Company).

 

(r) Equity
Capitalization.

 

(i)

Definitions:

 

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

 

(B)           “Preferred
Stock” means (x) the Company’s blank check
preferred stock, $0.001 par value per share, the terms of which may
be designated by the board of directors of the Company in a
certificate of designations and (y) any capital stock into which
such preferred stock shall have been changed or any share capital
resulting from a reclassification of such preferred stock (other
than a conversion of such preferred stock into Common Stock in
accordance with the terms of such certificate of
designations).

 

(ii) Authorized
and Outstanding Capital Stock. As of the date hereof, the
authorized capital stock of the Company consists of (A) 175,000,000
shares of Common Stock, of which, 44,092,965 are issued and
outstanding (excluding the Common Shares) and 48,583,204 shares are
reserved for issuance pursuant to Convertible Securities (as
defined below) exercisable or exchangeable for, or convertible
into, shares of Common Stock and (B) 10,000,000 shares of Preferred
Stock, 500,000 of which are designated as Series A Preferred Stock,
all of which are issued and outstanding, 4,000,000 of which are
designated as Series B Preferred Stock, 1,160,240 of which are
issued and outstanding, and 3,000,000 of which are designated as
Series C Preferred Stock, 2,318,012 of which are issued and
outstanding.

 

 

 

-12-

 

 

(iii) Valid
Issuance; Available Shares; Affiliates. All of such
outstanding shares are duly authorized and have been, or upon
issuance will be, validly issued and are fully paid and
nonassessable. Schedule ‎3(r)(iii) sets forth the
number of shares of Common Stock that are (A) reserved for issuance
pursuant to Convertible Securities (as defined below) (other than
the Warrants) and (B) that are, as of the date hereof, owned by
Persons who are “affiliates” (as defined in Rule 405 of
the 1933 Act and calculated based on the assumption that only
officers, directors and holders of at least 10% of the
Company’s issued and outstanding Common Stock are
“affiliates” without conceding that any such Persons
are “affiliates” for purposes of federal securities
laws) of the Company or any of its Subsidiaries. To the
Company’s knowledge, no Person owns 10% or more of the
Company’s issued and outstanding shares of Common Stock
(calculated based on the assumption that all Convertible Securities
(as defined below), whether or not presently exercisable or
convertible, have been fully exercised or converted (as
the case may be) taking account of any limitations on exercise or
conversion (including “blockers”) contained therein
without conceding that such identified Person is a 10% stockholder
for purposes of federal securities laws).

 

(iv) Existing
Securities; Obligations. Except as disclosed in the SEC
Documents: (A) none of the Company’s or any
Subsidiary’s shares, interests or capital stock is subject to
preemptive rights or any other similar rights or Liens suffered or
permitted by the Company or any Subsidiary; (B) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or
exchangeable for, any shares, interests or capital stock of the
Company or any of its Subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares,
interests or capital stock of the Company or any of its
Subsidiaries or options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or
exchangeable for, any shares, interests or capital stock of the
Company or any of its Subsidiaries; (C) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is
obligated to register the sale of any of their securities under the
1933 Act (except pursuant to this Agreement); (D) there are no
outstanding securities or instruments of the Company or any of its
Subsidiaries which contain any redemption or similar provisions,
and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or
may become bound to redeem a security of the Company or any of its
Subsidiaries; (E) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the
issuance of any or all of the Securities; and (F) neither the
Company nor any Subsidiary has any stock appreciation rights or
“phantom stock” plans or agreements or any similar plan
or agreement.

 

 

 

-13-

 

 

(s) Indebtedness and Other
Contracts. Except as set forth in the SEC Documents, neither
the Company nor any of its Subsidiaries, (i) has any outstanding
debt securities, notes, credit agreements, credit facilities or
other agreements, documents or instruments evidencing Indebtedness
of the Company or any of its Subsidiaries or by which the Company
or any of its Subsidiaries is or may become bound, (ii) is a party
to any contract, agreement or instrument, the violation of which,
or default under which, by the other party(ies) to such contract,
agreement or instrument could reasonably be expected to result in a
Material Adverse Effect, (iii) has any financing statements
securing obligations in any amounts filed in connection with the
Company or any of its Subsidiaries; (iv) is in violation of any
term of, or in default under, any contract, agreement or instrument
relating to any Indebtedness, except where such violations and
defaults would not result, individually or in the aggregate, in a
Material Adverse Effect, or (v) is a party to any contract,
agreement or instrument relating to any Indebtedness, the
performance of which, in the judgment of the Company’s
officers, has or is expected to have a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries have any
liabilities or obligations required to be disclosed in the SEC
Documents which are not so disclosed in the SEC Documents, other
than those incurred in the ordinary course of the Company’s
or its Subsidiaries’ respective businesses and which,
individually or in the aggregate, do not or could not have a
Material Adverse Effect. For purposes of this Agreement: (x)
“Indebtedness”
of any Person means, without duplication (A) all indebtedness for
borrowed money, (B) all obligations issued, undertaken or assumed
as the deferred purchase price of property or services (including,
without limitation, “capital leases” in accordance with
GAAP) (other than trade payables entered into in the ordinary
course of business consistent with past practice), (C) all
reimbursement or payment obligations with respect to letters of
credit, surety bonds and other similar instruments, (D) all
obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses,
(E) all indebtedness created or arising under any conditional sale
or other title retention agreement, or incurred as financing, in
either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even though the rights and
remedies of the seller or bank under such agreement in the event of
default are limited to repossession or sale of such property), (F)
all monetary obligations under any leasing or similar arrangement
which, in connection with GAAP, consistently applied for the
periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured
by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien upon or
in any property or assets (including accounts and contract rights)
owned by any Person, even though the Person which owns such assets
or property has not assumed or become liable for the payment of
such indebtedness, and (H) all Contingent Obligations in respect of
indebtedness or obligations of others of the kinds referred to in
clauses (A) through (G) above, but shall specifically exclude, by
way of example and not by limitation, all ordinary course payables
and obligations, and Indebtedness not to exceed $100,000 in amount;
(y) “Contingent
Obligation” means, as to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with
respect to any Indebtedness, lease, dividend or other obligation of
another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to
provide assurance to the obligee of such liability that such
liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such
liability will be protected (in whole or in part) against loss with
respect thereto; and (z) “Person” means an individual, a
limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization, any other
entity and any Governmental Entity or any department or agency
thereof.

 

 

 

-14-

 

 

(t) Litigation. There is no action,
suit, arbitration, proceeding, inquiry or investigation before or
by the Principal Market, any court, public board, other
Governmental Entity, self-regulatory organization or body pending
or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries, the Common Stock
or any of the Company’s or its Subsidiaries’ officers
or directors, whether of a civil or criminal nature or otherwise,
in their capacities as such, which is outside of the ordinary
course of business or individually or in the aggregate material to
the Company or any of its Subsidiaries. To the Company’s
knowledge, no director, officer or employee of the Company or any
of its Subsidiaries has willfully violated 18 U.S.C. §1519 or
engaged in spoliation in reasonable anticipation of litigation.
Without limitation of the foregoing, there has not been, and to the
knowledge of the Company, there is not pending or contemplated, any
investigation by the SEC involving the Company, any of its
Subsidiaries or any current or former director or officer of the
Company or any of its Subsidiaries. The SEC has not issued any stop
order or other order suspending the effectiveness of any
registration statement filed by the Company under the 1933 Act or
the 1934 Act, including, without limitation, the Registration
Statement. After reasonable inquiry of its employees, the Company
is not aware of any fact which might result in or form the basis
for any such action, suit, arbitration, investigation, inquiry or
other proceeding. Neither the Company nor any of its Subsidiaries
is subject to any order, writ, judgment, injunction, decree,
determination or award of any Governmental Entity.

 

(u) Insurance. The Company and each
of its Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in
the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has been
refused any insurance coverage sought or applied for, and neither
the Company nor any such Subsidiary has any reason to believe that
it will be unable to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a
cost that would not have a Material Adverse Effect.

 

(v) Employee Relations. Neither the
Company nor any of its Subsidiaries is a party to any collective
bargaining agreement or employs any member of a union. The Company
and its Subsidiaries believe that their relations with their
employees are good. No executive officer (as defined in Rule 501(f)
promulgated under the 1933 Act) or other key employee of the
Company or any of its Subsidiaries has notified the Company or any
such Subsidiary that such officer intends to leave the Company or
any such Subsidiary or otherwise terminate such officer’s
employment with the Company or any such Subsidiary. No executive
officer or other key employee of the Company or any of its
Subsidiaries is, or is now expected to be, in violation of any
material term of any employment contract, confidentiality,
disclosure or proprietary information agreement, non-competition
agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive
officer or other key employee (as the case may be) does not subject
the Company or any of its Subsidiaries to any liability with
respect to any of the foregoing matters. The Company and its
Subsidiaries are in compliance with all federal, state, local and
foreign laws and regulations respecting labor, employment and
employment practices and benefits, terms and conditions of
employment and wages and hours, except where failure to be in
compliance would not, either individually or in the aggregate,
reasonably be expected to result in a Material Adverse
Effect.

 

(w) Title.

 

(i) Real Property. Each of the
Company and its Subsidiaries holds good title to all real property,
leases in real property, facilities or other interests in real
property owned or held by the Company or any of its Subsidiaries
(the “Real
Property”) owned by the Company or any of its
Subsidiaries (as applicable). The Real Property is free and clear
of all Liens and is not subject to any rights of way, building use
restrictions, exceptions, variances, reservations, or limitations
of any nature except for (a) Liens for current taxes not yet due
and (b) zoning laws and other land use restrictions that do not
impair the present or anticipated use of the property subject
thereto. Any Real Property held under lease by the Company or any
of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do
not interfere with the use made and proposed to be made of such
property and buildings by the Company or any of its
Subsidiaries.

 

 

 

-15-

 

 

(ii) Fixtures
and Equipment. Each of the Company and its Subsidiaries (as
applicable) has good title to, or a valid leasehold interest in,
the tangible personal property, equipment, improvements, fixtures,
and other personal property and appurtenances that are used by the
Company or its Subsidiary in connection with the conduct of its
business (the “Fixtures and
Equipment”). The Fixtures and Equipment are
structurally sound, are in good operating condition and repair, are
adequate for the uses to which they are being put, are not in need
of maintenance or repairs except for ordinary, routine maintenance
and repairs and are sufficient for the conduct of the
Company’s and/or its Subsidiaries’ businesses (as
applicable) in the manner as conducted prior to the Closing. Each
of the Company and its Subsidiaries owns all of its Fixtures and
Equipment free and clear of all Liens except for (a) Liens for
current taxes not yet due and (b) zoning laws and other land use
restrictions that do not impair the present or anticipated use of
the property subject thereto.

 

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

 

 

 

-16-

 

 

(y) Intellectual Property Rights.
The Company and its Subsidiaries own or possess adequate rights or
licenses to use all trademarks, trade names, service marks, service
mark registrations, service names, original works of authorship,
patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and other
intellectual property rights and all applications and registrations
therefor (“Intellectual
Property Rights”) necessary to conduct their
respective businesses as now conducted. None of the Company's
Intellectual Property Rights have expired or terminated or have
been abandoned or are expected to expire or terminate or are
expected to be abandoned, within three years from the date of this
Agreement, except for those Intellectual Property Rights that
naturally expire at the end of their statutory term. The Company
does not have any knowledge of any infringement by the Company or
its Subsidiaries of Intellectual Property Rights of others. There
is no claim, action or proceeding being made or brought, or to the
knowledge of the Company or any of its Subsidiaries, being
threatened, against the Company or any of its Subsidiaries
regarding its Intellectual Property Rights. Neither the Company nor
any of its Subsidiaries is aware of any facts or circumstances
which might give rise to any of the foregoing infringements or
claims, actions or proceedings. The Company and its Subsidiaries
have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their Intellectual Property
Rights.

 

(z) Environmental Laws. The Company
and its Subsidiaries (i) are in compliance with all federal,
state, local and foreign laws relating to pollution or protection
of human health or the environment (including ambient air, surface
water, groundwater, land surface or subsurface strata), including
laws relating to emissions, discharges, releases or threatened
releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, “Hazardous Materials”) into the
environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials, as well as all authorizations,
codes, decrees, demands, or demand letters, injunctions, judgments,
licenses, notices or notice letters, orders, permits, plans or
regulations, issued, entered, promulgated or approved thereunder
(“Environmental
Laws”); (ii) have received all permits licenses or
other approvals required of them under applicable Environmental
Laws to conduct their respective businesses; and (iii) are in
compliance with all terms and conditions of any such permit,
license or approval where in each clause (i), (ii) and (iii), the
failure to so comply could be reasonably expected to have,
individually or in the aggregate, a Material Adverse
Effect.

 

(aa) [Intentionally
Omitted.]

 

(bb) Tax
Status. The Company and each of its Subsidiaries (i) has
timely made or filed all foreign, federal and state income and all
other tax returns, reports and declarations required by any
jurisdiction to which it is subject, (ii) has timely paid all taxes
and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and (iii)
has set aside on its books provision reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. There are no unpaid
taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company and
its Subsidiaries know of no basis for any such claim. The Company
is not operated in such a manner as to qualify as a passive foreign
investment company, as defined in Section 1297 of the U.S. Internal
Revenue Code of 1986, as amended (the “Code”).

 

 

 

-17-

 

 

(cc) Internal
Accounting and Disclosure Controls. The Company and each of
its Subsidiaries maintains internal control over financial
reporting (as such term is defined in Rule 13a-15(f) under the 1934
Act) that is effective to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles, including that (i)
transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset and liability
accountability, (iii) access to assets or incurrence of liabilities
is permitted only in accordance with management’s general or
specific authorization, (iv) the recorded accountability for assets
and liabilities is compared with the existing assets and
liabilities at reasonable intervals and appropriate action is taken
with respect to any difference, and (v) the interactive data in
XBRL included or incorporated by references in the Registration
Statement, the Prospectus and the Prospectus Supplement fairly
present the information called for in all material respects and are
prepared in accordance with the SEC’s rules and guidelines
applicable thereto. The Company maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) under the
1934 Act) that are effective in ensuring that information required
to be disclosed by the Company in the reports that it files or
submits under the 1934 Act is recorded, processed, summarized and
reported, within the time periods specified in the rules and forms
of the SEC, including, without limitation, controls and procedures
designed to ensure that information required to be disclosed by the
Company in the reports that it files or submits under the 1934 Act
is accumulated and communicated to the Company’s management,
including its principal executive officer or officers and its
principal financial officer or officers, as appropriate, to allow
timely decisions regarding required disclosure. Neither the Company
nor any of its Subsidiaries has received any notice or
correspondence from any accountant, Governmental Entity or other
Person relating to any potential material weakness or significant
deficiency in any part of the internal controls over financial
reporting of the Company or any of its Subsidiaries.

 

(dd) Off
Balance Sheet Arrangements. There is no transaction,
arrangement, or other relationship between the Company or any of
its Subsidiaries and an unconsolidated or other off balance sheet
entity that is required to be disclosed by the Company in its 1934
Act filings and is not so disclosed or that otherwise could be
reasonably likely to have a Material Adverse Effect.

 

(ee) Investment
Company Status. The Company is not, and upon consummation of
the sale of the Securities will not be, an “investment
company,” an affiliate of an “investment
company,” a company controlled by an “investment
company” or an “affiliated person” of, or
“promoter” or “principal underwriter” for,
an “investment company” as such terms are defined in
the Investment Company Act of 1940, as amended.

 

(ff) Manipulation
of Price. Neither the Company nor any of its Subsidiaries
has, and, to the knowledge of the Company, no Person acting on
their behalf has, directly or indirectly, (i) taken any action
designed to cause or to result in the stabilization or manipulation
of the price of any security of the Company or any of its
Subsidiaries to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or paid any compensation
for soliciting purchases of, any of the Securities, (iii) paid or
agreed to pay to any Person any compensation for soliciting another
to purchase any other securities of the Company or any of its
Subsidiaries or (iv) paid or agreed to pay any Person for research
services with respect to any securities of the Company or any of
its Subsidiaries.

 

(gg) U.S.
Real Property Holding Corporation. Neither the Company nor
any of its Subsidiaries is, or has ever been, and so long as any of
the Securities are held by any Buyer, shall become, a U.S. real
property holding corporation within the meaning of Section 897 of
the Code, and the Company and each Subsidiary shall so certify upon
any Buyer’s request.

 

 

 

-18-

 

 

(hh) Transfer
Taxes. On the Closing Date, all stock transfer or other
taxes (other than income or similar taxes) which are required to be
paid in connection with the issuance, sale and transfer of the
Securities to be sold to the Buyers hereunder will be, or will have
been, fully paid or provided for by the Company, and all laws
imposing such taxes will be or will have been complied
with.

 

(ii) Bank
Holding Company Act. Neither the Company nor any of its
Subsidiaries is subject to the Bank Holding Company Act of 1956, as
amended (the “BHCA”) and to regulation by the
Board of Governors of the Federal Reserve System (the
“Federal
Reserve”). Neither the Company nor any of its
Subsidiaries or affiliates owns or controls, directly or
indirectly, five percent (5%) or more of the outstanding shares of
any class of voting securities or twenty-five percent (25%) or more
of the total equity of a bank or any entity that is subject to the
BHCA and to regulation by the Federal Reserve. Neither the Company
nor any of its Subsidiaries or affiliates exercises a controlling
influence over the management or policies of a bank or any entity
that is subject to the BHCA and to regulation by the Federal
Reserve.

 

(jj) Shell
Company Status. The Company is not, and has not been for the
past two fiscal years, an issuer identified in, or subject to, Rule
144(i). The Company has, at least twelve months since it was last
an issuer identified in, or subject to, Rule 144(i), filed all
“Form 10 Information” pursuant to Rule
144(i).

 

(kk) Illegal
or Unauthorized Payments; Political Contributions. Neither
the Company nor any of its Subsidiaries nor, to the Company’s
knowledge, any of the officers, directors, employees, agents or
other representatives of the Company or any of its Subsidiaries or
any other business entity or enterprise with which the Company or
any Subsidiary is or has been affiliated or associated, has,
directly or indirectly, made or authorized any payment,
contribution or gift of money, property, or services, whether or
not in contravention of applicable law, (i) as a kickback or bribe
to any Person or (ii) to any political organization, or the holder
of or any aspirant to any elective or appointive public office
except for personal political contributions not involving the
direct or indirect use of funds of the Company or any of its
Subsidiaries.

 

(ll) Money
Laundering. The Company and its Subsidiaries are in
compliance with, and have not previously violated, the USA Patriot
Act of 2001 and all other applicable U.S. and non-U.S. anti-money
laundering laws and regulations, including, but not limited to, the
laws, regulations and Executive Orders and sanctions programs
administered by the U.S. Office of Foreign Assets Control,
including, without limitation, (i) Executive Order 13224 of
September 23, 2001 entitled, “Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001));
and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter
V.

 

(mm) No
Disagreements with Accountants and Lawyers. There are no
material disagreements of any kind presently existing, or
reasonably anticipated by the Company to arise, between the Company
and the accountants and lawyers formerly or presently employed by
the Company and the Company is current with respect to any fees
owed to its accountants and lawyers which could affect the
Company's ability to perform any of its obligations under any of
the Transaction Documents. In addition, on or prior to the date
hereof, the Company had discussions with its accountants about its
financial statements previously filed with the SEC. Based on those
discussions, the Company has no reason to believe that it will need
to restate any such financial statements or any part
thereof.

 

(nn) No
Additional Agreements. The Company does not have any
agreement or understanding with any Buyer with respect to the
transactions contemplated by the Transaction Documents other than
as specified in the Transaction Documents. 

 

 

 

-19-

 

 

(oo) Registration
Rights. No Person has any right to cause the Company or any
Subsidiary to effect the registration under the 1933 Act of any
securities of the Company or any Subsidiary.

 

(pp) Accountants.
OUM & CO. LLP (“OUM”), whose report dated June 25,
2019 relating to the financial statements of the Company is filed
with the SEC as part of the Company’s Annual Report on Form
10-K for the year ended March 31, 2019 filed with the SEC and
incorporated by reference into the Registration Statement and the
Prospectus, are and, during the periods covered by their report,
were an independent registered public accounting firm within the
meaning of the 1933 Act and the Public Company Accounting Oversight
Board (United States).

 

(qq) Listing
and Maintenance Requirements. The Common Stock is registered
pursuant to Section 12(b) of the 1934 Act, and the Company has
taken no action designed to, or which to its knowledge is likely to
have the effect of, terminating the registration of the Common
Stock under the 1934 Act nor has the Company received any
notification that the SEC is contemplating terminating such
registration. The Company is not in violation of any of the rules,
regulations or requirements of the Principal Market and has no
knowledge of any facts or circumstances that could reasonably lead
to delisting or suspension of the Common Stock by the Principal
Market in the foreseeable future. Except as disclosed in the SEC
Documents, during the two years prior to the date hereof, (i) the
Common Stock has been listed or designated for quotation on the
Principal Market, (ii) trading in the Common Stock has not been
suspended by the SEC or the Principal Market, and (iii) the Company
has received no communication, written or oral, from the SEC or the
Principal Market regarding the suspension or delisting of the
Common Stock from the Principal Market. The Common Stock is
currently eligible for electronic transfer through the Depository
Trust Company or another established clearing corporation and the
Company is current in payment of the fees to the Depository Trust
Company (or such other established clearing corporation) in
connection with such electronic transfer.

 

(rr) Public
Float Calculation. As of the close of trading on the
Principal Market on January 22, 2020, the aggregate market value of
the outstanding voting and non-voting common equity (as defined in
Rule 405) of the Company held by persons other than affiliates
of the Company (pursuant to Rule 144, those that directly, or
indirectly through one or more intermediaries, control, or are
controlled by, or are under common control with, the Company) (the
“Non-Affiliate
Shares”), was approximately $31,012,686 (calculated by
multiplying (x) the price at which the common equity of the
Company was last sold on the Principal Market on January 22, 2020
($0.7074) by (y) the number of Non-Affiliate Shares
outstanding on 43,840,381, 2020).

 

(ss) No
Disqualification Events. With respect to the Securities to
be offered, issued and sold hereunder and under the Warrant, as
applicable, in reliance on Rule 506(b) of Regulation D, none of the
Company, any of its predecessors, any affiliated issuer, any
director, executive officer, other officer of the Company
participating in the offering hereunder, any beneficial owner of
20% or more of the Company’s outstanding voting equity
securities, calculated on the basis of voting power, nor any
promoter (as that term is defined in Rule 405 under the 1933 Act)
connected with the Company in any capacity at the time of sale
(each, an “Issuer Covered
Person”) is subject to any of the “Bad
Actor” disqualifications described in Rule 506(d)(1)(i) to
(viii) of Regulation D (a “Disqualification Event”), except
for a Disqualification Event covered by Rule 506(d)(2) or (d)(3) of
Regulation D. The Company has exercised reasonable care to
determine whether any Issuer Covered Person is subject to a
Disqualification Event. The Company has complied, to the extent
applicable, with its disclosure obligations under Rule 506(e) of
Regulation D, and has furnished to each Buyer a copy of any
disclosures provided thereunder.

 

 

 

-20-

 

 

4.

COVENANTS.

 

(a) Reasonable Best Efforts. Each
Buyer shall use its reasonable best efforts to timely satisfy each
of the covenants hereunder and conditions to be satisfied by it as
provided in Section 6 of this Agreement. The Company shall use its
reasonable best efforts to timely satisfy each of the covenants
hereunder and conditions to be satisfied by it as provided in
Section ‎7 of this Agreement. 

 

(b) Form D and Blue Sky. The
Company agrees to file with the SEC a Form D with respect to the
Warrants as required under Regulation D and to provide a copy
thereof to each Buyer promptly after such filing. The Company
shall, on or before the Closing Date, take such action as the
Company shall reasonably determine is necessary in order to obtain
an exemption for, or to, qualify the Securities for sale to each
Buyer at the Closing pursuant to this Agreement under applicable
securities or “Blue Sky” laws of the states of the
United States (or to obtain an exemption from such qualification),
and shall provide evidence of any such action so taken to each
Buyer on or prior to the Closing Date. The Company shall make any
filings and reports relating to the offer and sale of the
Securities required under applicable securities or “Blue
Sky” laws of the states of the United States following the
Closing Date.

 

(c)    
Reporting Status. Until the
earlier of (i) the date on which the Buyers shall have sold all of
the Securities, and (ii) none of the Warrants remain outstanding
(the “Reporting
Period”), the Company shall timely file all reports
required to be filed with the SEC pursuant to the 1934 Act, and the
Company shall not terminate its status as an issuer required to
file reports under the 1934 Act even if the 1934 Act or the rules
and regulations thereunder would no longer require or otherwise
permit such termination. At any time during the Reporting Period,
if the Company (i) shall fail for any reason to satisfy the
current public information requirement under Rule 144(c) or
(ii) has ever been an issuer described in Rule 144(i)(1)(i) or
becomes an issuer in the future, and the Company shall fail to
satisfy any condition set forth in Rule 144(i)(2), and a
Registration Statement registering the Warrant Shares is not then
in effect to permit the resale of such Warrant Shares (a
“Public Information
Failure”), then, in addition to each Buyer’s
other available remedies, the Company shall pay to each Buyer, in
cash, as partial liquidated damages and not as a penalty, by reason
of any such delay in or reduction of its ability to sell the
Warrant Shares, an amount in cash equal to two percent (2.0%) of
the aggregate Exercise Price of each Buyer’s Warrants on the
day of a Public Information Failure and on every thirtieth
(30th) day
(prorated for periods totaling less than thirty days) thereafter
until the earlier of (a) the date such Public Information
Failure is cured and (b) such time that such public
information is no longer required for each Buyer to transfer
the Warrant Shares pursuant to Rule 144. The payments to which
each Buyer shall be entitled pursuant to this Section 4(c) are
referred to herein as “Public
Information Failure Payments.” Public Information
Failure Payments shall
be paid on the earlier of (i) the last day of the calendar
month during which such Public Information Failure Payments are incurred and
(ii) the third (3rd) Business Day after
the event or failure giving rise to the Public Information
Failure Payments is
cured. In the event the Company fails to make Public
Information Failure Payments in a timely manner, such
Public Information Failure Payments shall bear interest at
the rate of 1.5% per month (prorated for partial months) until paid
in full. Nothing herein shall limit each Buyer’s right to
pursue actual damages for the Public Information Failure, and each
Buyer shall have the right to pursue all remedies available to it
at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief.

 

(d) Use of Proceeds. The Company
will use the proceeds from the sale of the Securities as described
in the Prospectus Supplement, but not, directly or indirectly, for
(i) except as set forth on Schedule 4(d), the satisfaction of any
indebtedness of the Company or any of its Subsidiaries, (ii) the
redemption or repurchase of any securities of the Company or any of
its Subsidiaries, or (iii) the settlement of any outstanding
litigation.

 

 

 

-21-

 

 

(e) Financial Information. Unless
filed with the SEC through EDGAR and are available to the public
through the EDGAR system, the Company shall send the following to
each Buyer during the Reporting Period: (i) within one (1) Business
Day after the filing thereof with the SEC, a copy of its Annual
Reports on Form 10-K and Quarterly Reports on Form 10-Q, any
interim reports or any consolidated balance sheets, income
statements, stockholders’ equity statements and/or cash flow
statements for any period other than annual, any Current Reports on
Form 8-K and any registration statements (other than on Form S-8)
or amendments filed pursuant to the 1933 Act, (ii) unless the
following are widely disseminated via a recognized news release
service (such as PR Newswire), on the same day as the release
thereof, facsimile copies of all press releases issued by the
Company or any of its Subsidiaries, and (iii) copies of any notices
and other information made available or given to the stockholders
of the Company generally, contemporaneously with the making
available or giving thereof to the stockholders.

 

(f) Listing. The Company shall
promptly secure the listing or designation for quotation (as the
case may be) of all of the Underlying Securities (as defined below)
upon each national securities exchange and automated quotation
system, if any, upon which the Common Stock is then listed or
designated for quotation (as the case may be) (subject to official
notice of issuance) and shall maintain such listing or designation
for quotation (as the case may be) of all Underlying Securities on
such national securities exchange or automated quotation system.
The Company shall maintain the Common Stock’s listing or
authorization for quotation (as the case may be) on the Principal
Market, The New York Stock Exchange, the NYSE American, The Nasdaq
Global Market or The Nasdaq Global Select Market (each, an
“Eligible
Market”). Neither the Company nor any of its
Subsidiaries shall take any action which could be reasonably
expected to result in the delisting or suspension of the Common
Stock (including, without limitation, the Underlying Securities) on
an Eligible Market. The Company shall pay all fees and expenses in
connection with satisfying its obligations under this Section
‎4(f). “Underlying
Securities” means the (i) the Common Shares, (ii) the
Warrant Shares issuable upon exercise of the Warrants and (iii) any
capital stock of the Company issued or issuable with respect to the
Common Shares, the Warrants or the Warrant Shares, including,
without limitation, (1) as a result of any stock split, stock
dividend, recapitalization, exchange or similar event or otherwise
and (2) shares of capital stock of the Company into which the
shares of Common Stock are converted or exchanged and shares of
capital stock of a Successor Entity (as defined in the Warrants)
into which the shares of Common Stock are converted or exchanged,
in each case, without regard to any limitations on exercise of the
Warrants.

 

(g) Fees. The Company shall be
responsible for the payment of any placement agent’s fees,
financial advisory fees, transfer agent fees, DTC fees or
broker’s commissions (other than for Persons engaged by the
Investor) relating to or arising out of the transactions
contemplated by the Transaction Documents. The Company shall pay,
and hold each Buyer harmless against, any liability, loss or
expense (including, without limitation, reasonable attorneys’
fees and out-of-pocket expenses) arising in connection with any
claim relating to any such payment. Except as otherwise set forth
in the Transaction Documents, each party to this Agreement shall
bear its own expenses in connection with the sale of the Securities
to each Buyer.

 

(h) Pledge of Securities.
Notwithstanding anything to the contrary contained in this
Agreement, the Company acknowledges and agrees that the Securities
may be pledged by an Investor in connection with a bona fide margin
agreement or other loan or financing arrangement that is secured by
the Securities. The pledge of Securities shall not be deemed to be
a transfer, sale or assignment of the Securities hereunder, and no
Investor effecting a pledge of Securities shall be required to
provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other
Transaction Document. The Company hereby agrees to execute and
deliver such documentation as a pledgee of the Securities may
reasonably request in connection with a pledge of the Securities to
such pledgee by any Buyer.

 

 

 

-22-

 

 

(i) Prohibition of Short Sales and Hedging
Transactions. During the term of this Agreement, each Buyer
and its agents, representatives and affiliates shall not in any
manner whatsoever enter into or effect, directly or indirectly, any
(i) “short sale” (as such term is defined in Rule 200
of Regulation SHO of the 1934 Act) of the Common Stock, or (ii)
hedging transaction, which establishes a net short position with
respect to the Common Stock.

 

(j) Disclosure of Transactions and Other
Material Information.

 

(i) Disclosure of Transaction. The
Company shall, on or before 9:00 a.m., New York time, on the
first (1st) Business Day after
the date of this Agreement, (i) file with the SEC a Current Report
on Form 8-K reasonably acceptable to the Lead Buyer describing all
the material terms of the transactions contemplated by the
Transaction Documents in the form required by the 1934 Act and
attaching all the material Transaction Documents (including,
without limitation, this Agreement, the form of Warrant (including
all attachments, the “8-K
Filing”), and (ii) file with the SEC the Prospectus
Supplement pursuant to Rule 424(b) under the 1933 Act specifically
relating to the transactions contemplated by, and describing the
material terms and conditions of, the Transaction Documents,
containing information previously omitted at the time of
effectiveness of the Registration Statement in reliance on Rule
430B under the 1933 Act, and disclosing all information relating to
the transactions contemplated hereby required to be disclosed in
the Registration Statement and the Prospectus as of the date of the
Prospectus Supplement, including, without limitation, information
required to be disclosed in the section captioned “Plan of
Distribution” in the Prospectus. The Company shall permit the
Lead Buyer to review and comment upon the 8-K Filing and the
Prospectus Supplement within a reasonable time prior to their
filing with the SEC, the Company shall give reasonable
consideration to all such comments, and the Company shall not file
the 8-K Filing or the Prospectus Supplement with the SEC in a form
to which the Lead Buyer reasonably objects. Each Buyer shall
furnish to the Company such information regarding itself, the
Securities beneficially owned by it and the intended method of
distribution thereof, including any arrangement between any Buyer
and any other Person relating to the sale or distribution of the
Securities, as shall be reasonably requested by the Company in
connection with the preparation and filing of the Current Report
and the Prospectus Supplement, and shall otherwise cooperate with
the Company as reasonably requested by the Company in connection
with the preparation and filing of the Current Report and the
Prospectus Supplement with the SEC. From and after the 8-K Filing,
the Company shall have disclosed all material, non-public
information (if any) provided to any of the Buyers by the Company
or any of its Subsidiaries or any of their respective officers,
directors, employees or agents in connection with the transactions
contemplated by the Transaction Documents. In addition, effective
upon the 8-K Filing, the Company acknowledges and agrees that any
and all confidentiality or similar obligations under any agreement,
whether written or oral, between the Company, any of its
Subsidiaries or any of their respective officers, directors,
affiliates, employees or agents, on the one hand, and any of the
Buyers or any of their affiliates, on the other hand, shall
terminate.

 

 

 

-23-

 

 

(ii) Limitations
on Disclosure. The Company shall not, and the Company shall
cause each of its Subsidiaries and each of its and their respective
officers, directors, employees and agents not to, provide any Buyer
with any material, non-public information regarding the Company or
any of its Subsidiaries from and after the 8-K Filing without the
express prior written consent of each Buyer (which may be granted
or withheld in each such Buyer’s sole discretion). To the
extent that the Company delivers any material, non-public
information to any Buyer without such Buyer's consent, the Company
hereby covenants and agrees that no Buyer shall not have any duty
of confidentiality with respect to, or a duty not to trade on the
basis of, such material, non-public information. Subject to the
foregoing and other terms of this Agreement, neither the Company
nor any of its Subsidiaries shall issue any press releases or any
other public statements with respect to the transactions
contemplated hereby; provided, however, the Company shall be
entitled, without the prior approval of any Buyer, to issue any
press release or other public disclosure with respect to such
transactions (i) in substantial conformity with the 8-K Filing and
contemporaneously therewith, and (ii) as is required by applicable
law and regulations (provided that in the case of clause (i) the
Lead Buyer shall be consulted by the Company in connection with any
such press release or other public disclosure prior to its
release). Without the prior written consent of each Buyer (which
may be granted or withheld in each Buyer’ sole discretion),
the Company shall not (and shall cause each of its Subsidiaries and
affiliates to not) disclose the name of any Buyer in any filing,
announcement, release or otherwise.

 

(iii) Other Confidential Information.
Disclosure Failures; Disclosure Delay Payments. In addition
to other remedies set forth in this Section ‎4(j), and
without limiting anything set forth in any other Transaction
Document, at any time after the Closing Date if the Company, any of
its Subsidiaries, or any of their respective officers, directors,
employees or agents, provides any Buyer with material non-public
information relating to the Company or any of its Subsidiaries
(each, the “Confidential
Information”), the Company shall, on or prior to the
applicable Required Disclosure Date (as defined below), publicly
disclose such Confidential Information on a Current Report on Form
8-K or otherwise (each, a “Disclosure”). From and after such
Disclosure, the Company shall have disclosed all Confidential
Information provided to each Buyer by the Company or any of its
Subsidiaries or any of their respective officers, directors,
employees or agents in connection with the transactions
contemplated by the Transaction Documents. In addition, effective
upon such Disclosure, the Company acknowledges and agrees that any
and all confidentiality or similar obligations under any agreement,
whether written or oral, between the Company, any of its
Subsidiaries or any of their respective officers, directors,
affiliates, employees or agents, on the one hand, and any of the
Buyers or any of their affiliates, on the other hand, shall
terminate. “Required
Disclosure Date” means (x) if any Buyer authorized the
delivery of such Confidential Information, either (I) if the
Company and such Buyer have mutually agreed upon a date (as
evidenced by an e-mail or other writing) of Disclosure of such
Confidential Information, such agreed upon date or (II) otherwise,
the seventh (7th) calendar day after
the date such Buyer first received any Confidential Information or
(y) if such Buyer did not authorize the delivery of such
Confidential Information, the first (1st) Business Day after
such Buyer’s receipt of such Confidential
Information..

 

(k) Additional Issuance of
Securities. So long as any Buyer beneficially owns any
Warrants, the Company will not, without the prior written consent
of each Buyer holding any Warrant (which may be granted or withheld
in such Buyer’s sole discretion), issue any other securities
that would cause a breach or default under any of the Warrants. The
Company agrees that for the period commencing on the date hereof
and ending on the date immediately following the 60th calendar day after
the Closing Date (the “Restricted Period”), neither the Company nor
any of its Subsidiaries shall directly or indirectly:

 

 

 

-24-

 

 

(i) file a registration
statement under the 1933 Act relating to securities that are not
the Underlying Securities (other than (A) a registration statement
on Form S-8, (B) a new shelf registration statement on Form S-3
filed with the SEC prior to the third anniversary of the effective
date of the Registration Statement as the successor registration
statement to the Registration Statement covering Common Stock and
certain other securities of the company (but not with respect to
any Subsequent Financing during the Restricted Period), or (C) such
supplements or amendments to registration statements that are
outstanding and have been declared effective by the SEC as of the
date hereof solely to the extent necessary to keep such
registration statements effective and available and not with
respect to any Subsequent Financing;

 

(ii) amend
or modify (whether by an amendment, waiver, exchange of securities,
or otherwise) any of the Company’s warrants to purchase
Common Stock that are outstanding as of the date
hereof;

 

(iii) issue,
offer, sell, grant any option or right to purchase, or otherwise
dispose of (or announce any issuance, offer, sale, grant of any
option or right to purchase or other disposition of) any equity
security or any equity-linked or related security (including,
without limitation, any “equity security” (as that term
is defined under Rule 405 promulgated under the 1933 Act)), any
Convertible Securities (as defined below), any debt, any preferred
stock or any purchase rights or any combination of units thereof
(any such issuance, offer, sale, grant, disposition or announcement
(whether occurring during the Restricted Period or at any time
thereafter) is referred to as a “Subsequent Placement”).
Notwithstanding the foregoing, this Section ‎4(j)(iii) shall
not apply in respect of the issuance of (A) any private placement
of Common Stock pursuant to Section 4(a)(2) under the 1933 Act or
the rules thereunder; (B) shares of Common Stock or standard
options to purchase Common Stock to directors, officers or
employees of the Company in their capacity as such pursuant to an
Approved Stock Plan (as defined below), provided that the exercise
price of any such options is not lowered, none of such options are
amended to increase the number of shares issuable thereunder and
none of the terms or conditions of any such options are otherwise
materially changed in any manner that adversely affects any Buyer;
(C) shares of Common Stock issued upon the conversion or exercise
of Convertible Securities (other than standard options to purchase
Common Stock issued pursuant to an Approved Stock Plan that are
covered by clause (B) above) issued prior to the date hereof,
provided that the conversion, exercise or other method of issuance
(as the case may be) of any such Convertible Security is made
solely pursuant to the conversion, exercise or other method of
issuance (as the case may be) provisions of such Convertible
Security that were in effect on the date immediately prior to the
date of this Agreement, the conversion, exercise or issuance price
of any such Convertible Securities (other than standard options to
purchase Common Stock issued pursuant to an Approved Stock Plan
that are covered by clause (B) above) is not lowered, none of such
Convertible Securities (other than standard options to purchase
Common Stock issued pursuant to an Approved Stock Plan that are
covered by clause (B) above) are amended to increase the number of
shares issuable thereunder and none of the terms or conditions of
any such Convertible Securities (other than standard options to
purchase Common Stock issued pursuant to an Approved Stock Plan
that are covered by clause (B) above) are otherwise materially
changed in any manner that adversely affects any Buyer; (D) the
Common Shares, the Warrants and the Warrant Shares (each of the
foregoing in clauses (A) through (C), collectively the
“Excluded
Securities”). “Approved Stock Plan” means any
employee benefit plan which has been approved by the board of
directors of the Company prior to or subsequent to the date hereof
pursuant to which shares of Common Stock and standard options to
purchase Common Stock may be issued to any employee, officer or
director for services provided to the Company in their capacity as
such. “Convertible
Securities” means any capital stock or other security
of the Company or any of its Subsidiaries that is at any time and
under any circumstances directly or indirectly convertible into,
exercisable or exchangeable for, or which otherwise entitles the
holder thereof to acquire, any capital stock or other security of
the Company (including, without limitation, Common Stock) or any of
its Subsidiaries; or

 

 

 

-25-

 

 

(iv)      enter
into any financing or related agreement providing for an “at
the market” financing conducted on a delayed or continuous
basis (as defined in Rule 415(a) under the 1933 Act) (an
“ATM Offering”)
with any Person whereby the Company or any Subsidiary may sell
securities at a future determined price.

 

(l) Reservation of Shares. So long
as any portion of any of the Warrants remains outstanding, the
Company shall take all action necessary to at all times have
authorized, and reserved for the purpose of issuance, no less than
100% of the sum of the maximum number of Warrant Shares issuable
upon exercise in full of the Warrants (without regard to any
limitations on the exercise of the Warrants set forth therein)
(collectively, the “Required
Reserve Amount”); provided that at no time shall the
number of shares of Common Stock reserved pursuant to this Section
‎4(k) be reduced other than proportionally in connection with
any exercise of the Warrants. If at
any time the number of shares of Common Stock authorized and
reserved for issuance is not
sufficient to meet the Required Reserve Amount, the Company will
promptly take all corporate action necessary to authorize and
reserve a sufficient number of shares, including, without
limitation, calling a special meeting of stockholders to authorize
additional shares to meet the Company's obligations pursuant to the
Transaction Documents, in the case of an insufficient number of
authorized shares, obtain stockholder approval of an increase in
such authorized number of shares, and voting the management shares
of the Company in favor of an increase in the authorized shares of
the Company to ensure that the number of authorized shares is
sufficient to meet the Required Reserve Amount.

 

(m) Conduct of Business. The
business of the Company and its Subsidiaries shall not be conducted
in violation of any law, ordinance or regulation of any
Governmental Entity, except where such violations would not
reasonably be expected to result, either individually or in the
aggregate, in a Material Adverse Effect.

 

(n) Variable Securities. From the
date hereof until such time as the Lead Buyer no longer holds any
of the Warrants, the Company and each Subsidiary shall be
prohibited from effecting or entering into an agreement to effect
any Subsequent Placement involving a Variable Rate Transaction.
“Variable Rate
Transaction” means a transaction in which the Company
(A) issues or sells any debt or equity securities that are
convertible into, exchangeable or exercisable for, or include the
right to receive additional shares of Common Stock either
(1) at a conversion price, exercise price or exchange rate or
other price that is based upon and/or varies with the trading
prices of or quotations for the shares of Common Stock at any time
after the initial issuance of such debt or equity securities, or
(2) with a conversion, exercise or exchange price that is
subject to being reset at some future date after the initial
issuance of such debt or equity security or upon the occurrence of
specified or contingent events directly or indirectly related to
the business of the Company or the market for the Common Stock, or
(B) enters into an “equity line” or similar transaction
with any Person other than the Lead Buyer whereby the Company or
any Subsidiary may sell securities at a future determined price;
provided, however, a
Variable Rate Transaction shall not include an ATM Offering. The
Lead Buyer shall be entitled to obtain injunctive relief against
the Company and its Subsidiaries to preclude any such issuance,
which remedy shall be in addition to any right to collect
damages.

 

(o) Passive Foreign Investment
Company. The Company shall conduct its business, and shall
cause its Subsidiaries to conduct their respective businesses, in
such a manner as will ensure that the Company will not be deemed to
constitute a passive foreign investment company within the meaning
of Section 1297 of the Code.

 

(p) Corporate Existence. So long as
any Buyer beneficially owns any portion of any of the Warrants, the
Company shall not be party to any Fundamental Transaction (as
defined in the Warrants) unless the Company is in compliance with
the applicable provisions governing Fundamental Transactions set
forth in the Warrants.

 

 

 

-26-

 

 

(q) Exercise Procedures. The form
of Exercise Notice (as defined in the Warrants) included in the
Warrants sets forth the totality of the procedures required of the
Buyers in order to exercise the Warrants. No legal opinion or other
information or instructions shall be required of the Buyers to
exercise any portion of any of the Warrants. The Company shall
honor exercises of the Warrants and shall deliver the applicable
number of Warrant Shares in accordance with the terms, conditions
and time periods set forth in the Warrants. Without limiting the
preceding sentences, no ink-original Exercise Notice shall be
required, nor shall any medallion guarantee (or other type of
guarantee or notarization) of any Exercise Notice form be required
in order to exercise any portion of any of the
Warrants.

 

(r) Regulation M. The Company will
not take any action prohibited by Regulation M under the 1934 Act,
in connection with the distribution of the Securities contemplated
hereby.

 

(s) Passive Foreign Investment
Company. The Company shall conduct its business in such a
manner as will ensure that the Company will not be deemed to
constitute a passive foreign investment company within the meaning
of Section 1297 of the Code.

 

(t) General Solicitation. None of
the Company, any of its affiliates (as defined in Rule 501(b) under
the 1933 Act) or any person acting on behalf of the Company or such
affiliate will solicit any offer to buy or offer or sell the
Warrants or any Warrant Shares by means of any form of general
solicitation or general advertising within the meaning of
Regulation D, including: (i) any advertisement, article,
notice or other communication published in any newspaper, magazine
or similar medium or broadcast over television or radio; and (ii)
any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising.

 

(u) Aggregation; Integration. None
of the Company, its Subsidiaries or any of their affiliates, nor
any Person acting on their behalf will take, directly or
indirectly, shall make any offers or sales of any security or
solicited any offers to buy any security, under circumstances that
would cause the issuance of any of the Securities to require
approval of stockholders of the Company under the rules of the
Principal Market. None of the Company, its Subsidiaries, their
affiliates nor any Person acting on their behalf will take any
action or steps that would (i) require registration of the offer,
issuance or sale of the Warrants or any of the Warrant Shares under
the 1933 Act, (ii) cause the offer, issuance or sale of the Common
Shares, the Warrants or any of the Warrant Shares to any Buyer
hereunder to be integrated with any other offering of securities of
the Company, or (iii) cause the offer, issuance or sale of any
Warrant or any of the Warrant Shares to be integrated with any
other offering of securities of the Company.

 

(v) Notice of Disqualification
Events. The Company will notify each Buyer in writing, prior
to the Closing Date of (i) any Disqualification Event relating
to any Issuer Covered Person and (ii) any event that would,
with the passage of time, reasonably be expected to become a
Disqualification Event relating to any Issuer Covered Person, in
each case of which it is aware.

 

(w) Closing Documents. On or prior
to fourteen (14) calendar days after the Closing Date, the Company
agrees to deliver, or cause to be delivered, to each Buyer and
K&L Gates, LLP a complete closing set of the executed
Transaction Documents and any other document required to be
delivered to any party pursuant to Section ‎7 hereof or
otherwise.

 

5.

REGISTER; TRANSFER AGENT
INSTRUCTIONS; LEGEND.

 

(a) Register. The Company shall
maintain at its principal executive offices (or such other office
or agency of the Company as it may designate by notice to each
holder of Securities), a register for the Common Shares and the
Warrants in which the Company shall record the name and address of
the Person in whose name the Common Shares and the Warrants have been issued
(including the name and address of each transferee), the number of
Common Shares held by such Person and the number of Warrant Shares
issuable upon exercise of the Warrant held by such Person. The
Company shall keep the register open and available at all times
during business hours for inspection of each Buyer or its legal
representatives.

 

 

 

-27-

 

 

(b) Transfer Agent Instructions.
The Company shall issue irrevocable instructions to its Transfer
Agent and any subsequent transfer agent in a form acceptable to the
Lead Buyer (the “Irrevocable
Transfer Agent Instructions”) to issue certificates or
credit shares to the applicable balance accounts at DTC, registered
in the name of each Buyer or its respective nominee(s), for the
Common Shares and the Warrant Shares in such amounts as specified
from time to time by each Buyer to the Company upon the exercise of
the Warrants (as the case may be). The Company represents and
warrants that unless agreed by the Lead Buyer, no instruction other
than the Irrevocable Transfer Agent Instructions referred to in
this Section ‎5(b) will be given by the Company to its
Transfer Agent with respect to the Securities, and that the
Securities shall otherwise be freely transferable on the books and
records of the Company, as applicable, to the extent provided in
this Agreement and the other Transaction Documents. In the event
that such sale, assignment or transfer involves Warrant Shares
sold, assigned or transferred pursuant to an effective registration
statement or in compliance with Rule 144 (assuming the transferor
is not an affiliate of the Company), the transfer agent shall issue
such shares to each Buyer, assignee or transferee (as the case may
be) without any restrictive legend in accordance with Section
‎5‎(c) below. The Company acknowledges that a breach by
it of its obligations hereunder will cause irreparable harm to each
Buyer. Accordingly, the Company acknowledges that the remedy at law
for a breach of its obligations under this Section ‎5(b)
will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this
Section ‎5(b), that each Buyer shall be entitled, in
addition to all other available remedies, to an order and/or
injunction restraining any breach and requiring immediate issuance
and transfer, without the necessity of showing economic loss and
without any bond or other security being required. The Company
shall cause its counsel to issue a legal opinion to the Transfer
Agent as follows: (i) at the Closing with respect to the Common
Shares, (ii) upon each exercise of the Warrants (unless such
issuance covered by a prior legal opinion previously delivered to
the Transfer Agent), and (iii) on each date a registration
statement with respect to the issuance or resale of any of the
Warrant Shares is declared effective by the SEC. Any fees (with
respect to the Transfer Agent, counsel to the Company or otherwise)
associated with the issuance of such opinions or the removal of any
legends on any of the Securities shall be borne by the
Company.

 

(c) Legends. Certificates
and any other instruments evidencing the Common Shares. Each Buyer
understands that the Warrants and the Warrant Shares are being
issued pursuant to an exemption from registration or qualification
under the 1933 Act and applicable state securities laws, and except
as set forth below, the Warrants and the Warrant Shares shall bear
any legend as required by the “blue sky” laws of any
state and a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of such
stock certificates):

 

THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A CUSTOMARY
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II)
UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.

 

 

 

-28-

 

 

(d)

Removal of Legends

 

Certificates
evidencing the Warrant Shares shall not be required to contain the
legend set forth in Section ‎5‎(c) above or any other
legend (i) while a registration statement covering the resale of
such Warrant Shares is effective under the 1933 Act, (ii) following
any sale of such Warrant Shares pursuant to Rule 144 (assuming the
transferor is not an affiliate of the Company), (iii) if such
Warrant Shares are eligible to be sold, assigned or transferred
under Rule 144 (provided that the Buyer holding such Warrant Shares
provides the Company with reasonable assurances that such Warrant
Shares are eligible for sale, assignment or transfer under Rule 144
which shall not include an opinion of counsel), or (iv) if such
legend is not required under applicable requirements of the 1933
Act (including, without limitation, controlling judicial
interpretations and pronouncements issued by the SEC). If a legend
is not required pursuant to the foregoing, the Company shall no
later than two (2) Trading Days following the delivery by a Buyer
to the Company or the transfer agent (with notice to the Company)
of a legended certificate representing such Warrant Shares
(endorsed or with stock powers attached, signatures guaranteed, and
otherwise in form necessary to affect the reissuance and/or
transfer, if applicable), together with any other deliveries from
such Buyer as may be required above in this Section
‎5‎(c), as directed by such Buyer, either: (A) provided
that the Company’s transfer agent is participating in the DTC
Fast Automated Securities Transfer Program, credit the aggregate
number of Warrant Shares to which such Buyer shall be entitled to
such Buyer’s or its designee’s balance account with DTC
through its Deposit/Withdrawal at Custodian system or (B) if the
Company’s transfer agent is not participating in the DTC Fast
Automated Securities Transfer Program, issue and deliver (via
reputable overnight courier) to such Buyer, a certificate
representing such Warrant Shares that is free from all restrictive
and other legends, registered in the name of such Buyer or its
designee (the date by which such credit is so required to be made
to the balance account of such Buyer’s or such Buyer’s
nominee with DTC or such certificate is required to be delivered to
such Buyer pursuant to the foregoing is referred to herein as the
“Required Delivery
Date”).

 

(e) Buy-In. If the Company fails to
so properly deliver such unlegended certificates representing the
aggregate number of Warrant Shares to which a Buyer shall be
entitled, or so properly credit the aggregate number of Warrant
Shares to which such Buyer shall be entitled to
such Buyer’s
or its designee’s balance account with DTC through its
Deposit/Withdrawal at Custodian system, in each case by the
Required Delivery Date, then, in addition to all other remedies
available to such
Buyer, (i) the Company shall, pay to such Buyer, in cash, as partial
liquidated damages and not as a penalty, for each $1,000 of Warrant
Shares (based on the VWAP of the Common Stock on the date such
Warrant Shares are submitted to the Transfer Agent) delivered for
removal of the restrictive legend and subject
to Section 5(d), $10 per Trading Day (increasing to $20
per Trading Day five (5) Trading Days after such damages have
begun to accrue) for each Trading Day after the Legend Removal Date
until such certificate is delivered without a legend or such credit
to such balance account with DTC is made and (ii) if after the
Legend Removal Date such Buyer purchases (in an
open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by such Buyer of all or any
portion of the number of shares of Common Stock, or a sale of a
number of shares of Common Stock equal to all or any portion of the
number of shares of Common Stock, that such Buyer anticipated
receiving from the Company without any restrictive legend, then an
amount equal to the excess of such Buyer’s total
purchase price (including brokerage commissions and other
out-of-pocket expenses, if any) for the shares of Common Stock so
purchased (including brokerage commissions and other out-of-pocket
expenses, if any) (the “Buy-In Price”) over the product of
(A) such number of Warrant Shares that the Company was
required to deliver to such Buyer by the Legend
Removal Date multiplied by (B) the lowest closing sale price
of the Common Stock on any Trading Day during the period commencing
on the date of the delivery by such Buyer to the Company of
the applicable Warrant Shares (as the case may be) and ending on
the date of such delivery and payment under this Section
5(e).

 

(f)            FAST
Compliance. While any portion of any of the Warrants remains
outstanding, the Company shall maintain a transfer agent that
participates in the DTC Fast Automated Securities Transfer
Program.

 

 

 

-29-

 

 

6.

CONDITIONS
TO THE COMPANY’S OBLIGATION TO SELL.

 

The
obligation of the Company hereunder to issue and sell the Common
Shares and the Warrants to each Buyer at the Closing is subject to
the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for the
Company’s sole benefit and may be waived by the Company at
any time in its sole discretion (including with respect to any
individual Buyer) by providing the Lead Buyer and any applicable
Buyer with prior written notice thereof:

 

(a) Each Buyer shall
have executed this Agreement and delivered the same to the
Company.

 

(b) Each Buyer shall
have delivered to the Company the Purchase Price for the Common
Shares and the Warrants being purchased by each Buyer at the
Closing by wire transfer of immediately available funds in
accordance with the Flow of Funds Letter.

 

(c) The representations
and warranties of each Buyer shall be true and correct in all
material respects as of the date when made and as of the Closing
Date as though originally made at that time (except for
representations and warranties that speak as of a specific date,
which shall be true and correct as of such specific date), and each
Buyer shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by each
Buyer at or prior to the Closing Date.

 

7.

CONDITIONS TO THE BUYERS’
OBLIGATION TO PURCHASE.

 

The
obligation of each Buyer hereunder to purchase the Common Shares
and the Warrants at the Closing is subject to the satisfaction, at
or before the Closing Date, of each of the following conditions,
provided that these conditions are for the Buyers’ sole
benefit and may be waived by a Buyer at any time (and with the
consent of the Lead Buyer in any case) by providing the Company
with prior written notice thereof:

 

(a) The Company shall
have duly executed and delivered to each Buyer each of the
Transaction Documents, and the Company shall have (A) caused the
Transfer Agent to credit the Common Shares purchased by each Buyer
to such Buyer’s or its designee’s balance account with
DTC through its Deposit/Withdrawal at Custodian system and (B)
deliver to each Buyer a Warrant for that number of Warrant Shares
set forth opposite each such Buyer’s name on the signature
page hereto, duly executed on behalf of the Company and registered
in the name of each such Buyer or its designee.

 

(b) Each Buyer shall
have received the opinion of The Disclosure Law Group, a
Professional Corporation, the Company’s counsel, dated as of
the Closing Date, in the form reasonably acceptable to the Lead
Buyer.

 

(c) The Company shall
have delivered to each Buyer a copy of the Irrevocable Transfer
Agent Instructions, in the form reasonably acceptable to the Lead
Buyer, which instructions shall have been delivered to and
acknowledged in writing by the Company’s transfer
agent.

 

(d) The Company shall
have delivered to the Lead Buyer a certificate evidencing the
formation and good standing of the Company in the State of Nevada
issued by the Secretary of State of Nevada as of a date within ten
(10) days of the Closing Date.

 

 

 

-30-

 

 

(e) The Company shall
have delivered to the Lead Buyer a certificate evidencing the
Company’s qualification as a foreign corporation and good
standing issued by the Secretary of State (or comparable office) of
each jurisdiction in which the Company conducts business and is
required to so qualify, as of a date within ten (10) days of the
Closing Date.

 

(f) The Company shall
have delivered to the Lead Buyer a certificate, in the form
acceptable to each Buyer, executed by the Secretary of the Company
and dated as of the Closing Date, as to (i) the resolutions
consistent with Section ‎3(b) as adopted by the
Company’s board of directors in a form reasonably acceptable
to the Lead Buyer, (ii) the Articles of Incorporation of the
Company and (iii) the Bylaws of the Company, each as in effect
at the Closing.

 

(g) Each and every
representation and warranty of the Company shall be true and
correct as of the date when made and as of the Closing Date as
though originally made at that time (except for representations and
warranties that speak as of a specific date, which shall be true
and correct as of such specific date) and the Company shall have
performed, satisfied and complied in all respects with the
covenants, agreements and conditions required to be performed,
satisfied or complied with by the Company at or prior to the
Closing Date. The Lead Buyer shall have received a certificate,
duly executed by the Chief Executive Officer of the Company, dated
as of the Closing Date, to the foregoing effect and as to such
other matters as may be reasonably requested by each Buyer in the
form acceptable to the Lead Buyer.

 

(h) The Company shall
have delivered to the Lead Buyer a letter from the Transfer Agent
certifying the number of shares of Common Stock outstanding on the
Closing Date immediately prior to the Closing.

 

(i) The Common Stock
(A) shall be designated for quotation or listed (as applicable) on
the Principal Market and (B) shall not have been suspended, as of
the Closing Date, by the SEC or the Principal Market from trading
on the Principal Market nor shall suspension by the SEC or the
Principal Market have been threatened, as of the Closing Date,
either (I) in writing by the SEC or the Principal Market or (II) by
falling below the minimum maintenance requirements of the Principal
Market.

 

(j) The Company shall
have obtained all governmental, regulatory or third party consents
and approvals, if any, necessary for the sale of the Securities,
including without limitation, those required by the Principal
Market, if any.

 

(k) No statute, rule,
regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or
Governmental Entity of competent jurisdiction that prohibits the
consummation of any of the transactions contemplated by the
Transaction Documents.

 

(l) Since the date of
execution of this Agreement, no event or series of events shall
have occurred that reasonably would have or result in a Material
Adverse Effect.

 

(m) The Company shall
have submitted notice to the Principal Market to list or designate
for quotation (as the case may be) the Common Shares and the
Warrant Shares.

 

(n) The Lead Buyer
shall have received a letter on the letterhead of the Company, duly
executed by the Chief Executive Officer of the Company, setting
forth the wire transfer instructions of the Company (the
“Flow of Funds
Letter”).

 

 

 

-31-

 

 

(o) From the date
hereof to the Closing Date, (i) trading in the Common Stock shall
not have been suspended by the SEC or the Principal Market (except
for any suspension of trading of limited duration agreed to by the
Company, which suspension shall be terminated prior to the
Closing), and, (ii) at any time prior to the Closing Date, trading
in securities generally as reported by the Principal Market shall
not have been suspended or limited, or minimum prices shall not
have been established on securities whose trades are reported by
such service, or on the Principal Market, nor shall a banking
moratorium have been declared either by the United States or New
York State authorities nor shall there have occurred any material
outbreak or escalation of hostilities or other national or
international calamity of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each
case, in the reasonable judgment of any Buyer, makes it
impracticable or inadvisable to purchase the Securities at the
Closing.

 

(p) The Registration
Statement shall be effective and available for the issuance and
sale to the Buyers hereunder of an aggregate of 3,870,077 Common
Shares.

 

(q) The Company shall
have delivered to each Buyer the Prospectus and the Prospectus
Supplement (which may be delivered in accordance with Rule 172
under the 1933 Act).

 

(r) The Company shall
have delivered to each Buyer such other documents, instruments or
certificates relating to the transactions contemplated by this
Agreement as each Buyer or its counsel may reasonably
request.

 

8.

TERMINATION.

 

In the
event that the Closing shall not have occurred within five (5) days
of the date hereof, then each Buyer (with the Consent of the Lead
Buyer) shall have the right to terminate its obligations under this
Agreement at any time on or after the close of business on such
date without liability of such Buyer to the Company; provided,
however, the right to terminate this Agreement under this
Section ‎8 shall not be available to a Buyer if the
failure of the transactions contemplated by this Agreement to have
been consummated by such date is the result of such Buyer’s
breach of this Agreement. Nothing contained in this
Section ‎8 shall be deemed to release any party from any
liability for any breach by such party of the terms and provisions
of this Agreement or the other Transaction Documents or to impair
the right of any party to compel specific performance by any other
party of its obligations under this Agreement or the other
Transaction Documents.

 

9.

MISCELLANEOUS.

 

(a) Governing Law; Jurisdiction; Jury
Trial. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed
by the internal laws of the State of Delaware, without giving
effect to any choice of law or conflict of law provision or rule
(whether of the State of Delaware or any other jurisdictions) that
would cause the application of the laws of any jurisdictions other
than the State of Delaware. The Company hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts
sitting in Wilmington, Delaware, for the adjudication of any
dispute hereunder or in connection herewith or under any of the
other Transaction Documents or with any transaction contemplated
hereby or thereby, 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. Each
party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address
for such notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any manner permitted by
law. Nothing contained herein shall be deemed or operate to
preclude any Buyer from bringing suit or taking other legal action
against the Company in any other jurisdiction to collect on the
Company’s obligations to such Buyer or to enforce a judgment
or other court ruling in favor of such Buyer. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT
IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER
TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS
AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY OR THEREBY.

 

 

 

-32-

 

 

(b) Counterparts. This Agreement
may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and
delivered to the other party. In the event that any signature is
delivered by facsimile transmission or by an e-mail which contains
a portable document format (.pdf) file of an executed signature
page, such signature page shall create a valid and binding
obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such
signature page were an original thereof.

 

(c) Headings; Gender. The headings
of this Agreement are for convenience of reference and shall not
form part of, or affect the interpretation of, this Agreement.
Unless the context clearly indicates otherwise, each pronoun herein
shall be deemed to include the masculine, feminine, neuter,
singular and plural forms thereof. The terms
“including,” “includes,”
“include” and words of like import shall be construed
broadly as if followed by the words “without
limitation.” The terms “herein,”
“hereunder,” “hereof” and words of like
import refer to this entire Agreement instead of just the provision
in which they are found.

 

(d) Severability; Maximum Payment
Amounts. If any provision of this Agreement 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 Agreement so long as this Agreement 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). Notwithstanding anything to the
contrary contained in this Agreement or any other Transaction
Document (and without implication that the following is required or
applicable), it is the intention of the parties that in no event
shall amounts and value paid by the Company and/or any of its
Subsidiaries (as the case may be), or payable to or received by any
of the Buyers, under the Transaction Documents (including without
limitation, any amounts that would be characterized as
“interest” under applicable law) exceed amounts
permitted under any applicable law. Accordingly, if any obligation
to pay, payment made to a Buyer, or collection by a Buyer pursuant
the Transaction Documents is finally judicially determined to be
contrary to any such applicable law, such obligation to pay,
payment or collection shall be deemed to have been made by mutual
mistake of such Buyer, the Company and its Subsidiaries and such
amount shall be deemed to have been adjusted with retroactive
effect to the maximum amount or rate of interest, as the case may
be, as would not be so prohibited by the applicable law. Such
adjustment shall be effected, to the extent necessary, by reducing
or refunding, at the option of such Buyer, the amount of interest
or any other amounts which would constitute unlawful amounts
required to be paid or actually paid to such Buyer under the
Transaction Documents. For greater certainty, to the extent that
any interest, charges, fees, expenses or other amounts required to
be paid to or received by such Buyer under any of the Transaction
Documents or related thereto are held to be within the meaning of
“interest” or another applicable term to otherwise be
violative of applicable law, such amounts shall be pro-rated over
the period of time to which they relate.

 

 

 

-33-

 

 

(e) Entire Agreement; Amendments.
This Agreement, the other Transaction Documents and the schedules
and exhibits attached hereto and thereto and the instruments
referenced herein and therein supersede all other prior oral or
written agreements between the Buyers, the Company, its
Subsidiaries, their affiliates and Persons acting on their behalf,
and this Agreement, the other Transaction Documents, the schedules
and exhibits attached hereto and thereto and the instruments
referenced herein and therein contain the entire understanding of
the parties solely with respect to the matters covered herein and
therein. Except as specifically set forth herein or therein,
neither the Company nor any Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. For
clarification purposes, the Recitals are part of this Agreement.
Provisions of this Agreement may be amended only with the written
consent of the Company and the Lead Buyer, except in the case of
any covenant or other obligations applicable to all of the Buyers
shall require the consent of each Buyer. Any amendment of any
provision of this Agreement made in conformity with the provisions
of this Section ‎9(e) shall be binding upon each Buyer and
the Company. No waiver shall be effective unless it is in writing
and signed by an authorized representative of the waiving party,
and any waiver of any provision of this Agreement made in
conformity with the provisions of this Section ‎9(e) shall be
binding on the waiving party. The Company has not, directly or
indirectly, made any agreements with any Buyer relating to the
terms or conditions of the transactions contemplated by the
Transaction Documents except as set forth in the Transaction
Documents. Without limiting the foregoing, the Company confirms
that, except as set forth in this Agreement, no Buyer has made any
commitment or promise or has any other obligation to provide any
financing to the Company, any Subsidiary or otherwise. As a
material inducement for the Buyers to enter into this Agreement,
the Company expressly acknowledges and agrees that (i) no due
diligence or other investigation or inquiry conducted by any Buyer,
any of its advisors or any of its representatives shall affect such
Buyer’s right to rely on, or shall modify or qualify in any
manner or be an exception to any of, the Company’s
representations and warranties contained in this Agreement or any
other Transaction Document, (ii) nothing contained in the
Registration Statement, the Prospectus or the Prospectus Supplement
shall affect any Buyer’s right to rely on, or shall modify or
qualify in any manner or be an exception to any of, the
Company’s representations and warranties contained in this
Agreement or any other Transaction Document and (iii) unless a
provision of this Agreement or any other Transaction Document is
expressly preceded by the phrase “except as disclosed in the
SEC Documents,” nothing contained in any of the SEC Documents
shall affect any Buyer’s right to rely on, or shall modify or
qualify in any manner or be an exception to any of, the
Company’s representations and warranties contained in this
Agreement or any other Transaction Document.

 

(f) Notices. Any notices, consents,
waivers or other communications required or permitted to be given
under the terms of this Agreement must be in writing and will be
deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party) or electronic
mail; or (iii) one (1) Business Day after deposit with an overnight
courier service with next day delivery specified, in each case,
properly addressed to the party to receive the same. The addresses,
facsimile numbers and e-mail addresses for such communications
shall be:

 

 

 

-34-

 

 

 

If to
the Company:

 

VistaGen
Therapeutics, Inc.

343
Allerton Avenue

South
San Francisco, CA 94080

Telephone:
650-577-3600

Attention:
Shawn Singh, Chief Executive Officer

E-Mail:
ssingh@vistagen.com

 

With a
copy (for informational purposes only) to:

 

The
Disclosure Law Group, a Professional Corporation

655
West Broadway, Suite 870

San
Diego, CA 92101

Telephone:
619-272-7062

Attention:
Daniel W. Rumsey, Managing Director

E-Mail:
drumsey@disclosurelawgroup.com

 

If to
the Transfer Agent:

 

Computershare Trust
Company, N.A.

8742
Lucent Blvd., Suite 225

Highlands
Ranch, CO 80129

Telephone:
303-262-0637

Facsimile:
303-262-0609

Attention:
Audrey Matheney

E-Mail:
audrey.matheny@computershare.com

 

If to
the Lead Buyer:

 

Lincoln
Park Capital Fund, LLC

440
North Wells, Suite 410

Chicago, IL
60654

Telephone:
312.822.9300

Facsimile:
312.822.9301

E-mail:
jscheinfeld@lpcfunds.com/jcope@lpcfunds.com

Attention: Josh
Scheinfeld/Jonathan Cope

 

with a
copy (for informational purposes only) to:

 

K&L
Gates, LLP

200 S.
Biscayne Blvd., Ste. 3900

Miami,
Florida 33131

Telephone:
(305) 539-3306

Facsimile:
(305) 538-7095

Attention: clayton.parker@klgates.com

Email: Clayton E. Parker,
Esq.

 

 

 

-35-

 

 

 

If to a
Buyer other than the Lead Buyer, at the address set forth opposite
such Buyer’s signature on the signature page
hereto.

 

or to
such other address, e-mail address and/or facsimile number and/or
to the attention of such other Person as the recipient party has
specified by written notice given to each other party five (5) days
prior to the effectiveness of such change. Written confirmation of
receipt (A) given by the recipient of such notice, consent, waiver
or other communication, (B) mechanically or electronically
generated by the sender’s facsimile machine or e-mail
containing the time, date, recipient facsimile number and, with
respect to each facsimile transmission, an image of the first page
of such transmission or (C) provided by an overnight courier
service shall be rebuttable evidence of personal service, receipt
by facsimile or receipt from an overnight courier service in
accordance with clause (i), (ii) or (iii) above,
respectively.

 

(g) Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns, including any
subsequent purchasers of any of the Warrants (but excluding any
purchasers of Underlying Securities, unless pursuant to a written
assignment by a Buyer). The Company shall not assign this Agreement
or any rights or obligations hereunder without the prior written
consent of the Lead Buyer, including, without limitation, by way of
a Fundamental Transaction (as defined in the Warrants) (unless the
Company is in compliance with the applicable provisions governing
Fundamental Transactions set forth in the Warrants). Each Buyer may
assign some or all of its rights hereunder in connection with any
transfer of any of its Securities without the consent of the
Company, in which event such assignee shall be deemed to be a Buyer
hereunder with respect to such assigned rights.

 

(h) No Third Party Beneficiaries.
This Agreement is intended for the benefit of the parties hereto
and their respective permitted successors and assigns, and is not
for the benefit of, nor may any provision hereof be enforced by,
any other Person, other than the Indemnitees referred to in
Section ‎9(k).

 

(i) Survival. The representations,
warranties, agreements and covenants shall survive the
Closing.

 

(j) Further Assurances. Each party
shall do and perform, or cause to be done and performed, all such
further acts and things, and shall execute and deliver all such
other agreements, certificates, instruments and documents, as any
other party may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation
of the transactions contemplated hereby.

 

 

 

-36-

 

 

(k) Indemnification.

 

(i) In consideration of
the Lead Buyer’s and each Buyer’s execution and
delivery of this Agreement and acquiring the Securities and in
addition to all of the Company’s other obligations under the
Transaction Documents, the Company, and each Buyer other than the
Lead Buyer, jointly and severally, solely in the case of subsection
(iv) hereunder (collectively, the “Indemnitors”), shall defend,
protect, indemnify and hold harmless each Buyer, and each holder of
any Securities and all of their stockholders, partners, members,
officers, directors, employees and direct or indirect investors and
any of the foregoing Persons’ agents or other representatives
including, without limitation, those retained in connection with
the transactions contemplated by this Agreement (the
“Indemnitee
Affiliates”, and together with each Buyer, the
“Indemnitees”),
from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages,
and expenses in connection therewith (irrespective of whether any
such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys’
fees and disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or
relating to (i) any misrepresentation or breach of any
representation or warranty made by the Company in any of the
Transaction Documents, (ii) any breach of any covenant, agreement
or obligation of the Company contained in any of the Transaction
Documents, (iii) any cause of action, suit, proceeding or claim
brought or made against such Indemnitee by a third party (including
for these purposes a derivative action brought on behalf of the
Company or any Subsidiary) or which otherwise involves such
Indemnitee that arises out of or results from (A) the execution,
delivery, performance or enforcement of any of the Transaction
Documents, (B) any transaction financed or to be financed in whole
or in part, directly or indirectly, with the proceeds of the
issuance of the Securities, (C) the status of any Buyer or holder
of the Securities either as an investor in the Company pursuant to
the transactions contemplated by the Transaction Documents or as a
party to this Agreement (including, without limitation, as a party
in interest or otherwise in any action or proceeding for injunctive
or other equitable relief), or (D) with respect to the Registration
Statement, or any other registration statement of the Company
providing for the sale or resale by any Buyer of any Securities
filed by the Company with the SEC, (1) any untrue or alleged
untrue statement of a material fact contained in such registration
statement, any prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus,
or arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary to
make the statements therein (in the case of any prospectus or
supplement thereto, in light of the circumstances under which they
were made) not misleading, except to the extent, but only to the
extent, that such untrue statements or omissions are based solely
upon information regarding a Buyer furnished in writing to the
Company by such Buyer expressly for use therein or (2) any
violation or alleged violation by the Company of the 1933 Act, the
1934 Act or any state securities law, or any rule or regulation
thereunder in connection therewith or (iv) in the case of the Lead
Buyer or any of its Indemnitee Affiliates as Indemnitee, any cause
of action, suit, proceeding or claim brought or made against such
Indemnitee by a third party or an Indemnitor, or which otherwise
involves such Indemnitee, that arises out of or results from (A)
the performance of the obligations of the Lead Buyer hereunder in
good faith, (B) the status of such Indemnitee as Lead Buyer in
connection with the execution, delivery, performance or enforcement
of any of the Transaction Documents and or in connection with any
consent or notice right of the Lead Buyer hereunder or thereunder
or (D) any diligence matters or other matters related to the
Closing. To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company shall make
the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable
law.

 

 

 

-37-

 

 

(ii) Promptly
after receipt by an Indemnitee under this Section ‎9(k) of
notice of the commencement of any action or proceeding (including
any governmental action or proceeding) involving an Indemnified
Liability, such Indemnitee shall, if a claim in respect thereof is
to be made against any Indemnitor under this Section ‎9(k),
deliver to each such Indemnitor a written notice of the
commencement thereof, and each such Indemnitor shall have the right
to participate in, and, to the extent the Company or any other
Indemnitor so desires, to assume control of the defense thereof
with counsel mutually satisfactory to each such Indemnitor so
noticed and the Indemnitee; provided, however, that an Indemnitee
shall have the right to retain its own counsel with the fees and
expenses of such counsel to be paid by such Indemnitor(s) if: (A)
such Indemnitor(s) have agreed in writing to pay such fees and
expenses; (B) each such Indemnitor shall have failed promptly to
assume the defense of such Indemnified Liability and to employ
counsel reasonably satisfactory to such Indemnitee in any such
Indemnified Liability; or (C) the named parties to any such
Indemnified Liability (including any impleaded parties) include
both such Indemnitee and any Indemnitor, and such Indemnitee shall
have been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such Indemnitee and
any Indemnitor (in which case, if such Indemnitee notifies the
Company in writing that it elects to employ separate counsel at the
expense of such Indemnitor(s), then such Indemnitor(s) shall not
have the right to assume the defense thereof and such counsel shall
be at the expense of the such Indemnitor(s)), provided further,
that in the case of clause (C) above the such Indemnitor(s) shall
not be responsible for the reasonable fees and expenses of more
than one (1) separate legal counsel for the Indemnitees. The
Indemnitee shall reasonably cooperate with each Indemnitor in
connection with any negotiation or defense of any such action or
Indemnified Liability by each such Indemnitor and shall furnish to
each such Indemnitor all information reasonably available to the
Indemnitee which relates to such action or Indemnified Liability.
Each such Indemnitor shall keep the Indemnitee reasonably apprised
at all times as to the status of the defense or any settlement
negotiations with respect thereto. Each such Indemnitor shall not
be liable for any settlement of any action, claim or proceeding
effected without its prior written consent, provided, however, that
such Indemnitor(s) shall not unreasonably withhold, delay or
condition its consent. Each such Indemnitor shall not, without the
prior written consent of the Indemnitee, consent to entry of any
judgment or enter into any settlement or other compromise which
does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnitee of a release from all
liability in respect to such Indemnified Liability or litigation,
and such settlement shall not include any admission as to fault on
the part of the Indemnitee. Following indemnification as provided
for hereunder, each such Indemnitor shall be subrogated to all
rights of the Indemnitee with respect to all third parties, firms
or corporations relating to the matter for which indemnification
has been made. The failure to deliver written notice to any
Indemnitor within a reasonable time of the commencement of any such
action shall not relieve such Indemnitor of any liability to the
Indemnitee under this Section ‎9(k), except to the extent
that such Indemnitor is materially and adversely prejudiced in its
ability to defend such action.

 

(iii) The
indemnification required by this Section ‎9(k) shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, within ten (10) days after bills are
received or Indemnified Liabilities are incurred.

 

(iv) The
indemnity agreement contained herein shall be in addition to (A)
any cause of action or similar right of the Indemnitee against any
Indemnitor or others, and (B) any liabilities an Indemnitor may be
subject to pursuant to the law.

 

 

 

-38-

 

 

(l) Construction. The language used
in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent, and no rules of strict
construction will be applied against any party. No specific
representation or warranty shall limit the generality or
applicability of a more general representation or warranty. Each
and every reference to share prices, shares of Common Stock and any
other numbers in this Agreement that relate to the Common Stock
shall be automatically adjusted for any stock splits, stock
dividends, stock combinations, recapitalizations or other similar
transactions that occur with respect to the Common Stock after the
date of this Agreement. It is expressly understood and agreed that
for all purposes of this Agreement, and without implication that
the contrary would otherwise be true, neither transactions nor
purchases nor sales shall include the
location and/or reservation of borrowable shares of Common
Stock.

 

(m) Remedies. Each Buyer and in the
event of assignment by a Buyer of its rights and obligations
hereunder, each holder of any Securities, shall have all rights and
remedies set forth in the Transaction Documents and all rights and
remedies which such holders have been granted at any time under any
other agreement or contract and all of the rights which such
holders have under any law. Any Person having any rights under any
provision of this Agreement shall be entitled to enforce such
rights specifically (without posting a bond or other security), to
recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law.
Furthermore, the Company recognizes that in the event that it or
any Subsidiary fails to perform, observe, or discharge any or all
of its or such Subsidiary’s (as the case may be) obligations
under the Transaction Documents, any remedy at law would inadequate
relief to the Buyers. The Company therefore agrees that each Buyer
shall be entitled to specific performance and/or temporary,
preliminary and permanent injunctive or other equitable relief from
any court of competent jurisdiction in any such case without the
necessity of proving actual damages and without posting a bond or
other security. The remedies provided in this Agreement and the
other Transaction Documents shall be cumulative and in addition to
all other remedies available under this Agreement and the other
Transaction Documents, at law or in equity (including a decree of
specific performance and/or other injunctive relief).

 

(n) Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without
limiting any similar provisions of) the Transaction Documents,
whenever a Buyer exercises a right, election, demand or option
under a Transaction Document and the Company or any Subsidiary does
not timely perform its related obligations within the periods
therein provided, then such Buyer may rescind or withdraw, in its
sole discretion from time to time upon written notice to the
Company or such Subsidiary (as the case may be), any relevant
notice, demand or election in whole or in part without prejudice to
its future actions and rights; provided, however, that in the case
of a rescission of an exercise of the Warrant, such Buyer shall be
required to return any Warrant Shares, respectively, subject to any
such rescinded exercise notice concurrently with the return to such
Buyer of the aggregate exercise price paid to the Company for such
Warrant Shares, as applicable, and the restoration of such
Buyer’s right to acquire such Warrant Shares pursuant to such
Warrant (including, issuance of a replacement warrant certificate
evidencing such restored right), respectively.

 

 

 

-39-

 

 

(o) Payment Set Aside; Currency. To
the extent that the Company makes a payment or payments to a Buyer
hereunder or pursuant to any of the other Transaction Documents or
a Buyer enforce or exercise their rights hereunder or thereunder,
and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside, recovered from,
disgorged by or are required to be refunded, repaid or otherwise
restored to the Company, a trustee, receiver or any other Person
under any law (including, without limitation, any bankruptcy law,
foreign, state or federal law, common law or equitable cause of
action), then to the extent of any such restoration the obligation
or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment
had not been made or such enforcement or setoff had not occurred.
Unless otherwise expressly indicated, all dollar amounts referred
to in this Agreement and the other Transaction Documents are in
United States Dollars (“U.S.
Dollars”), and all amounts owing under this Agreement
and all other Transaction Documents shall be paid in U.S. Dollars.
All amounts denominated in other currencies (if any) shall be
converted into the U.S. Dollar equivalent amount in accordance with
the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to any amount
of currency to be converted into U.S. Dollars pursuant to this
Agreement, the U.S. Dollar exchange rate as published in the Wall
Street Journal on the relevant date of calculation.

 

(p) Judgment Currency.

 

(i) If for the purpose
of obtaining or enforcing judgment against the Company in
connection with this Agreement or any other Transaction Document in
any court in any jurisdiction it becomes necessary to convert into
any other currency (such other currency being hereinafter in this
Section ‎9(p) referred to as the “Judgment Currency”) an amount due
in US Dollars under this Agreement, the conversion shall be made at
the Exchange Rate prevailing on the Trading Day immediately
preceding:

 

(1) the date actual
payment of the amount due, in the case of any proceeding in the
courts of New York or in the courts of any other jurisdiction that
will give effect to such conversion being made on such date:
or

 

(2) the date on which
the foreign court determines, in the case of any proceeding in the
courts of any other jurisdiction (the date as of which such
conversion is made pursuant to this Section ‎9(p)(i)(1)
being hereinafter referred to as the “Judgment Conversion
Date”).

 

(ii) If
in the case of any proceeding in the court of any jurisdiction
referred to in Section ‎9(p)(i)(1) above, there is a
change in the Exchange Rate prevailing between the Judgment
Conversion Date and the date of actual payment of the amount due,
the applicable party shall pay such adjusted amount as may be
necessary to ensure that the amount paid in the Judgment Currency,
when converted at the Exchange Rate prevailing on the date of
payment, will produce the amount of US Dollars which could have
been purchased with the amount of Judgment Currency stipulated in
the judgment or judicial order at the Exchange Rate prevailing on
the Judgment Conversion Date.

 

(iii) Any
amount due from the Company under this provision shall be due as a
separate debt and shall not be affected by judgment being obtained
for any other amounts due under or in respect of this Agreement or
any other Transaction Document.

 

(q) Liquidated Damages. The
Company’s obligations to pay any partial liquidated damages
or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until
all unpaid partial liquidated damages and other amounts have been
paid notwithstanding the fact that the instrument or security
pursuant to which such partial liquidated damages or other amounts
are due and payable shall have been canceled.

 

 

 

[Signature
Pages Follows]

 

 

 

-40-

 

 

 

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

 

	
 

	

COMPANY:

 

	
 

	

VISTAGEN
THERAPEUTICS, INC.

 

 

 

By:  /s/
Shawn Singh                
     
                 

Name:
Shawn Singh

Title:
Chief Executive Officer

 

 

-41-

 

 

 

IN WITNESS WHEREOF, the undersigned
Buyer has caused this Agreement to be duly executed as of the date
first written above.

 

	

ADDRESS:

__________________________________

 

 

	

BUYER:

 

__________________________________ 

 

 

	
__________________________________ 

	

By: 
__________________________________
                                                             

Name:Title:

 

	
 

	

Total
Investment: $_________

 

Number
of Common Shares: __________

 

	
 

	

Number
of Warrant Shares: ___________

 

 

 

 

 

 

 

 

-42-

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