Document:

EXECUTION
COPY

 

EMPLOYMENT
AGREEMENT

 

AGREEMENT,
made June 18, 2018, by and between Marina Biotech, Inc., a Delaware corporation (the “Company”) and Robert
Moscato (the “Executive”).

 

RECITALS

 

In
order to induce Executive to serve as the Chief Executive Officer (the “CEO”) of the Company, the Company desires
to provide Executive with compensation and other benefits on the terms and conditions set forth in this Agreement.

 

Executive
is willing to accept such employment and perform services for the Company, on the terms and conditions hereinafter set forth.

 

It
is therefore hereby agreed by and between the parties as follows:

 

1.
Employment.

 

1.1
Subject to the terms and conditions of this Agreement, the Company agrees to employ Executive during the term hereof as its CEO.
In his capacity as CEO of the Company, Executive shall report to the Company’s Board of Directors (the “Board”)
and shall have the powers, responsibilities and authorities assigned to him by the Board from time to time.

 

1.2
Subject to the terms and conditions of this Agreement, Executive hereby accepts employment as the CEO of the Company commencing
as of June 18, 2018 (the “Commencement Date”), and agrees to devote his full working time and efforts, to the best
of his ability, experience and talent, to the performance of services, duties and responsibilities in connection therewith. Executive
shall perform such duties and exercise such powers, commensurate with his position as the CEO of the Company, as the Board shall
from time to time delegate to him on such terms and conditions and subject to such restrictions as the Board may reasonably from
time to time impose. Additionally the Company intends that Executive shall serve on the Board during the Term. Executive agrees
to serve on the Board, if elected, during the Term.

 

    	 

    	 

    

 

1.3
Except as provided in Section 12, nothing in this Agreement shall preclude Executive from engaging, so long as, in the reasonable
determination of the Board, such activities do not interfere with his duties and responsibilities hereunder, in charitable and
community affairs, from managing any passive investment made by him in publicly traded equity securities or other property (provided
that no such investment may exceed 1% of the equity of any entity, without the prior approval of the Board) or from serving, subject
to the prior written approval of the Board, as a member of boards of directors or as a trustee of any other corporation, association
or entity. Notwithstanding anything to the contrary in this Agreement, the Company acknowledges that Executive owns an indirect
12% interest in Cerecor, a publicly traded company, and is comfortable with such ownership, provided that Executive remains a
passive investor in Cerecor.

 

2.
Term of Employment. Executive’s term of employment under this Agreement shall commence on the Commencement Date and,
subject to the terms hereof, shall terminate on the earlier of: (i) the third anniversary of the Commencement Date (the “Termination
Date”); or (ii) the termination of Executive’s employment pursuant to this Agreement (the period from the Effective
Date until the termination of this Agreement shall be the “Term”). This Agreement shall be renewed automatically for
succeeding terms of one (1) year following the Termination Date (in which case both the Termination Date and the Term shall be
extended one year on each renewal), unless either party gives written notice to the other at least one hundred eighty (180) days
prior to the applicable Termination Date of its intention not to renew.

 

    	2

    	 

    

 

3.
Compensation.

 

3.1
Salary. The Company shall pay Executive a base salary (“Base Salary”) at the rate of $360,000 per annum during
the Term (prorated for partial years). Base Salary shall be payable in accordance with the ordinary payroll practices of the Company.
For the period beginning on the Commencement Date through July 8, 2018, Executive shall be paid at the rate of one half of the
Base Salary. Beginning July 9, 2018 and beyond Executive shall be paid at the rate of 100% of the Base Salary, except as the Board
may increase the Base Salary from time to time. Any adjustment in Base Salary shall be in the sole discretion of the Board and,
as so adjusted, shall constitute “Base Salary” hereunder. The Board shall consider Executive’s Base Salary for
annual increase no later than the end of the first quarter of each calendar year beginning in the first full calendar year after
the Commencement Date.

 

3.2
2018 Bonuses. In addition to his Base Salary, Executive shall be eligible to receive (2) two different bonuses for 2018,
as follows:

 

(a)
2018 Revenue Bonus. In the event that the Company’s Gross Revenue for the Prorated 2018 Fiscal Year (each as defined below)
equals or exceeds $1.2 million, as determined by the Company’s auditors, then the Company shall pay Executive a bonus (the
“2018 Revenue Bonus”) equal to $100,000 multiplied by a fraction, the numerator of which is the number of days in
the Prorated 2018 Fiscal Year during which Executive is an employee in good standing with the Company and the denominator of which
is 365. The Company shall pay Executive the 2018 Revenue Bonus (if earned) in 2019 within 30 days of the Company’s public
reporting of its 2018 final results, but in no event later than the end of 2019 and without regard to whether Executive remains
an employee in good standing beyond the Prorated 2018 Fiscal Year; but provided that Executive is an employee in good standing
with the Company on December 31, 2018. For purposes of this Agreement, the “Prorated 2018 Fiscal Year” means that
portion of the 2018 fiscal year starting on the Commencement Date and ending on the last day of the 2018 fiscal year. For purposes
of this Agreement, “Gross Revenue” shall mean the total amount of sales recognized by Company from the Commencement
Date through the remainder of the 2018 calendar year, less the sum of any returns, rebates, chargebacks and distribution discounts.

 

    	3

    	 

    

 

(b)
2018 Stock Price Bonus. In the event that the daily volume weighted average price of the Company’s common stock on the trading
market or exchange on which the Company’s common stock is then listed or quoted for trading is not less than $2.00 per share
(as adjusted for any stock splits, combinations or similar events) for a sixty (60) consecutive day period beginning on any day
within the Prorated 2018 Fiscal Year, then the Company shall pay Executive a bonus (the “2018 Stock Price Bonus”) equal
to $100,000 multiplied by a fraction, the numerator of which is the number of days in the Prorated 2018 Fiscal Year during which
Executive is an employee in good standing with the Company and the denominator of which is 365. The Company shall pay Executive
the 2018 Stock Price Bonus (if earned) in 2019, but not later than March 15, 2019; provided that the Executive must be an employee
in good standing with the Company on the date the 2018 Stock Price Bonus is otherwise due to be paid in order to receive it.

 

3.3
Annual Bonus. In addition to his Base Salary, starting for fiscal years 2019 (with the first such bonus payable in 2020)
Executive shall be eligible to receive an annual bonus (the “Bonus”) during the Term with a target amount equal to
fifty percent (50%) of Base Salary (the “Target Bonus”), based on performance criteria determined by the Board in
its sole discretion. The Company shall pay Executive the Bonus (if earned) for a year in the year following the year for which
it is earned, within 30 days of the Company’s public reporting of the fiscal results for the year in respect of which the
Bonus is earned, but in no event later than the end of such following year; provided that the Executive must be an employee in
good standing with the Company on the date the Bonus is otherwise due to be paid in order to receive it.

 

    	4

    	 

    

 

3.4 Compensation
Plans and Programs. Executive shall be eligible to participate in any compensation plan or program maintained by the Company
and generally made available to other senior executives of the Company, on terms comparable to those applicable to such other senior
executives.

 

3.5 Stock
Options

 

(a)
The Company is currently in the process of evaluating whether to implement a new stock option plan (the “New Plan”)
or amend its current stock option plan (the “Current Plan” and collectively with the New Plan, each a “Plan”).
As soon as practicable following the Commencement Date and the adoption or amendment of a Plan, provided that the Executive is
an employee of the Company on such grant date, the Company shall grant Executive an option (the “Option”) to purchase
1,000,000 shares of common stock of the Company (“Common Stock”). The per share exercise price of the Option shall
be the fair market value of a share of Common Stock on the Option’s grant date, which shall be the closing price of the Common
Stock on the Option’s grant date. The Executive shall be vested in 25% of the Option as of the grant date (covering 250,000
underlying shares of Common Stock), and the remaining unvested portion of the Option shall vest 25% on each of the first three
(3) anniversaries of the grant date such that on the third (3rd) anniversary of the grant date, Executive shall be fully
vested in the Option; provided that, except as discussed below, Executive must be employed by the Company on each vesting date
in order to vest in the applicable portion of the Option. The Board shall approve a form of Plan (or amendment to the Plan) within
thirty (30) days following the Commencement Date and shall recommend that the Company’s stockholders approve such Plan (or
amendment) at the next annual or special meeting of the stockholders of the Company.

 

    	5

    	 

    

 

(b)
Notwithstanding anything herein to the contrary, the Option shall be subject to the terms and conditions of the Plan and award
agreement (as applicable) and in the event of any conflict between this Agreement and such Plan and/or award agreement, the Plan
and award agreement shall control.

 

3.6
2018 Stock Options

 

(a)
In addition to the Option discussed in Section 3.5 above, as soon as practicable following the Commencement Date and the adoption
or amendment of the Plan, the Company shall grant Executive two additional options as follows:

 

(i)
The Company shall grant Executive an option (the “2018 Revenue Option”) to purchase 250,000 shares of Common Stock.
The 2018 Revenue Option shall be unvested as of the grant date and shall only vest if and on the date that the Company determines
that the Executive has earned the 2018 Revenue Bonus.

 

(ii)
The Company shall grant Executive an option (the “2018 Stock Price Option” and together with the 2018 Revenue Option,
the “2018 Options”) to purchase 250,000 shares of Common Stock. The 2018 Stock Price Option shall be unvested as of
the grant date and shall only vest if and on the date that the Company determines that the Executive has earned the 2018 Stock
Price Bonus.

 

    	6

    	 

    

 

(b)
The per share exercise price of the 2018 Options shall be the fair market value of a share of Common Stock on the 2018 Options’
grant dates, which shall be the closing price of the Common Stock on such grant date(s).

 

(c)
Notwithstanding anything herein to the contrary, the 2018 Options shall be subject to the terms and conditions of the Plan and
award agreements (as applicable) and in the event of any conflict between this Agreement and such Plan and/or award agreements,
the Plan and award agreements shall control.

 

3.7
Special Bonus. Within ten (10) days following the execution of this Agreement by the Company and Executive, the Company
shall make a one-time payment in the amount of $6,923.00 (less applicable withholding) to Executive by check or any other method
of payment acceptable to Executive and the Company (the “Special Bonus”), which is in full payment and consideration
for all services the Executive has provided to the Company and any subsidiaries through the Commencement Date, whether as an employee,
consultant, or otherwise. Executive acknowledges and agrees that this Special Bonus fully compensates him for such services and
that the Company does not owe him and he has no rights or claims to any additional amounts, benefits, or payments in connection
with his service to the Company and any subsidiaries prior to the Commencement Date.

 

    	7

    	 

    

 

4.
Employee Benefits.

 

4.1
Employee Benefit Programs, Plans and Practices. The Company shall provide Executive during the Term with coverage under
all employee pension and welfare benefit programs, plans and practices (commensurate with his position in the Company and to the
extent permitted under any employee benefit plan) in accordance with the terms thereof, which the Company generally makes available
to its senior executives. During the Term, Executive and his dependents shall be eligible for family coverage under the Company’s
group health insurance plan, subject to the terms of such plan. If Executive elects to enroll in such plan, the Company will pay
100% of the premiums thereunder (for both single or family coverage, as applicable). However, nothing herein requires the Company
to keep a health insurance plan or arrangement in place, or continue any health insurance plan or arrangement, and the Company
may modify, amend or terminate such plan or program at any time in its sole discretion. Furthermore, the Company may, in its sole
discretion, amend, modify, or cease paying the portion of the premiums it pays on Executive’s behalf, including, but not
limited to, in the event that the Company or any employee can become subject to any tax or penalty under the Patient Protection
and Affordable Care Act (as amended from time to time) or Sections 105(h), 106 or 125 of the Internal Revenue Code of 1986, as
amended, (the “Code”), or applicable regulations or guidance issued thereunder.

 

4.2
Vacation and Fringe Benefits. Executive shall be entitled to fifteen (15) business days paid vacation in each calendar
year, which shall be taken at such times as are consistent with Executive’s responsibilities hereunder. Unless otherwise
approved by the Board, any vacation days not taken in any calendar year shall be forfeited without payment therefor. In addition,
Executive shall be entitled to the perquisites and other fringe benefits generally made available to senior executives of the
Company, commensurate with his position with the Company.

 

5.
Expenses. Executive is authorized to incur reasonable expenses in carrying out his duties and responsibilities under this
Agreement, including, without limitation, expenses for travel and similar items related to such duties and responsibilities. The
Company will reimburse Executive for all such expenses upon presentation by Executive, from time to time, of accounts of such
expenditures (appropriately itemized and approved consistent with the Company’s policy).

 

    	8

    	 

    

 

6.
Termination of Employment.

 

6.1
Termination Not for Cause or for Good Reason.

 

(a)
The Company or Executive may terminate Executive’s employment at any time for any reason. If Executive’s employment
is terminated by the Company other than for Cause (as defined in Section 6.2 hereof) or as a result of Executive’s death
or Permanent Disability (as defined in Section 6.2 hereof), or if Executive terminates his employment for Good Reason (as defined
in Section 6.1 (d) hereof) prior to the Termination Date, Executive shall receive: (i) any accrued but unpaid portion of Base
Salary through the date of such termination, payable within fifteen (15) days of the date of such termination (or earlier if required
by applicable law); (ii) any unreimbursed business expenses incurred through the date of such termination and for which reimbursement
is permitted under the Company’s policies (payable in accordance with the Company’s policies); and (iii) all other
payments and benefits to which Executive is entitled pursuant to the terms of any employment benefit plan or program in which
Executive participated on the date of such termination, payable in accordance with the terms of such plans or programs (the amounts
described above in (i) through (iii) being the “Accrued Amounts”). In addition to the Accrued Amounts, subject to
Executive’s continued compliance with the terms of this Agreement, including, but not limited to, the provisions of Section
12 hereof, the Executive shall be entitled to: (A) continue to receive Base Salary for the Severance Period (defined below), payable
in accordance with the Company’s payroll practices (“Salary Continuation”); (B) immediately vest in the unvested
portion of the Option (if any) which would have vested during the Severance Period had Executive remained employed with the Company
through the end of the Severance Period; and (C) if Executive then participates in the Company’s medical plan(s) and the
Executive timely elects to continue to receive group health insurance coverage under the Consolidated Omnibus Budget Reconciliation
Act (“COBRA”), the Company shall either directly pay or reimburse the Executive for all monthly COBRA premiums incurred
by Executive on behalf of both himself and his dependents for the Severance Period (such monthly payments being the “COBRA
Amount”), provided that in order to be reimbursed, the Executive must provide the Company with adequate documentation of
his payment of such monthly COBRA premiums. The COBRA Amount shall maintain the coverage the Executive and his dependents (if
applicable) had immediately prior to the date of termination of Executive’s employment with the Company (subject to any
changes in coverage that effect employees generally). In the event the Executive does not elect COBRA coverage, the Executive
subsequently becomes ineligible for continued COBRA coverage, the Executive fails to provide the Company with adequate documentation
of his payment of such COBRA premiums (if applicable), or the Executive does not execute the Release or subsequently revokes the
Release, the Company shall no longer be obligated to pay the Executive any remaining portion of the COBRA Amount.

 

    	9

    	 

    

 

(b)
In order to receive the Salary Continuation, the accelerated vesting of a portion of the Option, and to continue receiving the
COBRA Amount, Executive must first execute and deliver to the Company a general release of claims in a form and substance acceptable
to the Company (the “Release”) by the date specified in such Release and such Release must become irrevocable by its
terms. The Company will begin paying Executive the Salary Continuation as described above, once the Release has become binding
upon and irrevocable by him, provided that in the event that the period Executive has to sign the Release and/or revoke the Release
spans two calendar years, the Company will begin paying Executive the Salary Continuation as soon as possible but in no event
earlier than the beginning of such second calendar year. In no event shall the required Release include a release of claims related
to any post-employment benefits or monies owed to Executive arising from or directly related to this Agreement.

 

(c)
For purposes of this Agreement, “Change of Control” shall mean:

 

(i)
The acquisition by any individual, entity or group (within the meaning of Rule 13d-3 promulgated under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”) or any successor provision) (any of the foregoing hereafter a “Person”)
of forty percent (40%) or more of either (a) the then outstanding shares of the capital stock of the Company (the “Outstanding
Capital Stock”) or (b) the combined voting power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Voting Securities”), provided, however, that such an acquisition by one
of the following shall not constitute a change of control: (1) the Company or any of its subsidiaries, or any employee benefit
plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries or (2) any Person that is eligible,
pursuant to Rule 13d-1(b) under the Exchange Act, to file a statement on Schedule 13G with respect to its beneficial ownership
of Voting Securities, whether or not such Person shall have filed a statement on Schedule 13G, unless such Person shall have filed
a statement on Schedule 13D with respect to beneficial ownership of forty percent (40%) or more of the Voting Securities or (3)
any corporation with respect to which, following such acquisition, more than sixty percent (60%) of both the then outstanding
shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Capital Stock or Voting Securities
immediately prior to such acquisition in substantially the same proportions as their ownership, immediately prior to such acquisition,
of the Outstanding Capital Stock or Voting Securities, as the case may be; or

 

    	10

    	 

    

 

(ii)
Individuals who, as of the Commencement Date, constitute the Board (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the Board, provided that any individual becoming a director subsequent to the Commencement Date
whose election or nomination for election by the Company’s shareholders was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual
or threatened election contest relating to the election of the directors of the Company (as such terms are used in Rule 14a-11
of Regulation 14A, or any successor section, promulgated under the Exchange Act); or

 

(iii)
Approval by the shareholders of the Company of a reorganization, merger or consolidation (a “Business Combination”),
in each case, with respect to which all or substantially all holders of the Outstanding Capital Stock and Voting Securities immediately
prior to such Business Combination do not, following such Business Combination, beneficially own, directly or indirectly, in substantially
the same proportions, more than sixty percent (60%) of, respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may
be, of the corporation resulting from the Business Combination; or

 

    	11

    	 

    

 

(iv)
A complete liquidation or dissolution of the Company; or

 

(v)
A sale or other disposition of all or substantially all of the assets of the Company other than to a corporation with respect
to which, following such sale or disposition, more than sixty percent (60%) of the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors are
then owned beneficially, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Capital Stock or Voting Securities immediately prior to such sale or disposition in substantially
the same proportions as their ownership of the Outstanding Capital Stock and Voting Securities, as the case may be, immediately
prior to such sale or disposition.

 

(d)
For purposes of this Agreement, “Good Reason” shall mean any of the following (without Executive’s express prior
written consent):

 

(i)
Any material breach by the Company of this Agreement, including any material reduction by the Company of Executive’s authorities,
duties or responsibilities (except in connection with the termination of Executive’s employment for Cause, as a result of
Permanent Disability, as a result of Executive’s death or by Executive other than for Good Reason);

 

    	12

    	 

    

 

(ii)
A failure by the Company to pay Executive his Base Salary, as and when due;

 

(iii)
The Company requiring Executive to report to a corporate officer or employee instead of the Board;

 

(iv)
any change in Executive’s primary place of business to a location more than fifty (50) miles from its current location;
or

 

(v)
a material diminution in the Executive’s Base Salary, other than a proportional reduction pursuant to a Company-wide reduction
of all executive salaries due to economic conditions or corporate restructuring;

 

provided,
however, that “Good Reason” shall not exist unless: (A) the Executive shall have given the Company written notice
within ninety (90) days after the date when Executive first learns of a condition constituting Good Reason, setting forth (1)
the conduct or condition deemed to constitute Good Reason and (2) a reasonable time, not less than thirty (30) days, within which
the Company may cure (if curable) such conduct or condition giving rise to Good Reason; and (B) the Company shall have failed
to so cure within such period. For the avoidance of doubt, if cured, such conduct or condition shall not constitute “Good
Reason” for purposes of this Agreement. In order for the Executive to resign for Good Reason, the Executive must terminate
his employment with the Company no later than ninety (90) days following the end of the Company’s cure period.

 

    	13

    	 

    

 

(e)
For purposes of this Agreement, “Severance Period “ shall mean: (i) twelve (12) months; or (ii) in the event the Company
terminates Executive’s employment for any reason other than for Cause within six (6) months following a Change of Control,
eighteen (18) months.

 

6.2
Discharge for Cause; Voluntary Termination by Executive; Death or Permanent Disability.

 

(a)
The Company shall have the right to terminate the employment of Executive for Cause. In the event that Executive’s employment
is terminated: (i) by the Company for Cause, as hereinafter defined; (ii) as a result of Executive’s Death or Permanent
Disability; or (iii) by Executive other than for Good Reason, Executive shall only be entitled to receive the Accrued Amounts.
Executive shall not be entitled, among other things, to the payment of any Bonus in respect of all or any portion of the fiscal
year in which such termination occurs. After the termination of Executive’s employment under this Section 6.2, the obligations
of the Company under this Agreement to make any further payments, or provide any benefits specified herein, to Executive shall
thereupon cease and terminate.

 

(b)
As used herein, the term “Cause” shall be limited to: (i) willful malfeasance, willful misconduct or gross negligence
by Executive in connection with his employment; (ii) any willful failure by Executive to perform his duties hereunder or any lawful
direction of the Board as required under Section 1.2, after notice of any such failure to perform such duties or direction was
given to Executive; (iii) the Executive’s breach of the provisions of Section 12 of this Agreement or any other breach of
a material provision of this Agreement; (iv) Executive’s indictment for or being charged with: (A) any felony; or (B) a
misdemeanor involving moral turpitude; (v) the Executive’s engaging in theft, fraud, dishonesty or embezzlement or similar
acts in the performance of his duties for the Company or any subsidiary; (vi) any act by the Executive that brings the Company
or any of its subsidiaries into disrepute, including any dishonesty, fraud, intentional misrepresentation of a material fact,
moral turpitude, illegality or conduct actionable under law as harassment; or (vii) the Executive’s material violation of
any Company policy.

 

    	14

    	 

    

 

(c)
As used herein, the term “Permanent Disability” shall mean that during the Term: (i) even with reasonable accommodations,
in Company’s sole discretion, Executive is unable to perform his duties hereunder due to a physical or mental condition,
sickness, injury or disability for ninety (90) consecutive days, or an aggregate period of one hundred twenty (120) days in any
six (6) months period; or (ii) the Executive becomes totally and permanently disabled under the Company’s long-term disability
benefit plan applicable to senior executive officers as in effect from time to time (if such a plan exists).

 

6.3
Continued Employment Beyond the Expiration of the Employment Term. Unless the parties otherwise agree in writing, continuation
of Executive’s employment with the Company beyond the Termination Date shall be deemed an employment at will and shall not
be deemed to extend any of the provisions of this Agreement and Executive’s employment may thereafter be terminated at will
by either Executive or the Company; provided that the provisions of Section 12 of this Agreement shall survive any termination
of this Agreement or Executive’s termination of employment hereunder.

 

7.
Mitigation of Damages. Executive shall not be required to mitigate damages or the amount of any payment provided for under
this Agreement by seeking other employment or otherwise after the termination of his employment hereunder, and any amounts earned
by Executive, whether from self-employment, as a common-law employee or otherwise, shall not reduce the amount of any payments
otherwise payable to him.

 

    	15

    	 

    

 

8.
Notices. All notices or communications hereunder shall be in writing, addressed as follows:

 

	 	To
    the Company:
	 	 	Marina
    Biotech, Inc.
	 	 	17870
    Castleton Street, Suite 250
	 	 	City
    of Industry, CA 91748
	 	 	Attn:
    Chairman
	 	 	 
	 	with
    a copy to:
	 	 	Pryor
    Cashman LLP
	 	 	7
    Times Square (Times Square Tower)
	 	 	New
    York, NY 10036
	 	 	Attn:
    Lawrence H. Remmel, Esq.
	 	 	 
	 	To
    Executive:
	 	 	Robert
    Moscato
	 	 	(to
    be completed)
	 	 	 
	 	with
    a copy to:
	 	 	Brooks,
    Pierce, McLendon, Humphrey & Leonard
	 	 	230
    North Elm Street, Suite 20000
	 	 	Greensboro,
    NC, 27401
	 	 	Attn:
    Bryan Starrett, Esq.

 

Any
such notice or communication shall be delivered by hand or by courier or sent certified or registered mail, return receipt requested,
postage prepaid, addressed as above (or to such other address as such party may designate in a notice duly delivered as described
above), and the third business day after the actual date of mailing shall constitute the time at which notice was given.

 

9.
Separability; Legal Fees. If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole
or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force
and effect. Each party shall bear the costs of any legal fees and other fees and expenses which may be incurred in respect of
enforcing its respective rights under this Agreement.

 

    	16

    	 

    

 

10.
Assignment. This contract shall be binding upon and inure to the benefit of the heirs and representatives of Executive
and the assigns and successors of the Company, but neither this Agreement nor any rights or obligations hereunder shall be assignable
or otherwise subject to hypothecation by Executive (except by will or by operation of the laws of intestate succession) or by
the Company, except that the Company may assign this Agreement to any successor (whether by merger, purchase or otherwise) to
the stock, assets or businesses of the Company.

 

11.
Amendment. This Agreement may only be amended by written agreement of the parties hereto.

 

12.
Nondisclosure of Confidential Information; Non-Disparagement; Non-Competition.

 

(a)
Executive shall not, without the prior written consent of the Company, use, divulge, disclose or make accessible to any other
person, firm, partnership, corporation or other entity any Confidential Information (as defined below) pertaining to the business
of the Company or any of its subsidiaries, except (i) while employed by the Company, in the business of and for the benefit of
the Company, or (ii) when required to do so by a court of competent jurisdiction, by any governmental agency having supervisory
authority over the business of the Company, or by any administrative body or legislative body (including a committee thereof)
with jurisdiction to order Executive to divulge, disclose or make accessible such information. For purposes of this Section 12(a),
“Confidential Information” shall mean non-public information concerning the financial data, strategic business plans,
product development (or other proprietary product data), customer lists, marketing plans and other non-public, proprietary and
confidential information of the Company or its subsidiaries (the “Restricted Group”) or customers, that, in any case,
is not otherwise available to the public (other than by Executive’s breach of the terms hereof).

 

    	17

    	 

    

 

(b)
During the Term and for twelve (12) months thereafter, Executive agrees that, without the prior written consent of the Company,
he will not, directly or indirectly, either as principal, manager, agent, consultant, officer, director, stockholder, partner,
investor, lender or employee or in any other capacity, carry on, be engaged in or have any financial interest in, any business
which is in competition with any business of the Restricted Group.

 

(c)
During the Term and for twenty-four (24) months thereafter, Executive agrees that, without the prior written consent of the Company,
he will not, directly or indirectly, on his own behalf or on behalf of any person, firm or company, (A) solicit or offer employment
to any person who has been employed by the Restricted Group at any time during the 12 months immediately preceding such solicitation,
and (B) solicit, call upon, or otherwise communicate in any way with any client, customer, prospective client or prospective customer
of the Company or of any member of the Restricted Group for the purposes of causing or of attempting to cause any such person
to purchase products sold or services rendered by the Company or by any member of the Restricted Group from any person other than
the Company or any member of the Restricted Group.

 

(d)
Executive agrees that he will not, directly or indirectly, individually or in concert with others, engage in any conduct or make
any statement that is likely to have the effect of undermining or disparaging the reputation of the Company or any member of the
Restricted Group, or their good will, products, or business opportunities, or that is likely to have the effect of undermining
or disparaging the reputation of any officer, director, agent, representative or employee, past or present, of the Company or
any member of the Restricted Group.

 

    	18

    	 

    

 

(e)
For purposes of this Section 12, a business shall be deemed to be in competition with the Restricted Group if it is principally
involved in the purchase, sale or other dealing in any property or the rendering of any service purchased, sold, dealt in or rendered
by the Restricted Group as a material part of the business of the Restricted Group within the same geographic area in which the
Restricted Group effects such purchases, sales or dealings or renders such services. Nothing in this Section 12 shall be construed
so as to preclude Executive from investing in any publicly or privately held company, provided Executive’s beneficial ownership
of any class of such company’s securities does not exceed 1% of the outstanding securities of such class.

 

(f)
Executive and the Company agree that this covenant not to compete is a reasonable covenant under the circumstances, and further
agree that if in the opinion of any court of competent jurisdiction such restraint is not reasonable in any respect, such court
shall have the right, power and authority to excise or modify such provision or provisions of this covenant as to the court shall
appear not reasonable and to enforce the remainder of the covenant as so amended. Executive agrees that any breach of the covenants
contained in this Section 12 would irreparably injure the Company. Accordingly, Executive agrees that the Company may, in addition
to pursuing any other remedies it may have in law or in equity, cease making any payments otherwise required by this Agreement
and obtain an injunction against Executive from any court having jurisdiction over the matter restraining any further violation
of this Agreement by Executive; provided that the Company shall remain liable to Executive for all remaining unpaid Salary Continuation
(to the extent otherwise owed to him) in the event that it is finally adjudicated by a court of competent jurisdiction that Executive
has not breached the covenants contained in this Section 12.

 

    	19

    	 

    

 

(g)
Notice of Immunity Under the Economic Espionage Act of 1996, as amended by the Defend Trade Secrets Act of 2016. Notwithstanding
any other provision of this Agreement:

 

(i)
Executive will not be held criminally or civilly liable under any federal or state trade secret law for any disclosure of a trade
secret that is made: (A) in confidence to a federal, state, or local government official, either directly or indirectly, or to
an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or (B) in a complaint or other
document that is filed under seal in a lawsuit or other proceeding.

 

(ii)
If Executive files a lawsuit for retaliation by the Company for reporting a suspected violation of law, Executive may disclose
the Company’s trade secrets to his or her attorney and use the trade secret information in the court proceeding if Executive:
(A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to
court order.

 

13.
Beneficiaries; References. Executive shall be entitled to select (and change, to the extent permitted under any applicable
law) a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following Executive’s death,
and may change such election, in either case by giving the Company written notice thereof. In the event of Executive’s death
or a judicial determination of his incompetence, reference in this Agreement to Executive shall be deemed, where appropriate,
to refer to his beneficiary, estate or other legal representative. Any reference to the masculine gender in this Agreement shall
include, where appropriate, the feminine.

 

    	20

    	 

    

 

14.
Survivorship. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement
to the extent necessary to the intended preservation of such rights and obligations. In particular, the provisions of Section
12 hereunder shall remain in effect as long as is necessary to give effect thereto.

 

15.
Governing Law; Jurisdiction; Disputes; Fees. This Agreement shall be construed, interpreted and governed in accordance
with the laws of the State of Delaware, without reference to rules relating to conflicts of law. In the event of any controversy
arising out of or relating to this Agreement, or any breach thereof, the parties shall first use their diligent and good faith
efforts to resolve the dispute by exchanging relevant information and negotiating in good faith. If such dispute resolution efforts
are unsuccessful, the parties to this Agreement agree to participate in non-binding mediation. Any party may, by written notice
to the other parties, require that the parties participate in non-binding mediation to attempt to resolve such dispute. Such mediation
shall be conducted in either Raleigh, North Carolina or Greensboro, North Carolina and shall be administered by a mediator mutually
acceptable to the Company and Executive, but absent their mutual agreement, by a mediator selected by the Charlotte, North Carolina
office of the American Arbitration Association (“AAA”) and administered by AAA in accordance with its then-existing
Employment Arbitration Rules and Mediation Procedures. Any suit with respect to this Agreement will be brought in the federal
or state courts in the State of Delaware, and Executive agrees and submits to the personal jurisdiction and venue thereof. Executive
irrevocably waives any objection he may have to the venue of any such suit brought in such court and any claim that such suit
has been brought in an inconvenient forum. Each party shall bear his or its own costs incurred in connection with enforcing its
rights under this Agreement, including attorney fees.

 

    	21

    	 

    

 

16.
Effect on Prior Agreements. This Agreement contains the entire understanding between the parties hereto and supersedes
in all respects any prior or other agreement or understanding between the Company or any subsidiary of the Company and Executive.
Under no circumstances shall Executive be entitled to any other severance payments or benefits of any kind, except for the payments
and benefits described herein.

 

17.
Withholding. The Company shall be entitled to withhold from payment any amount of withholding required by law.

 

18.
Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original.

 

    	22

    	 

    

 

19.
Section 409A. This Agreement is intended to comply with the requirements of Section 409A of the Code (“Section 409A”),
and the parties hereby agree to amend this Agreement as and when necessary or desirable to conform to or otherwise properly reflect
any guidance issued under Section 409A after the date hereof without violating Section 409A. In case any one or more provisions
of this Agreement fails to comply with the provisions of Section 409A, the remaining provisions of this Agreement shall remain
in effect, and this Agreement shall be administered and applied as if the non-complying provisions were not part of this Agreement.
The parties in that event shall endeavor to agree upon a reasonable substitute for the non-complying provisions, to the extent
that a substituted provision would not cause this Agreement to fail to comply with Section 409A, and, upon so agreeing, shall
incorporate such substituted provisions into this Agreement. In no event whatsoever shall the Company be liable for any additional
tax, interest or penalty that may be imposed on Executive by Section 409A or damages for failing to comply with Section 409A.
A termination of Executive’s employment hereunder shall not be deemed to have occurred for purposes of any provision of
this Agreement providing for the payment of any amount or benefit constituting “deferred compensation” under Section
409A upon or following a termination of employment unless such termination is also a “separation from service” within
the meaning of Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,”
“termination of employment” or like terms shall mean “separation from service.” In the event that any
payment or benefit made hereunder or under any compensation plan, program or arrangement of the Company would constitute payments
or benefits pursuant to a non-qualified deferred compensation plan within the meaning of Section 409A and, at the time of Executive’s
“separation from service” Executive is a “specified employee” within the meaning of Section 409A, then
any such payments or benefits shall be delayed until the six-month anniversary of the date of Executive’s “separation
from service”. Each payment made under this Agreement shall be designated as a “separate payment” within the
meaning of Section 409A. All reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance
with the requirements of Section 409A to the extent that such reimbursements or in-kind benefits are subject to Section 409A.
All reimbursements for expenses paid pursuant hereto that constitute taxable income to Executive shall in no event be paid later
than the end of the calendar year next following the calendar year in which Executive incurs such expense or pays such related
tax. Unless otherwise permitted by Section 409A, the right to reimbursement or in-kind benefits under this Agreement shall not
be subject to liquidation or exchange for another benefit and the amount of expenses eligible for reimbursement, or in-kind benefits,
provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided,
respectively, in any other taxable year.

 

[Signature
Page Follows]

 

    	23

    	 

    

 

IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above.

 

	MARINA
    BIOTECH, INC.	 	 	 
	 	 	 	 	 
	By	/s/
    Tim Boris	 	Date:
    	June
    19, 2018
	Name:	Tim
    Boris	 	 	 
	Title:	Authorized
Person and a Director	 	 	 
	 
    	 	 	 	 
	 	 	 	Date:	June
    19, 2018
	 	/s/
    Robert Moscato	 	 	 
		Robert
    Moscato	 	 	 

 

    	24achv-ex41_245.htm

 

 

 

Exhibit 4.1

 

COMMON STOCK PURCHASE WARRANT

 

ACHIEVE LIFE SCIENCES, INC. 

Warrant Shares: _______Initial Exercise Date: June 19, 2018

 

CUSIP: 004468 138

ISIN: US0044681387

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, CEDE & CO. or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on June 19, 2023 (the “Termination Date”) but not thereafter, to subscribe for and purchase from Achieve Life Sciences, Inc., a Delaware corporation (the “Company”), up to ______ shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).  This Warrant shall initially be issued and maintained in the form of a security held in book-entry form and the Depository Trust Company or its nominee (“DTC”) shall initially be the sole registered holder of this Warrant, subject to a Holder’s right to elect to receive a Warrant in certificated form pursuant to the terms of the Warrant Agency Agreement, in which case this sentence shall not apply.

Section 1.Definitions.  In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated in this Section 1:

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

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

1

 

value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

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

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

“Common Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

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

 

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

“Registration Statement” means the Company’s registration statement on Form S-1 (File No. 333-224840).

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

“Trading Day” means a day on which the Common Stock is traded on a Trading Market.

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

“Transfer Agent” means American Stock Transfer & Trust Company, LLC, the current transfer agent of the Company, with a mailing address of 6201 15th Avenue, Brooklyn, New York 11219, Attn: 2nd Floor, Reorganization Department and an email address of ReorgWarrants@ASTFINANCIAL.com, and any successor transfer agent of the Company.

2

 

“Underwriting Agreement” means the underwriting agreement, dated as of June 15, 2018 among the Company and Ladenburg Thalmann & Co. Inc. as representative of the underwriters named therein, as amended, modified or supplemented from time to time in accordance with its terms.

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

“Warrant Agency Agreement” means that certain warrant agency agreement, dated on or about the Initial Exercise Date, between the Company and the Warrant Agent.

“Warrant Agent” means the Transfer Agent and any successor warrant agent of the Company.

“Warrants” means this Warrant and other warrants to purchase Common Stock issued by the Company pursuant to the Registration Statement.

Section 2.Exercise.

a)Exercise of Warrant.  Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (with a copy to the Transfer Agent (or such other office or agency that the Company may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy or PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other 

3

 

type of guarantee or notarization) of any Notice of Exercise be required.  Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.  The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice.  The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

Notwithstanding the foregoing in this Section 2(a), a holder whose interest in this Warrant is a beneficial interest in certificate(s) representing this Warrant held in book-entry form through DTC (or another established clearing corporation performing similar functions), shall effect exercises made pursuant to this Section 2(a) by delivering to DTC (or such other clearing corporation, as applicable) the appropriate instruction form for exercise, complying with the procedures to effect exercise that are required by DTC (or such other clearing corporation, as applicable), subject to a Holder’s right to elect to receive a Warrant in certificated form pursuant to the terms of the Warrant Agency Agreement, in which case this sentence shall not apply.

b)Exercise Price.  The exercise price per share of Common Stock under this Warrant shall be $4.00, subject to adjustment hereunder (the “Exercise Price”).  

c)Cashless Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained therein is not available for the issuance of the Warrant Shares to the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

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

4

 

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

 

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

 

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

 

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

 

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

 

d)Mechanics of Exercise. 

	
 
	
i.
	
Delivery of Warrant Shares Upon Exercise.  The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise, and, in the case of each of (i) and (iii), subject to the Company’s receipt of the aggregate Exercise Price (such date, the “Warrant Share Delivery Date”).   Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record 

5

 

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

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

iii.Rescission Rights.  If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise, and the Company shall return all consideration paid by the Holder for such shares upon such rescission. Notwithstanding anything herein to the contrary, the Company shall not be required to make any cash payments to the Holder in lieu of issuance of the Warrant Shares.

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

6

 

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

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

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

7

 

processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

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

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

8

 

recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall within two (2) Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported.  The “Beneficial Ownership Limitation” shall be 4.99% (or, upon election by a Holder prior to the issuance of any Warrants, 9.99%) of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant.  The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply.  Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company.  The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant. 

f)Call Provision.  Subject to the provisions of Section 2(e) and this Section 2(f), if, after the Initial Exercise Date, (i) the VWAP for any 30 consecutive Trading Days (the “Measurement Period,” which 30 consecutive Trading Day period shall not have commenced until after the Initial Exercise Date) exceeds $12.00 (subject to adjustment for forward and reverse stock splits, recapitalizations, stock dividends and the like after the Initial Exercise Date), (ii) the average daily volume for such Measurement Period exceeds $500,000 per Trading Day and (iii) the Holder is not in possession of any information that constitutes, or might constitute, material non-public information which was provided by the Company, any of its subsidiaries, or any of their officers, directors, employees, agents or Affiliates, then the Company may, within 1 Trading Day of the end of any such Measurement Period, call for cancellation of all or any portion of this Warrant for which a Notice of Exercise has not yet been delivered (such right, a “Call”) for consideration equal to $0.001 per Warrant Share.  To exercise this right, the Company must deliver to the Holder an irrevocable written notice (a “Call Notice”), indicating therein the portion of unexercised portion of this Warrant to which such notice applies.  If the conditions set forth below for such Call are satisfied from the period from the date of the Call Notice through and including the Call Date (as defined below), then any portion of this Warrant subject to such Call Notice for which a Notice of Exercise shall not have been received by the Call Date will be cancelled at 6:30 p.m. (New York City time) on the tenth Trading Day after the date the Call Notice is received by the Holder (such date and time, the “Call Date”).  Any unexercised portion of this Warrant to which the Call Notice does not pertain will be 

9

 

unaffected by such Call Notice.  In furtherance thereof, the Company covenants and agrees that it will honor all Notices of Exercise with respect to Warrant Shares subject to a Call Notice that are tendered through 6:30 p.m. (New York City time) on the Call Date.  The parties agree that any Notice of Exercise delivered following a Call Notice which calls less than all of the Warrants shall first reduce to zero the number of Warrant Shares subject to such Call Notice prior to reducing the remaining Warrant Shares available for purchase under this Warrant.  For example, if (A) this Warrant then permits the Holder to acquire 100 Warrant Shares, (B) a Call Notice pertains to 75 Warrant Shares, and (C) prior to 6:30 p.m. (New York City time) on the Call Date the Holder tenders a Notice of Exercise in respect of 50 Warrant Shares, then (x) on the Call Date the right under this Warrant to acquire 25 Warrant Shares will be automatically cancelled, (y) the Company, in the time and manner required under this Warrant, will have issued and delivered to the Holder 50 Warrant Shares in respect of the exercises following receipt of the Call Notice, and (z) the Holder may, until the Termination Date, exercise this Warrant for 25 Warrant Shares (subject to adjustment as herein provided and subject to subsequent Call Notices).  Subject again to the provisions of this Section 2(f), the Company may deliver subsequent Call Notices for any portion of this Warrant for which the Holder shall not have delivered a Notice of Exercise.  Notwithstanding anything to the contrary set forth in this Warrant, the Company may not deliver a Call Notice or require the cancellation of this Warrant (and any such Call Notice shall be void), unless, from the beginning of the Measurement Period through the Call Date, (1) the Company shall have honored in accordance with the terms of this Warrant all Notices of Exercise delivered by  6:30 p.m. (New York City time) on the Call Date, and (2) a registration statement shall be effective as to all Warrant Shares and the prospectus thereunder available for use by the Company for the sale of all such Warrant Shares to the Holder, and (3) the Common Stock shall be listed or quoted for trading on the Trading Market, and (4) there is a sufficient number of authorized shares of Common Stock for issuance of all Warrant Shares, and (5) the issuance of all Warrant Shares subject to a Call Notice shall not cause a breach of any provision of Section 2(e) herein.  The Company’s right to call the Warrants under this Section 2(f) shall be exercised ratably among the Holders based on each Holder’s initial purchase of Warrants.

Section 3.Certain Adjustments.

a)Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this 

10

 

Warrant shall remain unchanged.  Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re‐classification.

b)Reserved. 

c)Subsequent Rights Offerings.  In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation). 

d)Pro Rata Distributions.  During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a "Distribution"), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, 

11

 

as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).  

e)Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) or Section 2(f) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) or Section 2(f) on the exercise of this Warrant).  For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.  Notwithstanding anything to the contrary, in the event of a Fundamental Transaction other than one in which a Successor Entity (as defined below) that is a publicly traded corporation whose stock is quoted or listed on a Trading Market assumes this Warrant such that the Warrant shall be exercisable for the publicly traded common stock of such Successor Entity, the Company or any Successor Entity shall, at the 

12

 

Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder an amount equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction using the same type or form of consideration (and in the same proportion) that is being offered and paid to the holders of Common Stock of the Company in connection with the Fundamental Transaction, whether that consideration be in the form of cash, stock or any combination thereof, or whether the holders of Common Stock are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction.  Any cash payment will be made by wire transfer of immediately available funds within five Business Days of the Holder’s election (or, if later, on the effective date of the Fundamental Transaction). “Black Scholes Value” means the value of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date.  The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 3(e) and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction). Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein.

13

 

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

g)Notice to Holder.  

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

ii.Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 10 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice.  To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any 

14

 

of its subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.  The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

Section 4.Transfer of Warrant.

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

b)New Warrants.  If this Warrant is not held in global form through DTC (or any successor depositary), this Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney.  Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto. 

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

Section 5.Miscellaneous.

15

 

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

b)Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company or the Warrant Agent of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

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

d)Authorized Shares.  

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

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to 

16

 

protect the rights of Holder as set forth in this Warrant against impairment.  Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

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

e)Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

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

17

 

g)Nonwaiver and Expenses.  No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies.  Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

	
 
	
h)
	
Notices.  Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Exercise, shall be in writing and delivered personally, by facsimile or e-mail, or sent by a nationally recognized overnight courier service, addressed to the Company, at 400 – 1001 W. Broadway Vancouver, B.C. V6H 4B1 Canada, Attention: Senior Paralegal, email address: sthomson@achievelifesciences.com, or such other facsimile number, email address or address as the Company may specify for such purposes by notice to the Holders. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile or e-mail, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number, e-mail address or address of such Holder appearing on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or via e-mail at the e-mail address set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or via e-mail at the e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.  Notwithstanding any other provision of this Warrant, as to any Warrant not held in certificated form, where this Warrant provides for notice of any event to a Holder, such notice shall be sufficiently given if given to DTC (or any successor depository) pursuant to the procedures of DTC (or such successor depository).

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

18

 

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

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

l)Amendment.  This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand, and the Holders or the beneficial owners of Warrants representing 67% of the 
Warrant Shares issuable under the Warrants then-outstanding as of the date such consent is sought, on the other hand.

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

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

o)Warrant Agency Agreement.  If this Warrant is held in global form through DTC (or any successor depositary), this Warrant is issued subject to the Warrant Agency Agreement.  To the extent any provision of this Warrant conflicts with the express provisions of the Warrant Agency Agreement, the provisions of this Warrant shall govern and be controlling.

 

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

 

(Signature Page Follows)

19

 

 

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

 

  

	
	
ACHIEVE LIFE SCIENCES, INC.

 

 

	
By:__________________________________________

     Name:

     Title:

 

 

 

 

20

 

 

NOTICE OF EXERCISE

 

To:achieve life sciences, inc.

 

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

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

[  ] in lawful money of the United States; or

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

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

_______________________________

 

 

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

 

_______________________________

 

_______________________________

 

_______________________________

 

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity: ________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

 

 

 

 

 

ASSIGNMENT FORM

 

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

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

		
	
Name:
	
 

	
 
	
(Please Print)

	
Address:
	
 

	
 

Phone Number:

Email Address:                                                             
	
(Please Print)

______________________________________

______________________________________

	
Dated: _______________ __, ______
	
 

	
Holder’s Signature:
	
 

	
Holder’s Address:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00284-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00284-of-00352.parquet"}]]