Document:

Exhibit 10.1

 

Execution
Version

 

RECAPITALIZATION
AGREEMENT

 

This RECAPITALIZATION AGREEMENT,
dated as of October 30, 2022 (this “Agreement”), is made and entered into by and among Acacia Research Corporation,
a Delaware corporation (the “Company”), Starboard Value LP, a Delaware limited partnership (the “Designee”)
and the investors listed on the Schedule of Investors attached hereto (individually, an “Investor” and collectively,
the “Investors”). The Company, the Designee and the Investors are each referred to herein as a “Party”
and collectively as the “Parties.”

 

RECITALS

 

WHEREAS,
the Parties entered into that certain Securities Purchase Agreement, dated as of November 18, 2019 (the “Securities Purchase
Agreement”), pursuant to which the Investors, as applicable, purchased from the Company (i) 350,000 shares of convertible
preferred stock of the Company designated as Series A Convertible Preferred Stock (the “Series A Convertible Preferred
Stock”), which are convertible into shares (the “Common Shares”) of the Company’s common stock, par
value $0.001 per share (the “Common Stock”), (ii) 6.00% Senior Secured Notes of the Company (the “Notes”),
(iii) Series A Warrants to purchase up to 5,000,000 shares (the “Series A Warrant Shares”) of Common
Stock (as amended and restated on the date hereof, the “Series A Warrants”) and (iv) Series B Warrants
to purchase up to 100,000,000 shares (the “Series B Warrant Shares”) of Common Stock (as amended and restated
on the date hereof, the “Series B Warrants” and, collectively with the Series B Warrant Shares, the Series A
Convertible Preferred Stock, the Common Shares, the Series A Warrants and the Series A Warrant Shares, and the securities offered
in the Rights Offering (as hereinafter defined), the “Securities”);

 

WHEREAS,
the Parties desire to enter into a series of transactions (collectively, the “Recapitalization”), pursuant to which,
subject to the terms and conditions described herein and the receipt of Stockholder Approval (as defined below), (i) the Investors
shall convert 350,000 shares of Series A Convertible Preferred Stock into shares of Common Stock, (ii) the Investors shall exercise
all outstanding Series A Warrants for a cash amount reduced by the Series A Payment (as hereinafter defined), (iii) the
Investors shall exercise all Outstanding Series B Warrants that can be exercised through a Limited Cash Exercise or Note Exercise
as set forth below, and (iv) the Company shall issue additional shares of Common Stock through a rights offering to all shareholders;

 

WHEREAS,
in connection with the consummation of the Recapitalization, the Parties desire to amend and restate the Amended and Restated Certificate
of Designations, Preferences and Rights of Series A Convertible Preferred Stock, dated as of January 7, 2020 (the “Certificate
of Designations”);

 

WHEREAS,
in connection with the consummation of the Recapitalization, the Parties desire to amend and restate the Registration Rights Agreement,
dated as of November 18, 2019, by and among the Company and the Investors party thereto (as amended, the “Registration Rights
Agreement”);

 

WHEREAS,
in connection with the consummation of the Recapitalization, the Parties desire to make certain commitments regarding the composition
and size of the board of directors of the Company (the “Board”);

 

     

     

    

 

WHEREAS,
a special committee comprised solely of directors of the Company not affiliated or associated with the Designee (the “Special
Committee”) has recommended the terms of this Agreement and the Recapitalization to the Board, and each of the Special Committee
and the Board has approved this Agreement and declared advisable and in the best interest of its stockholders, the transactions contemplated
by this Agreement, including the Recapitalization upon the terms and subject to the conditions set forth in this Agreement, and subject
to Section 6.3(a), each of the Special Committee and the Board has resolved to recommend that the stockholders of the Company
vote in favor of the Stockholder Approval.

 

NOW,
THEREFORE, in consideration of the agreements and covenants contained in this Agreement, and intending to be legally bound
thereby, the Parties hereby agree as follows:

 

ARTICLE I

RECAPITALIZATION TRANSACTIONS

 

1.1            Recapitalization
Transactions.

 

The Parties, as applicable,
hereby agree to take all of the following actions in connection with the Recapitalization, subject to the terms and conditions of this
Agreement including the satisfaction (or waiver) of the conditions set forth in ARTICLE VII.

 

(a)            Series A
Convertible Preferred Stock. Subject to the receipt of shareholder approval at the Company’s next Annual Meeting, (i) the
Company shall cause the Certificate of Designations to be amended and restated in the form attached hereto as Exhibit A (the
 “A&R Certificate of Designations”), and (ii) on or prior to July 14, 2023, the Investors shall convert
an aggregate amount of 350,000 shares of Series A Convertible Preferred Stock into Common Stock in accordance with the terms of the
Certificate of Designations.

 

(b)            Series A
Warrants. Within five (5) Business Days (as defined in the Certificate of Designations) following the date of this Agreement,
the Investors shall irrevocably exercise all of the Series A Warrants for cash, and the Company shall issue to the Investors shares
of Common Stock in accordance with the terms of the Series A Warrants and the Company shall pay to the Designee an aggregate amount
of $9,000,000 (the “Series A Payment”). Immediately prior to the exercise of the Series A Warrants, the Parties
hereby agree that the Series A Warrants shall be amended for all purposes to remove any limitation on exercise tied to the “Maximum
Percentage” (as defined in the Series A Warrants). The Series A Payment shall be paid through a reduction in the exercise
price paid for the Series A Warrants as permitted by Section 2(c) of the Series A Warrants. For U.S. federal income
tax purposes, the Parties agree that the Series A Payment shall be treated as an adjustment to the exercise price of the Series A
Warrants and the Parties shall report in a manner consistent with such treatment.

 

(c)            Series B
Warrants. On or prior to July 14, 2023, the Designee and the Investors shall, as applicable, irrevocably exercise 31,506,849
of the Series B Warrants (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction
relating to the Common Stock occurring after the date hereof), through “Note Cancellation” (as defined in the Series B
Warrants) or a combination of a “Note Cancellation” and a Limited Cash Exercise (as defined in the Series B Warrants)
in accordance with the terms of the Series B Warrants, as determined by the Designee and the Investors (the “Series B
Warrants Exercise”). The Parties hereby agree that the applicable Series B Warrants shall be amended for all purposes to
remove any limitation on exercise tied to the “Maximum Percentage” (as defined in the Series B Warrants) effective upon
the earlier of (x) the satisfaction conditions to the Closing set forth in Article VII and (y) the issuance of the Purchase
Rights as set forth in Section 1.1(d).

 

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(d)            Rights
Offering. The Company will use its reasonable best efforts to complete a distribution of purchase rights to all holders of its Common
Stock and to the Investors in accordance with the terms of the Series B Warrants (the “Rights Offering”). Each
holder of Common Stock shall receive one (1) right to purchase a share of Common Stock at $5.25 per share (the “Rights Exercise
Price”) (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction relating
to the Common Stock occurring after the date hereof) for every four (4) shares that that shareholder owns, and each Investor also
shall receive an equivalent right in accordance with the terms of the Series B Warrants (all such rights, the “Purchase
Rights”). If the Company determines that a shareholder vote is not required for consummation of the Rights Offering pursuant
to the applicable NASDAQ rules, the Company will use its reasonable best efforts to complete the distribution of the Purchase Rights on
or prior to January 15, 2023 which such Purchase Rights will expire not later than February, 15, 2023. In the event that the Company
determines that a shareholder vote is required under the applicable NASDAQ rules, the Parties, each acting reasonably and in good faith,
shall mutually agree upon a revised timetable for the Rights Offering. Pursuant to Section 4(a) of the Series B Warrants,
the Investors shall receive rights in the Rights Offering on an as exercised basis, or approximately 25,000,000 Purchase Rights. The Investors
hereby commit to purchase a minimum of an aggregate of 15,000,000 shares in the Rights Offering (as adjusted for any stock dividend, stock
split, stock combination, reclassification or similar transaction relating to the Common Stock occurring after the date hereof) and shall
make payment in cash, in full, of the Rights Exercise Price for such shares not later than the date by which holders of outstanding shares
of Common Stock shall have been required to make payment of the Rights Exercise Price in order to participate in the Rights Offering.
The Purchase Rights shall not be transferrable by any holder separate and apart from the underlying securities to which they are granted
other than any transfer to an affiliate of such holder. In addition, concurrently with the Rights Offering, each of the Investors holding
Series A Convertible Preferred Stock shall have the right to purchase from the Company a number of shares of Common Stock equal to
25% times the number of shares of Common Stock issuable upon conversion of such Series A Convertible Preferred Stock at a price equal
to the Rights Exercise Price, which purchase rights shall expire at the same time as the Purchase Rights. Immediately following the completion
of the Rights Offering as set forth herein and the expiration of the Purchase Rights, all Series B Warrants other than the Series B
Warrants to be exercised pursuant to Section 1.1(c) shall expire and be terminated and of no further force or effect.

 

(e)            Recapitalization
Payment. At the Closing, the Company shall pay to the Designee an aggregate amount of $66,000,000 (the “Recapitalization
Payment”). The Recapitalization Payment shall be paid through a reduction in the exercise price paid for the Series B Warrants
described in Section 1.1(c). For U.S. federal income tax purposes, the Parties agree that the Recapitalization Payment shall
be treated as an adjustment to the exercise price of the Series B Warrants and the Parties shall report in a manner consistent with
such treatment. If Stockholder Approval for the conversion of the Preferred Stock is not obtained, the Recapitalization Payment will be
reduced by $12,700,000.

 

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1.2            Withholding.
The Company shall be entitled to deduct and withhold from any amount payable pursuant to this Agreement such amounts as the Company determines
in good faith are required to be deducted or withheld therefrom or in connection therewith under any provision of U.S. federal, state,
local or foreign law relating to taxes. The Company shall provide written notice to the Designee of any deduction or withholding at least
(5) Business Days prior to Closing and shall use commercially reasonable efforts to cooperate with the Designee and the Investors
in mitigating any such deduction or withholding. To the extent such amounts are so deducted or withheld, such amounts shall be treated
for all purposes under this Agreement as having been paid to the Person in respect of which such deduction or withholding was made. The
Company agrees that no amount shall be deducted or withheld in connection with the Recapitalization Payment.

 

ARTICLE II

BOARD REPRESENTATION AND GOVERNANCE MATTERS

 

2.1            Unaffiliated
Board Representation.

 

(a)            The
Parties agree that for a period from the date of this Agreement until May 12, 2026 (the “Applicable Period”),
the Board shall include at least two (2) directors that are independent of, and not affiliates (as defined in Rule 144) of,
the Designee (for the avoidance of doubt, any employee, director or affiliate of the Designee (whether past or present) or any Person
that was nominated by the Designee or any of its affiliates to serve on the board of any other company shall not be deemed independent
of the Designee) (such directors, the “Unaffiliated Directors”). The initial Unaffiliated Directors shall be Maureen
O’Connell and Isaac T. Kohlberg. During the Applicable Period, unless the Nominating Governance and Sustainability Committee of
the Board makes a good faith determination that Ms. O’Connell and/or Mr. Kohlberg are no longer independent under applicable
NASDAQ rules or no longer qualified to serve as a director as result of a violation of Section H (Ethics and Conflict of Interest)
under the “Roles and Responsibilities” Section of the Corporate Governance Guidelines of the Company as in effect on
the date of this Agreement, the Company agrees that the Board shall nominate, and the Designee and each Investor agrees to vote in favor
of, each of Ms. O’Connell and Mr. Kohlberg (as applicable) for election to the Board at any meeting of the Company’s
stockholders during the Applicable Period where directors are being elected (or, to the extent such action is being taken by written consent,
to consent to each of Ms. O’Connell and Mr. Kohlberg’s election to the Board). If either of Ms. O’Connell
or Mr. Kohlberg (or any Replacement Director, as defined below) is unable or unwilling to serve as a director for any reason or ceases
to be a director, resigns as a director or is removed as a director prior to the expiration of the Applicable Period, the Company shall
appoint a substitute person to the Board that is independent of, and not associated or affiliated with, the Designee or any Investor in
accordance with this Section 2.1 (any such replacement director shall be referred to as a “Replacement Director”).

 

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(b)            The
Parties agree that Katharine Wolanyk shall continue to serve as a director of the Company until at least May 12, 2024 (or such earlier
date if Ms. Wolanyk is unwilling or unable to serve as a director for any reason or resigns as a director) unless the Nominating
Governance and Sustainability Committee of the Board makes a good faith determination that Ms. Wolanyk is no longer independent under
applicable NASDAQ rules or no longer qualified to serve as a director as result of a violation of Section H (Ethics and Conflict
of Interest) under the “Roles and Responsibilities” Section of the Corporate Governance Guidelines of the Company as
in effect on the date of this Agreement.

 

2.2            Chair
of the Board. Within five (5) business days following the date of this Agreement, the Company shall take all necessary action
to appoint Gavin Molinelli as a director and to name Mr. Molinelli as Chair of the Board, subject to Mr. Molinelli timely completing
the Company’s standard director and officer questionnaire. Mr. Molinelli shall serve as an “Additional Starboard Appointee”
for purposes of the Governance Agreement (as defined herein). The Parties agree that, notwithstanding anything to the contrary contained
in the Governance Agreement, the “Governance Period” for purposes of the Governance Agreement shall extend through the earlier
of the Closing or the termination of this Agreement.

 

2.3            Size
of the Board. The Parties hereby agree that following the Closing until the end of the Applicable Period, the number of directors
serving on the Board shall not exceed 10 members.

 

2.4            Vote
Required for Certain Business Combinations.

 

(a)            Definitions.
As used in this Section 2.4, (i) the following capitalized terms have the following meanings when used with initial capital
letters, and (ii) and capitalized terms not otherwise defined herein shall have the meaning ascribed to such terms in the Amended
and Restated Certificate of Incorporation of the Company, dated as of May 16, 2022 (the “Certificate of Incorporation”):

 

(i)            “Business
Combination” shall mean (a) any merger or consolidation of the Company or a Subsidiary with a Related Person, (b) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition other than in the ordinary course of business to or with a Related
Person of all or substantially all of the assets of the Company or a Subsidiary, (c) any merger or consolidation that would have
the effect of increasing the voting power of a Related Person, (d) the adoption of any plan or proposal for the liquidation or dissolution
of the Corporation proposed, directly or indirectly, by or on behalf of a Related Person or (e) any agreement, contract or other
arrangement or understanding providing, directly or indirectly, for any of the transactions described in this Section 2.4, in each
case other than (x) any transaction contemplated by this Agreement and (y) any distribution of purchase rights to stockholders
of the Company.

 

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(ii)            “Continuing
Director” shall mean any member of the Board who is neither a Related Person nor an affiliate (as defined in Rule 144)
of a Related Person, and any successor of a Continuing Director who is neither a Related Person nor associated or affiliated with a Related
Person and is recommended to succeed a Continuing Director by a majority of the Continuing Directors.

 

(iii)            “Market
Value” shall mean the average of the high- and low-quoted sales price on the date in question (or, if there is no reported sale
on such date, on the last preceding date on which any reported sale occurred) of a share on the principal United States securities exchange
registered under the Securities Exchange Act of 1934, as amended, or any successor statute thereto (the “Exchange Act”)
on which the shares are listed or admitted to trading, or, if the shares are not listed or admitted to trading on any such exchange, the
mean between the closing high bid and low-asked quotations with respect to a share on such date as quoted on the National Association
of Securities Dealers Automated Quotations System, or any similar system then in use, or, if no such quotations are available, the fair
market value on such date of a share as at least 66-2/3% of the Continuing Directors shall determine.

 

(iv)            “Person”
shall mean any individual, firm, corporation or other entity.

 

(v)            “Related
Person” shall mean the Designee and its affiliates, as defined in Rule 12b-2 under the Exchange Act, and any other individual,
partnership, corporation, trust or other Person with which it or they have any agreement, contract or other arrangement or understanding
with respect to acquiring, holding, voting or disposing of Voting Stock. A Related Person, its affiliates and all such other
individuals, partnerships, corporations and other Persons with whom it or they have any such agreement, contract or other arrangement
or understanding, shall be deemed a single Related Person for purposes of this Section 2.4; provided, however, that
the members of the Board shall not be deemed to be a Related Person solely by reason of their board membership. A person who is a Related
Person as of (i) the time any definitive agreement relating to a Business Combination is entered into, (ii) the record date
for the determination of stockholders entitled to notice of and to vote on a Business Combination or (iii) immediately prior to the
consummation of a Business Combination, shall be deemed a Related Person for purposes of this Section 2.4.

 

(vi)            “Subsidiary”
shall mean any corporation or other entity of which the Person in question owns, directly or indirectly, not less than 50% of any class
of equity securities or not less than 50% of the voting power of all securities of the Company entitled to vote generally in the election
of directors.

 

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(vii)            “Voting
Stock” shall mean any shares of the Company entitled to vote generally in the election of directors.

 

(b)            Vote
Required for Certain Business Combinations. In addition to any other vote required by this Certificate of Incorporation or the DGCL,
the affirmative vote of the holders of a majority of the outstanding Voting Stock held by stockholders other than a Related Person by
or with whom or on whose behalf, directly or indirectly, a Business Combination is proposed, voting as a single class, shall be required
for the approval or authorization of such Business Combination; provided, however, that the majority voting requirement shall not be applicable
and such Business Combination may be approved by the vote required by law or any other provision of this Certificate of Incorporation
if either:

 

(i)            The
Business Combination is approved by the Board by the affirmative vote of at least a majority of the Continuing Directors; or

 

(ii)            All
of the following conditions are satisfied:

 

(A)            The
aggregate amount of cash and the fair market value of the property, securities or other consideration to be received per share of capital
stock of the Company in the Business Combination by the holders of capital stock of the Company, other than the Related Person involved
in the Business Combination, shall not be less than the highest of (i) the highest per share price (including brokerage commissions,
soliciting dealers’ fees and dealer- management compensation, and with appropriate adjustments for recapitalizations, stock splits,
stock dividends and like transactions and distributions) paid by such Related Person in acquiring any of its holdings of such class or
series of capital stock during the two years preceding the Business Combination, if any, (ii) the highest per share Market Value
of such class or series of capital stock within the twelve-month period immediately preceding the date the proposal for such Business
Combination was first publicly announced or (iii) the book value per share of such class or series of capital stock, determined in
accordance with generally accepted accounting principles, as of the last day of the month immediately preceding the date the proposal
for such Business Combination was first publicly announced; and

 

The consideration to be received in
such Business Combination by holders of capital stock other than the Related Person involved shall, except to the extent that a stockholder
agrees otherwise as to all or part of the shares which he or she owns, be in the same form and of the same kind as the consideration paid
by the Related Person in acquiring capital stock already owned by it; provided, however, that if the Related Person has
paid for capital stock with varying forms of consideration, the form of consideration for shares of capital stock acquired in the Business
Combination by the Related Person shall either be cash or the form used to acquire the largest number of shares of capital stock previously
acquired by it.

 

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(c)            A
Related Person shall be deemed for purposes of this Section 2.4 to have acquired a share of the Company at the time when such
Related Person became the beneficial owner thereof. With respect to shares owned by Persons whose ownership is attributed to a Related
Person, if the price paid by such Related Person for such shares is not determinable, the price so paid shall be deemed to be the higher
of (i) the price paid upon acquisition thereof by the Person or (ii) the Market Value of the shares in question at the time
when the Related Person became the beneficial owner thereof.

 

(i)            For
purposes of this Section 2.4, in the event of a Business Combination upon consummation of which the Company would be the surviving
corporation or would continue to exist (unless it is provided, contemplated or intended that as part of such Business Combination a plan
of liquidation or dissolution of the Company will be effected), the term “other consideration to be received” in Section 2(b)(i) of
the Certificate of Incorporation shall include (without limitation) Common Stock or other capital stock of the Company retained by stockholders
of the Company (other than Related Persons who are parties to such Business Combination.

 

(ii)            Nothing
contained in this Section 2.4 shall be construed to relieve any Related Person from any fiduciary obligation imposed by law.

 

(d)            Notwithstanding
any other provision of the Certificate of Incorporation or the Bylaws of the Company (and notwithstanding the fact that a lesser percentage
may be permitted by law), any amendment, addition, alteration, change or repeal of this Section 2.4, or any amendment of the
Certificate of Incorporation or the Bylaws of the Company inconsistent with or modifying or permitting circumvention of this Section 2.4,
must first be proposed by the Board, upon the affirmative vote of at least two-thirds of the directors then in office at a duly constituted
meeting of the Board called for such purpose, and thereafter approved by the affirmative vote of the holders of not less than 75% of the
then outstanding Voting Stock held by stockholders other than a Related Person by or with whom or on whose behalf, directly or indirectly,
a Business Combination is proposed, voting as a single class.

 

ARTICLE III

closing

 

3.1            Closing.
The closing of the Series B Warrants Exercise (the “Closing”) shall take place at 10:00 a.m., New York City time,
on a date that is three (3) Business Days following the satisfaction or (to the extent permitted by applicable law) waiver in accordance
with this Agreement of all of the conditions set forth in ARTICLE VII (the “Closing Date”) (other than any such
conditions which by their nature cannot be satisfied until the Closing Date, which shall be required to be so satisfied or (to the extent
permitted by applicable law) waived in accordance with this Agreement on the Closing Date) by remote communication and by the exchange
of signature pages by electronic transmission or, to the extent such exchange is not practicable or the Parties otherwise agree in
writing, at the offices of Weil, Gotshal & Manges LLP in New York, New York, or such other time, date or place as the Company
and the Designee may agree in writing; provided, that the Closing may occur at such other time, date or place as may be agreed to in writing
by the Parties.

 

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3.2            Closing
Deliveries. At or prior to the launch of the Rights Offering, each of the Parties, as applicable, shall deliver or cause to be delivered
a duly executed counterpart to an Amended and Restated Registration Rights Agreement to be negotiated in good faith by the Parties, each
acting reasonably with reference to the existing Registration Rights Agreement (the “A&R Registration Rights Agreement”).

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES of the company

 

The Company represents and
warrants to each of the Designee and each of the Investors that, as of the date hereof and as of each Closing Date, except as contemplated
by the Transaction Documents or disclosed in (i) in all reports, schedules, forms, statements and other documents required to be
filed and so filed by it with, or furnished by it to, the SEC pursuant to the reporting requirements of the Securities Exchange Act of
1934, as amended (the “1934 Act”) (all of the foregoing filed or furnished prior to such Closing Date, and all exhibits
included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter
referred to as the “SEC Documents”) other than any risk factor disclosures in any such SEC Document contained in the
 “Risk Factors” section or any forward-looking statements within the meaning of the 1933 Act or the 1934 Act or (ii) the
attached disclosure schedules:

 

4.1            Organization
and Qualification. Each of the Company and each of its “Subsidiaries” (which for purposes of this Agreement means
any joint venture or entity in which the Company, directly or indirectly, owns any of the capital stock or holds an equity or similar
interest) are entities duly organized and validly existing and in good standing under the laws of the jurisdiction in which they are formed,
and have the requisite power and authorization to own their properties and to carry on their business as now being conducted and as presently
proposed to be conducted, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Each of the Company and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every
jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except
to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect.
As used in this Agreement, “Material Adverse Effect” means any material adverse effect on or affecting (i) the
business, properties, assets, liabilities, operations, results of operations, financial condition or prospects of the Company and its
Subsidiaries, taken as a whole, or (ii) on the Company’s ability to consummate any of the transactions contemplated hereby
or on the other Transaction Documents or by the agreements and instruments to be entered into in connection herewith or therewith, or
(iii) on the authority or ability of the Company to perform its obligations under the Transaction Documents; provided, that,
with respect to clause (i), none of the following shall be deemed either alone or in combination to constitute, and none of the following
shall be taken into account in determining whether there has been, a Material Adverse Effect: (A) changes in the industry in which
the Company or its Subsidiaries operate; (B) changes in the general economic or business conditions within the U.S. or other jurisdictions;
(C) general changes in the economy or securities, credit, financial or other capital markets of the U.S. or any other region outside
of the U.S. (including changes generally in prevailing interest rates, currency exchange rates, credit markets and price levels or trading
volumes); (D) earthquakes, fires, floods, hurricanes, tornadoes or similar catastrophes or acts of god or weather conditions, (E) political
conditions, including acts of terrorism, war, sabotage, national or international calamity, military action or any other similar event
or any change, escalation or worsening thereof after the date hereof; (F) any change in U.S. generally accepted accounting principles
or any change in laws (or interpretation or enforcement thereof); and (G) the execution of this Agreement or the public disclosure
of this Agreement or the transactions contemplated hereby; provided that a material adverse effect described in any of the foregoing clauses
(A) through (F) may be taken into account to the extent the Company and its Subsidiaries are disproportionately affected thereby
relative to other similarly-sized companies in the industry in which the Company and its Subsidiaries operate.

 

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4.2            Authorization;
Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations under this Agreement
and each of the other agreements entered into by the Parties in connection with the transactions contemplated by this Agreement (collectively,
the “Transaction Documents”), subject only to (i) as it relates to Section 1.1(a), the approval of
the Certificate of Designations Amendment Proposal by (x) the affirmative vote of at least a majority of the voting power of the
capital stock of the Company entitled to vote thereon and (y) the affirmative vote of at least a majority of the outstanding shares
of Series A Convertible Preferred Stock voting as a separate class, and (ii) as it relates to Section 1.1(d), solely
to the extent that the Company reasonably determines in good faith that such a vote is required under the NASDAQ rules, the approval of
all or any portion of the transactions contemplated by this Agreement by the affirmative vote of a majority of the votes cast on such
proposal (the vote referred to in the foregoing clause (ii), the “NASDAQ Vote”, and together with the vote referred
to in the foregoing clause (i), the “Company Requisite Vote”). The execution and delivery of the Transaction Documents
by the Company and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by the
Board. This Agreement and the other Transaction Documents have been (or will be, upon execution) duly executed and delivered by the Company,
and constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective
terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and
remedies.

 

4.3            No
Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby will not (i) result in a violation of the Certificate of Incorporation, or Bylaws
of the Company or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become
a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company is a party, including, without limitation, pursuant to any change of control, fundamental transaction
or other comparable provisions, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations and the rules and regulations of the Nasdaq Global Select Market (the “Principal
Market”)) applicable to the Company or by which any property or asset of the Company is bound or affected, other than, in the
cases of the foregoing clauses (ii) and (iii), such conflicts, defaults or violations that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

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4.4            Consents.
The Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any Governmental
Entity in order for it to execute, deliver or perform any of its obligations under or contemplated by this Agreement, in each case in
accordance with the terms hereof or thereof, except for the following consents, authorizations, orders, filings and registrations: (i) solely
with respect to the Series B Warrants Exercise, the filing of a notification with the Federal Trade Commission (“FTC”)
and the Department of Justice (“DOJ”) pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the “HSR Act”), (ii) the filing with the United States Securities and Exchange Commission (the “SEC”)
of a Form D and one or more registration statements in accordance with the requirements of the A&R Registration Rights Agreement
and any filings as may be required by state securities agencies, (iii) solely with respect to the A&R Certificate of Designations,
the Stockholder Approval (as defined below), (iv) the filing of the A&R Certificate of Designations with the Secretary of State
of the State of Delaware and (v) such consents, authorizations, orders, filings and registrations that, if not obtained, made or
given, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. All material consents, authorizations,
orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence will be obtained or effected
on or prior to the Closing Date (or in the case of the filings detailed above, will be made timely after the Closing Date), and the Company
is unaware of any facts or circumstances that might prevent the Company from obtaining or effecting any consent, registration, application
or filings pursuant to the preceding sentence. The Company is not in violation of the listing requirements of the Principal Market and
has no knowledge of any facts or circumstances that would reasonably lead to delisting or suspension of the Common Stock in the foreseeable
future. For purposes of this Agreement, “Governmental Entity” means any government or political subdivision, whether
federal, state, local, municipal or foreign, or any agency, department, branch, commission, board, official or instrumentality of any
such government or political subdivision, or any federal, state, local or foreign court, tribunal or arbitrator, or any stock exchange.

 

4.5            Equity
Capitalization. As of October 27, 2022, the authorized capital stock of the Company consists of (i) 300,000,000 shares of
Common Stock, of which 38,540,276 shares are issued and outstanding, 10,106,838 shares (as may be adjusted in accordance with the terms
of the Company’s stock incentive plans) are reserved for issuance pursuant to the Company’s stock incentive plans and no shares
are reserved for issuance pursuant to securities (other than the aforementioned options and the Securities) exercisable or exchangeable
for, or convertible into, Common Stock; and (ii) 10,000,000 shares of preferred stock, par value $0.001 per share, of which 0 shares
are issued and outstanding. All of such outstanding shares have been, or upon issuance will be, validly issued and are fully paid and
nonassessable. As of October 27, 2022, the Company has outstanding equity awards to employees with respect to 3,217,390 shares of
Common Stock. Except as disclosed in Schedule 4.5: (i) none of the Company’s capital stock is subject to preemptive
rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company; (ii) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any shares of capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional
shares of capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares of capital
stock of the Company or any of its Subsidiaries; (iii) other than the Notes, there are no outstanding debt securities, notes, credit
agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of the Company or any of its Subsidiaries
or by which the Company or any of its Subsidiaries is or may become bound; (iv) there are no financing statements securing obligations
filed in connection with the Company or any of its Subsidiaries; (v) there are no agreements or arrangements under which the Company
or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act (except pursuant to the Registration
Rights Agreement); (vi) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain
any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or
any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (vii) there are no
securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities; and
(viii) neither the Company nor any Subsidiary has any stock appreciation rights or “phantom stock” plans or agreements
or any similar plan or agreement.

 

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4.6            Investment
Company Status. Neither the Company nor any Subsidiary of the Company is an “investment company,” a company controlled
by an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter”
for, an “"investment company,” in each case as such terms are defined in the Investment Company Act of 1940, as amended
(the “1940 Act”).

 

4.7            SEC
Documents; Financial Statements. During the two (2) years prior to the date hereof, the Company has timely filed all SEC Documents.
As of their respective filing dates, all reports, schedules, forms, statements and other documents required to be filed and so filed by
it with, or furnished by it to, the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the
 “1934 Act”) (all of the foregoing filed or furnished prior to such Closing Date, and all exhibits included therein
and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as
the “SEC Documents”) complied in all material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC (or, if amended prior to the date hereof, the date of the filing of such amendment, with respect to the disclosures that
are amended), contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of their respective
filing dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of the SEC with respect thereto at the time of the applicable
filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles, consistently
applied during the periods involved (“GAAP”) (except (i) as may be otherwise indicated in such financial statements
or the notes thereto, (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements or (iii) as otherwise permitted by Regulation S-X and the other rules and regulations of the SEC) and
fairly present in all material respects the financial position of the Company and its Subsidiaries as of the dates thereof and the results
of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).

 

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4.8            No
Undisclosed Events, Liabilities, Developments or Circumstances. As of the date hereof, no event, liability, development or circumstance
has occurred or exists, or is contemplated to occur with respect to the Company, its Subsidiaries or their respective business, properties,
prospects, operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws on
a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which
has not been publicly announced.

 

4.9            Absence
of Litigation. Except with respect to any matters related to Intellectual Property Rights (as defined in the Securities Purchase Agreement)
that occur in the ordinary course of the Company’s business as a purchaser, seller and enforcer of Intellectual Property Rights,
as of the date hereof, there is no action, suit, proceeding, inquiry or investigation before or by the Principal Market, any court, public
board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, any such material action,
suit, proceeding, inquiry or investigation threatened against or affecting the Company or any of its Subsidiaries, the Common Stock or
any of the Company’s Subsidiaries or any of the Company’s or its Subsidiaries’ officers or directors, whether of a civil
or criminal nature or otherwise, in their capacities as such, except as set forth in Schedule 4.9. The matters set forth in Schedule
4.9 would not reasonably be expected to have a Material Adverse Effect.

 

4.10            Other
Liabilities. Schedule 4.10 sets forth, as of the date hereof, all of the Company’s and its Subsidiaries’ liabilities
(actual or potential), or payments owed by the Company or any of its Subsidiaries, to the parties identified therein.

 

4.11            Consulting
Agreements. Schedule 4.11 sets forth, as of the date hereof, (i) all of the Company’s or any of its Subsidiaries
material consulting or similar agreements (other than similar agreements for professional service providers engaged in the ordinary course
of business), (ii) any dispute related to any agreement referred to in the immediately clause (i) and (iii) any unpaid
invoices to the Company or any of its Subsidiaries.

 

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4.12            U.S.
Real Property Holding Corporation. Neither the Company nor any of its Subsidiaries is, has ever been, and so long as any Securities
are held by any of the Investors, shall not become, a U.S. real property holding corporation within the meaning of Section 897 of
the Code and the Company and each Subsidiary shall so certify upon any Investor's request.

 

4.13            No
Other Investor Representations and Warranties. The Company acknowledges and agrees that no Investor makes or has made any representations
or warranties with respect to the transactions contemplated hereby other than those specifically set forth in ARTICLE V.

 

ARTICLE V

representations
and warranties of

the
DESIGNEE AND THE investors

 

Each of the Designee and the
Investors, severally and not jointly, represents and warrants with respect to only itself that, as of the date hereof and as the Closing
Date:

 

5.1            Organization
and Qualification. The Designee or such Investor, as applicable, is duly organized and validly existing and in good standing under
the laws of the jurisdiction in which it is formed, and has the requisite power and authorization to own its properties and to carry on
its business as now being conducted and as presently proposed to be conducted. The Designee or such Investor, as applicable, is duly qualified
as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing
would not, individually or in the aggregate, reasonably be expected to have an Investor Material Adverse Effect. As used in this Agreement,
 “Investor Material Adverse Effect” means any effect, change, event or occurrence that would prevent or materially delay,
interfere with, hinder or impair (i) the consummation by the Designee or such Investor, as applicable, of any of the transactions
contemplated hereby on a timely basis or (ii) the material compliance by the Designee or such Investor, as applicable, with its obligations
under the Transaction Documents.

 

5.2            Consents.
Other than the filing of a notification with the FTC and the DOJ pursuant to the HSR Act and any filing required to be made pursuant to
Sections 13 and/or Section 16 of the 1934 Act, the Designee or such Investor, as applicable, is not required to obtain any consent,
authorization or order of, or make any filing or registration with any Governmental Entity in order for it to execute, deliver or perform
any of its obligations under or contemplated by the Transaction Documents, in each case in accordance with the terms hereof or thereof.
All consents, authorizations, orders, filings and registrations which the Designee or such Investor, as applicable, is required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to the Closing Date, or shall timely be made thereafter,
and the Designee or such Investor, as applicable, is unaware of any facts or circumstances that might prevent the Designee or such Investor,
as applicable, from obtaining or effecting any of the consent, registration, application or filings pursuant to the preceding sentence.
For purposes of this Agreement, “Person” means an individual, a limited liability company, a partnership (limited or
general), a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department
or agency thereof.

 

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

 

5.4            Accredited
Investor Status. The Designee or such Investor, as applicable, is an “accredited investor” as that term is defined in
Rule 501(a) of Regulation D. The Designee or such Investor, as applicable, (i) has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of its prospective investment with respect to the Common Stock,
Series A Convertible Preferred Stock, Series A Warrants and Series B Warrants and (ii) can bear the economic risk
of (A) an investment in such securities indefinitely and (B) a total loss in respect of such investment. As of the date hereof
and the Closing Date, the Designee or such Investor, as applicable, is acting solely in the capacity of an arm’s length purchaser
with respect to the Transaction Documents and the transactions contemplated hereby and thereby.

 

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

 

5.6            Information.
The Designee or such Investor, as applicable, and its advisors, if any, have been furnished with or had access to all materials relating
to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities that have been
requested by the Designee or such Investor, as applicable. The Designee or such Investor, as applicable, and its advisors, if any, have
been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigations conducted
by the Designee or such Investor, as applicable, or its advisors, if any, or its representatives shall modify, amend or affect the Designee’s
or such Investor’s, as applicable, right to rely on the Company’s representations and warranties contained herein. The Designee
or such Investor, as applicable, understands that its investment in the Securities involves a high degree of risk. The Designee or such
Investor has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with
respect to its acquisition of the Securities.

 

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5.7            No
Governmental Review. The Designee or such Investor, as applicable, understands that no Governmental Entity has passed on or made any
recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities
passed upon or endorsed the merits of the offering of the Securities.

 

5.8            Authorization;
Validity; Enforcement. The Designee or such Investor, as applicable, has the requisite power and authority to enter into and perform
its obligations under this Agreement and the Transaction Documents. The execution and delivery of this Agreement and the Transaction Documents
by the Designee or such Investor, as applicable, and the consummation by the Designee or such Investor, as applicable, of the transactions
contemplated hereby and thereby have been duly authorized by the Designee or such Investor, as applicable. This Agreement and the Transaction
Documents have been duly and validly authorized, executed and delivered on behalf of the Designee or such Investor, as applicable, and
shall constitute the legal, valid and binding obligations of the Designee or such Investor, as applicable, enforceable against the Designee
or such Investor, as applicable, in accordance with their respective terms, except as such enforceability may be limited by general principles
of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting
generally, the enforcement of applicable creditors’ rights and remedies.

 

5.9            General
Solicitation. To the Designee’s or such Investor’s, as applicable, knowledge, neither the Company nor any other Person
offered to sell the Securities to it by means of any form of general solicitation or advertising, including but not limited to: (A) any
advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television
or radio or (B) any seminar or meeting whose attendees were invited by any general solicitation or general advertising.

 

5.10            No
Conflicts. The execution, delivery and performance by the Designee or such Investor, as applicable, of this Agreement and the Transaction
Documents and the consummation by the Designee or such Investor, as applicable, of the transactions contemplated hereby and thereby will
not (i) result in a violation of the organizational documents of the Designee or such Investor, as applicable, or (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Designee or
such Investor, as applicable, is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and rules and regulations) applicable to the Designee or such Investor, as applicable,
except in the case of clauses (ii) and (iii) above, for such violations, conflicts, defaults or rights which would not, individually
or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Designee or such Investor, as applicable,
to perform its obligations hereunder.

 

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5.11            No
Other Company Representations or Warranties. The Designee and such Investor, as applicable, acknowledges and agrees that neither the
Company nor any of its Subsidiaries makes or has made any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in ARTICLE IV. In connection with the due diligence investigation of the Company by
such Investor and its representatives, the Designee or such Investor, as applicable, and its representatives have received and may continue
to receive from the Company and its representatives certain estimates, projections, forecasts and other forward-looking information, as
well as certain business plan information containing such information, regarding the Company and its Subsidiaries and their respective
businesses and operations. The Designee or such Investor, as applicable, hereby acknowledges that there are uncertainties inherent in
attempting to make such estimates, projections, forecasts and other forward-looking statements, as well as in such business plans, with
which the Designee or such Investor, as applicable, is familiar, that the Designee or such Investor, as applicable, is making its own
evaluation of the adequacy and accuracy of all estimates, projections, forecasts and other forward-looking information, as well as such
business plans, so furnished to the Designee or such Investor, as applicable, (including the reasonableness of the assumptions underlying
such estimates, projections, forecasts, forward-looking information or business plans), and that except for the representations and warranties
made by the Company in ARTICLE IV and in any certificate or other Transaction Document delivered by the Company in connection with
this Agreement, the Designee or such Investor, as applicable, will have no claim against the Company or any of its Subsidiaries, or any
of their respective representatives, with respect thereto.

 

ARTICLE VI

covenants

 

6.1            Cooperation.
Subject to the terms and conditions set forth in this Agreement, each of the Parties shall promptly take, or cause to be taken, all actions,
and to promptly do, or cause to be done, and to assist and cooperate with the other Parties in doing, all things reasonably necessary
under applicable laws to consummate and make effective the Recapitalization and the other transactions contemplated by this Agreement
as promptly as practicable after the date of this Agreement and in any event prior to the Outside Date, including: (i) the obtaining,
filing or delivering all of the necessary consents and clearances from Governmental Entities and other third parties and the making of
all filings and the taking of all steps as may be reasonably necessary to obtain consent or clearance from, or to avoid an action by,
any Governmental Entity; (ii) the defending of any actions, whether judicial or administrative, challenging this Agreement or the
consummation of the transactions contemplated hereby, including seeking to have any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed; and (iii) the execution and delivery of any additional instruments reasonably
necessary to consummate the transactions contemplated by, and to fully carry out the purposes of, this Agreement. The Designee shall,
and shall cause each of the Investors to, cooperate with the Company in structuring and implementing the Rights Offering, including furnishing
to the Company all information with respect to such Person necessary for inclusion in the Registration Statement or prospectus to be filed
by the Company with the SEC for the Rights Offering and as reasonably requested by the Company for inclusion in such Registration Statement
or prospectus.

 

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6.2            Stockholder
Meeting; Voting Commitment.

 

(a)            At
the next Annual Meeting of Stockholders of the Company (the “Annual Meeting”), the Company will, in coordination with
the Designee, in accordance with applicable law, the Certificate of Incorporation, the Certificate of Designations, and the Bylaws, use
its reasonable best efforts to obtain stockholder approval for the following proposal: an amendment to the Certificate of Designations
in the form of Exhibit A (the “Certificate of Designations Proposal”) (such affirmative approvals being
referred to herein collectively as the “Stockholder Approval”), and the Company shall use its reasonable best efforts
to solicit its stockholders’ approval of such resolutions in connection with the Stockholder Approval, including, without limitation,
by (x) subject to the last sentence of this Section 6.3(a), causing the Special Committee and the Board to recommend
to the stockholders of the Company that they approve such resolutions (the “Stockholder Vote Recommendation”), (y) using
reasonable best efforts to cause its officers and directors who hold shares of Common Stock and Series A Convertible Preferred Stock
to be present at the Stockholder Meeting for quorum purposes (including by proxy) and (z) using reasonable best efforts to cause
such officers and directors to vote their respective shares of Common Stock and Series A Convertible Preferred Stock in accordance
with the Stockholder Vote Recommendation. Notwithstanding anything to the contrary in this Agreement, the Special Committee and/or the
Board may withdraw, withhold, qualify or modify the Stockholder Vote Recommendation (any such action, a “Change in Recommendation”)
if the Special Committee and/or the Board, as applicable, determines in good faith, after consultation with its outside legal counsel
and financial advisor, that the failure to make such Change in Recommendation would be inconsistent with the directors’ fiduciary
duties under applicable law.

 

(b)            If
the Company reasonably determines in good faith that the NASDAQ Vote is required with respect to the transactions set forth in Section 1.1(d),
the Company will, in coordination with the Designee, and in accordance with applicable law, the Certificate of Incorporation, the Certificate
of Designations, and the Bylaws, use its reasonable best efforts to obtain shareholder approval for all or any portion of the transactions
contemplated by this Agreement subject to the NASDAQ Vote (the “NASDAQ Stockholder Approval”).

 

(c)            The
Designee and each of the Investors, as applicable, hereby agree, at the Annual Meeting or any adjournment or postponement thereof, to
be present (in person or by proxy) and vote (or cause to be voted) all of the shares of Common Stock and Series A Convertible Preferred
Stock beneficially owned by the Designee and each of the Investors, as applicable and calculated in accordance with Rule 13d-3 promulgated
under the 1934 Act, in accordance with the Stockholder Vote Recommendation. Each of the Designee and the Investors agree that it will
not, prior to the earlier of the Closing or the termination of this Agreement, sell, transfer, assign, encumber, hypothecate or similarly
dispose of (by operation of law or otherwise), either voluntarily or involuntarily, any of the shares of Common Stock or Series A
Convertible Preferred Stock beneficially owned by the Designee and each of the Investors as of the date of this Agreement.

 

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6.3            Waiver
of Preemptive Rights. The Designee and each of the Investors, as applicable, hereby waives its rights under Section 4(o) (Additional
Issuances of Securities) of the Securities Purchase Agreement solely with respect to the transactions contemplated by this Agreement.

 

6.4            HSR.

 

(a)            Each
of the Designee and the Company shall consult with one another with respect to the making of any registrations, filings and notices with
the FTC and the DOJ required to consummate the transactions as promptly as practicable after the date hereof and the obtaining of all
consents, authorizations and approvals of such Governmental Entities necessary, proper or advisable to consummate the transactions. Each
of the Designee and the Company shall use their reasonable best efforts to make any such registrations, filings and notices, if necessary,
as promptly as reasonably practicable after the date of this Agreement. Each of the Designee and the Company shall keep the other reasonably
apprised on a prompt basis of the status of matters relating to any of the foregoing. Designee and the Company shall have the right to
review in advance and, to the extent practicable, and subject to any restrictions under applicable law, each shall consult the other on,
any filing made with, or written materials submitted to, the FTC and/or the DOJ in connection with the transactions and each agrees to
in good faith consider comments of the other thereon. Designee and the Company shall promptly furnish to each other copies of all such
filings and written materials after their filing or submission, in each case subject to applicable laws. Subject to applicable laws, Designee
and the Company shall promptly advise each other upon receiving any communication from the FTC or the DOJ whose consent, authorization
or approval is required to consummate the Recapitalization, including promptly furnishing each other copies of any written or electronic
communication, and shall promptly advise each other when any such communication causes such party to believe that there is a reasonable
likelihood that any such consent, authorization or approval will not be obtained or that the receipt of any such consent, authorization
or approval will be materially delayed or conditioned.

 

(b)            Notwithstanding
anything to the contrary contained in this Agreement, including this Section 6.4, no Party shall be obligated to take or refrain
from taking or to agree to it or its affiliates taking or refraining from taking any action or to suffer to exist any restriction, condition
or requirement imposed by the FTC or DOJ which, individually or together with all other such actions, restrictions, conditions or requirements,
would, or would reasonably be expected to: (i) have a material adverse effect on the business, financial condition, assets, liabilities
or results of operations of such Party or any of its affiliates; (ii) impose any material limitations on such Party’s or its
affiliates’ ownership or operation of all or any portion of its or any of its affiliates’ businesses, operations or assets
or compel such Party or any of its affiliates to dispose of or hold separate all or any portion of its or any of its affiliates’
businesses, operations or assets or (iii) would reasonably be expected to substantially impair the benefits to such Party reasonably
likely, as of the date hereof, to be realized from the consummation of the Recapitalization.

 

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(c)            Notwithstanding
anything to the contrary contained in this Agreement, in no event shall a Party or any of its affiliates be required by the FTC or DOJ
to agree to take, or enter into any action, which action is not conditioned upon the Closing.

 

6.5            Termination
of Certain Agreements. Effective as of the later of the Closing and the date on which no Notes (as defined in the Securities Purchase
Agreement) remain outstanding, the Parties hereby agree that each of (i) the Securities Purchase Agreement and (ii) the Governance
Agreement, dated as of November 18, 2019, and amended and restated on January 7, 2020 (the “Governance Agreement”),
shall be automatically terminated and of no further force and effect without any further action by any party thereto. For the avoidance
of doubt, in accordance with Section 3.2, the Registration Rights Agreement shall be amended and restated in its entirety
as of the Closing.

 

6.6            Acknowledgement.
The Designee and each of the Investors, as applicable, hereby acknowledges and agrees that the Recapitalization shall not constitute a
 “Fundamental Transaction,” “Dilutive Issuance,” or “Change of Control” as defined under each of the
Certificate of Designations, the Series A Warrants, the Series B Warrants or the Notes and compliance with Section 1.1(d) in
lieu of distribution of Purchase Rights pursuant to the Series A Convertible Preferred Stock or be (or be deemed to be) in conflict,
violation or breach thereof (notwithstanding anything to the contrary therein). If, notwithstanding the foregoing, any court of competent
jurisdiction or other person should determine any of the foregoing in a manner inconsistent with the preceding sentence, the Designee
and each of the Investors irrevocably agree to waive, and not to assert, any and all rights they may acquire as a result thereof.

 

6.7            Form W-9
or W-8. At the Closing, each Investor shall provide an Internal Revenue Service Form W-9 or Form W-8, as applicable (or
applicable successor form) properly completed and executed by such Investor (or, if such Investor is disregarded for U.S. federal income
tax purposes, its regarded owner).

 

ARTICLE VII

conditions
to CLOSING

 

7.1            Mutual
Closing Conditions. The obligations of each of the Parties to consummate the Series B Warrants Exercise (and, in the case of
Section 7.1(a), the other applicable transactions contemplated by this Agreement) are conditioned upon the satisfaction at
or prior to the Closing (or waiver by both the Company and the Designee, to the extent permitted by applicable law) of each of the following:

 

(a)            Stockholder
Approval. Solely to the extent that the Company reasonably determines in good faith that the NASDAQ Vote is required with respect
to the transactions set forth in Section 1.1(d), the NASDAQ Stockholder Approval shall have been obtained in accordance with
applicable law, the Certificate of Incorporation, the Bylaws and the Certificate of Designations.

 

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(b)            No
Injunctions or Restraints. No Governmental Entity having jurisdiction over any Party shall have issued any order (whether preliminary,
temporary or permanent) or taken any other action, in each case restraining, enjoining or otherwise prohibiting the consummation of the
Series B Warrants Exercise nor any law shall be in effect that makes consummation of the Series B Warrants Exercise illegal
or otherwise prohibited.

 

(c)            Regulatory
Approval. The waiting period (or any extension thereof) applicable to the Series B Warrants Exercise under the HSR Act has expired
or been terminated.

 

7.2            Additional
Company Conditions to Closing. The obligation of the Company to consummate the Series B Warrants Exercise is further conditioned
upon satisfaction (or waiver by the Company) at or prior to the Series B Warrants Exercise of each of the following:

 

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

 

7.3            Additional
Investor Conditions to Closing. The obligation of each of the Investors to consummate the Recapitalization is further conditioned
upon the satisfaction (or waiver by the Designee) at or prior to the Closing of each of the following:

 

(a)            The
representations and warranties of the Company shall be true and correct in all material respects (except for such representations qualified
by materiality or Material Adverse Effect, which are true and correct in all respects) as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that speak as of a specific date which shall be true and correct
in all material respects (except for such representations qualified by materiality or Material Adverse Effect, which are true and correct
in all respects) as of such specified date) and the Company shall have performed, satisfied and complied in all material respects with
the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company
at or prior to the Closing Date.

 

    21

     

    

 

ARTICLE VIII

termination

 

8.1            Termination
of Agreement. This Agreement may be terminated at any time prior to the Closing as follows:

 

(a)            by
the mutual written consent of the Company and the Designee in a written instrument;

 

(b)            by
the Company or the Designee, if any Governmental Entity having jurisdiction over any Party shall have issued a final nonappealable order
or taken any other action, in each case permanently restraining, enjoining or otherwise prohibiting the consummation of the Recapitalization
or any law that permanently makes consummation of the Recapitalization illegal or otherwise prohibited shall be in effect; provided,
that the right to terminate this Agreement under this Section 8.1(b) shall not be available to the Company, on the one
hand, or the Designee, on the other hand, if such order or law was primarily due to a breach by the Company, on the one hand, or either
the Designee or any of the Investors, on the other hand, of this Agreement;

 

(c)            by
the Company, if the Designee or any of the Investors has breached this Agreement, which breach would result in the failure of a condition
set forth in Section 7.2(a) to be satisfied and such breach is incapable of being cured or, if capable of being cured,
is not cured by the earlier of (x) the Outside Date or (y) thirty (30) days following receipt by the Designee of written notice
of such breach from the Company; provided that the right to terminate this Agreement pursuant to the terms of this Section 8.1(c) shall
not be available if the Company is itself in breach of this Agreement, and which breach would result in a failure of a condition set forth
in Section 7.3(a);

 

(d)            by
the Designee, if the Company has breached this Agreement, which breach would result in the failure of a condition set forth in Section 7.3(a) to
be satisfied and such breach is incapable of being cured or, if capable of being cured, is not cured by the earlier of (x) the Outside
Date or (y) thirty (30) days following receipt by the Company of written notice of such breach from the Designee; provided
that the right to terminate this Agreement pursuant to the terms of this Section 8.1(d) shall not be available if the
Designee or any Investor is in breach of this Agreement, and which breach would result in a failure of a condition set forth in Section 7.2(a);
or

 

(e)            by
the Company or the Designee, if the Closing does not occur on or before July 31, 2023 (the “Outside Date”); provided
that the right to terminate this Agreement pursuant to this Section 8.1(e) shall not be available to the Company, on
the one hand, or the Designee, on the other hand, if the failure of the Closing to occur prior to such time was primarily due to a breach
of the Company, on the one hand, or either the Designee or any of the Investors, on the other hand, of this Agreement.

 

    22

     

    

 

8.2            Procedure
Upon Termination. In the event of valid termination of this Agreement by the Company or the Designee, or both, pursuant to Section 8.1,
written notice thereof shall be given to the other Parties, and this Agreement will terminate, effective immediately upon delivery of
such written notice to the other Parties, without further action by the Company or the Designee.

 

8.3            Effect
of Termination. In the event that this Agreement is validly terminated as provided in Section 8.1, each of the Parties
will be relieved of its duties and obligations arising under this Agreement after the date of such termination and such termination will
be without liability to the Company, the Designee or the Investors; provided, that Section 6.6 shall survive any such
termination; provided, further, that nothing in this Agreement shall release any Party from liability for fraud or any Willful
Breach of any covenant or agreement contained herein occurring prior to termination, in which case the aggrieved Party shall be entitled
to all rights and remedies available at law or in equity. For purposes of this Section 8.3, “Willful Breach” means
a material breach of this Agreement that is the consequence of an act or omission by the breaching party with the actual knowledge that
the taking of such act (or, in the case of an omission, failure to take such act) would cause or constitute such material breach, regardless
of whether breaching was the object of the act or failure to act.

 

ARTICLE IX

miscellaneous

 

9.1            Governing
Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement
shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision
or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State 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
brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each Party hereby irrevocably waives
personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such
Party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service
of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted
by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

    23

     

    

 

9.2            Counterparts.
This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each Party and delivered to the other Parties; provided that a facsimile
or .pdf signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as
if the signature were an original, not a facsimile or .pdf signature.

 

9.3            Headings.
The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

 

9.4            Severability.
If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest
extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity
of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change,
the original intentions of the Parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the Parties or the
practical realization of the benefits that would otherwise be conferred upon the Parties. The Parties will endeavor in good faith negotiations
to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as
possible to that of the prohibited, invalid or unenforceable provision(s).

 

9.5            Entire
Agreement; Amendments. This Agreement and the other Transaction Documents supersede all other prior oral or written agreements between
the Designee, the Investors, the Company, their affiliates and Persons acting on their behalf with respect to the Recapitalization, this
Agreement, the other Transaction Documents and the instruments referenced herein and therein contain the entire understanding of the Parties
with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor
any Investor makes any representation, warranty, covenant or undertaking with respect to such matters. Provisions of this Agreement may
be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively),
only with the written consent of the Company and the Designee. Any amendment or waiver effected in accordance with this Section 9.5
shall be binding upon each Party. The Company shall not agree to any amendment, waiver, modification or termination this Agreement unless
such amendment, waiver, modification or termination is first approved by the Unaffiliated Directors or a majority of the disinterested
directors of the Company.

 

    24

     

    

 

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

  

If to the Company:

 

Acacia Research Corporation

767 Third Avenue

6th Floor

New York, NY 10017

Attention: Jason W. Soncini,
General Counsel

E-mail: jsoncini@acaciares.com

Telephone:     (949) 480-8300

Facsimile:       (917)
720-9136

 

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

 

Weil, Gotshal &
Manges LLP

767 Fifth Avenue

New York, NY 10153

Attention: Michael J. Aiello;
Sachin Kohli

E-mail: michael.aiello@weil.com;
sachin.kohli@weil.com

Telephone:     (212)
310-8000

Facsimile:       (212)
310-8007

 

If to the Designee:

 

777 Third Avenue, 18th
Floor

New York, NY 10017

Attention:     Jeffrey
C. Smith

Facsimile:      212-320-0296

Telephone:   212-845-7977

E-mail:            jsmith@starboardvalue.com

 

If to an Investor, to its address, facsimile
number and e-mail address set forth on the Schedule of Investors, with copies to such Investor’s representatives as set
forth on the Schedule of Investors,

 

with a copy (for informational
purposes only when sending communications to the Designee and any of the Investors) to:

 

Schulte Roth &
Zabel LLP

919 Third Avenue

New York, New York 10022

Telephone:      (212) 756-2000

Facsimile:        (212) 593-5955

Attention: Eleazer N. Klein,
Esq

E-mail: eleazer.klein@srz.com

 

    25

     

    

 

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

 

9.7            Successors
and Assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, in whole or in part,
by operation of law or otherwise, by any of the Parties without the prior written consent of the Company and the Designee.

 

9.8            Third
Party Beneficiaries. This Agreement is intended for the benefit of the Parties and their respective permitted successors and assigns,
and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

9.9            Survival.
The representations and warranties contained in this Agreement or in any certificates or other documents delivered prior to or as of the
Closing Date shall survive until (but not beyond) the Closing. The covenants and agreements of the Parties that by their terms contemplate
performance following the Closing shall survive the Closing without limitation (except for those which, by their terms, contemplate a
shorter survival period).

 

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

 

9.11            No
Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the Parties to express their
mutual intent, and no rules of strict construction will be applied against any Party.

 

9.12            Expenses.
The Company shall reimburse each Investor and the Designee (in addition to any other expense amounts paid to any Investor, the Designee
or their counsel prior to the date of this Agreement) for all reasonable and documented out-of-pocket costs and expenses incurred in connection
with the transactions contemplated by this Agreement (including all legal fees and disbursements in connection therewith, documentation
and implementation of the transactions contemplated by this Agreement and including any fees payable by such Investor or the Designee
with respect to any necessary filings, approvals and/or clearances under the HSR Act, which aggregate amount shall not exceed $75,000
without the prior approval of the Company. Except as otherwise set forth herein, each party to this Agreement shall bear its own expenses
in connection with the Recapitalization.

 

9.13            Specific
Performance. The Parties agree that irreparable damage, for which monetary damages or other legal remedies, even if available, would
not be an adequate remedy, may occur in the event that any of the provisions of this Agreement were not performed (including failing to
take such actions as are required of it hereunder to consummate this Agreement) in accordance with their specific terms or were otherwise
breached by the Parties. It is accordingly agreed that the Parties shall be entitled to seek an injunction or injunctions, or any other
appropriate form of specific performance or equitable relief, to prevent breaches or threatened breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in the state and federal courts sitting in the City of New York, Borough of Manhattan,
without proof of damages or otherwise, this being in addition to any other remedy to which they are entitled to seek at law or in equity.
Each Party agrees not to raise any objections to the availability of the equitable remedy of specific performance and further agrees not
to assert that a remedy of specific enforcement is unenforceable, invalid, contrary to law or inequitable for any reason, nor to assert
that a remedy of monetary damages would provide an adequate remedy for any such breach. Each Party further agrees that neither the other
Party nor any other Person shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition
to obtaining any remedy referred to in this Section 9.13, and each Party irrevocably waives any right it may have to require
the obtaining, furnishing or posting of any such bond or similar instrument.

 

[Signature Page Follows]

 

    26

     

    

 

IN WITNESS WHEREOF, the Designee, each Investor
and the Company have caused their respective signature page to this Recapitalization Agreement to be duly executed as of the date
first written above.

 

	 	COMPANY:
	 	 
	 	ACACIA RESEARCH CORPORATION
	 	 
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:
	 	 
	 	DESIGNEE:
	 	 
	 	STARBOARD VALUE LP
	 	 
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:
	 	 
	 	INVESTORS:
	 	 
	 	STARBOARD VALUE AND OPPORTUNITY MASTER FUND LTD.
	 	 
	 	By: Starboard Value A LP, its general partner
	 	 
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:
	 	 
	 	STARBOARD X MASTER FUND LTD.
	 	 
	 	By: Starboard Value A LP, its general partner
	 	 
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

 

[Signature
Page to Recapitalization Agreement]

 

    

     

    

 

	 	STARBOARD VALUE AND OPPORTUNITY S LLC
	 	 
	 	By: Starboard Value LP, its manager
	 	 
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:
	 	 
	 	STARBOARD VALUE AND OPPORTUNITY C LP
	 	 
	 	By: Starboard Value R LP, its general partner
	 	 
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:
	 	 
	 	STARBOARD VALUE AND OPPORTUNITY MASTER FUND L LP
	 	 
	 	By: Starboard Value L LP, its general partner
	 	 
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:
	 	 
	 	STARBOARD VALUE LP, in its capacity as the investment manager
    of a certain managed account
	 	 
	 	By: Starboard Value GP LLC, its general partner
	 	 
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

 

[Signature
Page to Recapitalization Agreement]

 

    

     

    

 

Exhibit A

 

A&R Certificate of Designations

 

See attached.

 

    

     

    

 

Final
Form

 

FORM OF SECOND AMENDED AND RESTATED CERTIFICATE
OF

DESIGNATIONS, PREFERENCES AND RIGHTS OF SERIES A CONVERTIBLE

PREFERRED STOCK

OF

ACACIA RESEARCH CORPORATION

 

Acacia Research Corporation (the “Company”),
a corporation organized and existing under the General Corporation Law of the State of Delaware (the “DGCL”), does
hereby certify that the Board of Directors of the Company (the “Board”), pursuant to authority conferred upon the Board
by the Certificate of Incorporation, as amended, of the Company, and the Required Holders (as such term is defined in the Initial Certificate
of Designations, as defined below) of the Series A Convertible Preferred Stock of the Company, par value $0.001 per share (the “Series A
Preferred Shares”), pursuant to the provisions of the DGCL, have adopted resolutions amending and restating the Certificate
of Designations, Preferences and Rights of Series A Convertible Preferred Stock of the Company, as follows;

 

WHEREAS, pursuant to its authority, the Board previously
fixed the powers, designations, preferences and other special rights relating to the Series A Preferred Shares, consisting of up
to 350,000 shares of Series A Preferred Shares, 350,000 of which have been issued, as set forth in a Certificate of Designations,
Preferences and Rights of Series A Convertible Preferred Stock of Acacia Research Corporation dated November 18, 2019 (the “Initial
Certificate of Designations”); and

 

WHEREAS, pursuant to its authority, the Board duly
adopted on January 7, 2020, and by an Amended and Restated Certificate of Designations, Preferences and Rights of Series A Convertible
Preferred Stock of Acacia Research Corporation filed in the office of the Secretary of State of Delaware on January 7, 2020 (the
 “A&R Certificate of Designation”), the Company amended and restated the provisions of the Initial Certificate of
Designations;

 

WHEREAS, the Board wishes to amend and restate
the A&R Certificate of Designations in its entirety to remove certain limitations on conversion;

 

RESOLVED, that the Board does hereby amend and
restate the A&R Certificate of Designations, which shall have the following powers, designations, preferences and other special rights:

 

(1)            Ranking.
The Series A Preferred Shares shall rank prior and superior to all of the Common Stock and any other capital stock of the Company
with respect to the preferences as to dividends, distributions and payments upon a Liquidation Event. The rights of the shares of Common
Stock and other capital stock of the Company shall be of junior rank to and subject to the preferences and relative rights of the Series A
Preferred Shares. The Company shall be permitted to issue capital stock, including preferred stock, that is junior in rank to the Series A
Preferred Shares in respect of the preferences as to dividends and other distributions, redemption payments and payments upon a Liquidation
Event (such stock being referred to hereinafter collectively as “Junior Stock”), provided, that the maturity
date (or any other date requiring redemption, repayment or any other payment, including, without limitation, dividends in respect of any
such shares of preferred stock) of any such junior preferred shares is not on or before 91 days after the Maturity Date.

 

    

     

    

 

(2)            Prepayment.
Other than as specifically permitted by this Second Amended and Restated Certificate of Designations, Preferences and Rights of Series A
Preferred Shares of the Company (this “Certificate of Designations”), the Company may not prepay any portion of any
outstanding Conversion Amount.

 

(3)            Liquidation.
In the event of a Liquidation Event, holders of Series A Preferred Shares (each, a “Holder” and collectively,
the “Holders”) shall be entitled to receive in cash out of the assets of the Company legally available therefor, whether
from capital or from earnings available for distribution to its stockholders (the “Liquidation Funds”) upon such Liquidation
Event, but before any amount shall be paid to the holders of Junior Stock, an amount per Series A Preferred Share equal to the greater
of (i) the Conversion Amount and (ii) the amount that would have been received had such Series A Preferred Shares been
converted into Common Stock immediately prior to such Liquidation Event at the then effective Conversion Price (without regard to any
limitations on conversion); provided that, if the Liquidation Funds are insufficient to pay the full amount due to the Holders
and holders of shares of other classes or series of preferred stock of the Company, if any, that are of equal rank with the Series A
Preferred Shares as to payments of Liquidation Funds (such stock being referred to hereinafter collectively as “Pari Passu Stock”),
if any, then each Holder and each holder of any such Pari Passu Stock shall receive a percentage of the Liquidation Funds equal to the
full amount of Liquidation Funds that would be payable to such Holder as a liquidation preference, in accordance with their respective
Certificate of Designations, Preferences and Rights, as a percentage of the full amount of Liquidation Funds payable to all Holders and
holders of Pari Passu Stock.

 

(4)            Dividends.
From and after the first date of issuance of any Series A Preferred Shares (the “Issuance Date”), (i) the
Holders of record as they appear on the stock books of the Company on the fifteenth (15th) day (even if such day is not a Business Day)
(a “Preferential Dividend Record Date”) of the calendar month immediately preceding the first (1st) Business Day of
each succeeding Calendar Quarter (each such date, a “Preferential Dividend Date”), shall be entitled to receive, to
the fullest extent permitted by law and out of funds lawfully available therefor, before any dividends shall be declared, set apart for
or paid upon the Common Stock or any other Junior Stock, cash dividends, by wire transfer of immediately available funds, per Series A
Preferred Share on the applicable Preferential Dividend Date in arrears for the previous Calendar Quarter equal to an amount of cash calculated
at the applicable Preferential Dividend Rate on the Stated Value of each such Series A Preferred Share computed on the basis of a
360-day year and twelve 30-day months (the “Preferential Dividends”) and (ii) the Holders on the record date fixed
for holders of Common Stock for dividends and distributions (or, in the event no such date is fixed, on the Preferential Dividend Record
Date) shall be entitled to receive, concurrently with the dividends and distributions to the holders of Common Stock (or, in the event
no such dividends or distributions are made, on the Preferential Dividend Date), such dividends paid and distributions made to the holders
of Common Stock to the same extent as if such Holders had converted the Series A Preferred Shares into Common Stock (without regard
to any limitations on conversion) and had held such shares of Common Stock on such record date (the “Participating Dividends”
and together with the Preferential Dividends, the “Dividends”). Dividends on the Series A Preferred Shares shall
commence accruing on the Issuance Date, shall be cumulative and shall continue to accrue whether or not declared and whether or not in
any fiscal year there shall be net profits or surplus available for the payment of Dividends in such fiscal year, so that if in any fiscal
year or years, Dividends in whole or in part are not paid upon the Series A Preferred Shares for any reason, unpaid Dividends shall
accumulate thereon. If the Company fails to declare and pay in cash full Preferential Dividends on the Series A Preferred Shares
on any Preferential Dividend Date as provided in this Section 4, then any Preferential Dividends payable on such Preferential Dividend
Date on the Series A Preferred Shares but not paid shall accrue and bear interest at a rate equal to the Preferential Dividend Rate,
computed on the basis of a 360-day year and twelve 30-day months, from and including the applicable Preferential Dividend Date to but
excluding the day on which the Company shall have paid in cash in accordance with this Section 4 all Dividends on which the Series A
Preferred Shares that are then in arrears or until the conversion or redemption of the applicable shares of Series A Preferred Shares.
From and after the occurrence and during the continuance of a Triggering Event, the Preferential Dividend Rate shall be increased to either
(i) seven percent (7.0%) per annum if before the consummation of an Approved Investment or (ii) ten percent (10.0%) per annum
if after the consummation of an Approved Investment. In the event that such Triggering Event is subsequently cured, the adjustment referred
to in the preceding sentence shall cease to be effective as of the date of such cure; provided, that the Preferential Dividends
as calculated and unpaid at such increased rate during the continuance of such Triggering Event shall continue to apply to the extent
relating to the days after the occurrence of such Triggering Event through and including the date of cure of such Triggering Event; provided,
further, that for the purpose of this Section 4, such Triggering Event shall not be deemed cured unless and until any accrued
and unpaid Dividends shall be paid to the Holders, including, without limitation, Preferential Dividends accrued at the applicable increased
rate. The Company and its Subsidiaries shall not redeem or repurchase any Equity Interests or pay any dividends with respect to any Equity
Interests (other than Series A Preferred Shares pursuant to the terms of this Certificate of Designation) unless the Company has
declared all Dividends on the Series A Preferred Shares that have accrued through the Preferential Dividend Record Date immediately
preceding the date of such redemption or repurchase and paid all Dividends on the Series A Preferred Shares that are payable through
the Preferential Dividend Date immediately preceding the date of such redemption or repurchase.

 

    2

     

    

 

(5)            Conversion
of Series A Preferred Shares. At any time or times after the Issuance Date, the Series A Preferred Shares shall be convertible
into shares of Common Stock, on the terms and conditions set forth in this Section 5.

 

(a)            Holder’s
Conversion Right. At any time or times on or after the Issuance Date, any Holder shall be entitled to convert all or any portion
of the Conversion Amount of any Series A Preferred Shares, into fully paid and nonassessable shares of Common Stock in accordance
with this Section 5 at the Conversion Rate (as defined below).

 

(b)            Conversion.
The number of shares of Common Stock issuable upon conversion of each Series A Preferred Share pursuant to Section 5(a) shall
be determined according to the following formula (the “Conversion Rate”):

 

Conversion
Amount

Conversion Price

 

No fractional shares of Common Stock are to be
issued upon the conversion of any Series A Preferred Share, but rather the number of shares of Common Stock to be issued shall be
rounded up to the nearest whole number. The applicable Conversion Rate and Conversion Price from time to time in effect is subject to
adjustment as hereinafter provided.

 

(c)            Mechanics
of Conversion. The conversion of Series A Preferred Shares shall be conducted in the following manner:

 

(i)            Holder’s
Delivery Requirements. To convert Series A Preferred Shares into shares of Common Stock on any date on or after the Issuance
Date (a “Conversion Date”), a Holder shall (A) deliver to the Company on or prior to 11:59 p.m., New York time,
on such date, a copy of a properly completed notice of conversion executed by the Holder of the Series A Preferred Shares subject
to such conversion in the form attached hereto as Exhibit I (a “Conversion Notice”) and (B) if required
by Section 5(c)(vi), but without delaying the Company’s requirement to deliver shares of Common Stock on the applicable Share
Delivery Date (as defined below), surrender to a common carrier for delivery to the Company as soon as practicable following such date
the original certificates representing the Series A Preferred Shares being converted (or comply with the procedures set forth in
Section 22) (the “Series A Preferred Stock Certificates”). No ink-original Conversion Notice shall be required,
nor shall any medallion guarantee (or other type of guarantee or notarization) of any Conversion Notice be required.

 

    3

     

    

 

(ii)            Company’s
Response. Upon delivery to the Company of a Conversion Notice, the Company shall (I) as soon as practicable, but in any event
within one (1) Trading Day, send a confirmation of receipt of such Conversion Notice to such Holder and the Transfer Agent, which
confirmation shall constitute an instruction to the Transfer Agent to process such Conversion Notice in accordance with the terms herein
and (II) on or before the earlier of (A) the number of Trading Days comprising the Standard Settlement Period and (B) the
second (2nd) Trading Day following the date on which the Holder has delivered the applicable Conversion Notice to the Company (a “DTC
Share Delivery Date”), provided that (A) the shares of Common Stock issuable upon such conversion are subject to an effective
resale registration statement in favor of such Holder or (B) if converted at a time when Rule 144 would be available for immediate
resale of the shares of Common Stock issuable upon such conversion by such Holder, the Company shall credit such aggregate number of shares
of Common Stock to which such Holder shall be entitled to such Holder’s or its designee’s balance account with the Depository
Trust Company (“DTC”) through its Deposit/Withdrawal at Custodian (“DWAC”) system.

 

On or before the fifth (5th) Trading Day following
the date on which the Holder has delivered the applicable Conversion Notice to the Company (a “Book-Entry Delivery Date”
and together with the DTC Share Delivery Date, a “Share Delivery Date”), the shares of Common Stock issuable upon conversion
are not subject to an effective resale registration statement in favor of such Holder and, if converted at a time when Rule 144 would
not be available for immediate resale of the shares of Common Stock issuable upon conversion by such Holder, the Company shall (i) issue
the number of shares of Common Stock to which the Holder shall be entitled with such restrictive legends as shall be required pursuant
to Section 4(y) of the Securities Purchase Agreement, registered in the name of the Holder or its designee in book-entry form
at the Transfer Agent and (ii) deliver to the address as specified in the applicable Conversion Notice a copy from the Company’s
books and records evidencing such issuance. If a Series A Preferred Stock Certificate is physically submitted in connection with
any conversion and if the number of Series A Preferred Shares represented by the Series A Preferred Stock Certificate(s) submitted
for conversion is greater than the number of Series A Preferred Shares being converted, then the Company shall, as soon as practicable
and in no event later than five (5) Business Days after delivery of the Series A Preferred Stock Certificate(s) and at
its own expense, issue and deliver to such Holder a new Series A Preferred Stock Certificate representing the number of Series A
Preferred Shares not converted. The Company’s obligations to issue and deliver shares of Common Stock in accordance with the terms
and subject to the conditions hereof are absolute and unconditional, irrespective of any action or inaction by such Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to
enforce the same, or any setoff, counterclaim, recoupment, limitation or termination. While any Series A Preferred Shares are outstanding,
the Company shall use a transfer agent that participates in DTC Fast Automated Securities Transfer (“FAST”) Program.

 

    4

     

    

 

(iii)            Record
Holder. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of Series A Preferred
Shares shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the applicable Conversion Date,
irrespective of the date such shares of Common Stock are credited to such Holder’s account with DTC or the date of delivery of the
certificates evidencing such shares of Common Stock, as the case may be.

 

(iv)            Company’s
Failure to Timely Convert.

 

(A)            Cash
Damages. If on or prior to the applicable Share Delivery Date the Company shall fail to issue to a Holder in book- entry from
at the Transfer Agent or credit such Holder’s balance account with DTC, as applicable, for the number of shares of Common Stock
to which such Holder is entitled upon such Holder’s conversion of Series A Preferred Shares or the Company fails to comply
with its obligation to deliver shares of Common Stock as contemplated pursuant to clause (ii) below (unless such failure is due solely
to the action or inaction of the Holder or an agent of the Holder) (each, a “Conversion Failure”), then, in addition
to all other remedies available to the Holder, (A) the Company shall pay damages to such Holder for each Trading Day of such Conversion
Failure in an amount equal to 2.0% of the product of (1) the sum of the number of shares of Common Stock not issued to such Holder
on or prior to the applicable Share Delivery Date and to which such Holder is entitled, and (2) the Weighted Average Price of the
shares of Common Stock on the applicable Share Delivery Date and (B) in addition to the foregoing, if on or after the applicable
Share Delivery Date such Holder purchases (in an open market transaction or otherwise) shares of Common Stock relating to the applicable
Conversion Failure (a “Buy-In”), within two (2) Trading Days after such Holder’s request and in such Holder’s
discretion, either (i) pay cash to such Holder in an amount equal to such Holder’s total purchase price (including brokerage
commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (the “Buy-In Price”),
at which point the Company’s obligation to issue and deliver such certificate or credit such Holder’s balance account with
DTC for such shares of Common Stock shall terminate, or (ii) promptly honor its obligation to deliver to such Holder a certificate
or certificates representing such shares of Common Stock or credit the Holder’s balance account with DTC for such shares of Common
Stock, as applicable, and pay cash to such Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such
number of shares of Common Stock, times (B) the Closing Bid Price of the Common Stock on the applicable Conversion Date. 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 certificates
representing shares of Common Stock (or to electronically deliver such shares of Common Stock) upon conversion of the Series A Preferred
Shares as required pursuant to the terms hereof, but if the Holder exercises its Buy-In right, then such remedy shall be the sole and
exclusive remedy for such Conversion Failure.

 

    5

     

    

 

(B)            Void
Conversion Notice. If for any reason a Holder has not received all of the shares of Common Stock to which such Holder is entitled
on the applicable Share Delivery Date with respect to a conversion of Series A Preferred Shares, then such Holder, upon written notice
to the Company may void its Conversion Notice with respect to, and retain or have returned, as the case may be, any Series A Preferred
Shares that have not been converted pursuant to such Holder’s Conversion Notice; provided that the voiding of a Holder’s
Conversion Notice shall not affect the Company’s obligations to make any payments which have accrued prior to the date of such notice
pursuant to Section 5(c)(iv)(A) or otherwise.

 

(v)            Pro
Rata Conversion; Disputes. In the event the Company receives a Conversion Notice from more than one Holder for the same Conversion
Date and the Company can convert some, but not all, of such Series A Preferred Shares, the Company shall convert from each holder
electing to have Series A Preferred Shares converted at such time a pro rata amount of such holder’s portion of Series A
Preferred Shares submitted for conversion based on Stated Value of Series A Preferred Shares submitted for conversion on such date
by such holder relative to the aggregate Stated Value of Series A Preferred Shares submitted for conversion on such date. In the
event of a dispute as to the number of shares of Common Stock issuable to a Holder in connection with a conversion of Series A Preferred
Shares, the Company shall issue to such Holder the number of shares of Common Stock not in dispute and resolve such dispute in accordance
with Section 19.

 

    6

     

    

 

(vi)            Book-Entry.
Notwithstanding anything to the contrary set forth herein, upon conversion of Series A Preferred Shares in accordance with the terms
hereof, a Holder thereof shall not be required to physically surrender the certificate representing the Series A Preferred Shares
to the Company unless (A) the full or remaining number of Series A Preferred Shares represented by the certificate are being
converted, in which case such Holder shall deliver such stock certificate to the Company as soon as reasonably practicable following such
conversion or (B) a Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice)
requesting reissuance of Series A Preferred Shares upon physical surrender of any Series A Preferred Shares. Each Holder and
the Company shall maintain records showing the number of Series A Preferred Shares so converted and the dates of such conversions
or shall use such other method, reasonably satisfactory to the Holders and the Company, so as not to require physical surrender of the
certificate representing the Series A Preferred Shares upon each such conversion. In the event of any dispute or discrepancy, such
records of the Company establishing the number of Series A Preferred Shares to which the record holder is entitled shall be controlling
and determinative in the absence of manifest error. If the Company does not update its records to record such Stated Value and Dividends
converted and/or paid (as the case may be) and the dates of such conversions and/or payments (as the case may be) within two (2) Business
Days of such occurrence, then the Company’s records shall be automatically deemed updated to reflect such occurrence. Notwithstanding
the foregoing, if Series A Preferred Shares represented by a certificate are converted as aforesaid, a Holder may not transfer the
certificate representing the Series A Preferred Shares unless such Holder first physically surrenders the certificate representing
the Series A Preferred Shares to the Company, whereupon the Company will within five (5) Business Days of receipt of such surrender,
issue and deliver upon the order of such Holder a new certificate of like tenor, registered as such Holder may request, representing in
the aggregate the remaining number of Series A Preferred Shares represented by such certificate within five (5) Business Days.
A Holder and any assignee, by acceptance of a certificate, acknowledge and agree that, by reason of the provisions of this paragraph,
following conversion of any Series A Preferred Shares, the number of Series A Preferred Shares represented by such certificate
may be less than the number of Series A Preferred Shares stated on the face thereof. Each certificate for Series A Preferred
Shares shall bear the following legend:

 

ANY TRANSFEREE OF THIS CERTIFICATE SHOULD CAREFULLY REVIEW
THE TERMS OF THE COMPANY’S CERTIFICATE OF DESIGNATIONS RELATING TO THE SERIES A PREFERRED SHARES REPRESENTED BY THIS CERTIFICATE, INCLUDING
SECTION 5(c)(vi) THEREOF. THE NUMBER OF SERIES A PREFERRED SHARES REPRESENTED BY THIS CERTIFICATE MAY BE LESS THAN THE
NUMBER OF SERIES A PREFERRED SHARES STATED ON THE FACE HEREOF PURSUANT TO SECTION 5(c)(vi) OF THE CERTIFICATE OF DESIGNATIONS
RELATING TO THE SERIES A PREFERRED SHARES REPRESENTED BY THIS CERTIFICATE.

 

    7

     

    

 

(d)            Mandatory
Conversion at the Company’s Election. If at any time, or from time to time, from and after November 15, 2025 (the “Mandatory
Conversion Start Date”) (i) the Closing Bid Price of the Common Stock has equaled or exceeded 190% of the initial Conversion
Price (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction relating to the Common
Stock occurring after the Subscription Date, but, for the avoidance of doubt not giving effect to any adjustment to the Conversion Price
pursuant to Section 5(g)) (a “Mandatory Conversion Price Condition”) for at least thirty (30) consecutive Trading
Days following the Mandatory Conversion Start Date (a “Mandatory Conversion Measuring Period”) and (ii) no other
Equity Conditions Failure has occurred during the period beginning on the first day of the applicable Mandatory Conversion Measuring Period
relating to the applicable Mandatory Conversion (as defined below) through the applicable Mandatory Conversion Date (as defined below),
the Company shall from time to time have the right to require the Holders to convert all, or any portion, of the outstanding Series A
Preferred Shares, as designated in the Mandatory Conversion Notice (as defined below) relating to the applicable Mandatory Conversion
on the applicable Mandatory Conversion Date into fully paid, validly issued and nonassessable shares of Common Stock at the Conversion
Rate as of the applicable Mandatory Conversion Date (a “Mandatory Conversion”). The Company may exercise its right
to require conversion under this Section 5(d) by delivering within not more than thirty (30) days following the end of any such
Mandatory Conversion Measuring Period a written notice thereof by electronic mail to all Holders and the Transfer Agent (a “Mandatory
Conversion Notice” and the date the Company delivers to the Transfer Agent and all Holders such notice is referred to as a “Mandatory
Conversion Notice Date”). Each Mandatory Conversion Notice shall be irrevocable. Each Mandatory Conversion Notice shall (i) (a) state
the Trading Day on which the applicable Mandatory Conversion shall occur, which Trading Day shall be the thirtieth (30th) Trading Day
following the applicable Mandatory Conversion Notice Date (a “Mandatory Conversion Date”), (b) state the aggregate
Conversion Amount of the Series A Preferred Shares which the Company has elected to be subject to such Mandatory Conversion from
such Holder and all other Holders pursuant to this Section 5(d) and (c) state the number of shares of Common Stock to be
issued to such Holder on the applicable Mandatory Conversion Date and (ii) certify that the Mandatory Conversion Price Condition
relating to the applicable Mandatory Conversion has been satisfied and that there has been no other Equity Conditions Failure on any day
during the period beginning on the first day of the applicable Mandatory Conversion Measuring Period prior to the related Mandatory Conversion
Notice Date through the applicable Mandatory Conversion Notice Date. If the Company confirmed that there was no such Equity Conditions
Failure relating to the applicable Mandatory Conversion as of the applicable Mandatory Conversion Notice Date, but an Equity Conditions
Failure occurs at any time between the applicable Mandatory Conversion Notice Date and the applicable Mandatory Conversion Date (a “Mandatory
Conversion Interim Period”), the Company shall provide each Holder a subsequent written notice to that effect. If there is an
Equity Conditions Failure during the applicable Mandatory Conversion Interim Period, then such Mandatory Conversion shall be null and
void with respect to all or any part designated by such Holder of the unconverted Series A Preferred Shares subject to the applicable
Mandatory Conversion and such Holder shall be entitled to all the rights of a holder of Series A Preferred Shares with respect to
such Series A Preferred Shares; provided, however, that if a Holder waives in writing an Equity Conditions Failure
during the applicable Mandatory Conversion Interim Period, then the Company shall be required to proceed with the applicable Mandatory
Conversion with respect to such Holder (but not with respect any Holder who has not so waived such Equity Conditions Failure). Notwithstanding
anything to the contrary in this Section 5(d), until the applicable Mandatory Conversion has occurred, the Series A Preferred
Shares subject to the applicable Mandatory Conversion may be (i) converted, in whole or in part, by a Holder into shares of Common
Stock pursuant to Section 5 and/or (ii) exchanged, in whole or in part, by a Holder into Exchange Notes and Exchange Series B
Warrants pursuant to Section 16. All Series A Preferred Shares converted by a Holder after a Mandatory Conversion Notice Date
pursuant to Section 5(c) or exchanged pursuant to Section 16 shall reduce the Series A Preferred Shares required to
be converted on the related Mandatory Conversion Date. If the Company elects to cause a Mandatory Conversion pursuant to this Section 5(d),
then it must simultaneously take the same action in the same proportion with respect to all Series A Preferred Shares, to the extent
practicable or, if the pro rata basis is not practicable for any reason, by lot or such other equitable method as the Company determines
in good faith. At each Mandatory Conversion Date, each Series A Preferred Share to be converted pursuant to such Mandatory Conversion
shall automatically be converted into fully paid, validly issued, nonassessable shares of Common Stock at the Conversion Rate as of the
applicable Mandatory Conversion Date without any further act or deed on the part of the Company, any Holder or any other Person.

 

    8

     

    

 

(e)            [Reserved.]

 

(f)            Transfer
Taxes. The Company shall pay any and all transfer, stamp and similar taxes that may be payable with respect to the issuance and delivery
of Common Stock upon conversion of any Conversion Amount.

 

(g)            Adjustments
to Conversion Price. The Conversion Price will be subject to adjustment from time to time as provided in this Section 5(g).

 

(i)            Adjustment
of Conversion Price upon Issuance of Common Stock. If and whenever on or after the Subscription Date, the Company issues or sells,
or in accordance with this Section 5(g)(i) is deemed to have issued or sold, any shares of Common Stock (including the issuance
or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding shares of Common Stock issued by the
Company as a dividend or other distribution in respect of the Common Stock for which an adjustment is made pursuant to Section 5(g)(iii) or
deemed to have been issued or sold by the Company in connection with any Excluded Securities) for a consideration per share less than
a price (the “Applicable Price”) equal to the Conversion Price in effect immediately prior to such issuance or sale
or deemed issuance or sale (the foregoing, a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the
Conversion Price then in effect shall be reduced to an amount equal to the product of (A) the Conversion Price in effect immediately
prior to such Dilutive Issuance and (B) the quotient determined by dividing (1) the sum of (I) the product derived by multiplying
the Conversion Price in effect immediately prior to such Dilutive Issuance and the number of shares of Common Stock Deemed Outstanding
immediately prior to such Dilutive Issuance plus (II) the consideration, if any, received by the Company upon such Dilutive Issuance,
by (2) the product derived by multiplying (I) the Conversion Price in effect immediately prior to such Dilutive Issuance by
(II) the number of shares of Common Stock Deemed Outstanding immediately after such Dilutive Issuance. For purposes of determining
the adjusted Conversion Price under this Section 5(g)(i), the following shall be applicable:

 

(A)            Issuance
of Options. If the Company in any manner grants or sells any Options and the lowest price per share for which one share of Common
Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable
upon exercise of any such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding
and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes
of this Section 5(g)(i)(A), the “lowest price per share for which one share of Common Stock is issuable upon the exercise of
any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option”
shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one
share of Common Stock upon the granting or sale of the Option, upon exercise of the Option and upon conversion, exercise or exchange of
any Convertible Security issuable upon exercise of such Option less any consideration paid or payable by the Company with respect to such
one share of Common Stock upon the granting or sale of such Option, upon exercise of such Option and upon conversion exercise or exchange
of any Convertible Security issuable upon exercise of such Option. No further adjustment of the Conversion Price shall be made upon the
actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual
issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities.

 

    9

     

    

 

(B)            Issuance
of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per share
for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof is less than the Applicable Price, then
such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance
or sale of such Convertible Securities for such price per share. For the purposes of this Section 5(g)(i)(B), the “lowest price
per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof” shall be equal to the
sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock
upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security less any
consideration paid or payable by the Company with respect to such one share of Common Stock upon the issuance or sale of such Convertible
Security and upon conversion, exercise or exchange of such Convertible Security. No further adjustment of the Conversion Price shall be
made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities, and
if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Conversion Price
has been or is to be made pursuant to other provisions of this Section 5(g)(i), no further adjustment of the Conversion Price shall
be made by reason of such issue or sale.

 

(C)            Change
in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional consideration,
if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities
are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time, the Conversion Price
in effect at the time of such increase or decrease shall be adjusted to the Conversion Price, which would have been in effect at such
time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased
or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 5(g)(i)(C),
if the terms of any Option or Convertible Security that was outstanding as of the Subscription Date are increased or decreased in the
manner described in the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock deemed
issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease.
No adjustment pursuant to this Section 5(g)(i) shall be made if such adjustment would result in an increase of the Conversion
Price then in effect.

 

    10

     

    

 

(D)            Calculation
of Consideration Received. In case any Option is issued in connection with the issue or sale of other securities of the Company, together
comprising one integrated transaction, (x) the Options will be deemed to have been issued for the Option Value of such Options and
(y) the other securities issued or sold in such integrated transaction shall be deemed to have been issued or sold for the difference
of (I) the aggregate consideration received by the Company less any consideration paid or payable by the Company pursuant to the
terms of such other securities of the Company, less (II) the Option Value of such Options. If any shares of Common Stock, Options
or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will
be deemed to be the net amount received by the Company. If any shares of Common Stock, Options or Convertible Securities are issued or
sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration
determined by the Board in good faith, except where such consideration consists of publicly traded securities, in which case the amount
of consideration received by the Company will be the Closing Sale Price of such publicly traded securities on the date of receipt of such
publicly traded securities. If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving
entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed
to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common
Stock, Options or Convertible Securities, as the case may be, in each case determined by the Board in good faith. The fair value of any
consideration other than cash or publicly traded securities will be determined by the Board in good faith. If the Required Holders object
in writing to any determination of fair value by the Board pursuant to this subsection within five (5) Business Days of notice of
such determination (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Business
Days after the tenth (10th) Business Day following the Valuation Event by an independent, reputable appraiser jointly selected by the
Company and the Required Holders. The determination of such appraiser shall be final and binding upon all parties absent manifest error
and the fees and expenses of such appraiser shall be borne by the Company. Notwithstanding anything to the contrary contained herein,
if any calculation pursuant to this Section 5(g)(i)(D) would result in a Conversion Price that is lower than the par value of
the Common Stock, then the Conversion Price shall be deemed to equal the par value of the Common Stock.

 

(E)            Record
Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (I) to receive
a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (II) to subscribe for
or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue
or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or purchase, as the case may be.

 

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(ii)            Voluntary
Adjustment By Company. The Company may at any time, with the prior written consent of the Required Holders, reduce the then current
Conversion Price to any amount and for any period of time deemed appropriate by the Board.

 

(iii)            Adjustment
of Conversion Price upon Subdivision or Combination of Common Stock. If the Company at any time on or after the Subscription Date
subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common
Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced.
If the Company at any time on or after the Subscription Date combines (by combination, reverse stock split or otherwise) one or more classes
of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination
will be proportionately increased. Any adjustment under this Section 5(g)(iii) shall become effective at the close of business
on the date the subdivision or combination becomes effective.

 

(iv)            Other
Events. If any event occurs of the type contemplated by the provisions of this Section 5(g) but not expressly provided for
by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with
equity features), then the Board will make an appropriate adjustment in the Conversion Price, as mutually determined by the Board and
the Required Holders, so as to protect the rights of the Holders; provided that no such adjustment pursuant to this Section 5(g)(iv) will
increase the Conversion Price as otherwise determined pursuant to this Section 5(g).

 

(h)            Cash
Payment. In the event that the Company is unable to issue and deliver (i) any shares of Common Stock in accordance with the terms
of the Transaction Documents by virtue of the Company not having a sufficient number of authorized shares as set forth in Section 12,
or (ii) from and after the six (6) month anniversary of the Issuance Date, Freely Tradable Shares, the Company shall pay cash
on or prior to the applicable Share Delivery Date to such Holder in exchange for such number of shares of Common Stock that are not deliverable
or Freely Tradable Shares, as applicable, upon conversion of the Series A Preferred Shares at a price equal to the product of (x) such
number of shares of Common Stock and (y) the highest Closing Sale Price of the Common Stock in effect at any time during the period
beginning on the applicable Conversion Date and ending on the date the Company makes the payment provided for in this sentence. For the
avoidance of doubt, if the Company is required to make a cash payment to a Holder pursuant to this Section 5(h), the Company shall
upon and to the extent of such cash payment have satisfied its obligation to deliver shares of Common Stock upon such conversion.

 

    12

     

    

 

(i)            Notices.
The Company shall provide each Holder with prompt written notice of all actions taken pursuant to this Certificate of Designations, including
in reasonable detail a description of such action and the reason therefor. Without limiting the generality of the foregoing:

 

(i)            Promptly
upon any adjustment of the Conversion Price pursuant to Section 5(g), the Company shall give written notice thereof to each Holder,
setting forth in reasonable detail, and certifying, the calculation of such adjustment. In the case of a dispute as to the determination
of such adjustment, then such dispute shall be resolved in accordance with the procedures set forth in Section 19.

 

(ii)            The
Company shall give written notice to each Holder at least ten (10) Business Days prior to the date on which the Company closes its
books or takes a record (I) with respect to any dividend or distribution upon the Common Stock, (II) with respect to any pro
rata subscription offer to holders of Common Stock or (III) for determining rights to vote with respect to any Fundamental Transaction
or Liquidation Event.

 

(iii)            The
Company shall also give written notice to each Holder at least ten (10) Business Days prior to the date on which any Fundamental
Transaction or Liquidation Event will take place, provided that such information shall be made known to the public prior to or in conjunction
with such notice being provided to such Holder.

 

(6)            Redemption
at Option of Holders.

 

(a)            Triggering
Event. A “Triggering Event” shall be deemed to have occurred at such time as any of the following events and
each of the events in clauses (vi) and (vii) shall constitute a “Bankruptcy Triggering Event”:

 

(i)            the
failure of the applicable Registration Statement required to be filed pursuant to the Registration Rights Agreement to be filed or declared
effective within the applicable time period specified in the Registration Rights Agreement, or, at any time while the applicable Registration
Statement is required to be maintained effective pursuant to the terms of the Registration Rights Agreement, the effectiveness of the
applicable Registration Statement lapses for any reason (including, without limitation, the issuance of a stop order) or is unavailable
to any Holder for sale of all of such Holder’s Registrable Securities in accordance with the terms of the Registration Rights Agreement,
and such lapse or unavailability continues for a period of ten (10) consecutive Trading Days or for more than an aggregate of fifteen
(15) Trading Days in any 365-day period (other than days during an Allowable Grace Period (as defined in the Registration Rights Agreement));

 

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(ii)            (A) the
suspension of the Common Stock from trading on an Eligible Market for a period of five (5) consecutive Trading Days or for more than
an aggregate of fifteen (15) Trading Days in any 365-day period or (B) the failure of the Common Stock to be listed on an Eligible
Market;

 

(iii)            the
Company’s (A) failure to cure a Conversion Failure within five (5) Trading Days after the applicable Share Delivery Date
or (B) notice, written or oral, to any Holder, including by way of public announcement, or through any of its agents, at any time,
of its intention not to comply with a request for conversion of any Series A Preferred Shares into shares of Common Stock that is
tendered in accordance with the provisions of this Certificate of Designations;

 

(iv)            at
any time following the fifth (5th) consecutive Business Day that a Holder’s Authorized Share Allocation (as defined in Section 12),
determined as of such Business Day, is less than 130% of the sum of (A) the number of shares of Common Stock that such Holder would
be entitled to receive upon a conversion of the full Conversion Amount of such Holder’s Series A Preferred Shares and (B) the
number of shares of Common Stock that such Holder would be entitled to receive upon exercise in full of such Holder’s Warrants (without
regard to any limitations on exercise set forth in the Warrants, except, solely with respect to the first occurrence of an Authorized
Share Failure hereunder, to the extent the Company is complying with the terms set forth in Section 12(b));

 

(v)            the
Company’s failure to pay to such Holder any amount of Principal, Dividends, Redemption Price, Late Charges or other amounts when
and as due under this Certificate of Designations or any other Transaction Document, except, in the case of a failure to pay Dividends
and/or Late Charges when and as due, in which case only if such failure continues for a period of at least an aggregate of two (2) Business
Days;

 

(vi)            the
Company or any of its Subsidiaries, pursuant to or within the meaning of Title 11, U.S. Code, or any similar federal, foreign or state
law for the relief of debtors (collectively, “Bankruptcy Law”), (A) commences a voluntary case, (B) consents
to the entry of an order for relief against it in an involuntary case, (C) consents to the appointment of a receiver, trustee, assignee,
liquidator or similar official (a “Custodian”), (D) makes a general assignment for the benefit of its creditors
or (E) admits in writing that it is generally unable to pay its debts as they become due;

 

(vii)            a
court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (A) is for relief against the Company or
any of its Subsidiaries in an involuntary case, (B) appoints a Custodian of the Company or any of its Subsidiaries or (C) orders
the liquidation of the Company or any of its Subsidiaries;

 

(viii)            one
or more judgments, orders or awards for the payment of money aggregating (above any insurance coverage or indemnity from a credit worthy
party so long as the Company provides such Holder a written statement from such insurer or indemnity provider (which written statement
shall be reasonably satisfactory to such Holder) to the effect that such judgment, order or award is covered by insurance or an indemnity
and the Company will receive the proceeds of such insurance or indemnity within thirty (30) days of the issuance of such judgment, order
or award) in excess of $20,000,000 are rendered against the Company or any of its Subsidiaries and which judgments, orders or awards are
not, within thirty (30) days after the entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within thirty
(30) days after the expiration of such stay;

 

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(ix)            other
than as specifically set forth in another clause of this Section 6(a), the Company breaches any covenant or other term or condition
set forth in this Certificate of Designations or in Section 4(u) of the Securities Purchase Agreement, except, in the case of
a breach of a covenant or other term or condition of any such agreement which is curable, only if such breach continues for a period of
at least an aggregate of thirty (30) days;

 

(x)            if
such Holder is a Designee, other than as specifically set forth in another clause of this Section 6(a), the Company breaches any
representation, warranty, covenant or other term or condition set forth in Sections 3(b), 3(c), 3(d), 3(e), 3(i), 3(j), 3(k), 3(l), 3(p),
3(q), 3(r), 3(v), 3(ee), 3(ii), 3(mm), 3(nn), 3(qq), 4(v) or 4(z) of the Securities Purchase Agreement, except, in the case
of a breach of a covenant or other term or condition of any such agreement which is curable, only if such breach continues for a period
of at least an aggregate of thirty (30) days;

 

(xi)            any
breach or failure in any respect to comply with Sections 15 or 16 of this Certificate of Designations;

 

(xii)            a
false or inaccurate certification (including a false or inaccurate deemed certification) by the Company that the Equity Conditions are
satisfied or that there has been no Equity Conditions Failure or as to whether any Triggering Event has occurred;

 

(xiii)            the
Company fails to remove any restrictive legend on any certificate or any shares of Common Stock issued to the Holder upon conversion or
exercise (as the case may be) of any Securities (as defined in the Securities Purchase Agreement) acquired by the Holder under the Securities
Purchase Agreement (including the Series A Preferred Shares) as and when required by such Securities, the Certificate of Designations
or the Securities Purchase Agreement, unless otherwise then prohibited by applicable federal securities laws, and any such failure remains
uncured for at least five (5) consecutive Trading Days;

 

(xiv)            the
Company becomes an “investment company,” a company controlled by an “investment company” or an “affiliated
person” of, or “promoter” or “principal underwriter” for, an “investment company” as such terms
are defined in the Investment Company Act of 1940, as amended; or

 

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(xv)            any
Event of Default (as defined in the Notes) occurs with respect to any Notes.

 

(b)            Redemption
Option Upon Triggering Event. The Company shall promptly, but in any event within one (1) Business Day, notify
each Holder in writing upon the Company becoming aware that a Triggering Event has occurred (a “Notice of Triggering Event”),
and, to the extent required pursuant to Section 28, simultaneously with the delivery of such notice to the Holders, file a Current
Report on Form 8-K with the SEC to state such fact. In addition to all other rights of the Holders contained herein, at any time
after the earlier of a Holder’s receipt of a Notice of Triggering Event and a Holder becoming aware of a Triggering Event, such
Holder shall have the right, at such Holder’s option, to require the Company to redeem, to the fullest extent permitted by law and
out of funds lawfully available therefor, all or a portion of such Holder’s Series A Preferred Shares (a “Triggering
Event Redemption”) in cash by wire transfer of immediately available funds at a price equal to (i) if there is an Equity
Conditions Failure (that is not waived in writing by such Holder), the greater of (A) the Conversion Amount being redeemed and (B) the
product of (1) the Conversion Amount being redeemed and (2) the quotient determined by dividing (x) the highest Closing
Sale Price of the shares of Common Stock during the period beginning on the date immediately preceding such Triggering Event and ending
on the date such Holder delivers the Notice of Redemption at Option of Holder (as defined below), by (y) the lowest Conversion Price
in effect during such period, in addition to any and all other amounts due hereunder and (ii) otherwise, the Conversion Amount being
redeemed (the price set forth in the immediately preceding clause (i) or clause (ii), as applicable, the “Triggering Event
Redemption Price”).

 

(c)            Mandatory
Redemption upon Bankruptcy Triggering Event. Notwithstanding anything to the contrary herein, and notwithstanding any conversion that
is then required or in process, upon any Bankruptcy Triggering Event, whether occurring prior to or following the Maturity Date, the Company
shall immediately pay to the Holder an amount in cash representing the applicable Triggering Event Redemption Price, without the requirement
for any notice or demand or other action by any Holder or any other Person; provided that a Holder may, in its sole and absolute
discretion, waive such right to receive payment upon a Bankruptcy Triggering Event, in whole or in part, and any such waiver shall not
affect any other rights of such Holder hereunder, including any other rights in respect of such Bankruptcy Triggering Event, any right
to conversion, and any right to payment of the Triggering Event Redemption Price or any other Redemption Price, as applicable.

 

(d)            Mechanics
of Triggering Event Redemption at Option of Holder. At any time after the earlier of a Holder’s receipt of a Notice
of Triggering Event and such Holder becoming aware of a Triggering Event, any Holder may require the Company to redeem, to the fullest
extent permitted by law and out of funds lawfully available therefor, up to all of such Holder’s Series A Preferred Shares
by delivering written notice thereof (“Notice of Redemption at Option of Holder”) to the Company, which Notice of Redemption
at Option of Holder shall indicate the number of Series A Preferred Shares that such Holder is electing to redeem. Redemptions required
by this Section 6 shall be made in accordance with the provisions of Section 11.

 

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(e)            Payment
of Triggering Event Redemption Price. Upon the Company’s receipt of a Notice(s) of Redemption at Option of
Holder from any Holder, the Company shall as soon as practicable of such receipt notify each other Holder of the Company’s receipt
of such notice(s). The Company shall deliver to a Holder an amount in cash equal to the applicable Triggering Event Redemption Price by
wire transfer of immediately available funds on the third (3rd) Business Day after such Holder’s delivery of a Notice of Redemption
at Option of Holder to the Company; provided that upon a Bankruptcy Triggering Event, the Company shall deliver the applicable
Triggering Event Redemption Price in accordance with Section 6(c) (a “Triggering Event Redemption Date”).
To the extent redemptions required by this Section 6 are deemed or determined by a court of competent jurisdiction to be prepayments
of the Series A Preferred Shares by the Company, such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything
to the contrary in this Section 6, until the Triggering Event Redemption Price (together with any interest thereon) is paid in full,
the Conversion Amount submitted for redemption under this Section 6 (together with any interest thereon) may be (i) converted,
in whole or in part, by a Holder into shares of Common Stock pursuant to Section 5 and/or (ii) exchanged, in whole or in part,
by a Holder into Exchange Notes and Exchange Series B Warrants pursuant to Section 16. All Series A Preferred Shares converted
by a Holder after the delivery of a Notice of Redemption at Option of Holder pursuant to Section 5(c) or exchanged pursuant
to Section 16 shall reduce the Series A Preferred Shares required to be redeemed on the related Triggering Event Redemption
Date. The Holders and Company agree that in the event of the Company’s redemption of any Series A Preferred Shares under this
Section 6, the Holders’ damages would be uncertain and difficult to estimate because of the parties’ inability to predict
future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for the Holders. Accordingly,
any redemption premium due under this Section 6 is intended by the parties to be, and shall be deemed, a reasonable estimate of the
Holders’ actual loss of its investment opportunity and not as a penalty.

 

(f)            Disputes;
Miscellaneous. In the event of a dispute as to the determination of the arithmetic calculation of any Triggering Event Redemption
Price, such dispute shall be resolved pursuant to Section 19 with the term “Redemption Price” being substituted for the
term “Conversion Rate”. A Holder’s delivery of a Void Optional Redemption Notice (as defined in Section 11(d))
and exercise of its rights following such notice shall not affect the Company’s obligations to make any payments which have accrued
prior to the date of such notice. In the event of a redemption pursuant to this Certificate of Designations of less than all of the Series A
Preferred Shares represented by a particular Series A Preferred Stock Certificate, the Company shall promptly cause to be issued
and delivered to the Holder of such Series A Preferred Shares a Series A Preferred Stock Certificate representing the remaining
Series A Preferred Shares which have not been redeemed, if necessary.

 

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(7)            Other
Rights of Holders and the Company.

 

(a)            Change
of Control Redemption Right. Not less than ten (10) days prior to the consummation of a Change of Control, the Company
shall deliver written notice thereof to each Holder (a “Change of Control Notice”) setting forth a description of such
transaction in reasonable detail and the anticipated Change of Control Redemption Date if then known. At any time during the period beginning
on the earliest to occur of (x) the public announcement of any oral or written agreement by the Company or any of its Subsidiaries,
upon consummation of which the transaction contemplated thereby would reasonably be expected to result in a Change of Control, (y) such
Holder’s receipt of a Change of Control Notice, and (z) the consummation of such transaction which results in a Change of Control,
and ending twenty-five (25) Trading Days after the date of the consummation of such Change of Control, such Holder may require the Company
to redeem (a “Holder Change of Control Redemption”), to the fullest extent permitted by law and out of funds lawfully
available therefor, all or any portion of such Holder’s Series A Preferred Shares by delivering written notice thereof (a “Holder
Change of Control Redemption Notice”) to the Company, which Holder Change of Control Redemption Notice shall indicate the Conversion
Amount such Holder is electing to require the Company to redeem. Within ten (10) days before or after the applicable Change of Control,
the Company may redeem (a “Company Change of Control Redemption” and, together with a Holder Change of Control Redemption,
a “Change of Control Redemption”) all but not less than all of such Holder’s Series A Preferred Shares by
delivering written notice (a “Company Change of Control Redemption Notice” and, together with a Holder Change of Control
Redemption Notice, a “Change of Control Redemption Notice”) to the Holder, which Company Change of Control Redemption
Notice shall indicate the Conversion Amount the Company is electing to redeem; provided, that a Company Change of Control Redemption
shall only be permitted with respect to a Change of Control in which one hundred percent (100%) of the Equity Interests of the Company
is purchased for cash and/or Cash Equivalents (as defined in the Notes). If the Company elects to cause a Company Change of Control Redemption
pursuant to this Section 7(a), then it must simultaneously take the same action with respect to all Series A Preferred Shares
then outstanding. Any Series A Preferred Shares subject to redemption pursuant to this Section 7(a) shall be redeemed by
the Company in cash by wire transfer of immediately available funds at a price equal to the sum of (A) the greater of (x) the
Conversion Amount of the Series A Preferred Shares being redeemed and (y) the product of (i) the Conversion Amount being
redeemed and (ii) the quotient determined by dividing (I) the highest Closing Sale Price of the shares of Common Stock during
the period beginning on the date immediately preceding the public announcement of such Change of Control and ending on the date of such
Change of Control, by (II) the lowest Conversion Price in effect during such period, in addition to any and all other amounts due
hereunder and (B) the Make-Whole Amount (the “Change of Control Redemption Price”). The Company shall deliver
the Change of Control Redemption Price to each Holder concurrently with the consummation of such Change of Control if such a Change of
Control Redemption Notice is received prior to the consummation of such Change of Control and within three (3) Business Days after
the delivery to the Company of such notice otherwise (the “Change of Control Redemption Date”). Redemptions required
by this Section 7(a) shall be made in accordance with the provisions of Section 11 and shall have priority to payments
to stockholders in connection with a Change of Control. To the extent redemptions required by this Section 7(a) are deemed or
determined by a court of competent jurisdiction to be prepayments of the Series A Preferred Shares by the Company, such redemptions
shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section 7(a), until the Change of Control
Redemption Price (together with any interest thereon) is paid in full, the Conversion Amount submitted for redemption under this Section 7(a) (together
with any interest thereon) may be (i) converted, in whole or in part, by a Holder into shares of Common Stock pursuant to Section 5,
or in the event the Conversion Date is after the consummation of the Change of Control, shares or equity interests of the Successor Entity
substantially equivalent to the Common Stock pursuant to Section 5 and/or (ii) exchanged, in whole or in part, by a Holder into
Exchange Notes and Exchange Series B Warrants pursuant to Section 16. All Series A Preferred Shares converted by a Holder
after the delivery of a Change of Control Redemption Notice pursuant to Section 5(c) or exchanged pursuant to Section 16
shall reduce the Series A Preferred Shares required to be redeemed on the related Change of Control Redemption Date. The parties
hereto agree that in the event of the Company’s redemption of any portion of the Series A Preferred Shares under this Section 7(a),
the Holders’ damages would be uncertain and difficult to estimate because of the parties’ inability to predict future interest
rates and the uncertainty of the availability of a suitable substitute investment opportunity for the Holders. Accordingly, any redemption
premium due under this Section 7(a) is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holders’
actual loss of its investment opportunity and not as a penalty.

 

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(b)            Assumption
and Corporate Events. Upon the occurrence or consummation of any Fundamental Transaction, and it shall be a required condition to
the occurrence or consummation of any Fundamental Transaction that, the Company and the Successor Entity or Successor Entities, jointly
and severally, shall succeed to the Company, and the Company shall cause any Successor Entity or Successor Entities to jointly and severally
succeed to the Company, and be added to the term “Company” under this Certificate of Designations (so that from and after
the occurrence or consummation of such Fundamental Transaction, each and every provision of this Certificate of Designations referring
to the “Company” shall refer instead to each of the Company and the Successor Entity or Successor Entities, jointly and severally),
and the Successor Entity or Successor Entities, jointly and severally with the Company, may exercise every right and power of the Company
prior thereto and the Successor Entity or Successor Entities shall assume all of the obligations of the Company prior thereto under this
Certificate of Designations with the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally,
had been named as the Company in this Certificate of Designations. In addition to and not in substitution for any other rights hereunder,
prior to the occurrence or consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock become entitled
to receive securities, cash, assets or other property with respect to or in exchange for shares of Common Stock (a “Corporate
Event”), the Company shall make appropriate provision to ensure that, and any applicable Successor Entity or Successor Entities
shall ensure that, and it shall be a required condition to the occurrence or consummation of such Corporate Event that, such Holder will
have the right to receive upon conversion of such Holder’s Series A Preferred Shares at any time after the occurrence or consummation
of such Corporate Event at its option upon surrender of such Holder’s Series A Preferred Shares upon the occurrence or consummation
of the Corporate Event, shares of common stock or capital stock of the Successor Entity or Successor Entities, or if so elected by the
Holder in lieu of the shares of Common Stock (or other securities, cash, assets or other property) such Holder is entitled to receive
upon the conversion of such Holder’s Series A Preferred Shares prior to such Corporate Event (but not in lieu of such items
still issuable under Sections 4 and 7(c), which shall continue to be receivable on the Common Stock or on such shares of stock, securities,
cash, assets or any other property otherwise receivable with respect to or in exchange for shares of Common Stock), such shares of stock,
securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights and any shares
of Common Stock) which the Holders would have been entitled to receive upon the occurrence or consummation of such Corporate Event or
the record, eligibility or other determination date for the event resulting in such Corporate Event, had such Holder’s Series A
Preferred Shares been converted immediately prior to such Corporate Event or the record, eligibility or other determination date for the
event resulting in such Corporate Event. Provision made pursuant to the preceding sentence shall be in a form and substance reasonably
satisfactory to the Required Holders. The provisions of this Section shall apply similarly and equally to successive Fundamental
Transactions and Corporate Events and shall be applied without regard to any limitations on the conversion of the Series A Preferred
Shares.

 

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(c)            Purchase
Rights. If at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”),
then the Holders will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such
Holder could have acquired if such Holder had held the number of shares of Common Stock acquirable upon complete conversion of such Holder’s
Series A Preferred Shares (without regard to any limitations or restrictions on conversions of the Series A Preferred Shares)
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.

 

(8)            Optional
Redemption at the Holder’s Election. At any time or times (i) during the period commencing on May 15, 2021 and ending
on August 15, 2021, inclusive, (ii) during the period commencing on May 15, 2022 and ending on August 15, 2022, inclusive,
(iii) during the period commencing on November 15, 2024 and ending on February 15, 2025, inclusive, and (iv) in the
event the Company fails to obtain Stockholder Approval on or prior to the Stockholder Meeting Deadline (each of the events described in
the immediately preceding clauses (i) through (iv), a “Holder Optional Redemption Trigger Event”); provided,
however, that in cases of the immediately preceding clauses (i) and (ii) the Company shall have issued to the Buyers
less than $50,000,000 of aggregate principal amount of SPA Notes, each Holder shall have the right, in its sole and absolute discretion,
to require that the Company redeem (a “Holder Optional Redemption”), to the fullest extent permitted by law and out
of funds lawfully available therefor, all or any portion of the Conversion Amount of such Holder’s Series A Preferred Shares
then outstanding by delivering written notice thereof (a “Holder Optional Redemption Notice” and the date such Holder
delivers such notice to the Company, a “Holder Optional Redemption Notice Date”) to the Company which notice shall
state (i) the number of Series A Preferred Shares that is being redeemed by such Holder, (ii) the date on which such Holder
Optional Redemption shall occur, which date shall be the thirtieth (30th) day from the applicable Holder Optional Redemption Notice Date
(or, if such date falls on a day other than a Business Day, the next day that is a Business Day) (a “Holder Optional Redemption
Date”) and (iii) the wire instructions for the payment of the applicable Holder Optional Redemption Price (as defined below)
to such Holder. The portion of such Holder’s Series A Preferred Shares subject to redemption pursuant to this Section 8
shall be redeemed by the Company in cash at a price equal to the product determined by multiplying (i) the applicable Holder Optional
Redemption Premium and (ii) the Conversion Amount being redeemed, including, without limitation, any accrued and unpaid Dividends
on such Conversion Amount and any accrued and unpaid Late Charges (as defined in Section 19(d)) on such Conversion Amount and Dividends,
if any, through the applicable Holder Optional Redemption Date (a “Holder Optional Redemption Price”). On the applicable
Holder Optional Redemption Date, the Company shall deliver or shall cause to be delivered to each Holder the applicable Holder Optional
Redemption Price in cash by wire transfer of immediately available funds pursuant to wire instructions provided by such Holder in writing
to the Company. Notwithstanding anything to the contrary in this Section 8, until the applicable Holder Optional Redemption Price
is paid, in full, the Redemption Amount that is subject to the applicable Holder Optional Redemption may be (i) converted, in whole
or in part, by the Holders into shares of Common Stock pursuant to Section 5 and/or (ii) exchanged, in whole or in part, by
a Holder into Exchange Notes and Exchange Series B Warrants pursuant to Section 16. All Series A Preferred Shares converted
by a Holder after the delivery of a Holder Optional Redemption Notice pursuant to Section 5(c) or exchanged pursuant to Section 16
shall reduce the Series A Preferred Shares required to be redeemed on the Holder Optional Redemption Date. Holder Optional Redemptions
made pursuant to this Section 8 shall be made in accordance with Section 11. To the extent redemptions required by this Section 8
are deemed or determined by a court of competent jurisdiction to be prepayments of the Series A Preferred Shares by the Company,
such redemptions shall be deemed to be voluntary prepayments. The parties hereto agree that in the event of the Company’s redemption
of any portion of a Holder’s Series A Preferred Shares under this Section 8, such Holder’s damages would be uncertain
and difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty of the availability
of a suitable substitute investment opportunity for such Holder.

 

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(9)            Mandatory
Redemption at Maturity. If any Series A Preferred Shares remain outstanding on the Maturity Date, the Company shall redeem such
Series A Preferred Shares in cash in an amount equal to the outstanding Conversion Amount for each such Series A Preferred Share
(the “Maturity Date Redemption Price”). The Company shall pay the Maturity Date Redemption Price on the Maturity Date
by wire transfer of immediately available funds to an account designated in writing by such Holder. All redemptions shall be made on a
pro-rata basis to all holders of outstanding Series A Preferred Shares.

 

(10)            Redemption
at the Option of the Company. At any time during the period commencing on May 15, 2022 and ending on August 15, 2022, inclusive
(the “Company Optional Trigger Date”), so long as (i) the Company shall have issued to the Buyers less than $50,000,000
of aggregate principal amount of SPA Notes and (ii) there has been no Equity Conditions Failure during the period beginning on the
applicable Company Optional Redemption Notice Date (as defined below) through the applicable Company Optional Redemption Date (as defined
below), the Company shall have the right to redeem all, but not less than all, of the Conversion Amount then remaining under the Series A
Preferred Shares then outstanding (a “Company Optional Redemption Amount”) as designated in the applicable Company
Optional Redemption Notice on the applicable Company Optional Redemption Date (each as defined below) (a “Company Optional Redemption”).
The applicable Company Optional Redemption Amount shall be redeemed by the Company by delivery of the applicable Company Optional Redemption
Price on the applicable Company Optional Redemption Date in cash by wire transfer of immediately available funds pursuant to wire instructions
provided by the Holder in writing to the Company at a price equal to 115% of the Conversion Amount to be redeemed, including, without
limitation, any accrued and unpaid Dividends on such Conversion Amount and any accrued and unpaid Late Charges on such Conversion Amount
and Dividends, if any through the applicable Company Optional Redemption Date (a “Company Optional Redemption Price”).
The Company may exercise its right to require redemption under this Section 10 by delivering within five (5) Trading Days of
the Company Optional Trigger Date a written notice thereof to all, but not less than all, of the Holders (a “Company Optional
Redemption Notice” and the date all of the Holders receive such notice is referred to as a “Company Optional Redemption
Notice Date”). Each Company Optional Redemption Notice shall be irrevocable. Each Company Optional Redemption Notice shall (i) state
the date on which the applicable Company Optional Redemption shall occur (a “Company Optional Redemption Date”), which
date shall be the ninetieth (90th) day following the applicable Company Optional Redemption Notice Date; provided that if such
date falls on a day that is not a Business Day, the next day that is a Business Day and (ii) state the aggregate Company Optional
Redemption Amount which the Company has elected to be subject to Company Optional Redemption from the Holders pursuant to this Section 10
on the applicable Company Optional Redemption Date and (iii) certify that there has been no Equity Conditions Failure on the applicable
Company Optional Redemption Notice Date. If the Company confirmed that there was no such Equity Conditions Failure as of the applicable
Company Optional Redemption Notice Date but an Equity Conditions Failure occurs between the applicable Company Optional Redemption Notice
Date and the applicable Company Optional Redemption Date (a “Company Optional Redemption Interim Period”), the Company
shall provide the Holders a subsequent written notice to that effect. If there is an Equity Conditions Failure during such Company Optional
Redemption Interim Period, then the applicable Company Optional Redemption shall be null and void with respect to all or any part designated
by such Holder of the applicable unconverted Company Optional Redemption Amount and such Holder shall be entitled to all the rights of
a Holder with respect to such applicable Company Optional Redemption Amount. Notwithstanding anything to the contrary in this Section 10,
until the applicable Company Optional Redemption Price is paid, in full, the applicable Company Optional Redemption Amount may be (i) converted,
in whole or in part, by the Holders into shares of Common Stock pursuant to Section 5 and/or (ii) exchanged, in whole or in
part, by a Holder into Exchange Notes and Exchange Series B Warrants pursuant to Section 16. All Conversion Amounts converted
or exchanged by a Holder after the applicable Company Optional Redemption Notice Date shall reduce such Holder’s Company Optional
Redemption Amount required to be redeemed on the applicable Company Optional Redemption Date. Company Optional Redemptions made pursuant
to this Section 10 shall be made in accordance with Section 11. To the extent redemptions required by this Section 10 are
deemed or determined by a court of competent jurisdiction to be prepayments of the Series A Preferred Shares by the Company, such
redemptions shall be deemed to be voluntary prepayments. The parties hereto agree that in the event of the Company’s redemption
of any portion of the Series A Preferred Shares under this Section 10, the Holders’ damages would be uncertain and difficult
to estimate because of the parties’ inability to predict future interest rates and the uncertainty of the availability of a suitable
substitute investment opportunity for the Holders. For the avoidance of doubt, any Conversion Amount that is subject to a Conversion Notice
delivered to the Company may no longer be subject to a Company Optional Redemption even if the shares issuable upon such conversion have
not been delivered on or prior to the Company Optional Redemption Date. If the Company elects to cause a Company Optional Redemption pursuant
to this Section 10, then it must simultaneously take the same action in the same proportion with respect to all Series A Preferred
Shares to the extent practicable or, if the pro rata basis is not practicable for any reason, by lot or such other equitable method as
the Company determines in good faith.

 

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(11)            Redemptions.

 

(a)            General.
The Company shall pay the applicable Redemption Price on the applicable Redemption Date to each Holder in cash by wire transfer of immediately
available funds pursuant to wire instructions provided by such Holder in writing to the Company on the applicable due date. In the event
of a redemption of less than all of the Conversion Amount of a Holder’s Series A Preferred Shares, the Company shall promptly
cause to be issued and delivered to the Holder a new Series A Preferred Stock Certificate representing the outstanding Stated Value
which has not been redeemed and any accrued Dividend on such Stated Value and any accrued and unpaid Late Charges on such Stated Value
and Dividends, if any, which shall be calculated as if no Redemption Notice has been delivered. If the Company is unable to redeem all
of the Series A Preferred Shares submitted for redemption, the Company shall in addition to any remedy such Holder may have under
this Certificate of Designations, pay to each Holder interest at the rate of one and one-half percent (1.5%) per month (prorated for partial
months) in respect of each unredeemed Series A Preferred Share until paid in full.

 

(b)            Redemption
by Other Holders. Upon the Company’s receipt of notice from any Holder or holder of Notes, if any, for redemption or repayment
as a result of an event or occurrence substantially similar to the events or occurrences described in Section 6(b), Section 7(a) or
Section 8 or pursuant to analogous provisions set forth in the Notes (each, an “Other Redemption Notice”), the
Company shall promptly, but no later than one (1) Business Day of its receipt thereof, forward to each Holder a copy of such notice.
If the Company receives a Redemption Notice and one or more Other Redemption Notices, during the seven (7) Business Day period beginning
on and including the date which is three (3) Business Days prior to the Company’s receipt of such Holder’s Redemption
Notice and ending on and including the date which is three (3) Business Days after the Company’s receipt of a Holder’s
Redemption Notice and the Company is unable to redeem the entire Redemption Prices and such other amounts designated in such Redemption
Notice and such Other Redemption Notices received during such seven (7) Business Day period, then the Company shall redeem a pro
rata amount from each Holder and holder of Notes, if any, based on the Stated Value of the Series A Preferred Shares and principal
amount of Notes submitted for redemption pursuant to such Redemption Notice and such Other Redemption Notices received by the Company
during such seven (7) Business Day period.

 

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(c)            Insufficient
Assets. If upon a Redemption Date, the assets of the Company are insufficient to pay the applicable Redemption Price, the Company
shall redeem on such date, pro rata among the Holders and the Holders of Notes, if any, to be redeemed in proportion to the aggregate
number of Series A Preferred Shares then held by each such holder and principal amounts of Notes outstanding on the applicable Redemption
Date. Dividends on the Stated Value of the Series A Preferred Shares that have not been redeemed shall continue to accrue until such
time as the Company redeems such Series A Preferred Shares.

 

(d)            Void
Redemption. In the event that the Company does not pay a Redemption Price within the applicable time period, at any time thereafter
and until the Company pays such unpaid applicable Redemption Price in full, a Holder shall have the option to, in lieu of redemption,
require the Company to promptly return to such Holder any or all of the Series A Preferred Shares that were submitted for redemption
by such Holder and for which the applicable Redemption Price (together with any Late Charges thereon) has not been paid, by sending written
notice thereof to the Company (the “Void Optional Redemption Notice”). Upon the Company’s receipt of such Void
Optional Redemption Notice, (i) the Redemption Notice of Holder shall be null and void with respect to those Series A Preferred
Shares subject to the Void Optional Redemption Notice and (ii) the Company shall immediately return any Series A Preferred Shares
subject to the Void Optional Redemption Notice. A Holder’s delivery of a Void Optional Redemption Notice and exercise of its rights
following such notice shall not affect the Company’s obligations to make any payments of any amounts, including Late Charges, which
have accrued prior to the date of such notice with respect to the Conversion Amount subject to such notice.

 

(12)            Reservation
of Shares.

 

(a)            Reservation.
The Company shall at all times reserve out of its authorized and unissued shares of Common Stock a number of shares of Common Stock for
the Series A Preferred Shares equal to 130% of the maximum number of shares of Common Stock issuable with respect to the Series A
Preferred Shares. So long as any of Series A Preferred Shares are outstanding, the Company shall take all action necessary to reserve
and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Series A
Preferred Shares, at least the number of shares of Common Stock specified above in this Section 12(a) as shall from time to
time be necessary to effect the conversion of all of the Series A Preferred Shares then outstanding, assuming that the Conversion
Price at the applicable date of determination shall be the Conversion Price through the Maturity Date (the “Required Reserve
Amount”). The initial number of shares of Common Stock reserved for conversions of the Series A Preferred Shares and for
exercises of the Warrants and each increase in the number of shares so reserved shall be allocated among the Holders and the holders of
the Warrants pro rata based on the total number of shares of Common Stock issuable upon conversion of the Series A Preferred Shares
then outstanding and upon exercise of the Warrants then outstanding (the “Authorized Share Allocation”). In the event
that a holder shall sell or otherwise transfer such holder’s Series A Preferred Shares or Warrants, each transferee shall be
allocated a pro rata portion of such holder’s Authorized Share Allocation with respect to such portion of Series A Preferred
Shares and/or Warrants sold or otherwise transferred. Any shares of Common Stock reserved and allocated to any Person which ceases to
hold any Series A Preferred Shares or Warrants shall be allocated to the Holders and the remaining holders of Warrants, pro rata
based on the total number of shares of Common Stock issuable upon conversion of the Series A Preferred Shares then outstanding and
upon exercise of the Warrants then outstanding.

 

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(b)            Insufficient
Authorized Shares. If at any time while any of the Series A Preferred Shares remain outstanding the Company does not have a sufficient
number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of the Series A
Preferred Shares at least a number of shares of Common Stock equal to the Required Reserve Amount (an “Authorized Share Failure”),
then the Company shall use its reasonable best efforts to promptly take all action necessary to increase the Company’s authorized
shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Series A Preferred
Shares then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence
of an Authorized Share Failure, but in no event later than ninety (90) days after the occurrence of such Authorized Share Failure, the
Company shall either (x) obtain the written consent of its stockholders for the approval of an increase in the number of authorized
shares of Common Stock and provide each stockholder with an information statement with respect thereto or (y) hold a meeting of its
stockholders for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the
Company shall provide each stockholder with a proxy statement and shall use its reasonable best efforts to solicit its stockholders’
approval of such increase in authorized shares of Common Stock and to cause the Board to recommend to the stockholders that they approve
such proposal. Notwithstanding the foregoing, if during any such time of an Authorized Share Failure, the Company is able to obtain the
written consent of a majority of the shares of its issued and outstanding Common Stock to approve the increase in the number of authorized
shares of Common Stock, the Company may satisfy this obligation by obtaining such consent and submitting for filing with the SEC an Information
Statement on Schedule 14C.

 

(13)            Voting
Rights. Each Holder shall be entitled to the whole number of votes equal to the number of shares of Common Stock into which
such Holder’s Series A Preferred Shares would be convertible on the record date for the vote or consent of stockholders (without
regard to any limitations on conversion), and shall otherwise have voting rights and powers equal to the voting rights and powers of the
Common Stock; provided, however, that the Required Holders, by written notice to the Company, may terminate the voting rights
set forth in this Section 13 effective at any time from and after the registration of the Series A Preferred Shares under the
Exchange Act and, provided, further that solely for the purposes of calculating the number of votes to which each Series A Preferred
Share is entitled, the Conversion Price shall be the higher of (i) the Conversion Price then in effect and (ii) $2.86 (as adjusted
for any stock dividend, stock split, stock combination, reclassification or similar transaction relating to the Common Stock occurring
after the Subscription Date). Each Holder shall be entitled to receive the same prior notice of any stockholders’ meeting as is
provided to the holders of Common Stock in accordance with the bylaws of the Company, as well as prior notice of all stockholder actions
to be taken by legally available means in lieu of a meeting, and shall vote as a class with the holders of Common Stock as if they were
a single class of securities upon any matter submitted to a vote of stockholders, except those matters required by law or by the terms
hereof to be submitted to a class vote of the Holders, in which case the Holders only shall vote as a separate class.

 

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(14)            Equal
Treatment of Holders. No consideration shall be offered or paid to any of the Holders to amend or waive or modify any provision of
the Series A Preferred Shares, unless the same consideration (other than the reimbursement of legal fees) is also offered to all
of the Holders. This provision constitutes a separate right granted to each of the Holders by the Company and shall not in any way be
construed as the Holders acting in concert or as a group with respect to the purchase, disposition or voting of securities or otherwise.

 

(15)            No
Dilutive Issuances. Until all of the Series A Preferred Shares have been converted, redeemed or otherwise satisfied in accordance
with their terms, the Company shall not, and the Company shall not permit any of its Subsidiaries to, without the prior written consent
of the Required Holders, directly or indirectly, effect a Dilutive Issuance (but excluding shares of Common Stock deemed to have been
issued or sold by the Company (as determined pursuant to Section 5(g)) in connection with any Permitted Securities) on or prior to
the date that is ninety (90) days following the Stockholder Meeting Deadline.

 

(16)            Exchange.
From and after the consummation of an Additional Closing any Holder may, in its sole and absolute discretion, exchange (an “Exchange”)
all or any portion of such Holder’s Series A Preferred Shares (the Stated Value of the Series A Preferred Shares elected
to be exchanged by such Holder, the “Exchange Amount”), without any additional consideration, for (i) Senior Secured
Notes of the Company in the form attached as Exhibit B to the Securities Purchase Agreement (the “Exchange Notes”)
and (ii) Series B Warrants to purchase Common Stock in the form attached as Exhibit C-2 to the Securities Purchase Agreement
(the “Exchange Series B Warrants”). In the event that such Holder exercises this right, the Company shall take
all actions necessary, advisable or reasonably requested by such Holder to cause such Exchange to be promptly consummated in favor of
such Holder, and to promptly issue such Exchange Notes and Exchange Series B Warrants. The Exchange Notes (i) shall be of like
tenor with the Notes issued on an Additional Closing pursuant to the Securities Purchase Agreement, (ii) shall represent, as indicated
on the face of such new Exchange Note, the Exchange Amount, (iii) shall have an issuance date, as indicated on the face of such new
Exchange Note, which is the date of the issuance of the applicable Exchange Note, (iv) shall have the same rights and conditions
as the Notes issued on an Additional Closing pursuant to the Securities Purchase Agreement, including, without limitation, with respect
to its ranking and security interest, and (v) shall represent accrued and unpaid Interest and Late Charges (each as defined in the
Notes), if any, on the Principal (as defined in the Notes) and Interest of such Principal, equal to any accrued and unpaid Dividends and
Late Charges, if any, on the Stated Value and Dividends of the Series A Preferred Shares surrendered in such Exchange through the
date of the consummation of such Exchange. The Exchange Series B Warrants (i) shall be of like tenor with the Series B
Warrants issued on the Initial Closing (as defined in the Securities Purchase Agreement) pursuant to the Securities Purchase Agreement,
(ii) shall represent, as indicated on the face of such Exchange Series B Warrant, the right to purchase a number of Series B
Warrant Shares equal to the applicable Exchange Amount divided by the Conversion Price as in effect on the applicable date such Exchange
is consummated rounded up to the nearest whole number, (iii) shall have an issuance date, as indicated on the face of such new Warrant
which is the date of the issuance of the applicable Exchange Series B Warrants, and (iv) shall have the same rights and conditions
as the Series B Warrants issued on the Initial Closing pursuant to the Securities Purchase Agreement. For the purposes of Rule 144,
the Company acknowledges and agrees that the holding period of any Exchange Note and Exchange Series B Warrants may be tacked onto
the holding period of the Series A Preferred Shares surrendered in such Exchange, and the Company agrees not to take a position contrary
to this Section 16. Following any such exchange pursuant to this Section 16, such Holder’s Series A Preferred Shares
shall remain outstanding in accordance with its terms as to all amounts payable hereunder that have not been exchanged for Exchange Notes
and Series B Warrants in the applicable Exchange, if any. Upon the consummation of an Exchange any shares of Common Stock reserved
with respect to the Series A Preferred Shares being exchanged shall become available for any shares of Common Stock issuable with
respect to the Exchange Series B Warrants issued in such Exchange.

 

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(17)            Vote
to Change the Terms of or Issue Series A Preferred Shares. In addition to any other rights provided by law, except where the
vote or written consent of the holders of a greater number of shares is required by law or by another provision of the Certificate of
Incorporation, the affirmative vote of the Required Holders at a meeting duly called for such purpose or the written consent without a
meeting of the Required Holders, voting together as a single class, shall be required before the Company may: (a) amend or repeal
any provision of, or add any provision to, the Certificate of Incorporation or bylaws, or file any articles of amendment, certificate
of designations, preferences, limitations and relative rights of any series of preferred stock, if such action would adversely alter or
change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Series A Preferred Shares,
regardless of whether any such action shall be by means of amendment to the Certificate of Incorporation or by merger, consolidation or
otherwise; (b) increase or decrease (other than by conversion) the authorized number of shares of Series A Preferred Shares;
(c) change, amend or waive any provision of the Certificate of Designations with respect to the Series A Preferred Shares or
(d) whether or not prohibited by the terms of the Series A Preferred Shares, circumvent a right of the Series A Preferred
Shares by merger, consolidation or otherwise. Any amendment or waiver to this Certificate of Incorporation made in conformity with the
provisions of this Section 18 shall be binding on all Holders. No such amendment or waiver shall be effective to the extent that
it applies to less than all of the Holders. No vote of any class of stock other than the Series A Preferred Shares shall be required
to change, amend or waive any provision of the Certificate of Designations with respect to the Series A Preferred Shares except as
required by law or by another provision of the Certificate of Incorporation,

 

(18)            Dispute
Resolution. In the case of a dispute as to the determination of the Weighted Average Price, Closing Bid Price or the Closing Sale
Price or the arithmetic calculation of the Conversion Rate, the Conversion Price or any Redemption Price, the Company shall pay the applicable
Redemption Price that is not disputed or shall instruct the Transfer Agent to issue to such Holder the number of shares of Common Stock
that is not disputed, and the Company shall submit the disputed determinations or arithmetic calculations within two (2) Business
Days of the delivery of the Conversion Notice or Redemption Notice or other event giving rise to such dispute, as the case may be, to
the applicable Holder. If such Holder and the Company are unable to agree upon such determination or calculation within three (3) Business
Days of such disputed determination or arithmetic calculation being submitted to such Holder, then the Company shall, within two (2) Business
Days submit (a) the disputed determination of the Weighted Average Price, the Closing Bid Price or the Closing Sale Price to an independent,
reputable investment bank selected by such Holder and approved by the Company, such approval not to be unreasonably withheld, conditioned
or delayed, or (b) the disputed arithmetic calculation of the Conversion Rate, Conversion Price or any Redemption Price to an independent,
outside accountant, selected by such Holder and approved by the Company, such approval not to be unreasonably withheld, conditioned or
delayed. The Company, at its expense, shall cause the investment bank or the accountant, as the case may be, to perform the determinations
or calculations and notify the Company and the applicable Holder of the results no later than five (5) Business Days from the time
it receives the disputed determinations or calculations. Such investment bank’s or accountant’s determination or calculation,
as the case may be, shall be binding upon all parties absent demonstrable error.

 

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(19)            General
Provisions.

 

(a)            In
addition to the above provisions with respect to Series A Preferred Shares, such Series A Preferred Shares shall be subject
to and be entitled to the benefit of the provisions set forth in the Certificate of Incorporation of the Company with respect to preferred
stock of the Company generally; provided, however, that in the event of any conflict between such provisions, the provisions
set forth in this Certificate of Designations shall control.

 

(b)            Any
Series A Preferred Shares which are converted, repurchased or redeemed in full shall be automatically be deemed cancelled and shall
not be reissued, sold or transferred.

 

(c)            Whenever
notice is required to be given under this Certificate of Designations, unless otherwise provided herein, such notice shall be given in
accordance with Section 9(f) of the Securities Purchase Agreement.

 

(d)            Whenever
any payment of cash is to be made by the Company to any Person pursuant to this Certificate of Designations, such payment shall be made
in lawful money of the United States of America via wire transfer of immediately available funds to an account designated by such Holder;
provided, that a Holder, upon written notice to the Company, may elect to receive a payment of cash in lawful money of the United
States of America by a check drawn on the account of the Company and sent via overnight courier service to such Person at such address
as previously provided to the Company in writing (which address, in the case of each of the Buyers, shall initially be as set forth on
the Schedule of Buyers attached to the Securities Purchase Agreement). Whenever any amount expressed to be due by the terms of this Certificate
of Designations is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is a Business
Day. Any amount due under the Transaction Documents which is not paid when due shall result in a late charge being incurred and payable
by the Company in an amount equal to interest on such amount at the rate of six percent (6.0%) per annum from the date such amount was
due until the same is paid in full (“Late Charge”).

 

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(e)            To
the extent permitted by law, the Company hereby waives demand, notice, protest and all other demands and notices in connection with the
delivery, acceptance, performance, default or enforcement of this Certificate of Designations.

 

(20)            Governing
Law; Jurisdiction; Jury Trial. This Certificate of Designations shall be governed by and construed and enforced in accordance with,
and all questions concerning the construction, validity, interpretation and performance of this Certificate of Designations shall be governed
by, the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the
State of Delaware. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The
City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any
claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient
forum or that the venue of such suit, action or proceeding is improper. The Company hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to the Company at the address set
forth in Section 9(f) of the Securities Purchase Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the Holders from bringing suit or taking other
legal action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holders, to realize on
any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holders. THE
COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS CERTIFICATE OF DESIGNATIONS OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(21)            Lost
or Stolen Certificates. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of any Series A Preferred Stock Certificates representing the Series A Preferred Shares, and, in the case of loss,
theft or destruction, of an indemnification undertaking by such Holder to the Company in customary form (but without any obligation to
post a surety or other bond) and, in the case of mutilation, upon surrender and cancellation of the Series A Preferred Stock Certificate(s),
the Company shall execute and deliver new preferred stock certificate(s) of like tenor and date within five (5) Business Days
of receipt of such evidence.

 

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(22)            Remedies,
Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Certificate of Designations
and any of the other Transaction Documents shall be cumulative and in addition to all other remedies available under this Certificate
of Designations, at law or in equity (including a decree of specific performance and/or other injunctive relief). No remedy contained
herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy. Nothing herein shall limit a Holder’s
right to pursue actual damages for any failure by the Company to comply with the terms of this Certificate of Designations. The Company
covenants to each Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts
set forth or provided for herein with respect to payments, conversion, redemption and the like (and the computation thereof) shall be
the amounts to be received by such Holder thereof and shall not, except as expressly provided herein, be subject to any other obligation
of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable
harm to the Holders and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event
of any such breach or threatened breach, the Holders shall be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.

 

(23)            Construction;
Headings. This Certificate of Designations shall be deemed to be jointly drafted by the Company and all Buyers and shall not be construed
against any Person as the drafter hereof. The headings of this Certificate of Designations are for convenience of reference and shall
not form part of, or affect the interpretation of, this Certificate of Designations.

 

(24)            Failure
or Indulgence Not Waiver. No failure or delay on the part of a Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.

 

(25)            Transfer
of Series A Preferred Shares. Each Holder may offer, sell, assign or transfer all or any portion of such Holder’s Series A
Preferred Shares, the accompanying rights thereunder and shares of Common Stock issued pursuant to the terms hereof without the consent
of the Company, subject only to the provisions of Section 2(f) of the Securities Purchase Agreement. Holders shall have such
right to transfer and to exercise rights with respect to fractional Series A Preferred Shares and any redemptions of Series A
Preferred Shares by the Company shall be made calculating the number of applicable Series A Preferred Shares to one-ten thousandth
of a Series A Preferred Share.

 

(26)            Series A
Preferred Share Register. The Company shall maintain at its principal executive offices (or such other office or agency of
the Company as it may designate by notice to the Holders), a register for the Series A Preferred Shares, in which the Company shall
record the name and address of the persons in whose name the Series A Preferred Shares have been issued, as well as the name and
address of each transferee. The Company may treat the person in whose name any Series A Preferred Share is registered on the register
as the owner and holder thereof for all purposes, notwithstanding any notice to the contrary, but in all events recognizing any properly
made transfers.

 

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(27)            Stockholder
Matters. Any stockholder action, approval or consent required, desired or otherwise sought by the Company pursuant to the rules and
regulations of the Principal Market, the DGCL, this Certificate of Designations or otherwise with respect to the issuance of the Series A
Preferred Shares or the Common Stock issuable upon conversion thereof may be effected by written consent of the Company’s stockholders
or at a duly called meeting of the Company’s stockholders, all in accordance with the applicable rules and regulations of the
Principal Market and the DGCL. This provision is intended to comply with the applicable sections of the DGCL permitting stockholder action,
approval and consent affected by written consent in lieu of a meeting.

 

(28)            Disclosure.
Except if an individual affiliated with such Holder serves on the Board, including pursuant to the Governance Agreement, upon receipt
or delivery by the Company of any notice in accordance with the terms of this Certificate of Designations, unless the Company has in good
faith determined that the matters relating to such notice do not constitute material, nonpublic information relating to the Company or
its Subsidiaries, the Company shall contemporaneously with any such receipt or delivery publicly disclose such material, nonpublic information
on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains material, nonpublic information
relating to the Company or its Subsidiaries, the Company so shall indicate to such Holder contemporaneously with delivery of such notice,
and in the absence of any such indication, such Holder shall be allowed to presume that all matters relating to such notice do not constitute
material, nonpublic information relating to the Company or its Subsidiaries.

 

(29)            Independent
Nature of Holders’ Obligations and Rights. The rights and obligations of each Holder under any Transaction Document
are several and not joint with the obligations of any other Holder, and no Holder shall be responsible in any way for the performance
of the obligations of any other Holder under any Transaction Document. Nothing contained herein or in any other Transaction Document,
and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute such Holder as a partnership, an association,
a joint venture or any other kind of entity, or create a presumption that the Holders are in any way acting in concert or as a group with
respect to such obligations or the transactions contemplated by the Transaction Documents. Each Holder shall be entitled to independently
protect and enforce its rights, including, without limitation, the rights arising out of this Certificate of Designations or out of any
other Transaction Documents, and it shall not be necessary for any other Holder to be joined as an additional party in any proceeding
for such purpose.

 

(30)            Payment
of Collection, Enforcement and Other Costs. If (a) any Series A Preferred Shares of a Holder is placed in the hands of an
attorney for collection or enforcement or is collected or enforced through any legal proceeding or a Holder otherwise takes action to
collect amounts due under such Holder’s Series A Preferred Shares or to enforce the provisions of such Series A Preferred
Shares or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company creditors’
rights and involving a claim under a Holder’s Series A Preferred Shares, then the Company shall pay the costs incurred by such
Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding,
including, but not limited to, attorneys’ fees and disbursements.

 

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(31)            Certain
Definitions. For purposes of this Certificate of Designations the following terms shall have the following meanings:

 

(a)            “Additional
Closing” shall have the meaning ascribed to such term in the Securities Purchase Agreement.

 

(b)            “Additional
Closing Date” shall have the meaning ascribed to such term in the Securities Purchase Agreement.

 

(c)            “Affiliate”
shall have the meaning ascribed to such term in Rule 405 of the Securities Act and, for purposes of Section 3(e), shall also
include with respect to any Person, any other Person whose securities would be deemed to be constructively owned by such first Person,
owned by a single “entity” with respect to such first Person as defined in Section 1.382-3(a)(1) of the Treasury
Regulations, or otherwise aggregated with shares owned by such first Person, pursuant to the provisions of Section 382 of the Code
and the Treasury Regulations promulgated thereunder.

 

(d)            “Approved
Investment” shall have the meaning ascribed to such term in the Securities Purchase Agreement.

 

(e)            “Approved
Stock Plan” means any employee benefit plan which has been approved by the Board, pursuant to which the Company’s securities
may be issued to any employee, officer or director for services provided to the Company.

 

(f)            “Bloomberg”
means Bloomberg Financial Markets.

 

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

 

(h)            “Buyer”
shall have the meaning ascribed to such term in the Securities Purchase Agreement.

 

(i)            “Calendar
Quarter” means each of: the period beginning on and including January 1 and ending on and including March 31; the
period beginning on and including April 1 and ending on and including June 30; the period beginning on and including July 1
and ending on and including September 30; and the period beginning on and including October 1 and ending on and including December 31.

 

(j)            “Capital
Stock” means:

 

(i)            in
the case of a corporation, corporate stock;

 

(ii)            in
the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated)
of corporate stock;

 

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(iii)            in
the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

 

(iv)            any
other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.

 

(k)            “Change
of Control” means any Fundamental Transaction other than (i) an Approved Investment, (ii) any reorganization, recapitalization
or reclassification of the Common Stock in which holders of the Company’s voting power immediately prior to such reorganization,
recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded
securities and, directly or indirectly, are, in all material respects, the holders of a of the voting power of the surviving entity (or
entities with the authority or voting power to elect the members of the board of directors (or their equivalent if other than a corporation)
of such entity or entities) after such reorganization, recapitalization or reclassification or (iii) pursuant to a migratory merger
effected solely for the purpose of changing the jurisdiction of incorporation of the Company; provided, however, that a
Change of Control will be deemed not to have occurred if ninety percent (90%) or more of the consideration in the transaction or transactions
which otherwise would constitute a Change of Control consists of shares of common stock, depositary receipts or other certificates representing
common equity interests traded or to be traded immediately following such transaction on an Eligible Market.

 

(l)            “Closing
Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price and
last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market
begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as the case may
be, then the last bid price or the last trade price, respectively, of such security prior to 4:00:00 p.m., New York time, as reported
by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing
bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such security
is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively,
of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no
closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the
ask prices, respectively, of any market makers for such security as reported in the Pink Open Market (f/k/a OTC Pink) published by OTC
Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices). If the Closing Bid Price
or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price
or the Closing Sale Price, as the case may be, of such security on such date shall be the fair market value as mutually determined by
the Company and the applicable Holder. If the Company and such Holder are unable to agree upon the fair market value of such security,
then such dispute shall be resolved pursuant to Section 19. All such determinations to be appropriately adjusted for any stock dividend,
stock split, stock combination, reclassification or other similar transaction relating to the Common Stock occurring during the applicable
calculation period.

 

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(m)            “Code”
means the Internal Revenue Code of 1986, as amended.

 

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

 

(o)            “Common
Stock Deemed Outstanding” means, at any given time, the number of shares of Common Stock outstanding at such time, plus the
number of shares of Common Stock deemed to be outstanding pursuant to Sections 5(f)(i)(A) and 5(f)(i)(B) hereof regardless of
whether the Options or Convertible Securities are actually exercisable at such time, but excluding any shares of Common Stock owned or
held by or for the account of the Company or issuable pursuant to the terms of the Certificate of Designations.

 

(p)            “Conversion
Amount” means, for each Series A Preferred Share, the sum of (A) the Stated Value to be converted, redeemed or otherwise
with respect to which this determination is being made, (B) accrued and unpaid Dividends, if any, with respect to such Stated Value
and (C) accrued and unpaid Late Charges, if any, with respect to such Stated Value and Dividends, if any.

 

(q)            “Conversion
Price” means, as of any Conversion Date or other date of determination, $3.65, as adjusted as provided herein.

 

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

 

(s)            “Designee”
means Starboard Value LP or any of its Affiliates.

 

(t)            “Eligible
Market” means the Principal Market, The New York Stock Exchange, The Nasdaq Capital Market, The Nasdaq Global Market or the
NYSE American.

 

    33

     

    

 

(u)            “Equity
Conditions” means each of the following conditions: (i) on each day during the Equity Conditions Measuring Period, either
(x) one or more Registration Statements filed and required to be filed pursuant to the Registration Rights Agreement shall be effective
and available for the resale of all remaining Registrable Securities including the shares of Common Stock issuable upon conversion of
the Conversion Amount that is subject to the applicable Mandatory Conversion or the applicable Company Optional Redemption, as the case
may be, requiring the satisfaction of the Equity Conditions, in accordance with the terms of the Registration Rights Agreement and there
shall not have been any Grace Periods (as defined in the Registration Rights Agreement) or (y) all shares of Common Stock issuable
pursuant to the terms of the Certificate of Designations, including the shares of Common Stock issuable upon conversion of the Conversion
Amount that is subject to the applicable Mandatory Conversion or the applicable Company Optional Redemption, as the case may be, requiring
the satisfaction of the Equity Conditions, shall be eligible for sale without restriction or limitation pursuant to Rule 144 and
without the need for registration under any applicable federal or state securities laws; (ii) on each day during the Equity Conditions
Measuring Period the Company shall have no knowledge of any fact that would reasonably be expected to cause (x) the Registration
Statements required pursuant to the Registration Rights Agreement not to be effective and available for the resale of all remaining Registrable
Securities, including the shares of Common Stock issuable upon conversion of the Conversion Amount that is subject to the applicable Mandatory
Conversion or the applicable Company Optional Redemption, as the case may be, requiring the satisfaction of the Equity Conditions, in
accordance with the terms of the Registration Rights Agreement or (y) any shares of Common Stock issuable pursuant to the terms of
the Certificate of Designations, including the shares of Common Stock issuable upon conversion of the Conversion Amount that is subject
to the applicable Mandatory Conversion or the applicable Company Optional Redemption, as the case may be, requiring the satisfaction of
the Equity Conditions, not to be eligible for sale without restriction or limitation pursuant to Rule 144 and without the requirement
to be in compliance with Rule 144(c)(1) (or any successor thereto) promulgated under the Securities Act and any applicable state
securities laws; (iii) the shares of Common Stock issuable upon conversion of the Conversion Amount that is subject to the applicable
Mandatory Conversion or the applicable Company Optional Redemption, as the case may be, requiring the satisfaction of the Equity Conditions
may be issued in full and the rules or regulations of the Principal Market or any other applicable Eligible Market (for the avoidance
of doubt, failure of this clause (iii) shall not be deemed an Equity Conditions Failure provided that the Company complies with the
applicable provisions of Section 5(d)); (iv) on each day during the Equity Conditions Measuring Period, the Common Stock is
designated for quotation on the Principal Market or any other Eligible Market and shall not have been suspended from trading on such exchange
or market nor shall delisting or suspension by such exchange or market been commenced or pending with delisting or suspension reasonably
expected to occur within thirty (30) days of each applicable date of determination either (A) in writing by such exchange or market
or (B) by falling below the then effective minimum listing maintenance requirements of such exchange or market; (v) the shares
of Common Stock issuable upon conversion of the Conversion Amount that is subject to the applicable Mandatory Conversion or the applicable
Company Optional Redemption, as the case may be, requiring the satisfaction of the Equity Conditions are duly authorized and listed and
eligible for trading without restriction on an Eligible Market; (vi) during the Equity Conditions Measuring Period, the Company shall
have delivered shares of Common Stock pursuant to the terms of the Certificate of Designations and to the holders on a timely basis as
set forth in Section 5(c) hereof; (vii) if the event requiring the satisfaction of the Equity Conditions is a Mandatory
Conversion, the Mandatory Conversion Price Condition is satisfied; and (viii) during the Equity Conditions Measuring Period, Holder
shall not be in possession of any material, nonpublic information received from the Company, any Subsidiary or its respective agent or
Affiliates.

 

    34

     

    

 

(v)            “Equity
Conditions Failure” means that on the applicable date of determination through the applicable date of determination, the Equity
Conditions have not each been satisfied (or waived in writing by such Holder, provided that the Equity Condition set forth in clause
(iii) of such definition shall not be waivable by any Holder).

 

(w)            “Equity
Conditions Measuring Period” means each day during the period beginning thirty (30) Trading Days immediately prior to the applicable
date of determination and ending on and including the applicable date of determination; provided, however, if the event
requiring the satisfaction of the Equity Conditions is a Mandatory Conversion, the Equity Conditions Measuring Period shall mean the applicable
date of determination.

 

(x)            “Equity
Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security
that is convertible into, or exchangeable for, Capital Stock other than the Stockholders Notes).

 

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

 

(z)            “Excluded
Securities” means any shares of Common Stock issued or issuable: (A) under any Approved Stock Plan; (B) pursuant to
the terms of this Certificate of Designations or upon the exercise of the Warrants; provided that the terms of Warrants or the
Certificate of Designations, as applicable, are not amended, modified or changed on or after the Subscription Date to increase the number
of shares issued or issuable pursuant to such securities (other than in connection with stock splits or combinations) or to decrease the
exercise price, exchange price or conversion price of such securities (other than in connection with stock splits or combinations) or
to extend the term of such securities; and (C) upon conversion, exercise or exchange of any Options or Convertible Securities which
are outstanding on the day immediately preceding the Subscription Date, provided that the terms of such Options or Convertible
Securities, as applicable, are not amended, modified or changed on or after the Subscription Date to increase the number of shares issued
or issuable pursuant to such securities (other than in connection with stock splits or combinations) or to decrease the exercise price,
exchange price or conversion price of such securities (other than in connection with stock splits or combinations) or to extend the term
of such securities.

 

(aa)     “Freely
Tradable Shares” means (x) from and after the six (6) month anniversary of the Issuance Date, shares of Common Stock
without any restrictive legend that are eligible for resale by the applicable Holder without restriction or limitation pursuant to Rule 144
of the Securities Act other than the requirement to be in compliance with Rule 144(c)(1) (or any successor thereto) and any
limitation on the amount of such sales pursuant to Rule 144(e) (or any successor thereto) of the Securities Act, and (y) from
and after the earlier of the Effectiveness Deadline and the Effective Date (each as defined in the Registration Rights Agreement), shares
of Common Stock that are eligible for resale by the applicable Holder without restriction or limitation pursuant to an effective Registration
Statement that is available for use.

 

    35

     

    

 

(bb)     “Fundamental
Transaction” means (i) that the Company shall, directly or indirectly, including through Subsidiaries, Affiliates or otherwise,
in one or more related transactions, (a) consolidate or merge with or into (whether or not the Company is the surviving corporation)
another Subject Entity, or (b) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties
or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation S-X) to one
or more Subject Entities, or (c) make, or allow one or more Subject Entities to make, or allow the Company to be subject to or have
its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that is accepted
by the holders of more than either (1) 50% of the outstanding shares of Common Stock, (2) 50% of the outstanding shares of Common
Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with any Subject Entities
making or party to, such purchase, tender or exchange offer were not outstanding; or (3) such number of shares of Common Stock such
that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such purchase, tender or exchange
offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the outstanding
shares of Common Stock, or (d) consummate a stock purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more Subject Entities whereby such Subject Entities,
individually or in the aggregate, acquire, either (1) more than 50% of the outstanding shares of Common Stock, (2) more than
50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all the Subject Entities making or party
to, or Affiliated with any Subject Entity making or party to, such stock purchase agreement or other business combination were not outstanding;
or (3) such number of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined
in Rule 13d-3 under the Exchange Act) of more than 50% of the outstanding shares of Common Stock, or (e) reorganize, recapitalize
or reclassify its Common Stock, (ii) that the Company shall, directly or indirectly, including through Subsidiaries, Affiliates or
otherwise, in one or more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate to be or
become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, whether through
acquisition, purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger,
consolidation, business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization
or reclassification or otherwise in any manner whatsoever, of either (a) more than 50% of the aggregate ordinary voting power represented
by issued and outstanding shares of Common Stock, (b) more than 50% of the aggregate ordinary voting power represented by issued
and outstanding shares of Common Stock not held by all such Subject Entities as of the Subscription Date calculated as if any shares of
Common Stock held by all such Subject Entities were not outstanding, or (c) a percentage of the aggregate ordinary voting power represented
by issued and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow such Subject Entities to
effect a statutory short form merger or other transaction requiring other stockholders of the Company to surrender their shares of Common
Stock without approval of the stockholders of the Company or (iii) that the Company shall, directly or indirectly, including through
Subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other instrument
or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition in which case this definition
shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary
to correct this definition or any portion of this definition which may be defective or inconsistent with the intended treatment of such
instrument or transaction.

 

    36

     

    

 

(cc)     “Governance
Agreement” shall have the meaning ascribed to such term in the Securities Purchase Agreement.

 

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

 

(ee)     “Holder
Optional Redemption Premium” means (i) in the case of the Holder Optional Redemption Trigger Events set forth in clauses
(i) and (ii) of Section 8, 115%, (ii) in the case of the Holder Optional Redemption Trigger Event set forth in clause
(iii) of Section 8, 100% and (ii) in the case of the Holder Optional Redemption Trigger Event set forth in clause (iv) of
Section 8, 110%.

 

(ff)     “Liquidation
Event” means the voluntary or involuntary liquidation, dissolution or winding up of the Company or such Subsidiaries the assets
of which constitute all or substantially all of the assets of the business of the Company and its Subsidiaries taken as a whole, in a
single transaction or series of transactions, or adoption of any plan for the same.

 

(gg)     “Make-Whole
Amount” means a cash amount per $100 Conversion Amount of Series A Preferred Shares being redeemed in a Change of Control
determined by multiplying the applicable Make-Whole Stock Price (as adjusted for any stock dividend, stock split, stock combination, reclassification
or similar transaction relating to the Common Stock occurring after the Subscription Date) by the amount set forth in the table below
(with interpolation for Make-Whole Stock Prices between the amounts in the columns below) corresponding to the date of the Change of Control
occurring after the date in the first column but prior to the date, if any, on the immediately following row of the first column below:

 

	 	 	Make-Whole Stock Price
	Change of
 Control
 Redemption Date	 	$1.00
 or
 less	 	$1.25	 	$1.50	 	$1.75	 	$2.00	 	$2.25	 	$2.50	 	$2.75	 	$3.00	 	$3.25	 	$3.50	 	$3.75	 	$4.00	 	$4.25	 	$4.50	 	$10.00	 	$50.00	 	$100.00
 or
 greater
	11/15/2019	 	16.61	 	16.40	 	16.49	 	16.63	 	16.92	 	17.31	 	17.76	 	17.93	 	18.41	 	22.24	 	22.18	 	21.50	 	19.87	 	18.38	 	17.53	 	5.46	 	0.95	 	0.47
	11/15/2020	 	21.98	 	20.84	 	20.35	 	20.24	 	20.32	 	20.16	 	20.44	 	20.39	 	20.35	 	20.83	 	20.82	 	20.21	 	18.65	 	17.18	 	16.38	 	4.84	 	0.80	 	0.40
	11/15/2021	 	19.02	 	18.20	 	17.93	 	18.02	 	18.26	 	18.23	 	18.61	 	18.64	 	18.68	 	19.25	 	19.29	 	18.76	 	17.27	 	15.83	 	15.09	 	4.14	 	0.65	 	0.32
	11/15/2022	 	15.86	 	15.35	 	15.31	 	15.59	 	15.98	 	16.08	 	16.56	 	16.69	 	16.80	 	17.47	 	17.56	 	17.12	 	15.71	 	14.29	 	13.61	 	3.35	 	0.49	 	0.24
	11/15/2023	 	12.42	 	12.35	 	12.51	 	12.81	 	13.17	 	13.70	 	13.95	 	14.48	 	14.70	 	15.41	 	15.60	 	15.26	 	13.72	 	12.90	 	11.68	 	2.56	 	0.31	 	0.16
	11/15/2024	 	9.03	 	9.26	 	9.63	 	10.02	 	10.59	 	11.09	 	11.56	 	11.97	 	12.55	 	12.89	 	13.43	 	13.17	 	11.78	 	10.55	 	9.85	 	1.38	 	0.16	 	0.08
	11/15/2025	 	5.42	 	5.81	 	6.32	 	6.97	 	7.61	 	8.26	 	8.92	 	9.53	 	10.10	 	10.61	 	11.03	 	10.75	 	9.58	 	8.55	 	7.56	 	0.03	 	0.01	 	0.00
	11/15/2026	 	1.99	 	2.23	 	2.66	 	3.25	 	3.94	 	4.70	 	5.47	 	6.28	 	7.04	 	7.80	 	8.55	 	8.53	 	7.48	 	6.63	 	5.90	 	0.00	 	0.00	 	0.00
	11/15/2027	 	0.05	 	0.04	 	0.03	 	0.03	 	0.02	 	0.03	 	0.06	 	0.25	 	0.79	 	1.79	 	3.12	 	3.82	 	3.52	 	3.30	 	3.12	 	0.00	 	0.00	 	0.00

 

    37

     

    

 

The exact Make-Whole Stock Price and Change of Control Redemption
Date may not be set forth in the table above, in which case, if the Make- Whole Stock Price is between two such amounts in the table or
the Change of Control Redemption Date is between two Change of Control Redemption Dates in the table, the applicable value will be determined
by straight-line interpolation between the applicable value set forth for the higher and lower Make-Whole Stock Prices and the earlier
and later Change of Control Redemption Dates, as applicable, based on a 365-day year. In no event shall the Make-Whole Amount be greater
than or less than the maximum and minimum values set forth in the table above and no Make-Whole Amount shall be paid with respect to a
Change of Control occurring on or after November 15, 2027.

 

(hh)     “Make-Whole
Stock Price” means (i) the cash amount paid per share of Common Stock, if the holders of Common Stock receive only cash
in the applicable Change of Control or (ii) in any other situation, the price of the Common Stock at the time of the consummation
of the applicable Change of Control (all such determinations to be appropriately adjusted for any stock split, stock dividend, stock combination,
reclassification or other similar transaction relating to the Common Stock during such period).

 

(ii)            “Maturity
Date” shall be November 15, 2027 (the “Original Maturity Date”), as may be extended at the option of
any Holder with respect to such Holder’s Series A Preferred Shares (i) in the event that, and for so long as, a Triggering
Event shall have occurred and be continuing on the Maturity Date (as may be extended pursuant to this Section 31(ii)) or any event
shall have occurred and be continuing on the Maturity Date (as may be extended pursuant to this Section 31(ii)) that with the passage
of time and the failure to cure would result in a Triggering Event and (ii) through the date that is ten (10) Business Days
after the consummation of a Change of Control in the event that a Change of Control is publicly announced or a Change of Control Notice
is delivered prior to the Maturity Date; provided, however, in the event a Holder elects to extend the Original Maturity
Date as provided herein, the Company shall nevertheless have the right to pay the Company Optional Redemption Price at any time after
the Original Maturity Date so long as no properly delivered Conversion Notice is outstanding.

 

(jj)     “Notes”
means: (i) the SPA Notes, (ii) all Senior Secured Notes, if any, issued by the Company in an Exchange and (iii) all Stockholders
Notes.

 

(kk)     “Option
Value” means the value of an Option calculated using the Black-Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg determined as of (A) the Trading Day prior to the public announcement of the issuance of the applicable Option
if the issuance of such Option is publicly announced or (B) the Trading Day immediately following the issuance of the applicable
Option if the issuance of such Option is not publicly announced, for pricing purposes and reflecting (i) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the remaining term of the applicable Option as of the applicable date of
determination, (ii) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function
on Bloomberg as of (A) the Trading Day immediately following the public announcement of the applicable Option if the issuance of
such Option is publicly announced or (B) the Trading Day immediately following the issuance of the applicable Option if the issuance
of such Option is not publicly announced, (iii) the underlying price per share used in such calculation shall be the highest Weighted
Average Price of the Common Stock during the period beginning on the Trading Day prior to the execution of definitive documentation relating
to the issuance of the applicable Option and ending on (A) the Trading Day immediately following the public announcement of such
issuance, if the issuance of such Option is publicly announced or (B) the Trading Day immediately following the issuance of the applicable
Option if the issuance of such Option is not publicly announced, (iv) a zero cost of borrow and (v) a 360 day annualization
factor.

 

    38

     

    

 

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

 

(mm)     “Parent
Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person, including such entity whose
common capital stock or equivalent equity security is quoted or listed on an Eligible Market (or, if so elected by the Required Holders,
any other market, exchange or quotation system), or, if there is more than one such Person or such entity, the Person or such entity designated
by the Required Holders or in the absence of such designation, such Person or entity with the largest public market capitalization as
of the date of consummation of the Fundamental Transaction.

 

(nn)     “Permitted
Securities” means (i) Excluded Securities and (ii) securities issued by the Company in a primary offering pursuant
to a registration statement that is declared effective under the Securities Act.

 

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

 

(pp)     “Preferential
Dividend Rate” means, initially, 3.00% per annum (the “Initial Preferential Dividend Rate”), and from and
after the consummation of an Approved Investment, the Initial Preferential Dividend Rate shall be increased to 8.00% per annum.

 

(qq)     “Principal
Market” means The Nasdaq Global Select Market.

 

(rr)     “Redemption
Dates” means, collectively, each Triggering Event Redemption Date, each Change of Control Redemption Date, the Company Optional
Redemption Date, each Holder Optional Redemption Date and the Maturity Date, each of the foregoing, individually, a “Redemption
Date”.

 

(ss)     “Redemption
Notices” means, collectively, each Notice of Redemption at Option of Holder, each Change of Control Redemption Notice, the Company
Optional Redemption Notice, each Holder Optional Redemption Notice and any other redemption notices set forth herein, each of the foregoing,
individually, a “Redemption Notice”.

 

    39

     

    

 

(tt)     “Redemption
Prices” means, collectively, each Triggering Event Redemption Price, each Change of Control Redemption Price, the Company Optional
Redemption Price, each Holder Optional Redemption Price, the Maturity Date Redemption Price and any other redemption price set forth herein
(including, in each case, any interest and damages thereon), each of the foregoing, individually, a “Redemption Price”.

 

(uu)     “Registrable
Securities” shall have the meaning ascribed to such term in the Registration Rights Agreement.

 

(vv)     “Registration
Rights Agreement” means that certain registration rights agreement dated as of the Subscription Date by and among the Company
and the Buyers, as may be amended, amended and restated, supplemented or otherwise modified from time to time.

 

(ww)     “Registration
Statement” shall have the meaning ascribed to such term in the Registration Rights Agreement.

 

(xx)            “Required
Holders” means the Holders representing at least a majority of the aggregate Series A Preferred Shares then outstanding
and shall include the Designee so long as the Designee and/or any of its Affiliates is a Holder.

 

(yy)     “SEC”
means the United States Securities and Exchange Commission.

 

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

 

(aaa)     “Securities
Purchase Agreement” means that certain securities purchase agreement, dated as of the Subscription Date, by and among the Company
and the Buyers pursuant to which the Company issued the Series A Preferred Shares, the Notes and the Warrants, as may be amended,
amended and restated, supplemented or otherwise modified from time to time.

 

(bbb)     “Series B
Warrant Shares” shall have the meaning ascribed to such term in the Securities Purchase Agreement.

 

(ccc)     “Series B
Warrants” shall have the meaning ascribed to such term in the Securities Purchase Agreement.

 

(ddd)     “SPA
Notes” means all Senior Secured Notes, if any, issued by the Company pursuant to the Securities Purchase Agreement on an Additional
Closing Date.

 

(eee)     “Standard
Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary
Eligible Market with respect to the Common Stock as in effect on the date of delivery of the applicable Conversion Notice.

 

(fff)     “Stated
Value” means, per Series A Preferred Share, $100, subject to adjustment to preserve such value for stock splits, stock
dividends, recapitalizations, reorganizations, reclassifications, combinations, reverse stock splits or other similar events relating
to the Series A Preferred Shares after the Subscription Date.

 

    40

     

    

 

(ggg)     “Stockholder
Approval” shall have the meaning ascribed to such term in the Securities Purchase Agreement.

 

(hhh)     “Stockholder
Meeting Deadline” shall have the meaning ascribed to such term in the Securities Purchase Agreement.

 

(iii)            “Stockholders
Notes” shall have the meaning ascribed to such term in the Securities Purchase Agreement.

 

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

 

(kkk)     “Subscription
Date” means November 18, 2019.

 

(lll)     “Subsidiary”
shall have the meaning ascribed to such term in the Securities Purchase Agreement.

 

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

 

(nnn)     “Trading
Day” means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal
trading market for the Common Stock on such day, then on the principal securities exchange or securities market on which the Common Stock
is then traded; provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade
on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of
trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange
or market, then during the hour ending at 4:00:00 p.m., New York time).

 

(ooo)            “Transaction
Documents” shall have the meaning ascribed to such term in the Securities Purchase Agreement.

 

(ppp)     “Transfer
Agent” means Computershare Trust Company, N.A. or such other agent or agents of the Company as may be designated by the Board
as the transfer agent for the Series A Preferred Shares and/or the Common Stock, as applicable.

 

(qqq)     “Treasury
Regulations” means the final and temporary (but not proposed) tax regulations promulgated under the Code, as such regulations
may be amended from time to time.

 

    41

     

    

 

(rrr)     “Warrants”
has the meaning ascribed to such term in the Securities Purchase Agreement, and shall include all warrants issued in exchange therefor
or replacement thereof.

 

(sss)     “Weighted
Average Price” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal
Market during the period beginning at 9:30:01 a.m., New York time (or such other time as the Principal Market publicly announces is the
official open of trading), and ending at 4:00:00 p.m., New York time (or such other time as the Principal Market publicly announces is
the official close of trading), as reported by Bloomberg through its “Volume at Price” function or, if the foregoing does
not apply, the dollar volume- weighted average price of such security in the over-the-counter market on the electronic bulletin board
for such security during the period beginning at 9:30:01 a.m., New York time (or such other time as such market publicly announces is
the official open of trading), and ending at 4:00:00 p.m., New York time (or such other time as such market publicly announces is the
official close of trading), as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by
Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for
such security as reported in the Pink Open Market (f/k/a OTC Pink) published by OTC Markets Group, Inc. (or a similar organization
or agency succeeding to its functions of reporting prices). If the Weighted Average Price cannot be calculated for a security on a particular
date on any of the foregoing bases, the Weighted Average Price of such security on such date shall be the fair market value as mutually
determined by the Company and the applicable Holder. If the Company and such Holder are unable to agree upon the fair market value of
such security, then such dispute shall be resolved pursuant to Section 19. All such determinations shall be appropriately adjusted
for any stock dividend, stock split, stock combination, reclassification or other similar transaction relating to the Common Stock occurring
during the applicable calculation period.

 

* * * * *

 

    42

     

    

 

IN WITNESS WHEREOF, the Company has caused this
Second Amended and Restated Certificate of Designations to be signed by [●], its [●], as of [●] day of [●].

 

	 	ACACIA RESEARCH CORPORATION
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

 

    43

     

    

 

EXHIBIT I

 

ACACIA RESEARCH CORPORATION

 

CONVERSION NOTICE

 

Reference is made to the Second Amended and Restated
Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock of Acacia Research Corporation (the “Certificate
of Designations”). In accordance with and pursuant to the Certificate of Designations, the undersigned hereby elects to convert
the number of shares of Series A Convertible Preferred Stock, par value $0.001 per share (the “Series A Preferred Shares”),
of Acacia Research Corporation, a Delaware corporation (the “Company”), indicated below into shares of Common Stock,
par value $0.001 per share (the “Common Stock”), of the Company, as of the date specified below.

 

Date of Conversion: ________________________________________________________________________________________________

 

Number of Series A Preferred Shares to be
converted: _______________________________________________________________________

 

Stock certificate no(s). of Series A Preferred
Shares to be converted: ____________________________________________________________

 

Tax ID Number (If applicable): _________________________________________________________________________________________

 

Please confirm the following information: ________________________________________________________________________________________

 

Conversion Price: ___________________________________________________________________________________________________

 

Number of shares of Common Stock to be
issued: ___________________________________________________________________________

 

Please issue the Common Stock into which the Series A Preferred
Shares are being converted to the Holder, or for its benefit, as follows:

 

		 ̈	Check here if requesting delivery as a certificate to the following name and to the following address:

 

	 	 	Issue to:	 
	 	 	 	 
	 	 	 
	 	 	 
	 	 	Address:	 
	 	 	 	 

 

	 	 	Telephone Number:	 
	 	 	 
	 	 	Facsimile Number:	 

 

		 ̈	Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows:

 

DTC Participant: ______________________________________________________________________________________________

 

DTC Number: ________________________________________________________________________________________________

 

    44

     

    

 

Account Number: _____________________________________________________________________________________________

 

Authorization: ________________________________________________________________________________________________

 

By: ________________________________________________________________________________________________________

 

Title: _______________________________________________________________________________________________________

 

Dated: ______________________________________________________________________________________________________

 

Account Number (if electronic book entry
transfer): ____________________________________________________________________

 

Transaction Code Number (if electronic
book entry transfer): _____________________________________________________________

 

    45

     

    

 

ACKNOWLEDGMENT

 

The Company hereby acknowledges this Conversion
Notice and hereby directs Computershare Trust Company, N.A. to issue the above indicated number of shares of Common Stock in accordance
with the Transfer Agent Instructions dated November 18, 2019 from the Company and acknowledged and agreed to by Computershare Trust
Company, N.A.

 

	 	ACACIA RESEARCH CORPORATION
	 	 
	 	By:	 
	 	 	Name:	 
	 	 	Title:	 

 

    46atnahspharmauklimitedlic

THE SYMBOL “[****]” DENOTES PLACES WHERE CERTAIN IDENTIFIED INFORMATION HAS  BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL, AND (ii)  WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.      LICENSE AND SUPPLY AGREEMENT  by and between  AQUESTIVE THERAPEUTICS, INC.  and  ATNAHS PHARMA UK LIMITED   Dated as of September 26, 2022       

 

      LICENSE AND SUPPLY AGREEMENT  This LICENSE AND SUPPLY AGREEMENT (together with the Schedules hereto, this  “Agreement”) is entered into as of September 26, 2022 (the “Effective Date”) by and between  Aquestive Therapeutics, Inc., a Delaware corporation having its principal place of business at 30  Technology Drive, Warren, New Jersey 07059 (“Aquestive”), and Atnahs Pharma UK Limited, a  company registered in England and Wales  having its principal place of business at Suite 1, 3rd  Floor 11-12 St. James’ Square, London, United Kingdom, SW1Y 4LB  (“Pharmanovia”).   Aquestive and Pharmanovia are sometimes referred to hereinafter individually as a “Party” and  collectively as the “Parties.”  RECITALS:  A. Aquestive owns patented and trade secret proprietary technology related to film- based drug delivery systems using its PharmFilm® technologies, including orally soluble film  strips containing active pharmaceutical ingredients.  B. Pharmanovia desires to obtain from Aquestive, and Aquestive desires to grant to  Pharmanovia, an exclusive license to Commercialize (defined below) the Product (defined below)  in the Field (defined below) in the Territory (defined below), subject to the terms of this Agreement  and as set forth in the Product Schedule (defined below) which shall form a part of this Agreement.  C. The Parties desire that Aquestive shall act as the exclusive manufacturer and  supplier to Pharmanovia of finished drug products as specifically described in the Product  Schedule, subject to the terms of this Agreement.  D. In consideration of the foregoing and the mutual representations, warranties and  covenants contained herein, the Parties, intending to be legally bound hereby, agree as follows:  1. DEFINITIONS  As used herein, the following terms shall have the following meanings:  1.1 “Adverse Event” means any untoward medical occurrence in a patient, clinical  investigation subject, or consumer following administration of a medicine, as related to the use of  the Product which requires reporting to a Regulatory Authority.  1.2 “Affiliate” of a Person means any other Person that directly, or indirectly through  one or more intermediaries, controls, is controlled by, or is under common control with such first  Person.  As used in this definition of Affiliate, “control” and, with correlative meanings, the terms  “controlled by” and “under common control with,” shall mean to possess the power to direct the  management or policies of a Person, whether through: (a) direct or indirect beneficial ownership  of fifty percent (50%) or more of the voting interest in such entity; (b) the right to appoint fifty  percent (50%) or more of the directors of such entity; or (c) by contract or otherwise.    1.3 “Agreement” has the meaning set forth in the Preamble of this Agreement.  

 

   2    1.4 “API” means the active pharmaceutical ingredient(s) with respect to the Product as  set forth in the Product Schedule.  1.5 “Applicable Currency” means the applicable currency of a country in a Territory  for the purpose of calculating amounts recognized as Net Sales under this Agreement.   1.6 “Applicable Law” means all laws, rules and regulations, or other requirements of  Regulatory Authorities including, without limitation, the FCPA and Healthcare Laws, applicable  to the Development, Commercialization, or Supply of the Product, as the case may be, that may  be in effect from time to time during the Term.  1.7 “Aquestive” has the meaning set forth in the Preamble to this Agreement.  1.8 “Aquestive Indemnitees” has the meaning set forth in Section 11.1.  1.9 “Aquestive IP” means the Aquestive Patents, the Dossier and further any and all  Intellectual Property owned or Controlled by Aquestive or its Affiliates as of the Effective Date or  during the Term, including Improvements, which is useful or necessary to Commercialize the  Product in the Field in the Territory.  1.10 “Aquestive Know-How” means data, knowledge, techniques, inventions, designs,  drawings, health and safety information, material safety data sheets, tests (including Supply,  manufacturing and batch records), reports, procedures, processes, models, manuals, formulae,  systems, experiments, samples, specimens, results, statistics, research, tables of operating  conditions and the like and all other know-how, in each case to the extent not in the public domain  (whether proprietary or not) in connection with the Product in the Territory.  1.11 “Aquestive Marks” means, collectively, the Aquestive Housemark and the  Aquestive Product Mark(s).  1.12 “Aquestive Product Mark(s)” means the Aquestive trademark(s) with respect to the  Product, if any, set forth in the Product Schedule.  1.13 “Aquestive Patents” means those patents and patent applications owned or  Controlled by Aquestive or its Affiliates during the Term related to the formulation, manufacturing  and use of the Product in the Field in the Territory, including, without limitation, any divisionals  or any substitute applications, any patent issued with respect to any such patent applications, any  patents which remain valid subsequent to any post grant proceedings or other challenges which  result in the patent being enforceable, any amendment or extension including any supplementary  protection certificate of any such patent, and any confirmation patent or registration patent or  patent of addition based on any such patent, and all foreign counterparts of any of the foregoing,  or as applicable portions thereof or individual claims therein.  A list of the Aquestive Patents as of  the Effective Date is attached hereto as Schedule 1.13, which may be updated from time to time,  as applicable, by amendment of such Schedule or, if specific to the Product, as set forth in the  Product Schedule to this Agreement (each such Aquestive Patent specific to the Product, an  “Aquestive Product Patent”).  1.14 “Bankruptcy Code” has the meaning set forth in Section 14.18.  

 

   3    1.15 “Bankruptcy Event” means the occurrence of any of the following with respect to  a Party: (a) such Party files or has filed against it in any court or agency, pursuant to any statute or  regulation of any state or country, a petition in voluntary or involuntary bankruptcy or insolvency  or for reorganization and such filing is not withdrawn or dismissed within sixty (60) days after the  filing thereof; (b) such Party files for, or consents to be filed against it an arrangement or for the  appointment of a receiver or trustee of such Party or of its assets and such filing is not withdrawn  within sixty (60) days after the filing thereof; (c) such Party is served with an involuntary petition  against it, filed in any insolvency proceeding, and such petition is not dismissed within sixty (60)  days after the filing thereof; or (d) the dissolution or liquidation of such Party, or such Party shall  make an assignment for the benefit of its creditors or (e) such Party ceases to carry on business.   1.16 “Bankruptcy Supply Failure” means Aquestive’s inability or failure to Supply  Product manifested over a period of sixty (60) days or more following a Bankruptcy Event.  1.17 “Business Day” means any day other than a Saturday or Sunday on which banking  institutions in New York, New York, United States and London, England are open for business.  1.18 “Calendar Quarter” means the three (3) month period in any given calendar year  ending on March 31, June 30, September 30, and December 31.  1.19 “Certificate of Analysis” means the certificate evidencing the analytical tests  conducted on a specific lot of the Product reflecting that such Product and any Raw Materials used  therein conform to the relevant Specifications and setting forth, inter alia, the items tested and test  results, and accompanied by all documentation required by Applicable Law and/or a Regulatory  Authority to Commercialize such Product in the Territory.    1.20 “Certificate of Compliance” means the certificate evidencing that the Product  delivered to Pharmanovia was manufactured in accordance with Applicable Law, and the  applicable Regulatory Approval.  1.21 “Clinical Supply” has the meaning set forth in Section 4.3.1.  1.22 “CMC Data” means chemistry, manufacturing and controls data required by  Applicable Law and/or a Regulatory Authority to Develop the Product in the Territory.    1.23 “COGS” means the following costs incurred by Aquestive or its Affiliates or  subcontractors related to the Supply of the Product on a per Unit basis: (i) the landed cost of raw  materials, including invoice price, freight and duties; (ii) reasonably allocated direct and indirect  labor and overhead costs; (iii) costs in incurred in connection with quality assurance (including  testing, sampling and complaint investigation); and (iii) warehousing and shipping costs,  determined in accordance with GAAP, consistently applied.  1.24 Commercialization” means any and all activities directed to preparation for sale of,  registration, marketing, promoting, distributing, including importing, exporting, transporting,  offering for sale and selling the Product in the Field in the Territory and interacting with Regulatory  Authorities regarding any of the foregoing.  When used as a verb, “Commercialize” means to  engage in Commercialization.  

 

   4    1.25 “Commercially Reasonable Efforts” means, with respect to a Party and its  obligations under this Agreement with respect to a Product, the level of efforts and resources  (measured as of the time that such efforts and resources are required to be used under this  Agreement) that are comparable to those used by a similarly situated company in the industry of a  similar size and profile as such Party to develop, manufacture, supply or commercialize, as the  case may be, a pharmaceutical product owned by such company or to which it has rights which is  at a similar stage of research, development or commercialization (as the case may be), and with  similar market potential as the applicable Product and at a similar stage in life cycle, taking into  account, as applicable: that product’s profile of efficacy and safety; proprietary position, including  expected and actual market exclusivity (including patent and regulatory exclusivity); regulatory  status, including anticipated or approved labeling and anticipated or approved post-approval  requirements; present and future market and commercial potential, including the competitiveness  of the marketplace; any legal and regulatory issues involved, the expected and actual profitability  of that product and other relevant factors, including technical, legal, scientific, medical, sales  performance, commercial and/or marketing factors.  1.26 “Competitive Infringement” has the meaning set forth in Section 13.2.1.  1.27 “Confidential Information” has the meaning set forth in Section 10.1.  1.28 “Confidentiality Agreement” means that certain Confidentiality Agreement  between Aquestive and Pharmanovia executed and delivered as of December 13, 2021.  1.29 “Control” or “Controlled” means, with respect to any Intellectual Property, the  possession (whether by ownership, license or sublicense, other than by a license, sublicense or  other right granted (but not assignment) pursuant to this Agreement) by a Party (or its Affiliate) of  the ability to assign or grant to the other Party the licenses, sublicenses or rights to access and use  such Intellectual Property as provided for in this Agreement, without violating the terms of any  agreement or other arrangement with any Third Party in existence as of the time such Party would  be required hereunder to grant such license, sublicense, or rights of access or use.  1.30 “CPA Firm” has the meaning set forth in Section 7.11.  1.31 “Delivery Failure” has the meaning set forth in Section 5.10.1.  1.32 “Development” means all development activities conducted in connection with or  as a condition of seeking or obtaining and maintaining Regulatory Approval of the Product in the  Field in the Territory including, among other things: (a) the conduct of all research, non-clinical,  and pre-clinical activities, testing and studies of the Product; drug discovery, toxicology,  pharmacokinetic, pharmacodynamic, drug-drug interaction, safety, tolerability and  pharmacological studies, formulation, statistical analysis and report writing; (b) the conduct of all  clinical studies (including post-Marketing Authorization human studies) and the distribution of the  Product for use in clinical studies, if any; (c) preparation, filing and prosecution of any Regulatory  Approval or Regulatory Approval Application for the Product; (d) responsibility for all regulatory  filing submissions and registrations; (e) Raw Material testing; (f) all development activities  directed to label expansion (including prescribing information) or obtaining Marketing  Authorization of the Product for one or more additional indications following initial Marketing  

 

   5    Authorization; (g) all development activities conducted after receipt of Marketing Authorization  of the Product that are required or requested in writing by a Regulatory Authority as a condition  of, or in connection with, obtaining or maintaining a Marketing Authorization; (h) any  pharmacoeconomic studies required for the Marketing Authorization; (i) any investigator- or  institution-sponsored studies required for the Marketing Authorization; (j) pre-approvals, post- approval obligations and reporting relating to the Product in the Field in the Territory; and (j) all  regulatory affairs related to any of the foregoing.  When used as a verb, “Develop” means to  engage in Development.  1.33 “Disclosing Party” has the meaning set forth in Section 10.1.  1.34 “Dosage Strength” means the dosage strength with respect to the Product as set  forth in the Product Schedule.    1.35 “Dossier” means a copy of the documents submitted to the FDA in support of the  NDA for the Product including scientific and technical data relating to the Product and other  related information that may be required for Pharmanovia’s submissions for Regulatory Approvals  in the Territory; for the avoidance of doubt this includes but not limited to any raw technical data  supporting the NDA during pre-assessment and assessment phases.   1.36 “Excluded Claim” has the meaning set forth in Section 14.12.8.  1.37 “Effective Date” has the meaning set forth in the Preamble of this Agreement.  1.38 “Exchange Rate” has the meaning set forth in Section 7.2.  1.39 “Executive Officer” has the meaning set forth in Section 14.12.2.  1.40 “FCPA” means the U.S. Foreign Corrupt Practices Act (15 U.S.C. Section 78dd-1,  et. seq.), as amended and as may be further amended after the Effective Date, and any equivalent  non-U.S. regulations or standards, if and as applicable during the Term.  1.41 “FDA” means the United States Food and Drug Administration, and any of its  successor agencies or departments.   1.42 “Field” means the field with respect to the Product as set forth in the Product  Schedule.  1.43 “First Commercial Sale” means with respect to a country in the Territory, the first  sale of the Product to a Third Party by Pharmanovia (or any Affiliate or subcontractor of  Pharmanovia authorized by Pharmanovia pursuant to this Agreement) within such country in the  Territory after Regulatory Approval (and where applicable, (i) pricing or reimbursement approval  in such country and (ii) labeling approval) for the Product has been obtained in such country.   1.44 “Force Majeure” has the meaning set forth in Section 14.7.  1.45 “GAAP” means generally accepted accounting principles set forth from time to  time in the opinions and pronouncements of the Accounting Principles Board and the American  

 

   6    Institute of Certified Public Accountants and statements and pronouncements of the Financial  Accounting Standards Board (or agencies with similar functions of comparable stature and  authority within the United States accounting profession), which are applicable to the  circumstances as of the date of determination, in any case consistently applied.  1.46 “Healthcare Laws” shall mean (i) the Federal Food, Drug & Cosmetic Act (FDC  Act) (21 U.S.C. §§ 301 et seq.) and the regulations promulgated thereunder, including but not  limited to those related to current good manufacturing practices (cGMP) and any analogous law  of any foreign country (including for the avoidance of doubt EU cGMP); (ii) any and all federal,  state and local fraud and abuse laws, including, without limitation, the federal Anti-Kickback  Statute (42 U.S.C. § 1320a-7b), the Stark Law (42 U.S.C. § 1395nn and §1395(q)), the civil False  Claims Act (31 U.S.C. § 3729 et seq.), Sections 1320a-7 and 1320a-7a of Title 42 of the United  States Code, the criminal health care fraud statute (18 U.S.C. § 1347), the regulations promulgated  pursuant to such statutes, and any analogous law of any state or foreign country; (iii) any federal,  state, or local law regulating the interactions with healthcare professionals and reporting thereof  and any analogous law of any foreign country; (iv) the Controlled Substances Act and the  regulations promulgated thereunder and any analogous law of any foreign country; (v) the Health  Insurance Portability and Accountability Act of 1996 (Pub. L. No. 104-191) (HIPAA), the Health  Information Technology for Economic and Clinical Health Act of 2009 (HITECH Act), the  regulations promulgated under such laws, and any applicable state privacy and security laws and  any analogous law of any foreign country; (vi) Medicare (Title XVIII of the Social Security Act)  and the regulations promulgated thereunder; (vii) Medicaid (Title XIX of the Social Security Act)  and the regulations promulgated thereunder; (viii) TRICARE (f/k/a CHAMPUS); (ix) the  Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. No. 108-173)  and the regulations promulgated thereunder; (x) quality, safety and accreditation standards and  requirements of all applicable state, federal, and foreign laws or regulatory bodies; (xi)  requirements of law relating to the manufacturing, labeling or relabeling, packaging or  repackaging, marketing, sale, or distribution of drugs or medical devices, including laws governing  license requirements for any of the foregoing activities; (xii) laws related to the hiring of  employees or acquisition of services or supplies from those who have been excluded from  government health care programs, quality, safety, privacy, security, licensure or accreditation; and  (xiii) laws and regulations promulgated by any regulatory authority equivalent to the FDA in a  foreign country including but not limited to the European Medicines Agency (“EMA”) and the  Medicines and Healthcare Products Regulatory Agency (“MHRA”) including the applicable  regulations and guidances of the FDA and the EMA (and national implementations thereof) that  constitute good laboratory practices, good manufacturing practices and good clinical practices).     1.47 “Housemark” means the name and logo of Aquestive or any of its Affiliates as  identified in Schedule 1.47A attached hereto, and the name and logo of Pharmanovia or any of its  Affiliates as identified on Schedule 1.47B attached hereto, as each such schedule may be updated  from time to time, and made a part hereof by amendment of such Schedule.  1.48 “ICC” has the meaning set forth in Section 14.12.3.  1.49 “ICC Rules” has the meaning set forth in Section 14.12.3.  

 

   7    1.50 “Improvements” means any invention, discovery, development or modification  with respect to the Product, the technology covered by the Aquestive Patents and/or the Aquestive  Know-How and/or relating to the exploitation thereof, whether or not patented or patentable,  including any enhancement in the efficiency, operation, Supply, ingredients, preparation,  presentation, formulation, means of delivery (including the development of any delivery system  or enhancement thereto) or dosage of the Product, the technology covered by the Aquestive IP,  any discovery or development of any new or expanded indications for the Product, the technology  covered by the Aquestive IP or any discovery or development that improves the stability, safety  or efficacy of the Product, the technology covered by the Aquestive IP.   1.51 “Indemnitee” has the meaning set forth in Section 11.3.1.  1.52 “Indemnitor” has the meaning set forth in Section 11.3.1.  1.53 “Intellectual Property” means, collectively, all: (a) patents and patent applications,  including, without limitation, any divisionals or any substitute applications, any patent issued with  respect to any such patent applications, any patents which remain valid subsequent to any post  grant proceedings or other challenges which result in the patent being enforceable, any amendment  or extension including any supplementary protection certificate of any such patent, and any  confirmation patent or registration patent or patent of addition based on any such patent, and all  foreign counterparts of any of the foregoing, or as applicable portions thereof or individual claims  therein; (b) copyrightable works, copyrights in works of authorship of any type, including  computer software and industrial designs, registrations and applications for registration thereof;  (c) trade secrets, know-how, processes, specifications, product designs, descriptions of the  manufacturing process and equipment and all other manufacturing information, engineering and  other manuals and drawings, standard operating procedures, flow diagrams, chemical,  pharmacological, toxicological, pharmaceutical, physical and analytical, safety, quality assurance,  quality control and clinical data, technical information, data, research records, supplier lists and  similar data and information, and all rights in any jurisdiction, according to the Applicable Laws  of such jurisdiction, to limit the use or disclosure thereof; (d) any and all rights to extensions to  any of the foregoing; (e) any and all rights of application regarding any of the foregoing; and  (f) rights to sue and recover damages or obtain injunctive relief for infringement, or  misappropriation of any of the foregoing.   1.54 “Losses” means any and all damages, awards, deficiencies, settlement amounts,  defaults, assessments, fines, dues, penalties, costs, fees, liabilities, obligations, taxes, liens, losses,  lost profits and expenses (including, without limitation, court costs, interest and reasonable fees of  attorneys, accountants and other experts), together with all documented out-of-pocket costs and  expenses incurred in complying with any judgments, orders, decrees, stipulations, investigations  and injunctions that arise from or relate to a Third Party Claim.  1.55 “Marketing Authorization” means authorization from the relevant Regulatory  Authority within the Territory to market, sell or otherwise Commercialize the Product in one or  more countries in the Field in the Territory.  1.56 “Marketing Expenses” means all costs and expenses incurred in connection with  the Commercialization of the Product in the Field in the Territory, including, without limitation:  

 

   8    (a) marketing, advertising, sampling, and promotional activities; (b) marketing studies;  (c) primary and secondary market research; (d) promotional materials; and (e) samples.    1.57 “Milestone Payments” has the meaning set forth in Section 7.1.  1.58 “Minimum Volume Commitment” has the meaning set forth in Section 7.4.  1.59 “[****]” has the meaning set forth in Section 2.9.  1.60 “NDA” means a new drug application submitted pursuant to the requirements  of the FDA under 21 U.S.C. § 355(b)(1) of the Act, in each case, with all additions, deletion  or supplements thereto.   1.61 “Net Sales” means, for any period of determination, the aggregate amount  invoiced for the Product by Pharmanovia (or any Affiliate, or agent of Pharmanovia) to a Third  Party during such period, less amounts for the following accruals applied on a per Unit basis:  (a) credits, refunds, allowances, charge-backs, rebates, returns, distribution and  other fees, reimbursements, bona fide price reductions, and similar payments provided  to wholesalers, chains, mass merchandisers, group purchasing organizations and other  distributors, buying groups, health care insurance carriers, pharmacy benefit  management companies, health maintenance organizations, other institutions or health  care organizations, any governmental, quasi-governmental or regulatory body, agency  or authority in respect of any governmental programs;  (b) credits or discounts related to sales promotions, trade show discounts and  stocking allowances and trade volume and cash discounts and rebates in amounts that  are usual and customary, including retroactive corrections, including shelf stock or  other pricing related adjustments (and corrections for billing errors or shipping errors);  and  (c) any tax, tariff, duty or government charge (including any sales, value added,  excise or similar tax or relevant surtax or government charge) levied on the sale,  importation, exportation, transportation or delivery of the Product and borne by the  seller thereof that is not reimbursed by any Third Party.  (d) costs incurred for such Product that is destroyed due to recall of goods; and  (e) any other similar and customary deductions that are consistent with  International Financial Reporting Standards.  The amounts recognized as Net Sales, including any deductions accrued pursuant to  clauses (a) through (d) of this Section 1.61 shall be consistent with and determined from books  and records maintained in accordance with International Financial Reporting Standards and shall  only be deducted once and only to the extent not otherwise deducted from the aggregate amount  invoiced.  

 

   9    A “sale” shall not include transfers or dispositions of Product for pre-clinical or clinical  purposes or as samples, in each case, without charge.  For the purposes of this definition the transfer of Product by Pharmanovia to any Affiliate  shall not be considered a sale unless such Affiliate is the last entity in the distribution chain that  directly sells and dispenses Product to patients, health care providers, and/or health institutions.   1.62 “Party” or “Parties” has the meaning set forth in the Preamble to this Agreement.  1.63 “Payment Period” means each Calendar Quarter period during the Term;  commencing in the year in which the First Commercial Sale of the Product occurs.  1.64 “Person” means an individual, sole proprietorship, partnership, limited partnership,  limited liability partnership, corporation, limited liability company, business trust, joint stock  company, trust, unincorporated association, joint venture or other legal entity or organization,  including a government or political subdivision, department, or agency of a government.  1.65 “Pharmanovia” has the meaning set forth in the Preamble to this Agreement.  1.66 “Pharmanovia Indemnitees” has the meaning set forth in Section 11.2.  1.67 “Pharmanovia Marks” means the Pharmanovia Housemark and such trade dress  and trademarks as are notified to Aquestive by Pharmanovia in writing from time to time.   1.68 “Primary Packaging” means the foil pouch that individually wraps and touches each  Unit.  1.69 “Primary Packaging Design” means artwork associated with the Primary Packaging  for the Product in the Field in the Territory.  1.70 “Product” means the Product set forth in the Product Schedule.    1.71 “Product Label” means labels and other written material pertaining to the core label  for the Product including, but not limited to, safety information, prescribing information,  medication guides, and instructions for use.  1.72 “Product Requirements” has the meaning set forth in Section 5.1.  1.73  “Product Schedule” means with respect to the Product, the Product specific details  concerning the Product including the Product description, the API, specific Aquestive Product  Patents (if any) covering the Product, specific Aquestive Product Mark(s) (if any) covering the  Product, Dosage Strength, Milestone Fees, Minimum Volume Commitment, Royalty Fees,  Territory, Product Transfer Price and any other Product or Territory-specific information required  for the performance of the obligations contemplated under this Agreement.    1.74 “Product Transfer Price” has the meaning set forth in Section 5.2.  

 

   10    1.75 “Profit” means, for any period of determination, Net Sales, less Product Transfer  Price on a per Unit basis, less the following accruals applied on a per Unit basis: quality release,  distribution and logistics fees, freight and insurance.  1.76 “Profit Share” has the meaning set forth in Section 5.2.  1.77  “Purchase Orders” has the meaning set forth in Section 5.1.  1.78 “Quarterly Payment Reports” has the meaning set forth in Section 7.5.  1.79 “Quality Agreement” has the meaning set forth in Section 5.11.  1.80 “Raw Materials” means raw materials, chemicals, work-in-process, and other  materials used to Supply Product under this Agreement.  1.81 “Raw Materials Safety Stock” has the meaning set forth in Section 5.9.  1.82 “Recall” has the meaning set forth in Section 4.8.1.  1.83 “Recall Expenses” has the meaning set forth in Section 4.8.1.  1.84 “Recall Objection Notice” has the meaning set forth in Section 4.8.3.  1.85 “Receiving Party” has the meaning set forth in Section 10.1.  1.86 “Regulatory Approval” means authorization from the relevant Regulatory  Authorities within the Territory for approval to Commercialize the Product in the Field in the  Territory, including the Marketing Authorization for the Product.  1.87 “Regulatory Approval Application” means any filings submitted to a Regulatory  Authority in the Territory, in each case, with all additions, deletion or supplements thereto, for  Regulatory Approval of the Product in the Field in the Territory.  1.88 “Regulatory Authority” means any national, international, federal, regional, state,  provincial or local government, or political subdivision thereof, or any multinational  organization or any authority, regulatory agency, department, bureau, commission, council or  other regulatory or taxing authority entitled to exercise any administrative, executive, judicial,  legislative, police, regulatory or taxing authority or power, including with respect to the granting  of approvals (including pricing and reimbursement approvals), licenses, registrations, or  authorizations for the marketing, sale, manufacturing, testing, labeling, storage, handling,  packaging, shipping or supply of the Product or granting Regulatory Approval for the Product,  including the FDA, any other regulatory authority(ies) equivalent to the FDA including the EMA  and the MHRA, and any successor(s) thereto having substantially the same functions, or any court  or tribunal (or any department, bureau or division thereof, or any governmental arbitrator or arbitral  body).  1.89 “Regulatory Notification” shall have the meaning given to it in Section 4.6.2.  

 

   11    1.90 “Rescheduled Delivery Date” has the meaning set forth in Section 5.10.1.  1.91 “[****]” has the meaning set forth in Section 2.9.  1.92 “[****]” has the meaning set forth in Section 2.9.  1.93 “[****]” has the meaning set forth in Section 2.9.  1.94 “Royalty Fees” has the meaning set forth in Section 7.2.  1.95 “Safety Data Exchange Agreement” has the meaning set forth in Section 5.12.  1.96 “Secondary Packaging” means the packaging that contains the Primary Packaging  and which does not come in contact with the single dosage strips of the Product.   1.97 “Secondary Packaging Design” means artwork associated with the Secondary  Packaging for the Product in the Field in the Territory.  1.98 “Specifications” means the written specifications for the Product and Raw  Materials including, without limitation, the shelf life of the Product and Raw Materials for such  Product and the specifications as set forth in the applicable Regulatory Approval for the Product.   The Specifications, and any modifications or supplements thereto from time to time during the  Term, shall be mutually approved in a specific written agreement by the Parties and, upon such  mutual written agreement, shall be deemed to be incorporated by reference in this Agreement.  1.99 “Statement of Work” means a written document executed and delivered by the  Parties that defines, as applicable, the work activities, requirements, deliverables, timeline,  associated pricing and any other terms and conditions to govern given work project to be conducted  by Aquestive under this Agreement.  1.100 “Steering Committee” has the meaning set forth in Section 6.  1.101 “Supply” means all activities related to the manufacture, supply, processing,  storing, labeling, and packaging (as specified in this Agreement) quality control, storage release  by Aquestive for sale and delivery of the Product including quality control and release.  1.102 “Technology Transfer Plan” has the meaning set forth in Section 9.2.  1.103 “Technology Transfer Partner” has the meaning set forth in Section 9.2.  1.104 “Term” has the meaning set forth in Section 12.1.  1.105 “Territory” means the territory with respect to the Product as set forth in the Product  Schedule.    1.106 “Third Party” means any Person other than Aquestive and Pharmanovia and their  respective Affiliates.  1.107 “Third Party Claim” has the meaning set forth in Section 11.1.   

 

   12    1.108 “Unit” shall mean a single dosage strip of the Product, in an individual foil pouch,  for sample or sale.   2. CERTAIN RIGHTS AND OBLIGATIONS  2.1 Licenses Granted to Pharmanovia.  Subject to the terms and conditions of this  Agreement, Aquestive hereby grants to Pharmanovia, and Pharmanovia hereby accepts, during the  Term, as to the Product in the Field in the Territory, an exclusive (including as to Aquestive and  its Affiliates), royalty-bearing license under and to the Aquestive Product Patents and as to the  Product in the Field in the Territory, an exclusive, royalty-bearing, license under and to the  Aquestive IP to: (i) register the Product with the applicable Regulatory Authorities within the Field  in the Territory and (ii) Commercialize the Product in the Field in the Territory (including but not  limited to the right to sublicense to distributors the right to distribute and promote the Product in  the Territory in accordance with the terms of this Agreement.  2.2 Exclusivity.    2.2.1 Aquestive hereby covenants and agrees with Pharmanovia that during the  Term, other than as expressly provided in this Agreement, neither Aquestive or its Affiliates, nor  any Person acting on behalf of Aquestive or its Affiliates, shall grant any license or right with  respect to the Aquestive IP to any Affiliate or Third Party to, research, make, have made, Develop  or Commercialize the Product in the Field in the Territory.  Notwithstanding anything to the  contrary contained in this Agreement, Aquestive shall have the sole and exclusive right to be the  exclusive Developer (except for the limited Development rights of Pharmanovia set forth in  Section 4.3, manufacturer and supplier of all Product Commercialized under this Agreement.  2.2.2 Pharmanovia hereby covenants and agrees that neither Pharmanovia, nor  any of its Affiliates shall, directly or indirectly (whether through an Affiliate, Third Party, or by  any transfer or license rights to an Affiliate or Third Party), during the Term, make, use, Develop  (except for the limited Development rights of Pharmanovia set forth in Section 4.3), import/export,  seek Regulatory Approval for, manufacture, supply, distribute, offer to sell, sell, market, promote,  detail, or otherwise commercialize any products that contains the API as the active pharmaceutical  ingredient and that is delivered in a buccal, sublingual or nasal form, in the Field in the Territory  other than pursuant to this Agreement and other than to the extent such products are being  commercialized by Pharmanovia as of the Effective Date.  2.3 No Implied Licenses; Negative Covenant.  Except as set forth in this Agreement,  neither Party shall acquire any license or other Intellectual Property interest, by implication or  otherwise, under any Intellectual Property Controlled by the other Party or its Affiliates.  Neither  Party shall, nor shall it permit any of its Affiliates or subcontractors to, practice any Intellectual  Property licensed to it by the other Party outside the scope of the licenses granted to it under this  Agreement.  2.4 Use of Subcontractors.   2.4.1 Aquestive Use of Subcontractors.  Subject to the terms of the Agreement,  Pharmanovia acknowledges and agrees that Aquestive may exercise its rights or perform its  obligations, including Development, clinical and Supply activities, under this Agreement through  

 

   13    one or more subcontracts with Third Parties selected by Aquestive; provided that, Aquestive will  remain fully responsible to Pharmanovia for the performance of all obligations delegated to the  subcontractor including responsibility for the work allocated to, and payment to, such Third Parties  to the same extent it would if it had done such work itself.  Aquestive shall notify Pharmanovia in  writing of all activities sub-contracted to Third Parties and the names thereof.  2.4.2 Pharmanovia Use of Subcontractors.  Subject to the terms of the Agreement,  Aquestive acknowledges and agrees that Pharmanovia may exercise its rights or perform its  obligations including the right to Develop (as set forth in Section 4.3), Commercialize, to hold  Regulatory Approvals and distribute the Product in the Territory under this Agreement through  one or more subcontracts for distribution with Third Parties selected by Pharmanovia; provided  that, except as set forth in this Agreement, Pharmanovia will remain fully responsible for the  performance of all obligations delegated to the subcontractor including responsibility for the work  allocated to, and payment to, such Third Parties to the same extent it would if it had done such  work itself.   2.5 Trademarks.  2.5.1 Subject to the terms and conditions of this Agreement, Aquestive hereby  grants to Pharmanovia, and Pharmanovia hereby accepts as to the Product in the Field in the  Territory: (a) a non-exclusive, non-transferable, non-sublicensable license to use the Aquestive  Marks (excluding the Aquestive Product Mark(s)); and (b) an exclusive, non-transferable, non- sublicensable license to use the Aquestive Product Mark(s), in each case, solely in conjunction  with the Commercialization of the Product in the Field in the Territory and solely for such uses as  are specifically approved in writing by Aquestive (which uses Aquestive hereby confirms includes  use of the Aquestive Marks to identify Aquestive as the manufacturer of the Product if so required  by Applicable Laws).  For the avoidance of doubt there is no obligation on Pharmanovia to apply  the Aquestive Marks to the Product packaging, except as required by Applicable Law.  2.5.2 Aquestive hereby confirms that Pharmanovia may apply the Pharmanovia  Marks to the Product. Subject to the terms and conditions of this Agreement, Pharmanovia hereby  grants to Aquestive, and Aquestive hereby accepts, a non-exclusive, non-transferable, non- sublicensable license to use the Pharmanovia Marks solely in conjunction with the labeling and  specified packaging of Product for Supply in the Field in the Territory and solely as such are  approved in writing by Pharmanovia.  2.5.3 Without prejudice to Section 2.5.2, Aquestive shall:   2.5.3.1 only use the Pharmanovia Marks in accordance with all written  instructions (including any brand guidelines) which Pharmanovia may provide to Aquestive from  time to time;    2.5.3.2  not apply to register or otherwise attempt to register  (whether in its own name, or in the name of any third party), any Pharmanovia Mark or any  confusingly similar trade mark as a trade mark with any governmental authority, in any  jurisdiction, at any time.  

 

   14    2.5.4 All use of the Pharmanovia Marks by Aquestive and its Affiliates, and all  goodwill generated in connection therewith, shall inure solely for and to the benefit of  Pharmanovia.  2.6 Packaging and Labeling.    2.6.1 Packaging and Labeling.  Aquestive shall label and package Product in  accordance with the Primary Packaging Design Specifications and Secondary Packaging  specifications that are provided by Pharmanovia from time to time.  Pharmanovia shall be  responsible, at its cost and expense, for developing and providing Aquestive with a copy of all  graphics and artwork to be used with the Product, including the Primary Packaging Design, which  shall be delivered to Aquestive as an electronic file in Adobe Illustrator format.  Pharmanovia shall  be responsible, at its cost and expense, for any required submissions to the applicable Regulatory  Authorities in the Territory regarding the labeling and packaging configurations for the Product,  including any permitted changes in labeling or packaging configurations, and shall be responsible,  at its cost and expense, for ensuring that labeling, packaging configurations, and the Primary  Packaging Design Specifications complies with Applicable Law.  Pharmanovia shall be  responsible for ensuring that all Primary Packaging and Secondary Packaging complies with  Applicable Law.  The packaging for the Product, including the Primary Packaging and Secondary  Packaging, shall, if required by Applicable Law indicate that the Product is manufactured by  Aquestive.    2.6.2 Changes.  2.6.2.1 Changes to Packaging of Product. Pharmanovia shall have the  right, upon prior written notice to Aquestive, to change the Primary Packaging and Secondary  Packaging of the Product consistent with Applicable Law and the terms and conditions of this  Agreement.  Upon delivery of such written notice, the Parties will mutually agree in good faith  upon a written Statement of Work that shall include a reasonable timeframe for implementation of  such changes, including without limitation, giving effect to the use of the remaining work-in- process and any Raw Materials and packaging materials in-process or held in inventory by  Aquestive prior to effecting such change and a reasonable estimate of the additional costs and  expenses to be reimbursed to Aquestive by Pharmanovia as a result of the implementation of such  changes; provided that any such costs and expenses arising from a change of Manufacturing Site  by Aquestive shall be borne by Aquestive. Subject to the foregoing, such changes shall be at  Pharmanovia’s sole cost and expense (including documented cost of any inventory, work-in- process, Raw Materials, documentation updates and packaging materials of Aquestive which  become obsolete or unusable as a result of such request) provided that Aquestive shall use  Commercially Reasonable Efforts to reallocate such inventory, work in process, Raw Materials  and packaging materials.  Aquestive shall not be required to make any such change if: (a) it  requires any material capital investment by Aquestive; or (b) it results in any cost increases  (including manpower allocations or resources) to Aquestive that is not reimbursed by  Pharmanovia. For the avoidance of doubt the initial implementation of a new SKU of the Product  in the Territory shall not constitute a change pursuant to this Section 2.6.2.1.  2.6.2.2 Changes to Product Specifications. Either Party shall have the  right to request that a change be made to the Specifications for the Product upon prior written  

 

   15    notice to, and (except for changes required by Applicable Law) subject to the approval of, the other  Party and, if approved, the Parties shall agree on a reasonable timeframe for implementation of  such changes.  If either Party proposes making any material changes to the Specifications, such  Party shall give the other Party at least sixty (60) days prior written notice of the proposed change  unless such change is required because of Applicable Law, regulatory requirements or product  performance concerns, or the availability or quality of the Product components, in which case such  notice shall be provided as soon as reasonably possible.  The other Party shall promptly, but no  later than within thirty (30) days after receiving such written notice, inform the notifying Party in  writing of any objections to the proposed change, including any changed validation requirements  necessary to accept such proposed change.  In no event may any change in the Specifications of  the Product be implemented except in compliance with Applicable Law.  Neither Pharmanovia nor  Aquestive shall refuse without good and reasonable cause implementation of a proposed change  in the Specifications that is or would be otherwise allowed by Regulatory Authorities and that does  not affect the Product Transfer Price or the performance of the Product and Aquestive shall not  refuse the implementation of a proposed change requested by Pharmanovia subject to Aquestive  and Pharmanovia agreeing in good faith in writing to such change.  If a change is made under this  Section 2.6.2.2, the Party requesting the change shall be liable for the costs and expenses of  implementing such change (with the exception of if a change is required to comply with Applicable  Law or regulatory requirements in the Territory in which case Pharmanovia shall be liable for such  costs and expenses).   2.7 Aquestive Retained Rights.  Any rights of Aquestive not expressly granted to  Pharmanovia under the provisions of this Agreement shall be retained by Aquestive.  In  furtherance of the foregoing and not in limitation thereof, Aquestive, except as expressly set forth  in Section 2.1, shall retain the right: (a) to carry-out its obligations under this Agreement; and (b)  to exploit the Aquestive IP for purposes outside of the scope of the licenses granted in Section 2.1  for any and all purposes anywhere in the world, without any duty to account to Pharmanovia or  obtain Pharmanovia’s consent for such exploitation.   2.8 Confirmatory Licenses. Aquestive shall if requested to do so by Pharmanovia,  enter into one or more confirmatory license agreements in such form as may be agreed by the  Parties for purposes of recording the licenses granted under this Agreement with the applicable  patent offices in the Territory.  The Parties shall use best efforts to ensure that, subject to  Applicable Law, neither this Agreement, nor the contents thereof (excepts as required by  Applicable Law) shall form part of any public record.  2.9 [****]  3. COMMERCIALIZATION  3.1 Pharmanovia Responsibility and Control.  Except as otherwise expressly set  forth in this Agreement, Pharmanovia shall have sole responsibility for all Commercialization  activities for the Product in the Field in the Territory, including developing strategies and tactics  related to the advertising, promotion, pricing, marketing, and selling the Product in the Field in the  Territory. Pharmanovia shall comply, and shall use Commercially Reasonable Efforts to procure  that all of its Third Party agents and subcontractors, if any, to comply, with all Applicable Law in  Commercializing the Product in accordance with this Agreement.  

 

   16    3.2 Specific Commercialization Rights and Obligations of Pharmanovia.  Subject  to any conditions or limitations set forth in this Agreement, it shall be Pharmanovia’s sole right  and responsibility as to the Product in the Field in the Territory to: (a) develop advertising and  promotional materials related to the Product; (b) book sales for the Product; (c) handle all returns  of the Product; (d) handle all aspects of order processing, Product distribution, invoicing and  collection of receivables for the Product; (e) collect data regarding sales to end users of the Product;  (f) monitor inventory levels of the Product; (g) provide first line customer support; (h) conduct  pharmacovigilance; (i) warehouse the Product; and (j) determine the price for the Product and any  discounts and rebates that may be offered thereto, including decisions relating to customer  allowances and credits.   3.3 Product Launch and Market Coverage.  Pharmanovia shall use its Commercially  Reasonable Efforts to launch the Product in the applicable country in the Territory within sixty  (60) days of receiving the first delivery of saleable, Product following the later of pricing  reimbursement and receipt of the Regulatory Approval of such Product in such country in the  Territory. Aquestive acknowledges that it shall be consistent with Commercially Reasonable  Efforts for Pharmanovia to prioritize Commercialization of the Product in certain countries of the  Territory and not to proceed with Commercialization of a Product in all countries of the Territory  at the same planned timetable.  3.4 Commercialization and Marketing Expenses.  Pharmanovia shall be responsible  for and pay one hundred percent (100%) of all costs and expenses incurred in connection with the  Commercialization of a Product in the Territory including, without limitation, all Marketing  Expenses.  4. DEVELOPMENT AND REGULATORY MATTERS  4.1 Transfer of Regulatory Documentation and Other Information.    4.1.1 At no cost to Pharmanovia except as set out in the Product Schedule,  Aquestive will provide Pharmanovia with the applicable Dossier (including associated CMC Data  and clinical and other data referenced in the Dossier to the upon Pharmanovia’s payment of the  first milestone payment to Aquestive as set forth in the Product Schedule and, subject to the terms  of this Agreement, will use Commercially Reasonable Efforts to provide, on an ongoing basis  during the Term:  4.1.1.1 copies of all (i) applications (including all INDs), registrations,  licenses, authorizations and approvals including ANDA in relation to the Product; and (ii) material  correspondence and reports submitted to or received from Regulatory Authorities related to the  Product and all supporting documents with respect thereto and referenced therein, including all  adverse event files and complaint files;   4.1.1.2 necessary technical consultation and clinical study support by  Aquestive personnel;  

 

   17    4.1.1.3 to the extent in Aquestive’s possession or control, such further  documentation related to a Regulatory Approval for the Product requested by a Regulatory  Authority;  in each case in a timely manner to support Pharmanovia’s efforts to obtain Regulatory Approvals  for the Product in the Field in the Territory.  4.1.2 At no cost to Aquestive, Pharmanovia shall provide Aquestive with copies  of: (a) data and documents submitted to Regulatory Authorities in connection with obtaining  Regulatory Approvals and post-approval maintenance of the Regulatory Approvals for the Product  on a quarterly basis during the Term; (b) its annual report for safety and Adverse Events filed with  applicable Regulatory Authorities in English; and (c) in English other safety data received by  Pharmanovia with respect to the Product on an annual basis or more frequently as required to  ensure expedited safety reporting in accordance with Applicable Law or as reasonably requested  by Aquestive in writing from time to time during the Term and in accordance with the Safety Data  Exchange Agreement.    4.1.3 At no cost to Pharmanovia, Aquestive shall provide Pharmanovia a  summary of Adverse Events reported by Aquestive to the FDA on an annual basis or more  frequently as required to ensure expedited safety reporting in accordance with Applicable Law in  the relevant country in the Territory or as reasonably requested by Pharmanovia in writing from  time to time during the Term and in accordance with the Safety Data Exchange Agreement.  4.1.4 Aquestive will provide Pharmanovia with such documentation (including  clinical trial data) in Aquestive’s possession or control, and technical assistance, as is necessary or  desirable for Pharmanovia to maintain the Regulatory Approvals in the Territory.   4.1.5 The documentation and support and consultation to be provided pursuant to  Section 4.1.2 and Section 4.1.4 by Aquestive to Pharmanovia shall be provided at no charge except  the extent that Aquestive is not in possession or control of the relevant documentation and/or  further work is required to generate the documentation and/or provide the support; in these  circumstances Aquestive will provide Pharmanovia with cost estimates to provide the relevant  documentation and/or support and the Parties mutually agree in writing to execute a Statement of  Work for these activities prior to the commencement of such work.  4.2 Development Rights and Responsibilities of Aquestive.  Aquestive shall provide  Pharmanovia, at no cost, with regulatory materials and other regulatory data and information in its  possession or control related to the Product (in English), to the extent necessary to support the  Development activities to be conducted by Pharmanovia under this Agreement with respect to the  Product in the Field in the Territory to the extent required by a Regulatory Authority in connection  with the Regulatory Approvals including to achieve Marketing Authorization for the Product in  the Field in the Territory or maintenance thereof. Aquestive shall use Commercially Reasonable  Efforts to cause the relevant Third Parties to provide Pharmanovia with regulatory materials and  other regulatory data and information related to each Product in English to the extent required by  a Regulatory Authority in connection with a Regulatory Approval including the Marketing  Authorization for the Product in the Field in the Territory; in connection with this Third Party  support Aquestive will provide Pharmanovia with cost estimates from these Third Parties to  

 

   18    provide the relevant support and the Parties mutually agree in writing to execute a Statement of  Work for these activities prior to the commencement of such work. At Pharmanovia’s written  request in connection with a Regulatory Approval or Regulatory Approval Application or  maintenance thereof for the Product in the Field in the Territory, Aquestive shall use Commercially  Reasonable Efforts to provide reasonable assistance to Pharmanovia with its preparation and  submission of such Regulatory Approval Application or maintenance for the Product in Field in  the Territory.  4.3 Development Rights and Responsibilities of Pharmanovia.  Subject to the  general oversight of the Steering Committee, Pharmanovia shall have sole responsibility for and  have sole right to carry out, the performance of, and unless otherwise expressly set forth in this  Agreement, shall be responsible for the sole cost of, the Development activities described in this  Section 4.3.    4.3.1 Approval and Post-Approval Activities.  Pharmanovia shall be solely  responsible for, and have sole right to perform, the Development activities required to obtain the  Regulatory Approvals and any post-approval maintenance of Regulatory Approvals for the  Product in the Field in the Territory including, without limitation, any Phase III or Phase IV  commitments, periodic safety reviews, annual reports, regulatory submissions, and the  development, stability testing, implementation, and maintenance of a pharmacovigilance program.   Pharmanovia shall provide Aquestive data and documents relating to such Development activities  and post-approval maintenance of the Regulatory Approvals: (i) as requested by Aquestive and (ii)  at least thirty (30) days prior to submitting any such data or document to any Regulatory Authority.   Aquestive shall Supply Pharmanovia quantities of Product required for clinical studies (“Clinical  Supply”), registration purposes, and validation purposes at the Product Transfer Price, in each  case, if necessary for Development of the Product in the Field in the Territory and to the extent  included in a Statement of Work.  Aquestive shall provide Clinical Supply with blank packaging,  and Pharmanovia shall be solely responsible for the labeling of Clinical Supply.  4.3.2 No Right to Develop Product Formulation.  Notwithstanding anything to  the contrary contained in this Agreement or otherwise, Pharmanovia acknowledges and agrees that  neither it nor any of its Affiliates, agents or subcontractors shall have any right to Develop the  Product formulation itself.  In the event that any Regulatory Authority requires any modification  to the Product formulation, Aquestive shall, at Pharmanovia’s sole cost and expense: (i) assess in  good faith the feasibility of such modifications to the Product formulation and (ii) if feasible,  engage in Development of the Product formulation and shall deliver the necessary information and  documents to Pharmanovia in accordance with the requirements of such Regulatory Authority.   4.4 Regulatory Activities.  Pharmanovia shall be responsible for preparing and filing  all Regulatory Approval Applications and other documents in the Field in the Territory, and each  Regulatory Approval relating to the Product in the Field in the Territory shall, during the Term, be  owned by and held in the name of Pharmanovia or its Affiliate or nominee.  Pharmanovia shall file  each Regulatory Approval Application in accordance with Applicable Law.  Pharmanovia shall be  solely responsible for the conduct of, have sole right to conduct, and shall use Commercially  Reasonable Efforts to, promptly conduct: all Development activities in connection with or as a  condition of seeking or obtaining and maintaining Regulatory Approval of each Product in the  Field in the Territory, including, without limitation, preparing and filing all regulatory applications  

 

   19    and documents in the Territory, meetings with Regulatory Authorities in the Territory, submissions  and maintenance of each Regulatory Approval Application and preparation and submission of all  supplements thereto, conducting periodic safety reviews, all submissions to the Regulatory  Authorities in the Territory, all post-marketing obligations required by the Regulatory Authorities,  and the development and implementation of a pharmacovigilance program specific to the Product  in the Field in the Territory, all in compliance with all Applicable Law.  Pharmanovia shall be  responsible and pay for one hundred percent (100%) of the costs and expenses incurred in  connection with the foregoing activities unless otherwise specifically provided for in this  Agreement.  Pharmanovia shall designate a regulatory liaison to report to the Steering Committee  on the status of regulatory activities, including material communications with all Regulatory  Authorities in the Territory, on an as-needed basis as determined by the Steering Committee.   Pharmanovia shall provide the Steering Committee with reasonable advance notice, but not less  than thirty (30) days’ notice, of Pharmanovia’s intent to file any Regulatory Approvals for the  Product.   4.5 Annual Stability Testing.  If any annual stability testing on the Product is required  by any Regulatory Authority in the Territory (which is outside the scope of any annual stability  testing that has already been completed by Aquestive, or if Aquestive does not already have the  data required by the Regulatory Authority to prevent the need for any further annual stability  testing) where the Product is commercially sold, Aquestive shall perform such stability testing  pursuant to a Statement of Work, and Pharmanovia shall be responsible for all costs and expenses  associated with the performance and maintenance of such stability testing.  For the avoidance of  doubt, at no cost to Pharmanovia, Aquestive shall share with Pharmanovia stability data in its  possession or control generated from any stability data testing on the Product required by any  Regulatory Authority outside the Territory.   4.6 Communications and Meetings with Regulatory Authorities.    4.6.1 Communications with Regulatory Authorities.  Pharmanovia shall have sole  control, and have authority and responsibility for, interfacing, corresponding, and meeting with all  Regulatory Authorities for Regulatory Approvals in the Territory.  At all times during the Term,  Pharmanovia shall be responsible, at its cost and expense, for pharmacovigilance reporting to the  applicable Regulatory Authorities in compliance with Applicable Law in the Territory, including,  but not limited to, reporting any and all Adverse Events to the applicable Regulatory Authorities.   4.6.2 Notification by the Parties of Regulatory Actions.  Each Party shall as soon  as reasonably possible after receipt of any notices of inspections, proposed regulatory actions,  investigations or material official written requests by any Regulatory Authority with respect to the  Supply or Commercialization of Product, as well as any corrective or other actions with Regulatory  Authorities initiated by a Party with respect thereto within or outside the Territory (“Regulatory  Notification”) so far as they relate to the Territory, provide written notice to the other Party in  reasonable detail with respect thereto and will provide the other Party with copies of all related  documentation.  

 

   20    4.7 Regulatory Notifications.   4.7.1 Notice.  Each Party or its respective authorized representative shall provide  the other Party with written notice, in a sufficiently timely basis to enable the other Party to comply  in all material respects with Applicable Law in the relevant country in the Territory and in any  event within three (3) Business Days of receipt of a Regulatory Notification that: (a) raises any  material concerns regarding the safety or efficacy of the Product; (b) indicates or suggests a Third  Party Claim arising in connection with the Product; or (c) is reasonably likely to lead to a Recall,  market withdrawal or field correction of, field alert report or comparable report with respect to the  Product.  Examples of Regulatory Notifications shall include, but not be limited to correspondence  from a Regulatory Authority relating to:  4.7.1.1 inspections by a Regulatory Authority of manufacturing,  distribution or other related facilities concerning  safety or efficacy issues with the Product;  4.7.1.2 inquiries by a Regulatory Authority concerning clinical  investigation activities (including, without limitation, inquiries regarding investigators, clinical  monitoring organizations and other related Third Parties) with respect to the Product;  4.7.1.3 any receipt of a warning letter from a Regulatory Authority  relating to the Product;  4.7.1.4 any initiation of any Regulatory Authority investigation,  detention, seizure, or injunction concerning the Product.  4.8 Recalls or Other Corrective Action.    4.8.1 Notice of Action.  Aquestive shall maintain traceability records in  accordance with Applicable Law, necessary to permit a recall, field correction or other notification  to the field, of the Product.  Pharmanovia shall have the exclusive right to institute a recall, market  withdrawal, field correction or field report of the Product and shall be responsible for managing  the recall and communications with customers and Regulatory Authorities.  As soon as reasonably  possible, Pharmanovia shall notify Aquestive of any actions to be taken by Pharmanovia or its  Affiliates, subcontractors or agents with respect to any recall or market withdrawal or field  correction, field alert report or comparable report or any matter which is suspected or likely to be  the subject of a complaint which may require a recall, market correction or similar action relating  to the Product in the Territory (a “Recall”) if possible this shall be prior to any such action being  taken so as to permit Aquestive a reasonable opportunity to consult with Pharmanovia with respect  thereto.  At Pharmanovia’s written request and cost, Aquestive shall use Commercially Reasonable  Efforts to provide reasonable assistance to Pharmanovia in conducting such Recall; the costs of  such assistance shall be borne in the same manner as other Recall Expenses.  The cost of any  Recall, including, the costs of notifying customers and the costs associated with the shipment of  such Product from customers and all reasonable credits extended to customers as a result thereof,  and the costs of replacing the Product (collectively, “Recall Expenses”), occasioned or required as  part of a general Recall of Product, shall be borne as provided in the following sentences:   4.8.1.1 Any Recall Expenses, to the extent solely caused by Aquestive its  Affiliates or subcontractors, or the failure of Aquestive to Supply the Product conforming to the  

 

   21    Specifications or applicable Regulatory Approvals, as determined by a final non-appealable order  of a Regulatory Authority or as mutually agreed in writing by the Parties, shall be borne by  Aquestive.   4.8.2 Any Recall Expenses to the extent caused by Pharmanovia or any Third  Party (other than Aquestive’s subcontractors) or the failure of Pharmanovia or its subcontractors  to Commercialize the Product conforming to the applicable Regulatory Approvals or other breach  of this Agreement by Pharmanovia, as determined by a final non-appealable order of a Regulatory  Authority or as mutually agreed in writing by the Parties, shall be borne by Pharmanovia.  4.8.3 Recall Objection Notice. In the event that there is no determination by a  Regulatory Authority or the Parties dispute which Party is the cause of a Recall, either Party may  send a written notice of objection regarding such Recall to the other Party (the “Recall Objection  Notice”).  The Parties agree to attempt to resolve such dispute within ten (10) days after receipt of  the Recall Objection Notice.  If Pharmanovia and Aquestive fail within ten (10) days after receipt  of the Recall Objection Notice to agree as to the Party that is the cause of such Recall, the issue,  and as applicable, any representative samples of the Product, shall be submitted to a mutually and  reasonably acceptable independent Third Party laboratory of national reputation, or consultant (if  not a laboratory analysis issue), as evidenced by written agreement of the Parties, for analysis or  review.  The results of such evaluation by such independent Third Party laboratory or consultant,  as the case may be, must be in writing and shall be binding upon the Parties.  If Aquestive, its  Affiliates or subcontractors is determined to have been the sole cause of such Recall, Aquestive  shall pay one hundred percent (100%) of the Recall Expenses including the cost of any such  evaluation, or, if it is determined that both Parties are partially at fault, then the Parties shall share  in the Recall Expenses in proportion to each Party’s relative fault.  Otherwise, Pharmanovia shall  pay the Recall Expenses relating to such Recall including the cost of any such evaluation and  destruction of any recalled Product.  If the fees of the independent laboratory or consultant are due  in advance, Pharmanovia and Aquestive shall each pay fifty percent (50%) of such fees; provided,  however, that promptly after the independent Third Party laboratory or consultant completes its  evaluation, the Party that is responsible for the Recall Expenses shall reimburse the other Party for  its fifty percent (50%) share of such fees; and if the Parties are found to be proportionately at fault,  each Party shall reimburse the other Party for such Party’s proportion of such fees.    4.8.4 Recall Information Received.  Each Party shall, as soon as reasonably  practicable, notify the other Party in writing of any Recall, market withdrawal or field correction  of, field alert report or comparable report as detailed in the Quality Agreement with respect to the  Product and supply all information received by it relating thereto in sufficient detail to allow the  Parties to comply with Applicable Law in the relevant country in the Territory.  5. SUPPLY   5.1 Commercial Supply Obligations.    5.1.1 Subject to the terms and conditions of this Agreement, during the Term,  Aquestive shall exclusively Supply Pharmanovia and Pharmanovia’s Affiliates and subcontractors  with, and Pharmanovia shall, subject to Section 5.2, exclusively purchase from Aquestive, all of  Pharmanovia’s requirements of Pharmanovia and Pharmanovia’s Affiliates and subcontractors of  

 

   22    the Product for commercial sale in the Field in the Territory during the Term, pursuant to binding  purchase orders delivered by Pharmanovia to Aquestive in accordance with Section 5.3 (“Purchase  Orders”).  Aquestive shall Supply Product to Pharmanovia in Units in accordance with the terms  and conditions of this Agreement, Applicable Law, the Purchase Order the Specifications and the  shelf-life requirements set out in the Product Schedule (“Product Requirements”).  5.1.2 Without prejudice to any other rights that Pharmanovia may have under this  Agreement, in equity or at law the restriction in Section 5.1.1 shall not apply if and to the extent a  Bankruptcy Supply Failure occurs. In such an event and without prejudice to any other any other  rights that Pharmanovia may have under this Agreement, in equity or at law:  5.1.2.1 Pharmanovia may immediately terminate the exclusivity of the  appointment of Aquestive pursuant to Section 5.1 by written notice to Aquestive and with effect  from such notification the exclusive purchase obligation pursuant to Section 5.1 shall cease to  apply for the remainder of the Term; and  5.1.2.2 Aquestive shall grant to Pharmanovia, a perpetual irrevocable,  non-exclusive sub-licensable license to the Aquestive Know-How and a license to Supply and/or  have Supplied the Product; and  5.1.2.3 The provisions of Section 9 relating to technology transfer shall  apply.  5.1.2.4 For the avoidance of doubt, Aquestive shall not be relieved of its  Supply obligations by virtue of such loss of exclusivity. Following such loss of exclusivity, nothing  in this Agreement shall prevent Pharmanovia or any Affiliate of Pharmanovia from purchasing  and/or having manufactured the Product from or by any other manufacturer or supplier, or from  manufacturing the Product itself.  5.2 Product Transfer Price.    5.2.1 Aquestive shall Supply quantities of each Unit of the Product to  Pharmanovia at each of the initial transfer prices set forth in the Product Schedule (each a “Product  Transfer Price”). The Parties agree that upon the earlier of (a) the end of Commercialization Year  3 (as defined in the Product Schedule) and (b) each time an adjustment to the Minimum Volume  Commitment, if any, is made pursuant to Section 7.4, the Parties shall discuss and agree upon in  good faith a revision to the Product Transfer Price.  Thereafter, Aquestive may, after notification  to Pharmanovia, increase the Product Transfer Price providing Pharmanovia not less than [****]  days written notice of any such proposed increase no more than [****] to the extent necessary to  cover actual increases in COGS, as evidenced by relevant supporting documents provided,  however, any such price increase shall apply prospectively only and shall not apply to Product  subject to binding Purchase Orders. The Parties acknowledge that cost reductions and Product  Transfer Price may be possible by improvements in manufacturing processes and increased  purchasing resulting from an increase in purchasing volume by Pharmanovia, among other  reasons.  In the event that Aquestive’s COGS are reduced the Parties shall have a good faith  discussion about a proportion reduction in the Product Transfer Price. Thereafter, Aquestive shall,  after notification to Pharmanovia, reduce the Product Transfer Price providing Pharmanovia  

 

   23    written notice to the COGS have been reduced. In connection with the foregoing, the Parties agree  to discuss in good faith potential actions to be taken to develop cost reductions, but the foregoing  does not constitute a guarantee of any cost reductions.  5.2.2 Notwithstanding the foregoing, if, at any time after the end of the [****] year  of this Agreement, Pharmanovia can establish by competent evidence that its Profit/Net Sales in  respect of the Product on a [****] month basis has fallen below [****]% for all countries in the  Territory, then at Pharmanovia’s request, the Parties agree that for future Purchase Orders:  5.2.2.1 the Product Transfer Price shall be equal to COGS plus [****]%;  and   5.2.2.2 no further Royalty payments shall be made by Pharmanovia and  Pharmanovia shall instead pay to Aquestive a Profit Share as further set out in Section 7.3.  5.3 Forecasts, Order and Delivery of Product.    5.3.1 In order to assist Aquestive in planning production, Pharmanovia shall  deliver to Aquestive in advance of each Calendar Quarter a supply forecast that includes the  quantities of each Product and Primary Packaging (including samples) required by Pharmanovia  by month for the next twelve (12) months.  The first such forecast for the Product shall be delivered  within a mutually agreed timeframe in writing in advance of the First Commercial Sale of such  Product in the relevant country in the Territory, and thereafter on the first Business Day of each  February, May, August, and November of each calendar year during the Term for the immediately  succeeding Calendar Quarter.  Aquestive shall, no later than [****] Business Days after receipt of  each such forecast, notify Pharmanovia in writing of any objections or prospective problems in  meeting Pharmavovia’s forecasted requirements; provided however, that such objections or  prospective problems can be raised only if and to the extent the forecasted requirements with  regard to the applicable month exceeds [****]% of forecasted requirements with regard to the  same month set forth in the immediately preceding supply forecast.   5.3.2 Pharmanovia shall furnish to Aquestive binding Purchase Orders on a  monthly basis corresponding to the first three (3) months of the most recent supply forecast.  Each  such Purchase Order shall designate the quantity of the Product ordered and the requested date of  delivery of such Product to Pharmanovia. Aquestive shall confirm receipt and acceptance of each  conforming Purchase Order in writing within five (5) Business Days after its receipt of each  Purchase Order.  Pharmanovia shall furnish Purchase Orders by the fifth (5th) Business Day of  each month and a minimum of ninety (90) days prior to the requested delivery date.  Each Purchase  Order shall be in whole batch increments of Units and corresponding Primary Packaging based on  the batch sizes and minimum orders set forth in the Product Schedule or as may otherwise be  agreed in writing by the Parties.  The Parties agree that no provision of any Purchase Order, invoice  or of any confirmation or acknowledgement or any other documentation or forms submitted by  either Party to the other Party shall be controlling to the extent it sets forth any terms or conditions  that are additional to, or in conflict or inconsistent with, the terms or conditions of this Agreement.  5.3.3 In the event that any Purchase Order is more than [****]% of the amounts  set forth in the most recent supply forecast, Aquestive shall use Commercially Reasonable Efforts  

 

   24    to Supply such excess amounts but shall not be liable for its inability to do so. If there is a shortage  of any Product and/or Raw Materials, components or other materials, or capacity at the  Manufacturing Facility, Aquestive shall use Commercially Reasonable Efforts to equitably  apportion such Products or materials or capacity between the affected Products for supply and sale  to Pharmanovia under this Agreement and those corresponding products (or other products  requiring the same Raw Materials) manufactured by or on behalf of Aquestive and/or its Affiliates  (whether for themselves or Third Parties) for sale in or outside the Territory. Aquestive shall  inform Pharmanovia without delay of any actual or suspected capacity issues at the Manufacturing  Facility and/or any supply difficulties in relation to the Products.  5.3.4 Aquestive and Pharmanovia will consider each individual Purchase Order  filled as long as no less than [****]% and no more than [****]% of the quantities are delivered  against the individual Purchase Order.  Pharmanovia agrees to accept delivery of up to [****]%  of the requested Purchase Order.   5.3.5 Aquestive shall deliver Products set forth in each Purchase Order Ex Works  (Incoterms 2020 edition, published by the International Chamber of Commerce and any successor  thereto) at the Manufacturing Facility to Pharmanovia’s designated carrier as specified by  Pharmanovia in the applicable Purchase Order or otherwise notified in writing to Aquestive by  Pharmanovia at least thirty (30) days prior to the applicable delivery date set forth in such Purchase  Order.  Title to the Products shall pass to Pharmanovia on delivery free of any security, charge,  interest, lien or other encumbrance.  5.3.6 Each batch of Product Delivered to Pharmanovia (or its nominee) under this  Agreement will have a remaining shelf life at the time of delivery of no less than the minimum  shelf life for such Product set out in the Product Schedule.  5.3.7  Aquestive shall not change the Manufacturing Facility for the Supply of  the Product or the process, plant or equipment used in the manufacture (including packaging) of  the Product, without twelve (12) months’ prior written notice to Pharmanovia. Aquestive shall be  responsible for all costs or expenses incurred by Pharmanovia and its Affiliates incurred as a result  of any request by Aquestive to change the Manufacturing Facility.  5.4 Invoice.  Aquestive shall invoice Pharmanovia at the Product Transfer Price for all  quantities of the Product delivered in accordance herewith.  Each invoice shall be delivered  concurrently with each shipment of such Product and be accompanied by a Certificate of Analysis,  Certificate of Compliance, customs invoice, packing list and at the cost and expense of  Pharmanovia, any other documentation required by the applicable Regulatory Authorities or by  Applicable Law to Commercialize such Product in the Field in the Territory.  Payments shall be  made in accordance with Section 7.7, and shall be due within [****] days after receipt of the  invoice with respect thereto, subject to the procedure for rejected shipments set forth in  Section 5.6.  In the event that any invoice is disputed in writing by Pharmanovia, the Parties shall  meet within ten (10) Business Days after Aquestive’s receipt of such written dispute to discuss and  submit any relevant document necessary for clarifications.  5.5 Suspension of Services.  Subject to any invoice being disputed by either Party in  good faith, if the payment of any sum exceeding $[****] due under this Agreement to Aquestive  

 

   25    is not paid or is delayed, in addition to any other rights and remedies available to Aquestive under  this Agreement (including, without limitation, interest due under Section 7.77), at law or in equity,  Aquestive shall have the right, with forty-five (45) days prior written notice during which time  Pharmanovia may cure any default, to suspend or delay the performance of the services by  Aquestive under this Agreement, provided that Aquestive shall have given Pharmanovia at least  two written notices of intention to suspend or delay performance pursuant to this Section 5.5 during  such forty-five (45) day notice period.  In the event of suspension or discontinuation of the services  due to delayed or non-payment in circumstances where Aquestive is entitled to do so pursuant to  the terms hereof, Aquestive shall not be liable for any Losses (whether direct or indirect) incurred  by Pharmanovia as a result of the suspension or discontinuation of services.   5.6 Product Not in Compliance with Purchase Order.  If Pharmanovia does not submit  written notice that the Product does not meet the Product Requirements, including the reasons  therefore, within ten (10) Business Days of:  5.6.1.1 delivery of the Product if such failure to meet the Product  Requirements is reasonably discoverable by visual inspection at the delivery date; and  5.6.1.2 discovery of the failure, if such failure to meet the Product  Requirements is not reasonably discoverable by visual inspection at the delivery date and which  renders such Product unsuitable for distribution to subjects or patients,  such Product shall be deemed accepted by Pharmanovia provided, however, that such acceptance  or deemed acceptance shall not adversely affect any claim for indemnification provided in  Section 11.  If Pharmanovia and Aquestive do not agree on the rejection of the Product, then either  Party may refer the matter for final analysis to an independent Third Party laboratory of national  reputation pursuant to Section 5.7 for the purpose of determining the results thereof.  5.7 Independent Testing.  If Aquestive disagrees with Pharmanovia’s rejection of any  shipment of the Product, then such Product shall be submitted to an independent Third Party  laboratory (or other professional Third Party independent assessor) of national reputation,  mutually and reasonably acceptable to both Parties in writing, for analytical testing to determine  the extent of such Product’s compliance or non-compliance with the Product Requirements.  Any  determination by such Third Party shall be in writing and shall be final and binding upon the  Parties.  The fees and expenses of such laboratory testing and all other related expenditure incurred  as a result of the dispute shall be borne entirely by the Party against whom such Third Party’s  findings are made.  5.8 Return of Non-Conforming Product.  Notwithstanding any other provisions of this  Agreement to the contrary, Pharmanovia agrees to return to Aquestive (or at Aquestive’s written  direction, to its contractors) or dispose of such Product as Aquestive may direct in writing to  Pharmanovia any Product, in any such case at Aquestive’s sole cost, that: (a) does not conform  with the Product Requirements at the time of Ex Works delivery to Pharmanovia; (b) to the extent  is not in compliance with the Purchase Order as set forth in Section 5.6; or (c) if Pharmanovia and  Aquestive mutually agree in writing.  Aquestive shall be responsible for the costs associated with  the return and proper disposal of all such Product to the extent not in conformance with the Product  Requirements and Purchase Order at the time of shipment and Pharmanovia’s sole remedy for such  

 

   26    shipment of non-conforming Product is replacement thereof by Aquestive with Product  conforming to Product Requirements (at Aquestive’s sole cost including shipping costs incurred  by Pharmanovia).  Notwithstanding the foregoing, Aquestive shall not be responsible for any costs  associated with the return and proper disposal of any such Product that is in conformance with the  Specifications and Purchase Order at the time of shipment including but not limited to where such  non-conformance arose after the time of shipment due to any act or omission of Pharmanovia or a  Third Party.   5.9 Raw Materials Safety Stock. Within sixty (60) days after the First Commercial  Sale, Aquestive will establish and at all times during the term of this Agreement maintain a safety  stock of Raw Materials in quantities sufficient to satisfy Pharmanovia’s requirements for Products  for the succeeding ninety (90) days based on Pharmanovia’s most recent quarterly forecast  delivered pursuant to Section 5.3.1 (“Raw Materials Safety Stock”). Deliveries by Aquestive to  Pharmanovia of Product may use the Raw Materials Safety Stock. Aquestive shall keep  Pharmanovia reasonably informed of the level of Raw Materials safety stock. If the Raw Materials  Safety Stock drops below a ninety (90) day supply, Aquestive shall replenish the Raw Materials  Safety Stock as quickly as practicable.  5.10 Delivery Failure.  5.10.1 Where the quantity of conforming Product delivered is less than [****]%  of the amount required by the relevant binding Purchase Order, the Parties shall enter into good  faith discussions regarding the cure of such delivery shortfall, and, unless otherwise agreed in  writing by Pharmanovia, in the event of any such Product shortfall resulting in delivery of less  than [****]% of the amount of Product required by a binding Purchase Order or the Product is not  delivered on the delivery date set forth in such binding Purchase Order (“Delivery Failure”),  Aquestive shall cure such Product shortfall as soon as reasonably practicable after the original  delivery date in accordance with such delivery schedule as may be mutually agreed between the  Parties and in any event no later than with the next delivery of Product as set forth in the relevant  binding Purchase Order (each, a “Rescheduled Delivery Date”).  5.10.2 In the event a Delivery Failure continues after a Rescheduled Delivery Date,  provided that the reason for the Delivery Failure is not due in whole or in part to any delay, fault  or failure attributable to Pharmanovia or a dispute covered by Section 5.7, by written notice to  Aquestive, the Parties shall discuss a resolution in good faith  and Pharmanovia shall be entitled  to (i) require Aquestive to prioritize its manufacturing capacity (if the Delivery Failure is a result  of a deficiency in Aquestive’s manufacturing capacity) to ensure the Delivery Failure is cured no  later than sixty (60) days after receipt of such written notice by Aquestive; (ii) cancel such binding  Purchase Order (or the relevant portions thereof) without penalty to Pharmanovia; and (iii) recover  any expedited shipping fees actually incurred by Pharmanovia as a direct result of such Delivery  Failure, in each case only if Pharmanovia can establish that it will have insufficient inventory of  Product to satisfy forecasted customer orders for the succeeding sixty (60) days as a result of such  Delivery Failure.  5.10.3 In the event of Delivery Failure continues after a Rescheduled Delivery  Date on [****] or more occasions in any [****] month period Pharmanovia shall be entitled to a  

 

   27    [****]% percent discount per calendar month for each month a Purchase Order subject to such  Delivery Failure is delivered beyond the delivery date.  5.10.4 Notwithstanding anything in this Section 5.10 or elsewhere in this  Agreement to the contrary, any delay in delivery to the extent due to Force Majeure,  Pharmanovia’s requested change of a binding Purchase Order, or any negligence on the part of  Pharmanovia shall not be regarded as Delivery Failure.  5.11 Aquestive Quality Agreement.  In connection with the Supply activities of the  Product under this Agreement, within ninety (90) days of the Effective Date, Pharmanovia and  Aquestive will enter into a written quality assurance agreement, reasonably acceptable to both  Parties, which details the obligations of each Party with respect to the Supply of the Product by  Aquestive (the “Quality Agreement”).  The definitive terms and conditions for such detailed  quality assurance obligations shall be discussed in good faith and agreed upon between  Pharmanovia and Aquestive separately in the Quality Agreement, which shall thereupon be  incorporated by reference into and made a part of this Agreement.  In the event of conflict between  terms of the Quality Agreement and the terms of this Agreement, the terms of this Agreement will  govern.  5.12 Adverse Event and Safety Reporting.  Within thirty (30) days of the Effective Date,  the Parties will enter into a written Safety Data Exchange Agreement with respect to the Product  which shall thereupon be incorporated by reference into and made part of this Agreement (the  “Safety Data Exchange Agreement”).  In the event of conflict between terms of the Safety Data  Exchange Agreement and the terms of this Agreement, the terms of this Agreement will govern.  Notwithstanding anything to the contrary contained in this Agreement, Pharmanovia shall be  responsible for making all reports of Adverse Events to the applicable Regulatory Authority.  6. STEERING COMMITTEE.    No later than one (1) month following the Effective Date, the Parties will establish a committee  consisting of the appropriate business and/or technical leaders to provide a forum for  communication between the Parties regarding Development, Supply and Commercialization  activities under this Agreement (the “Steering Committee”).  Each Party shall assign an alliance  manager (who shall serve on the Steering Committee) to oversee the implementation of this  Agreement and to organize each Steering Committee meeting and provide updates for the Product  to the Steering Committee.  The Steering Committee shall discuss key activities deemed critical to  Regulatory Approvals and Commercialization of the Product.  The Steering Committee shall meet  at least two (2) times per Calendar Year, on a schedule and at a location to be agreed by the Parties.   Notwithstanding the foregoing, the Steering Committee shall be solely advisory and not have any  decision-making authority.  For the avoidance of doubt, Pharmanovia shall have the sole decision- making authority regarding the Commercialization for the Product in the Field in the Territory and  all other activities for which Pharmanovia has responsibility under this Agreement.  7. PAYMENTS AND REPORTS   7.1 Milestone Payments. Milestone payments shall be due from Pharmanovia to  Aquestive in respect of a Product as set forth in the Product Schedule (“Milestone Payments”).  

 

   28    Each Milestone Payment shall be payable only once on the first attainment of the corresponding  milestone event irrespective of (i) the number of times each milestone event is achieved; and (ii)  the number of Products that achieve the milestone event or countries of the Territory in which the  milestone event is achieved.   7.2 Royalties.  During the Term, subject to the provisions of Section 5.3 and Section  7.3, Pharmanovia shall pay to Aquestive a royalty payment in each Payment Period through the  termination or expiration of this Agreement as set forth the Product Schedule (“Royalty Fees”).  Royalty Fees shall be paid in US Dollars (as per Section 7.7) and shall be calculated by applying  a weighted average exchange rate based on monthly Net Sales.  This calculation shall be based on  [****].  7.3 Profit Share. If the conditions set out in Section 5.2.2 are met, Pharmanovia shall  pay to Aquestive a Profit share in each Payment Period through the termination or expiration of  this Agreement as set forth the Product Schedule (“Profit Share”).  7.4 Minimum Volume Commitment.  In the event in any year during which the  exclusivity of the Supply arrangement described at Section 5.1.1 is in operation, the quantity of  Product purchased by Pharmanovia from Aquestive under this Agreement is less than the  minimum amount set forth for such year in the Product Schedule (the “Minimum Volume  Commitment”), then unless such failure is attributable to the failure of Aquestive to supply  conforming Product to Pharmanovia under this Agreement within 60 days of its due date, or due  to matters outside of the control of Pharmanovia that impacts Pharmanovia’s ability to sell Product,  in which case the Parties shall have a good faith discussion regarding adjustment of the Minimum  Volume Commitment, and unless otherwise set forth in the Product Schedule, Pharmanovia shall  pay to Aquestive the price of the quantity of Product that Pharmanovia would have to purchase to  meet the Minimum Volume Commitment in such year within thirty (30) days of the end of such  year.  For any part year during which the Minimum Volume Commitment applies, the amount of  the Minimum Volume Commitment shall be pro-rated.   7.5 Pharmanovia Reports and Payments.  During the Term, Pharmanovia shall  submit Quarterly Payment Reports or quarterly Profit Share reports (as applicable) (“Quarterly  Payment Reports”) to Aquestive within [****] days following the end of each Calendar Quarter.   Each Quarterly Payment Report shall cover the most recently completed Calendar Quarter and  shall show: (a) the aggregate gross and Net Sales of each Product during the most recently  completed Calendar Quarter including reasonable detail with respect to the calculation of Net  Sales, Units sold, discounts, credits and other components in the calculation of Net Sales; and  (b) the Royalty Fees or Profit Share (as applicable), in U.S. dollars, payable with respect to such  Net Sales; and (c) in relation to the Profit Share, further deductions made to Net Sales in relation  to the Profit Share calculation.   7.6 Invoicing and Payment. Aquestive shall invoice Pharmanovia for the Royalty  Fees or Profit Share (as applicable) within [****] Business Days of receipt of each Quarterly  Payment Report.  Pharmanovia shall pay the Royalty Fees or Profit Share (as applicable) within  [****] days of receipt of the invoice.  

 

   29    7.7 Manner of Payment.  All sums due under this Agreement shall be payable in U.S.  dollars by ACH in immediately available funds to such bank account(s) as Aquestive shall  designate in writing.  All overdue amounts due to Aquestive hereunder shall bear interest at the  rate equal to one and one half percent (1.5%) per month or at the highest rate permitted by  Applicable Law, whichever is less.  7.8 Bartering Prohibited.  Pharmanovia and its Affiliates and subcontractors shall not  solicit or accept any bartered goods or services in exchange for the sale or transfer of the Product.  7.9 Taxes and Withholding.  All payments under this Agreement will be made without  any deduction or withholding for or on account of any taxes, duties, levies, or other charges.   Pharmanovia will: (a) pay to the relevant authorities the full amount otherwise required to be  deducted or withheld under Applicable Law promptly upon determining that such deduction or  withholding is required; and (b) forward to Aquestive an official receipt (or certified copy) or other  documentation reasonably acceptable to Aquestive evidencing such payment to such authorities.  The Parties shall use Commercially Reasonable Efforts to cooperate and coordinate with each  other in completing and filing documents required under the provisions of any applicable tax laws  (including tax treaties) in connection with the making of any required tax or withholding payment,  in connection with a claim of exemption from, or entitlement to, a reduced or zero rate of  withholding or in connection with any claim to a refund of or credit for any such payment.  The  Party receiving a payment pursuant to this Agreement shall provide the remitting Party appropriate  certification from relevant revenue authorities that such Party is a tax resident of that jurisdiction  or reduction or exemption from tax withholding, if such receiving Party wishes to claim the  benefits of an income tax treaty to which that jurisdiction is a party.  Upon the receipt thereof, any  deduction and withholding of taxes shall be made at the appropriate treaty tax rate.  7.10 Accounting.  Except as otherwise defined in this Agreement, all financial terms  and standards defined or used in this Agreement for sales or activities occurring in the Territory  shall be governed by and determined in accordance with GAAP, including the calculation of Net  Sales and royalties due Aquestive hereunder; provided that when the actual results become known  in accordance with GAAP relative to any accrued amount, any difference between the actual  results and the accrual shall be reported and accounted for in the next payment due hereunder  (subject to customary processing periods).  To the extent that the difference between such accruals  and the actual results has led to an underpayment, Pharmanovia shall pay Aquestive the amount  of such underpayment on the next date payment is due to Aquestive hereunder.    7.11 Record Keeping; Audits.  The Parties and their Affiliates shall keep books and  accounts of record in connection with Net Sales and Profit with respect to the Product (in the case  of Pharmanovia) in sufficient detail to permit accurate determination of all figures necessary for  verification of Royalty Fees and Profit Share to be paid hereunder and COGS (in the case of  Aquestive, solely to the extent the Profit Share is in effect).  The Parties and its Affiliates shall  retain such records for a period of at least three (3) years after the end of the Calendar Quarter in  which they were generated; provided, however, that if any records are in dispute and one Party has  received written notice from the other of the records which are in dispute, then that Party and its  Affiliates shall keep such records until such dispute is resolved.  No more than once every calendar  year, upon reasonable advance written notice to the other Party, a Party will have the right to  engage a nationally recognized public accounting firm of its choice and reasonably acceptable to  

 

   30    the other Party (which accounting firm will not be the external auditor of the selecting Party, will  not have been hired or paid on a contingency basis and will have experience auditing  pharmaceutical companies) (a “CPA Firm”) to conduct an audit of such books and records of the  other Party and its Affiliates to determine the correctness of the amount of royalties paid to  Aquestive or COGS (as applicable) under the terms of this Agreement.  The CPA Firm will be  given access to and will be permitted to examine such books and records of the audited Party as it  will reasonably request, upon thirty (30) days’ prior written notice having been given by the other  Party, during regular business hours, for the sole purpose of determining compliance with the Net  Sales royalty provisions, Profit Share provisions, or COGs calculations set out in this Agreement.   Prior to any such examination taking place, the CPA Firm will enter into a confidentiality  agreement reasonably acceptable to Pharmanovia and Aquestive with respect to the Confidential  Information to which they are given access and will not contain in its report or otherwise disclose  to the other Party or any Third Party any information labeled by the audited Party as being  confidential customer information regarding pricing or other competitively sensitive proprietary  information.  Aquestive and Pharmanovia will be entitled to receive a full written report of the  CPA Firm with respect to its findings and the requesting Party will provide, without condition or  qualification, the audited Party with a copy of the report, or other summary of findings, prepared  by such CPA Firm promptly following its receipt of same.  In the event of any dispute between  Aquestive and Pharmanovia regarding the findings of any such inspection or audit, the Parties will  initially attempt in good faith to resolve the dispute amicably between themselves, and if the Parties  are unable to resolve such dispute within thirty (30) days after delivery to both Parties of the CPA  firm’s report, each Party will select an internationally recognized independent certified public  accounting firm (other than the CPA Firm), and the two firms chosen by the Parties will choose a  third internationally recognized independent certified public accounting firm which accounting  firm will not be the external auditor of either Party, will not have been hired or paid on a  contingency basis and will have experience auditing pharmaceutical companies) which selected  accounting firm will resolve the dispute, and such selected accounting firm’s determination will  be binding on both Parties absent manifest error by such selected accounting firm.  All costs and  expenses of such auditor incurred in connection with performing any such audit shall be paid by  the requesting Party unless such audit discloses an underpayment or miscalculation of at least  [****]%, in which case the audited Party shall bear such costs and expenses.  In the event of the  engagement of other accounting firms relating to a dispute between the Parties as referred to in  this Section 7.11, all costs and expenses of such other accounting firms shall be paid by the Party  found to be at fault by the final determination of the selected accounting firm.   7.12 Underpayments and Overpayments.  If an audit conducted pursuant to Section  7.11 reveals that additional royalties were due to Aquestive under this Agreement, then  Pharmanovia shall pay to Aquestive the additional royalties within [****] days of the date  Pharmanovia receives written notice of such underpayment.  If an audit conducted pursuant to  Section 7.11 reveals that Aquestive was paid royalties in excess of those Royalty Fees or Profit  Share payments, as applicable, due to Aquestive under this Agreement, or an overpayment of the  Product Transfer Price by Pharmanovia  then Pharmanovia shall, at its election, be entitled to: (a)  a refund of such amount within [****] days of the date Aquestive receives written notice of such  overpayment; or (b) deduct such amount from the next royalty or other payment due Aquestive  under this Agreement.  

 

   31    8. REPRESENTATIONS, WARRANTIES AND COVENANTS  8.1 Representations, Warranties and Covenants of Each Party.  Each Party hereby  represents and warrants as of the Effective Date to the other Party as follows:  8.1.1 Corporate Existence, Power, and Authority.  Such Party: (a) is duly formed  and in good standing under the laws of the jurisdiction of its formation; (b) has the power and  authority and the legal right to enter into this Agreement and perform its obligations hereunder;  and (c) has taken all necessary action on its part required to authorize the execution and delivery  of this Agreement and the performance of its obligations hereunder.  8.1.2 Binding Agreement.  This Agreement has been duly executed and delivered  on behalf of such Party and constitutes a legal, valid and binding obligation of such Party and is  enforceable against it in accordance with its terms subject to the effects of bankruptcy, insolvency  or other laws of general application affecting the enforcement of creditor rights and judicial  principles affecting the availability of specific performance and general principles of equity,  whether enforceability is considered a proceeding at law or equity.  8.1.3 Compliance with Applicable Law.  All necessary consents, approvals and  authorizations of all Regulatory Authorities and other Persons required to be obtained by such  Party in connection with the execution and delivery of this Agreement and the performance of its  obligations as of the Effective Date hereunder have been obtained.  8.1.4 No Conflict with Applicable Law.  The execution and delivery of this  Agreement, the performance of such Party’s obligations hereunder, and any actions or omissions  of such Party related to the activities contemplated hereunder and the circumstances surrounding  this Agreement: (a) do not and will not conflict with or violate any Applicable Law or any  provision of the articles of incorporation, bylaws or other governing charter documents of such  Party; and (b) do not and will not conflict with, violate, or breach, or constitute a default or require  any consent under, any contractual obligation or court or administrative order by which such Party  is bound.  8.1.5 Bankruptcy; Insolvency.  Neither Party is aware of any Bankruptcy Event  affecting such Party or of any action or petition, pending or otherwise, for bankruptcy or  insolvency of such Party or its Affiliates or subsidiaries in any state, country, or other jurisdiction,  and it is not aware of any facts or circumstances that could result in such Party becoming or being  declared insolvent, bankrupt or otherwise incapable of meeting its obligations under this  Agreement as they become due in the ordinary course of business.  8.2 Additional Aquestive Representations, Warranties and Covenants.  Aquestive  represents, warrants, and covenants to Pharmanovia as follows:  8.2.1 Right to Grant Licenses.  Aquestive and its Affiliates owns the rights, title,  and interest in and to the Aquestive Patents, the Aquestive IP and the Aquestive Marks free from  encumbrances, charges or liens of any kind (except such encumbrances, charges or liens granted  in connection with commercial lending arrangements in the ordinary course of business) and have  the right to grant the licenses granted to Pharmanovia herein.  

 

   32    8.2.2 Intellectual Property.    8.2.2.1 To Aquestive’s knowledge, as of the Effective Date, no Third  Party is infringing or making unauthorized use of any registered Aquestive IP.  8.2.2.2 No outstanding written claim or threat of action has been received  by Aquestive or its Affiliates (and to Aquestive’s knowledge, there are no allegations or  proceedings, pending or threatened), claiming that the grant of the licenses pursuant to this  Agreement, or the exploitation of the Aquestive IP  or the Product (including any activities relating  to the Development of the Product by Aquestive) has infringed, is infringing or would be likely to  infringe, any valid and subsisting intellectual property rights of any Third Party.  8.2.2.3 Except as disclosed to Pharmanovia in writing prior to the  Effective Date, , as of the Effective Date, there are no proceedings, pending or threatened in  writing, or to Aquestive’s knowledge, pending, which challenge Aquestive’s exclusive ownership,  the validity or the enforceability of the Aquestive IP.  8.2.2.4 As of the Effective Date, all registrations and filings necessary to  preserve the rights in the Aquestive Patents have been made and are in good standing and all  applicable fees have been paid on or before the due date for payment.  8.2.2.5 Within the three (3) years preceding the Effective Date, Aquestive  has not received written notice of any claim or threatened claim from any Person (including any  employee of Aquestive or any of its Affiliates) claiming compensation in respect of Aquestive’s  or its Affiliates’ ownership, use or exploitation of any Aquestive IP.  8.2.3 Aquestive Patents.  To Aquestive’s knowledge, the Aquestive Patents  represent all patents relating to the Supply and Commercialization of the Product in the Field in  the Territory, as of the Effective Date.  8.2.4 Third Party Agreements.  Except in connection with commercial lending  arrangements, neither Aquestive nor any of its Affiliates is a party to or otherwise bound by any  oral or written contract or agreement that conflicts with, or limits the scope of, any of the rights or  licenses granted to Pharmanovia hereunder or that will result in any Third Party obtaining any  interest in, or that would give to any Third Party any right to assert any claim in or with respect to,  any of Pharmanovia’s rights under this Agreement.  8.2.5 Product Development.   8.2.5.1 In respect of the Product, Aquestive, its  Affiliates and their  contractors have gathered, generated, prepared, processed, maintained and retained all data and  information that is required to be generated, maintained or retained pursuant to and in accordance  with (and have conducted all development activities accordance with) with good laboratory  practice and Applicable Laws; and  8.2.5.2 Aquestive has not withheld from Pharmanovia or any Regulatory  Authority any material adverse information relating to the safety or efficacy of the Product, and  

 

   33    Aquestive is not aware of any scientific or technical facts or circumstances that would adversely  affect the safety or efficacy of the Product.  8.2.6 Supply of Product.  8.2.6.1 Aquestive has the capacity and resources to Supply the Product in  accordance with this Agreement.  8.2.6.2 Aquestive has and shall maintain the necessary facilities,  equipment, know-how, procedures and personnel to manufacture and Supply the Product in  accordance with the terms of this Agreement.  8.2.6.3 All activities required to validate Aquestive’s equipment, plant,  Manufacturing Facilities, and production processes necessary for the manufacture and Supply the  Product have been completed.  8.2.7 Compliance with Applicable Law.  Aquestive shall comply with and  maintain in force all licenses, consents, permits and authorizations necessary to perform its  obligations under this Agreement and shall perform its obligations under this Agreement in  compliance with Applicable Law, in each case in all material respects.   8.2.8 Compliance with Anti-Bribery, Anti-Corruption, and Ethics Policies.   Aquestive shall have and maintain in place through the Term its own policies and procedures to  ensure compliance with Applicable Law relating to anti-bribery and anti-corruption in the  Territory.  Aquestive will immediately report to Pharmanovia any request or demand for any undue  or suspicious financial or other advantage of any kind received by Aquestive or any of its Affiliates  in connection with the performance of this Agreement.  8.2.9 No Debarment.  None of Aquestive or its Affiliates have employed or  otherwise used in any capacity, and will not employ or otherwise use in any capacity, the services  of any Person debarred under United States law, including Section 21 U.S.C. 335a, or any foreign  equivalent thereof.   8.3 Additional Pharmanovia Representations, Warranties and Covenants.   Pharmanovia further represents, warrants, and covenants to Aquestive that:  8.3.1 Right to Grant Licenses.  Pharmanovia and its Affiliates have the right to  grant the licenses granted to Aquestive herein.  8.3.2 Third Party Agreements.  As of the Effective Date, neither Pharmanovia nor  any of its Affiliates is a party to or otherwise bound by any oral or written contract or agreement  that will result in any Third Party obtaining any interest in, or that would give to any Third Party  any right to assert any claim in or with respect to, any of Aquestive’s rights under this Agreement.  8.3.3 Compliance with Applicable Law.  Pharmanovia shall comply with and  maintain in force all licenses, consents, permits and authorizations necessary to perform its  obligations under this Agreement and shall perform its obligations under this Agreement in  compliance with Applicable Law in the Territory.    

 

   34    8.3.4 Compliance with Anti-Bribery, Anti-Corruption, and Ethics Policies.   Pharmanovia shall have and maintain in place through the Term its own policies and procedures  to ensure compliance with Applicable Law relating to anti-bribery and anti-corruption in the  Territory.  Pharmanovia will immediately report to Aquestive: (a) any request or demand for any  undue or suspicious financial or other advantage of any kind received by Pharmanovia in  connection with the performance of this Agreement.   8.3.5 No Debarment.  None of Pharmanovia or its Affiliates have employed or  otherwise used in any capacity, and will not employ or otherwise use in any capacity, the services  of any Person debarred under United States law, including Section 21 U.S.C. 335a, or any foreign  equivalent thereof.  8.4 Disclaimer.  AQUESTIVE HEREBY DISCLAIMS ANY AND ALL  REPRESENTATIONS AND WARRANTIES IN CONNECTION WITH THE  TRANSACTIONS CONTEMPLATED HEREIN NOT EXPRESSLY MADE IN THIS  AGREEMENT TO THE MAXIMUM EXTENT PERMITTED UNDER APPLICABLE LAWS,  INCLUDING WITH RESPECT TO THE PRODUCT OR ANY PATENT OR OTHER  INTELLECTUAL PROPERTY LICENSED OR GRANTED UNDER THIS AGREEMENT,  INCLUDING ANY WARRANTY OF NON-INFRINGEMENT, QUALITY, PERFORMANCE,  IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR  PURPOSE OR ANY  WARRANTIES ARISING FROM COURSE OF PERFORMANCE,  COURSE OF DEALING OR USAGE OR TRADE.   9. TECHNOLOGY TRANSFER  9.1 Upon the occurrence of a Bankruptcy Supply Failure, Pharmanovia shall be entitled  to request that a program for transitioning the Supply of the relevant Product to Pharmanovia or  its nominee is carried out by submitting a request to Aquestive. Pending such transition, Aquestive  agrees to introduce Pharmanovia or its designee to, and or assist Pharmanovia or its designee to  enter into agreements with, any of Aquestive’s Third Party manufacturers, including, if so  requested by Pharmanovia, by assigning or novating Aquestive’s or its Affiliate’s relevant  contracts (in whole or in part as applicable) to Pharmanovia or its designee.   9.2 As soon as reasonably practicable following Aquestive’s receipt of any request  pursuant to Section 9.1, but in any event no later than thirty (30) days after such receipt, the Parties  shall negotiate in good faith and agree a formal plan (“Technology Transfer Plan”) for the  transitioning of Supply of the Product to Pharmanovia or to any Affiliate of Pharmanovia or third  party contract manufacturer as Pharmanovia may direct (following consultation with Aquestive)  (“Technology Transfer Partner”).   9.3 Aquestive shall carry out the activities allocated to it in the Technology Transfer  Plan in accordance with any timelines set out therein. The methods that will be used to effect the  Technology Transfer Plan will include:  9.3.1 the provision of copies of all such documentation and materials in the  possession of Aquestive and/or its Affiliates which record Aquestive Know-How related to the  

 

   35    Supply of Products including the then-current process for the Supply of the Products, as well as  any improvements or enhancements to such processes;   9.3.2 the provision of technical assistance to Pharmanovia and/or the Technology  Transfer Partner to ensure timely transfer of Supply of the Product; and  9.3.3 access to employees of Aquestive and its Affiliates (and/or their third party  contract manufacturer) who have knowledge of the Products and the Manufacturing process at  Aquestive’s (and/or its Affiliates’ and/or their third party contract manufacturer’s) premises  and/or, where reasonably required, at Pharmanovia’s or Technology Transfer Partner’s premises.   10. CONFIDENTIAL INFORMATION  10.1 General.  Pursuant to the terms of this Agreement, each of Aquestive and  Pharmanovia (in such capacity, the “Disclosing Party”) has disclosed and will be disclosing to the  other Party, and to the Affiliates, officers, directors, employees, agents and/or representatives of  each (in such capacity, the “Receiving Party”) certain secret, confidential or proprietary data,  Intellectual Property and related information, including, without limitation, technical, scientific,  business and other information, data, materials and the like relating to drug applications, patent  applications, products, processes, formulations, manufacturing technology, samples, operating  methods and procedures, marketing, manufacturing, distribution and sales methods and systems,  sales figures, pricing policies and price lists and other business information (“Confidential  Information”).  The terms and conditions of this Agreement shall be considered Confidential  Information.  Without limiting the foregoing, it is acknowledged that the Aquestive IP (other than  any published Aquestive Patents) shall constitute the Confidential Information of Aquestive  (subject to Section 10.3) for purposes of this Agreement.  The Receiving Party shall make no use  of any Confidential Information of the Disclosing Party except in the exercise of its rights and the  performance of its obligations set forth in this Agreement.  The Receiving Party: (a) shall keep and  hold as confidential, and shall cause its officers, directors, employees, agents, and representatives  to keep and hold as confidential, all Confidential Information of the Disclosing Party; and (b) shall  not disclose, and shall cause its Affiliates, officers, directors, employees, agents, and  representatives not to disclose, any Confidential Information of the Disclosing Party.  Confidential  Information disclosed by the Disclosing Party shall remain the sole and absolute property of the  Disclosing Party, subject to the rights granted in this Agreement or Applicable Law.  10.2 Prior Confidentiality Agreement.  As of the Effective Date, the terms of this  Section 10 shall supersede any prior non-disclosure, secrecy, or confidentiality agreement between  the Parties (or their Affiliates) relating to the subject of this Agreement, including the  Confidentiality Agreement, which is hereby terminated.  Any information disclosed pursuant to  any such prior agreement shall be deemed Confidential Information for purposes of this  Agreement.  10.3 Exceptions.  The above restrictions set forth in Section 10.1 on the use and  disclosure of Confidential Information shall not apply to any information which: (a) is already  known to the Receiving Party at the time of disclosure by the Disclosing Party, as demonstrated  by competent proof (other than as a result of prior disclosure under any agreement between the  Parties with respect to confidentiality); (b) is or becomes generally known or available to the public  

 

   36    other than through any act or omission of the Receiving Party in breach of this Agreement (or any  other agreement between the Parties with respect to confidentiality); (c) is acquired by the  Receiving Party from a Third Party who is not directly or indirectly under an obligation of  confidentiality to the Disclosing Party with respect to same, or (d) is developed independently by  the Receiving Party without the use, direct or indirect, of the Disclosing Party’s  Confidential  Information.  In addition, nothing in this Section 10 shall be interpreted to limit the ability of either  Party to disclose its own Confidential Information to any other Person on such terms and subject  to such conditions as it deems advisable or appropriate.  10.4 Permitted Disclosures.  It shall not be a breach of Section 10.1 if a Receiving Party  discloses Confidential Information of a Disclosing Party: (a) pursuant to Applicable Law,  including securities laws applicable to a public company, to any Regulatory Authority or the listing  standards or agreements of any national or international securities exchange or The NASDAQ  Stock Market, the New York Stock Exchange, or other Regulatory Authority; (b) in order to  comply with its obligations under the listing standards or agreements of any national or  international securities exchange or The NASDAQ Stock Market or the New York Stock  Exchange; or (c) in a judicial, administrative or arbitration proceeding to enforce such Party’s  rights under this Agreement; provided, however, that the Receiving Party: (i) provides the  Disclosing Party with as much advance written notice as possible of the required disclosure;  (ii) reasonably cooperates with the Disclosing Party in any attempt to prevent, limit or seek  confidential treatment for the disclosure; and (iii) discloses only the minimum amount of  Confidential Information necessary for compliance.  The Parties may also disclose the existence  of this Agreement and terms thereof to their directors, investors, officers, employees, attorneys,  accountants and other advisers on a need to know basis and may, upon obtaining a written  confidentiality agreement, further disclose the existence and terms of this Agreement to third  Parties to whom it may be relevant in connection with financings, acquisitions, licenses and similar  transactions to the extent such Third Parties are under confidentiality obligations at least as  restrictive as those set forth herein.  10.5 Equitable Remedies.  Each Party specifically recognizes that any breach by it of  this Section 10 may cause irreparable injury to the other Party and that actual damages may be  difficult to ascertain, and in any event, may be inadequate.  Accordingly (and without limiting the  availability of legal or equitable, including injunctive, remedies under any other provisions of this  Agreement), each Party agrees that in the event of any such breach, the other Party shall be entitled  to seek injunctive relief and such other legal and equitable remedies as may be available, without  the necessity of securing or posting of any bond or proving actual damages.    11. INDEMNIFICATION; LIMITATION OF LIABILITY  11.1 Indemnification by Pharmanovia.  Pharmanovia shall defend, indemnify and  hold harmless Aquestive and its Affiliates and each of their respective successors and assigns, and  each of their respective officers, directors, shareholders, employees, subcontractors, agents, and  representatives (“Aquestive Indemnitees”) from and against all claims, allegations, suits, actions  or proceedings asserted against any Aquestive Indemnitee by any Third Parties, whether  governmental or private (“Third Party Claims”), and all associated Losses, to the extent arising  out of or resulting from: (a) the performance or failure to perform by Pharmanovia (or any of its  Affiliates, subcontractors or agents) of any of Pharmanovia’s obligations under this Agreement;  

 

   37    (b) a breach by Pharmanovia or any of its Affiliates, subcontractors or agents of any of  Pharmanovia’s obligations, representations, warranties, covenants or agreements under this  Agreement; (c) the Commercialization by or on behalf of Pharmanovia of any Products in the  Territory; or (d) violation of Applicable Law by any Pharmanovia Indemnitee; provided, that, in  all cases referred to in this Section 11.1, Pharmanovia shall not be liable to indemnify any  Aquestive Indemnitee for any Losses of such Aquestive Indemnitee to the extent that such Losses  were caused by or arise out of: (i) the negligence or willful misconduct or intentional wrongdoing  of Aquestive or any of its Affiliates, subcontractors or agents in the performance of Aquestive’s  obligations under this Agreement; (ii) any breach by Aquestive or any of its Affiliates,  subcontractors or agents of Aquestive’s obligations, representations, warranties, covenants or  agreements under this Agreement; or (iii) matters for which Aquestive has an obligation to  indemnify any Pharmanovia Indemnitee pursuant to Section 11.2.  11.2 Indemnification by Aquestive.  Aquestive shall defend, indemnify and hold  harmless Pharmanovia and its Affiliates and each of their successors and assigns, and each of their  respective officers, directors, shareholders, employees, subcontractors, agents, and representatives  (“Pharmanovia Indemnitees”) from and against all Third Party Claims, and all associated Losses,  to the extent arising out of or resulting from: (a) the performance or failure to perform by Aquestive  (or any its Affiliates, subcontractors or agents) any of Aquestive’s obligations under this  Agreement; (b) a breach by Aquestive or any of its Affiliates, subcontractors or agents of any of  Aquestive’s obligations, representations, warranties, covenants or agreements under this  Agreement; or (c) any claim or allegation that the Aquestive Patents infringe upon the Intellectual  Property Rights of a Third Party; other than any claim or demand that is directed solely to the API  and the alleged infringement would have occurred from the use of the API alone; or (d) violation  of Applicable Law by any Aquestive Indemnitee; provided, that, in all cases referred to in this  Section 11.2, Aquestive shall not be liable to indemnify any Pharmanovia Indemnitee for any  Losses of such Pharmanovia Indemnitee to the extent that such Losses were caused by or arise out  of: (i) the negligence or willful misconduct or intentional wrongdoing of Pharmanovia or any of  its Affiliates, subcontractors or agents in the performance of Pharmanovia’s obligations under this  Agreement; (ii) any breach by Pharmanovia or any of its Affiliates, subcontractors or agents of  Pharmanovia’s representations, warranties, covenants or agreements under this Agreement; or  (iii) matters for which Pharmanovia has an obligation to indemnify any Aquestive Indemnitee  pursuant to Section 11.1.  11.3 Procedure for Indemnification.    11.3.1 Notice.  In the case of a Third Party Claim or demand made by any Person  who is not a Party of this Agreement (or an Affiliate thereof) as to which a Party (the “Indemnitor”)  may be obligated to provide indemnification pursuant to this Agreement, such Party seeking  indemnification hereunder (“Indemnitee”) will notify the Indemnitor in writing of the Third Party  Claim (and specifying in reasonable detail the factual basis for the Third Party Claim and, to the  extent known, the amount of the Third Party Claim) reasonably promptly after becoming aware of  such Third Party Claim; provided, however, that failure to give such notification will not affect  the indemnification provided hereunder except to the extent the Indemnitor shall have been  actually materially prejudiced as a result of such failure.  

 

   38    11.3.2 Defense of Claim.  If a Third Party Claim is made against an Indemnitee,  then the Indemnitor will be entitled, within thirty (30) days after receipt of written notice from the  Indemnitee of the commencement or assertion of any such Third Party Claim, to assume the  defense thereof by providing written notice to Indemnitee of its intention to assume the defense of  such Third Party Claims within such thirty (30) day period (at the expense of the Indemnitor) with  counsel selected by the Indemnitor and reasonably satisfactory to the Indemnitee for so long as the  Indemnitor is conducting a good faith and diligent defense.  Should the Indemnitor so elect to  assume the defense of such Third Party Claim, the Indemnitor will not be liable to the Indemnitee  for any legal or other expenses subsequently incurred by the Indemnitee in connection with the  defense thereof; provided, however, that if under applicable standards of professional conduct a  conflict of interest exists between the Indemnitor and the Indemnitee in respect of such claim, such  Indemnitee shall have the right to employ separate counsel to represent such Indemnitee with  respect to the matters as to which a conflict of interest exists and in that event the reasonable fees  and expenses of such separate counsel shall be paid by such Indemnitor; provided, further, that the  Indemnitor shall only be responsible for the reasonable fees and expenses of one separate counsel  for all Indemnitees, provided that where a conflict of interest is found to exist each Indemnitee  with a conflict will be entitled to separate counsel at such Indemnitees’ expense.  If the Indemnitor  assumes the defense of any Third Party Claim, the Indemnitee shall have the right to participate in  the defense thereof and to employ counsel, at its own expense, separate from the counsel employed  by the Indemnitor.  If the Indemnitor assumes the defense of any Third Party Claim, the Indemnitor  will promptly supply to the Indemnitee copies of all material correspondence and documents  relating to or in connection with such Third Party Claim and keep the Indemnitee reasonably  informed of developments relating to or in connection with such Third Party Claim, as may be  reasonably requested in writing by the Indemnitee (including, without limitation, providing to the  Indemnitee on reasonable request updates and summaries as to the status thereof).  If the  Indemnitor chooses to defend a Third Party Claim, all Indemnitees shall reasonably cooperate with  the Indemnitor in the defense thereof (such cooperation to be at the expense, including reasonable  legal fees and expenses, of the Indemnitor).  If the Indemnitor does not elect to assume control by  written acknowledgement of the defense of any Third Party Claim within the thirty (30) day period  set forth above, or if such good faith and diligent defense is not being or ceases to be conducted  by the Indemnitor, the Indemnitee shall have the right, at the expense of the Indemnitor (but limited  to the reasonable legal fees and expenses of one counsel for all Indemnitees), after five (5) Business  Days’ written notice to the Indemnitor of its intent to do so, to undertake the defense of the Third  Party Claim for the account of the Indemnitor (with counsel selected by the Indemnitee), and to  compromise or settle such Third Party Claim, exercising reasonable business judgment.  11.3.3 Settlement of Claims.  In no event may the Indemnitor compromise or settle  any Third Party Claim without the prior written consent of the Indemnitee such consent not to be  unreasonably withheld or delayed.  Without limiting the foregoing, if the Indemnitor  acknowledges in writing its obligation to indemnify the Indemnitee for a Third Party Claim, the  Indemnitee will agree to any settlement, compromise or discharge of such Third Party Claim that  the Indemnitor may recommend that by its terms obligates the Indemnitor to pay the full amount  of Losses (whether through settlement or otherwise) in connection with such Third Party Claim  and unconditionally and irrevocably releases the Indemnitee completely from all Losses in  connection with such Third Party Claim; provided, however, that, without the Indemnitee’s prior  written consent, the Indemnitor shall not consent to any settlement, compromise or discharge  (including, without limitation, the consent to entry of any judgment), that provides for injunctive  

 

   39    or other nonmonetary relief affecting the Indemnitee or which admits fault or negligence on the  part of the Indemnitee.  11.3.4 Assumption of Defense.  Notwithstanding anything to the contrary  contained herein, an Indemnitee shall be entitled to assume the defense of any Third Party Claim  with respect to the Indemnitee upon written notice to the Indemnitor pursuant to this Section  11.3.4, in which case, the Indemnitor shall be relieved of liability under Section 11.1 or 11.2, as  applicable, solely for such Third Party Claim and related Losses.  11.4 Insurance.  During the Term and for a period of five (5) years after the termination  or expiration of this Agreement, each Party shall obtain and/or maintain, respectively, at its sole  cost and expense, comprehensive general liability insurance, products liability insurance and  clinical trials insurance (including any self-insured arrangements), each in amounts, respectively,  which are reasonable and customary in the pharmaceutical industry for companies of comparable  size and activities at the respective place of business of each Party but in no event less than Ten  Million Dollars ($10,000,000) per occurrence and Ten Million Dollars ($10,000,000) annual  aggregate.  Each Party shall also maintain any mandatory insurance, including but not limited to  workers compensation coverage, in accordance with all Applicable Law.  All insurance policies  reflecting such insurance shall be written on a “per occurrence” or “claims made” basis with an  insurance company rated at least A-3 by Best’s rating guide.  Each of the Parties and their  designees who have an insurable interest shall be added as an additional insured on the other  Party’s product liability insurance policy.  If requested, each Party shall provide the other with a  certificate of insurance and shall keep such policy current.  Each Party shall provide at least thirty  (30) calendar days’ prior written notice to the other Party of the cancellation or any substantial  modification of the terms of coverage.  Such product liability insurance (or self-insured  arrangements) shall insure against all liability, including without limitation personal injury,  physical injury, or property damage arising out of the manufacture, sale, distribution, or marketing  of the Products.  Each Party shall require its insurers to waive all rights of subrogation against the  other Party, and its directors, officers, employees, and agents on all the foregoing coverages.  Each  Party shall provide written proof of the existence of such insurance to the other Party upon written  request.  Each Party acknowledges and agrees that its liabilities under this Agreement will not be  limited by the amount of such Party’s insurance.  11.5 Limitation of Liability.  EXCEPT AS EXPRESSLY SET FORTH IN THIS  AGREEMENT, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER  PARTY OR ANY OF ITS AFFILIATES FOR ANY CONSEQUENTIAL, INCIDENTAL,  INDIRECT, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES OR LOSSES (INCLUDING,  WITHOUT LIMITATION, LOST PROFITS, BUSINESS OR GOODWILL) SUFFERED OR  INCURRED BY THE OTHER PARTY OR ITS AFFILIATES IN CONNECTION WITH THIS  AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREIN OR A BREACH OR  ALLEGED BREACH OF THIS AGREEMENT, HOWEVER ARISING WHETHER FOR  BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE.  THE  FOREGOING SENTENCE SHALL NOT APPLY IN CASES OF A PARTY’S GROSS  NEGLIGENCE, OR INTENTIONAL MISCONDUCT, FRAUD OR DEATH OR PERSONAL  INJURY CAUSED BY NEGLIGENCE.  12. TERM AND TERMINATION  

 

   40    12.1 Term.  The initial term shall commence as of the Effective Date and shall run unless  terminated in accordance with the terms of this Agreement, on a country by country basis in the  Territory, for a period of [****] years from the First Commercial Sale (together with any renewal  term, the “Term”).  Pharmanovia shall have the option to renew this Agreement for successive  [****] renewal terms by providing [****] days written notice to Aquestive prior to the expiration  of the then current term.   12.2 Termination.    12.2.1 Termination of this Agreement.  In addition to any other provision of this  Agreement expressly providing for termination of this Agreement, this Agreement may be  terminated as follows:   12.2.1.1 By either Party immediately upon written notice: (a) upon the  occurrence of a Bankruptcy Event with respect to the other Party; or (b) in addition to and not in  limitation of the termination rights set forth below in this Section 12.2, if the other Party commits  any material misrepresentation or breach of any of its covenants, obligations, representations or  warranties under this Agreement and, in the case of a breach which is capable of remedy, such  Party fails to remedy the same within sixty (60) days after receipt of a written notice describing  the breach and requiring it to be so remedied.   12.2.1.2 By Aquestive upon thirty (30) days’ prior written notice if  Pharmanovia has violated Section 2.2.2.   12.2.1.3 By Pharmanovia on thirty (30) days’ prior written notice if  Aquestive has violated Section 2.2.1.  12.2.1.4 By Aquestive upon written notice to Pharmanovia in the event that  Pharmanovia fails to pay as and when due: (a) any Milestone Payment;(b) any Royalty Fee; or (c)  any amount required to be paid with respect to a Minimum Volume Commitment; and in the case  of (a) fails to remedy same within thirty (30) days of receipt and in the case of (b) and (c) within  forty five (45) days of a written notice describing the failure and requiring it to be so remedied  provided that Pharmanovia’s failure to pay is not due to an invoice being disputed in writing by  Pharmanovia in good faith.   12.2.1.5 By either Party on no less than three (3) months’ written notice of  termination if Pharmanovia does not file for the first Regulatory Approval in a country in the  Territory within three (3) years of the Effective Date provided that the Parties shall have had good  faith discussions for at least three (3) months to discuss a resolution of this issue prior to any such  notice being served.  12.2.1.6 By Pharmanovia upon written notice to Aquestive if Aquestive  does not use Commercially Reasonable Efforts to execute its Supply responsibilities for the  Product and Aquestive fails to remedy the same within [****] days after receipt of a written notice  from Pharmanovia describing failure and requiring it to be so remedied.   12.2.1.7 By Aquestive, after the third anniversary of the Effective Date,  upon written notice in respect to a specific country in the Territory if Pharmanovia does not use  

 

   41    Commercially Reasonable Efforts to execute its Commercialization and Development  responsibilities for the Product in that specific country in the Territory and Pharmanovia fails to  demonstrate in good faith an intention to Commercialize the Product in such country in the  Territory  within [****] days after receipt of a written notice from Aquestive describing failure  and requiring it to be so remedied. For the purposes of this section, the EEA shall be considered a  single country.  12.2.1.8 By Aquestive upon [****] days’ prior written notice if the  quantities of Units purchased by Pharmanovia from Aquestive under the Product Schedule do not  meet the Minimum Volume Commitment (to the extent applicable) in any [****] consecutive  [****], unless such failure is attributable to the failure of Aquestive to supply a conforming  Product to Pharmanovia under this Agreement, or due to matters outside of the control of  Pharmanovia that impacts Pharmanovia’s ability to sell Product.  12.3 Effects of Termination.    12.3.1 Effect of Termination Generally.  On the expiration or earlier termination  of this Agreement for any reason, except as otherwise expressly provided herein, all rights and  obligations of each Party hereunder or thereunder, as the case may be, shall cease.  12.3.2 Disposition and Transfer of Inventory upon Termination; Royalty Fees Due  Thereon Not Affected By Termination.  On the expiration or earlier termination of this Agreement:  (a) all unpaid Royalty Fees for the Product sold as of the effective date of termination shall remain  due and payable as scheduled; (b) on the agreement of both Parties, Aquestive shall complete all  work-in-process, and Pharmanovia shall purchase at the Product Transfer Price under this  Agreement, all remaining inventory of Product and, at cost, all Raw Materials relating thereto in  Aquestive’s possession or control but not to exceed a supply of the affected Product corresponding  to the last [****] of the most recent supply forecast delivered by Pharmanovia in accordance with  Section 5.3 and Aquestive shall use all Commercially Reasonable Efforts to mitigate the cost  thereof to Pharmanovia and to consult with Pharmanovia in connection with such attempts to  mitigate; (c) Pharmanovia shall have the right to sell out such remaining inventory of the affected  Products for a period of up to [****] months; and (d) Pharmanovia shall pay to Aquestive the  Royalty Fees on each sale of remaining inventory of the Product by Pharmanovia and/or its  Affiliates when and as such Product is sold.   12.3.3 Accrued Rights. Termination, relinquishment, or expiration of this  Agreement for any reason shall be without prejudice to any right which shall have accrued to the  benefit of either Party prior to such termination, relinquishment or expiration including damages  arising from any breach under this Agreement.  Termination, relinquishment, or expiration of this  Agreement shall not relieve either Party from any obligation which is expressly or by implication  intended to survive such termination, relinquishment or expiration of this Agreement and shall not  affect or prejudice any provision of this Agreement which is expressly or by implication provided  to come into effect on, or continue in effect after, such termination, relinquishment, or expiration.   Remedies for breaches under this Agreement shall also survive any termination, relinquishment,  or expiration of this Agreement.  12.3.4 Intellectual Property Rights.   

 

   42    12.3.4.1 Upon expiration of this Agreement or termination by Pharmanovia  pursuant to Sections 12.2.1.1 , 12.2.1.3, 12.2.1.5 or 12.2.1.6, all right, title and interest, in and to,  with respect to each Regulatory Approval and all data generated in support of such Regulatory  Approval for the Product in the Territory shall remain with Pharmanovia or its Affiliates and  nominees, including without limitation, from all associated pre-clinical and clinical studies. For  the avoidance of doubt, in these circumstances Pharmanovia shall have no further obligation,  notwithstanding Section 12.3.2, to pay any Royalty Payments or payments associated with failure  to meet the Minimum Volume Commitments pursuant to this Agreement, relating to the period  after the expiry or termination date.  12.3.4.2 Upon termination of this Agreement or part thereof by Aquestive  pursuant to Sections 12.2.1.1, 12.2.1.2, 12.2.1.4, 12.2.1.5, 12.2.1.7 or 12.2.1.8,  Aquestive shall  have the right, to be exercised at Aquestive’s sole option, to receive an assignment in whole or in  part, directly or to a designated sublicensee, of all of Pharmanovia’s right, title and interest, in and  to, with respect to the Product in the affected country in the Territory if it is a partial termination,  (i) each Regulatory Approval and (ii) all data generated in support of such Regulatory Approval,  including without limitation, from all associated pre-clinical and clinical studies, if a partial  termination in relation to the Product in the affected country in the Territory; for the avoidance of  doubt this shall not include the Pharmanovia Marks.  Such assignment shall be made for  consideration equaling Pharmanovia’s out-of-pocket costs incurred (excluding payments made by  Pharmanovia to Aquestive in respect of same under this Agreement).  In connection with any  assignment contemplated by this Section 12.3.4.2, Pharmanovia shall cooperate with Aquestive  and execute and deliver to Aquestive any and all documents reasonably necessary to perfect its or  its sublicensee’s rights to the foregoing and, to the extent applicable, Pharmanovia shall ensure  that the all Product-related Intellectual Property and Regulatory Approvals, if a partial termination  in relation to the Product in the affected country in the Territory to be assigned remain in good  standing until such assignment to Aquestive is complete. Aquestive undertakes, in these  circumstances, within 3 months, to carry out the necessary variations to the Regulatory Approvals  and artwork related thereto, to ensure that the Pharmanovia Marks and any other reference to  Pharmanovia or its Affiliates or nominees is removed therefrom.  12.3.5 Survival.  The following Sections of this Agreement, as well as any other  provisions in this Agreement which specifically state they will survive termination or expiration  of this Agreement or any terms of this Agreement that would reasonably be expected in the  contemplation of both Parties to survive termination, shall survive expiration or termination of this  Agreement for any reason:  Section 1, Section 2.1 (provided that the license granted in Section 2.1  shall be non-exclusive and all such sections shall survive for the sole purpose of selling out  remaining inventory of Product as set forth in Section 12.3.2 , Section 4.8, Sections 5.4,  5.46, 5.6,  5.7, 5.11 and 5.12, Section 8.1 (with respect to unpaid milestone payments which have accrued as  of such termination), Section 7.2 through Section 7.12 inclusive (with respect to Royalty Fee  payments  and Profit Share payments due after such termination or expiration for sales prior to  such termination or expiration or otherwise in respect of sales permitted pursuant to Section  12.3.2), Sections 8.4, 9, 10, 11, 12.3, 13.5.2, and 14.   

 

   43    12.3.6 Return of Confidential Information.    12.3.6.1 Within thirty (30) days of any expiration or termination of this  Agreement: (a) Pharmanovia shall cease to use and shall deliver to Aquestive, upon written request  of Aquestive, all Confidential Information of Aquestive, except for any documents or records that  Pharmanovia is required to retain by Applicable Law or reasonably necessary for Pharmanovia to  exercise its rights under Section 12.3.2; and (b) Aquestive shall cease to use and shall deliver to  Pharmanovia, upon written request, all Confidential Information of Pharmanovia except for any  documents or records that Aquestive is required to retain by Applicable Law or that are reasonable  necessary for Aquestive to exercise its rights under Section 12.3.2; provided, however, that all  such retained documents or records shall continue to be subject to the confidentiality obligations  under this Agreement.  13. INTELLECTUAL PROPERTY  13.1 Patent Prosecution and Maintenance.    13.1.1 Aquestive shall be responsible for the preparation, filing, prosecution and  maintenance (including payment of renewal fees when due) of the Aquestive Patents. The cost of  such preparation, filing, prosecution and maintenance of the Aquestive Patents shall be borne by  Aquestive.     13.1.2 Aquestive shall use Commercially Reasonable Efforts to procure the grant  of any of the Aquestive Patents that are patent applications in each country of the Territory.  Aquestive shall provide updates on the status of the Aquestive Patents to the Steering Committee  on a regular basis and, if reasonably practicable, consult with Atnahs on material decisions in  relation thereto.  13.1.3 In the event that Aquestive desires to abandon or cease prosecution or  maintenance of any Aquestive Patent, Aquestive shall provide reasonable prior written notice to  Pharmanovia of such intention to abandon (which notice shall, to the extent possible, be given no  later than sixty (60) days prior to the next deadline for any action that must be taken with respect  to any such Aquestive Patent in the relevant patent office).  In such case, upon Pharmanovia’s  written election provided no later than thirty (30) days after such notice from Aquestive,  Pharmanovia shall have the right to assume prosecution and maintenance of such Aquestive Patent  at Pharmanovia’s expense.  If Pharmanovia does not provide such election within thirty (30) days  after such notice from Aquestive, Aquestive may, in its sole discretion, continue prosecution and  maintenance of such Aquestive Patent or discontinue prosecution and maintenance of such  Aquestive Patent.  13.2 IP Enforcement Against Third Parties.    13.2.1 Each Party shall promptly notify the other Party in writing of any alleged or  threatened infringement of any Aquestive Patent of which they become aware (a “Competitive  Infringement”).  13.2.2 In each such instance of Competitive Infringement of any Aquestive Patent,  Aquestive shall have the right, but not the obligation, in its own name and under its own direction  

 

   44    and control, to institute litigation against such alleged or threatened Competitive Infringement at  its cost and expense.  If Aquestive does not, within ninety (90) days after its receipt or delivery of  notice under Section 13.2.1 relating to infringement of any Aquestive Patent, commence a suit to  enforce the applicable patent, take other action to terminate such Competitive Infringement or  initiate a defense against such Competitive Infringement, then: (i) Pharmanovia will have the right,  but not the obligation, including conducting infringement proceedings and settlement negotiations  in its own and Aquestive’s name,  to commence such a suit or take such an action or defend against  such Competitive Infringement in the Territory at Pharmanovia’s cost and expense, to be  represented in any such suit by counsel of its own choice and (ii) if Pharmanovia exercises its right  under the foregoing clause (i), Aquestive will take all reasonable and appropriate actions in order  to permit Pharmanovia to commence a suit or take the actions with respect to the Competitive  Infringement.  Neither Party will enter into any settlement, consent judgment or other voluntary  final disposition of any action under this Section 13.2 without the other Party’s prior written  consent, which consent will not be unreasonably withheld, delayed, or conditioned unless the  settlement includes any express or implied admission of liability or wrongdoing on either Party’s  part, in which case the right to grant or deny consent is absolute and at its sole discretion.  13.2.3 Each Party shall reasonably assist the Party enforcing any such rights under  this Section 13.2 in any such action or proceeding if so requested by the enforcing Party, and will  be named in or join such action or proceeding if requested by the enforcing Party, and will  reasonably cooperate with the enforcing Party in such participation (including providing copies of  all prior claim construction submissions and supporting documents subject to confidentiality  provisions as required); provided, that if Aquestive is the enforcing Party, the reasonable, out-of- pocket costs and expenses of Pharmanovia in connection therewith, including any Aquestive- approved investigation and analysis thereof, is to be reimbursed to Pharmanovia on an as-incurred  basis.  The enforcing Party shall keep such other Party and/or its designated legal counsel  reasonably informed as to the progress in connection with the foregoing Competitive Infringement  (including any settlement discussions), and will reasonably consider the other Party’s comments  on any such efforts.  13.2.4 If the enforcing Party recovers monetary damages in such claim, suit or  action, such recovery will be allocated first to the reimbursement of any expenses incurred by the  Parties in such litigation the remaining amounts will be retained by Pharmanovia, however,  Pharmanovia will calculate Net Sales under this Agreement based on the remaining amounts  attributed to lost sales as if Pharmanovia had made the infringing sales directly, and will pay to  Aquestive the Royalty Fees owed by Pharmanovia to Aquestive pursuant to Section 7.2 or any  Profit Share owed by Pharmanovia to Aquestive pursuant to Section 7.3.  13.3 Action by Third Party.  In the event that any Third Party initiates a declaratory  judgment action alleging the noninfringement, invalidity or unenforceability of the Aquestive  Patents, or if any Third Party brings an infringement action against Pharmanovia or its Affiliates  or subcontractors because of the exercise of the rights granted to Pharmanovia under this  Agreement with respect to the Aquestive Patents, and Aquestive or Pharmanovia has not  commenced any action to enforce Aquestive Patents against such Third Party under the terms of  Section 13.2 above, each Party will give prompt notice to the other Party of any such action of  which it becomes aware.  Aquestive shall have the right, but not the obligation, to take any  necessary actions (including the filing of pleadings required by the Applicable Law or any local  

 

   45    rules of court) and defend against such action under its own control and at its own expense.  If  Aquestive fails to defend such action, Pharmanovia will have the right, but not the obligation to  defend against such action under its own control and at its own cost and expense; Aquestive will  take all reasonable and appropriate actions in order to permit Pharmanovia to initiate and continue  such defense and will provided all assistance reasonably requested by Pharmanovia in connection  with such defense.  Neither Party will enter into any settlement, consent judgment or other  voluntary final disposition of any action under this Section 13.3 without the other Party’s prior  written consent, which consent will not be unreasonably withheld, conditioned or delayed, unless  the settlement includes any express or implied admission of liability or wrongdoing on either  Party’s part, in which case the right to grant or deny consent is absolute and at its sole discretion.   Notwithstanding the above, if Aquestive or Pharmanovia has commenced any action to enforce  Aquestive Patents against such Third Party under the terms of Section 13.2 above, then the terms  of Section 13.2 will supersede the terms of this Section 13.3.  13.4 Ownership of Pharmanovia Housemarks; Termination of Right to Use.    13.4.1 Pharmanovia shall own all right, title, and interest in the Pharmanovia  Housemarks and Pharmanovia Marks in all forms of use or display in which they may appear, and  any goodwill associated therewith.  Notwithstanding any provision of this Agreement, Aquestive  agrees that it shall not, by virtue of this Agreement, acquire any right, title, and interest in or to the  Pharmanovia Housemarks or Pharmanovia Marks or any goodwill associated therewith.  13.4.2 Upon and following the termination of this Agreement, except in  connection with any Supply of Product to Pharmanovia after termination or expiration of this  Agreement, Aquestive shall not use the Pharmanovia Housemarks, the Pharmanovia Marks, or any  other name or mark of Pharmanovia.  13.5 Ownership of Aquestive Marks; Termination of Right to Use.    13.5.1 Aquestive shall own all right, title, and interest in the Aquestive Marks in  all forms of use or display in which they may appear, and any goodwill associated therewith.   Notwithstanding any provision of this Agreement, Pharmanovia agrees that it shall not, by virtue  of this Agreement, acquire any right, title, and interest in or to the Aquestive Marks or any goodwill  associated therewith.  13.5.2 Upon and following the termination of this Agreement, except in  connection with any Supply of Product to Pharmanovia after termination or expiration of this  Agreement, Pharmanovia shall not use the Aquestive Marks or any other name or mark of  Aquestive.  14. MISCELLANEOUS  14.1 Independent Contractor.  Neither Aquestive nor Pharmanovia, together in each  case with their respective employees and representatives, are under any circumstances to be  considered as employees, partners, joint venturers, agents, or representatives of the other by virtue  of this Agreement, and neither shall have the authority or power to bind the other or contract in  the other’s name.  

 

   46    14.2 Registration and Filing of this Agreement.  To the extent, if any, that either Party  concludes in good faith that it or is required to file or register this Agreement or a notification  thereof with any Regulatory Authority including, without limitation, the U.S. Securities and  Exchange Commission or the U.S. Federal Trade Commission, in accordance with Applicable  Law, such Party shall (a) inform the other Party thereof, (b) provide copies of the proposed  disclosure to the other Party reasonably in advance of such filing or other disclosure under the  circumstances, (c) promptly notify the other Party in writing of such requirement and any  respective timing constraints, and (d) give the other Party a reasonable time under the  circumstances from the date of notice by such Party of the required disclosure to comment upon  and request confidential treatment for such disclosure; provided, that, the other Party shall  promptly review and provide comments regarding the proposed disclosure and the disclosing Party  will in good faith consider incorporating such comments.  14.3 Notices.  All notices or other communications required or permitted to be given  under any of the provisions of this Agreement shall be in writing in the English language, and shall  be deemed to have been duly given: (a) when personally received by the intended recipient; (b)  when delivered by messenger or internationally recognized delivery service (with confirmation of  receipt); (c) when delivered via e-mail or facsimile (and promptly confirmed by mail); or (d) three  (3) Business Days after having been mailed by first class registered or certified mail, return receipt  requested, postage prepaid, addressed to the applicable party at the address indicated below, or to  any other address or addressee as any Party may in the future specify by notice to the other Party  (with notice of change of address or addressee not being valid until actually received):  If to  Pharmanovia:  Atnahs Pharma UK Limited  Sovereign House, Miles Gray Road, Basildon, Essex  SS14 3FR  Telephone: +44 1268 820 870  Attention: Dr James Burt, CEO  With a copy to: Atnahs Pharma UK Limited  Sovereign House, Miles Gray Road, Basildon, Essex  SS14 3FR  Telephone: +44 1268 820 870  Attention: General Counsel  If to Aquestive: Aquestive Therapeutics, Inc.  30 Technology Drive  Warren, New Jersey 07059  Attn:  Daniel Barber, Chief Executive Officer  E-mail:  dbarber@aquestive.com  With a copy to: Aquestive Therapeutics, Inc.  30 Technology Drive  Warren, New Jersey 07059  Attention:  General Counsel  E-mail:  lbraender@aquestive.com  

 

   47    14.4 Binding Effect; No Assignment.  This Agreement shall be binding upon and inure  to the benefit of the Parties and their respective successors and permitted assigns.  Except as  expressly set forth in this Agreement, neither Aquestive nor Pharmanovia may assign any of its  rights or delegate any of its liabilities or obligations hereunder without the prior written consent of  the other Party, provided, however, that, without the prior written consent of the other Party: (a)  either Party may assign this Agreement to any purchaser of all or substantially all of its assets or  business to which this Agreement relates; and (b) either Party may assign this Agreement and/or  its rights and obligations under this Agreement to any of its Affiliates.  No assignment hereunder  shall relieve the assigning Party of its responsibilities or obligations hereunder; provided, further  that any assignee shall agree in writing to be bound by all of the obligations of the assigning Party  hereunder.  Any purported assignment or transfer in violation of this Section 13.4 will be void  ab initio and of no force or effect. Aquestive shall not assign or otherwise transfer any right, title  or interest in any of the Aquestive IP to any third party unless provision is made to ensure that the  assignee’s rights to such Aquestive IP remain subject to the license rights granted to Pharmanovia  under this Agreement and further obligations are not imposed on Pharmanovia thereby.  14.5 No Implied Waivers; Rights Cumulative.  No failure on the part of Aquestive or  Pharmanovia to exercise and no delay in exercising any right, power, remedy or privilege under  this Agreement, or provided by statute or at law or in equity or otherwise, including the right or  power to terminate this Agreement, shall impair, prejudice or constitute a waiver of any such right,  power, remedy or privilege or be construed as a waiver of any breach of this Agreement or as an  acquiescence therein, nor shall any single or partial exercise of any such right, power, remedy or  privilege preclude any other or further exercise thereof or the exercise of any other right, power,  remedy or privilege.  14.6 Severability.  If any provision of this Agreement is held invalid or unenforceable  by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full  force and effect.  Any provision of this Agreement held invalid or unenforceable only in part or  degree shall remain in full force and effect to the extent not held invalid or unenforceable.  The  Parties further agree to replace such invalid or unenforceable provision of this Agreement with a  valid and enforceable provision that shall achieve, to the extent possible, the economic, business,  and other purposes of such invalid or unenforceable provision.  14.7 Force Majeure.  Neither Party shall be liable for delay in delivery or  nonperformance (except for any obligation for the payment of money), in whole or in part, nor  shall the other Party have the right to terminate this Agreement except as otherwise specifically  provided in  this Section 14.7, to the extent that such delay in delivery or nonperformance is caused  by any of the following events that are reasonably beyond the control of such Party and without  the fault or negligence of such Party: (i) strikes, lockouts or other labor disturbances; (ii) any  change or effect resulting from or associated with acts of war or terrorism or changes imposed by  a Regulatory Authority to address concerns associated with war or terrorism; (iii) any change or  effect resulting from any acts of God, force majeure events, armed hostilities or sabotage, riots,  civil commotion, insurrections, or any other weather developments or natural or man-made  disasters; (iv) any change or effect resulting from any epidemics, pandemics or other public health  emergencies, including COVID-19 or any worsening or variant thereof, or (vii) any change or  effect resulting from conflict in the territory of Ukraine or any sanctions or restrictions related  thereto, (a “Force Majeure”); provided, however, that the Party affected by such a condition shall,  

 

   48    as soon as it becomes aware of same (but in any event within ten (10) days of its occurrence), give  written notice to the other Party stating the nature of the condition, its anticipated duration and any  action being taken to avoid or minimize its effect.  The suspension of performance shall be of no  greater scope and no longer duration than is reasonably required and the nonperforming Party shall  use its Commercially Reasonable Efforts to remedy its inability to perform; provided, however,  that in the event the suspension of performance continues for a period of ninety (90) consecutive  calendar days after the date of the occurrence, and such failure to perform would constitute a  material breach of this Agreement in the absence of such force majeure event, the non-affected  Party may terminate this Agreement immediately by written notice to the other Party.  14.8 Amendment.  This Agreement may not be amended, and no provision hereof may  be modified or waived, except by an instrument in writing duly executed by each of the Parties  hereto.  14.9 Rules of Construction.  The Parties hereto agree that they have been represented  by counsel during the negotiation and execution of this Agreement and, therefore, waive the  application of any law, regulation, holding or ruling of construction providing that ambiguities in  an agreement or other document shall be construed against the Party drafting such agreement or  document.  14.10 Publicity.    14.10.1 Press Releases.  The Parties acknowledge that each of Pharmanovia  and Aquestive intends to issue press releases and other public statement disclosing the existence  of or relating to this Agreement, and each agrees to provide the other Party a copy of such release  and statement and to obtain the express prior written consent of the other Party, which consent  shall not be unreasonably withheld, conditioned or delayed; provided, however, that neither Party  shall be prevented from complying with any duty of disclosure it may have pursuant to Applicable  Law, including securities laws applicable to a public company.  14.10.2 Use of Marks.  During the Term, Aquestive will have the right to  display the Pharmanovia Housemark on the partnership page of its corporate website, and  Pharmanovia will have the right to display the Aquestive Marks on its corporate website.  14.11 Expenses.  Except as expressly set forth herein, each Party shall bear all fees and  expenses incurred by such Party in connection with, relating to or arising out of the execution,  delivery and performance of this Agreement and the consummation of the transactions  contemplated hereby, including attorneys’, accountants’ and other professional fees and expenses.  14.12 Governing Law; Dispute Resolution.    14.12.1 This Agreement shall be governed by and construed in accordance  with the laws (substantive and procedural) of the state of New York, United States without  regarding to its conflict of laws principles.  The Parties expressly exclude application of the United  Nations Convention for the International Sale of Goods.  14.12.2 In the event of any dispute, claim, or controversy between the Parties  under this Agreement, the Parties will first attempt in good faith to resolve such dispute by  

 

   49    negotiation and consultation between themselves.  In the event that such dispute is not resolved on  an informal basis within ten (10) days, either Party may refer the matter to the Parties’ Executive  Officers for attempted resolution.  Each Party shall designate an “Executive Officer” of its  company as the designee in the event of any dispute that has not been resolved in accordance with  this Section 14.12.2.  The Executive Officer shall be the President of the respective Party or his or  her designee.  The Executive Officers of the Parties will attempt in good faith to resolve such  dispute by negotiation and consultation for a thirty (30) day period following such referral.  14.12.3 If the Executive Officers cannot reach consensus on a given matter  within thirty (30) days, then, such dispute, controversy, or claim that is not an “Excluded Claim”  shall be resolved by binding arbitration by the International Court of Arbitration of the  International Chamber of Commerce (“ICC”) in accordance with the rules of the ICC as in force  on the date on which the request for arbitration is filed (“ICC Rules”).  The place of arbitration  shall be New York, New York, United States.  Such arbitration shall be conducted by a sole  arbitrator mutually selected by written agreement of the Parties.  In the event that the Parties are  not able to mutually select the sole arbitrator, the arbitration shall be conducted by a panel of three  arbitrators, consisting of one arbitrator to be selected by the Party referring such matter to  arbitration and one arbitrator to be selected by the other Party, and the third to be selected jointly  by the two arbitrators selected by the Parties in accordance with the ICC Rules.  The arbitration  shall be conducted in English.    14.12.4 It is the intention of the Parties that discovery procedures, although  permitted as described herein, will be limited except in exceptional circumstances.  The  arbitrator(s) will permit such limited discovery procedures necessary for an understanding of any  legitimate issue raised in the arbitration, including the production of documents.  No later than  thirty (30) days after selection of the arbitrator(s), the Parties and their representatives shall hold a  preliminary meeting with the arbitrator(s), to mutually agree upon and thereafter follow procedures  seeking to assure that the arbitration will be concluded within six (6) months from such meeting.   Failing any such mutual agreement, the arbitrator(s) will design and the Parties shall follow  procedures to such effect.  The arbitrator(s) will, in rendering its decision, apply the governing law  (procedural and substantive) of the State of New York, United States without giving effect to any  rules or laws relating to arbitration.  Any award rendered by the arbitrator(s) will be final and  binding, and judgment may be entered upon it in any court of competent jurisdiction.  14.12.5 Either Party may apply to the arbitrator(s) for interim injunctive relief  until the arbitration award is rendered or the controversy is otherwise resolved.  Either Party also  may, without waiving any remedy under this Agreement, seek from any court having jurisdiction  any injunctive or provisional relief necessary to protect the rights or property of that Party pending  the arbitration award.  The arbitrator(s) shall have no authority to award punitive or any other non- compensatory damages.  The prevailing Party shall be entitled to recover its reasonable attorneys’  fees, costs and disbursements.  The costs of the arbitration including without limitation, the fees  of the arbitrator (but excluding each party’s attorney’s fees) shall be initially shared equally by the  parties but may be awarded by the arbitrator as additional damages in favor of the prevailing party.  14.12.6 Except to the extent necessary to confirm or enforce an award or as may  be required by law, neither a Party nor an arbitrator may disclose the existence, content, or results  of an arbitration without the prior written consent of both Parties.  In no event shall an arbitration  

 

   50    be initiated after the date when commencement of a legal or equitable proceeding based on the  dispute, controversy or claim would be barred by the applicable New York statute of limitations.  14.12.7 Notwithstanding anything to the contrary contained in this  Agreement, each of the Parties shall have the right to bring an action or claim for interim measures,  including specific performance or injunctive relief, in order to preserve its rights or enforce the  obligations of the other Party under this Agreement, in any court of competent jurisdiction or  having jurisdiction over any of the Parties or their respective assets, without the need to first submit  such matter to arbitration under this Section 14.12.   14.12.8 As used in this Section 14.12, the term “Excluded Claim” shall  mean a dispute, controversy or claim that concerns (i) the inventorship, validity, enforceability or  infringement of a patent, trademark or copyright; or (ii) any antitrust, anti-monopoly, anti- corruption or competition law or regulation, whether or not statutory.  14.13 Entire Agreement.  This Agreement, the Quality Agreement, the Safety Data  Exchange Agreement and the Product Schedule contains the entire agreement between the Parties  with respect to the subject matter hereof and supersede all prior agreements, written or oral,  between the Parties.  14.14 Third Party Beneficiaries.  None of the provisions of this Agreement, express or  implied, is intended to be or shall be for the benefit of or enforceable by any Person (including,  without limitation, any creditor of either Party hereto) other than Pharmanovia and Aquestive and  their respective successors and permitted assigns.  No such Person shall obtain any right under any  provision of this Agreement or shall by reasons of any such provision make any claim in respect  of any debt, liability, or obligation (or otherwise) against either Party hereto.  14.15 Non-Recourse.  No past, present or future director, officer, employee, incorporator,  member, partner, stockholder, Affiliate, agent, attorney or representative of either Party or any of  their respective Affiliates shall have any liability (whether in contract or in tort) for any obligations  or liabilities of such Party or applicable Affiliate arising under, in connection with or related to  this Agreement or any of the transactions contemplated hereunder including for any Third Party  Claim relating thereto.  14.16 Interpretation and Construction.  The headings of Sections in this Agreement  are provided for convenience only and shall not affect its construction or interpretation.  All  references to “Section” or “Sections” refer to the corresponding Section or Sections of this  Agreement.  All words used in this Agreement shall be construed to be of such gender or number  as the circumstances require.  Unless otherwise expressly provided in this Agreement, the word  “including” does not limit the preceding words or terms and shall be deemed to be followed by the  words “without limitation.” Unless otherwise expressly provided in this Agreement, the terms  “shall have responsibility for”, “shall be responsible for” or the like, shall be deemed to be followed  by “and shall be obligated to duly carry out such responsibility.”  14.17 Controlling Language.  This Agreement and the Schedules hereto are prepared  and executed in the English language only, which language shall control and prevail in all respects.   The English language shall be used in the interpretation and performance of this Agreement.  Any  

 

   51    translations of this Agreement into any other language are for reference only and shall have no  legal or other effect.  Any notice which is required or permitted to be given by one Party to the  other under this Agreement shall be in the English language and shall be in writing.  All other  correspondence and documentation required to be delivered to a Party under this Agreement,  arising out of or connected with this Agreement, and any related purchase order(s) shall be in the  English language; provided that if a document to be delivered under this Agreement is in a  language other than English in its original form, it shall be delivered in its original language and  at Aquestive’s written request, Pharmanovia will provide Aquestive with a copy of English  translation of such document the cost of which shall be borne by Aquestive.  All proceedings  related to this Agreement shall be conducted in the English language.  14.18 Rights in Bankruptcy.  The Parties acknowledge that all rights and licenses  granted under or pursuant to any Section of this Agreement are, and shall otherwise be deemed to  be, for purposes of Section 365(n) of Title 11 of the United States Code and other similar foreign  laws (collectively, the “Bankruptcy Code”), licenses of rights to be “intellectual property” as  defined under the Bankruptcy Code or such foreign laws.  Pharmanovia shall have all rights,  elections, and protections under the Code and all other applicable bankruptcy, insolvency, and  similar laws with respect to this Agreement and the subject matter hereof. If a case is commenced  during the Term by or against Aquestive or its Affiliates or their respective assets under a  Bankruptcy Code  or a similar proceeding then, then subject to Pharmanovia’s rights of election  under Section 365(n), all rights, licenses, and privileges granted to Pharmanovia under this  Agreement will continue subject to the respective terms and conditions hereof, and will not be  affected, even by Aquestive’s rejection of this Agreement and Aquestive (in any capacity,  including debtor-in-possession) and its successors and assigns (including, without limitation, a  trustee) shall perform all of the obligations provided in this Agreement to be performed by such  Party.   14.19 Product Schedule.  To the extent any terms and provisions of the Product Schedule  conflict with the terms and provisions of this Agreement, the terms and provisions of this  Agreement shall control, except to the extent that the Product Schedule expressly and specifically  states an intent to supersede a certain provision of this Agreement on a specific matter.  The  Product Schedule and any amendments thereto shall be deemed to be incorporated herein by  reference.  14.20 Counterparts; Signatures.  This Agreement may be executed in multiple  counterparts, all of which, when executed, shall be deemed to be an original and all of which  together shall constitute one and the same document.  Signatures provided by facsimile or e-mail  transmission shall be deemed to be original signatures.  [Signature page follows]    

 

  [Signature Page to License, Development and Supply Agreement]      IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by  their duly authorized representatives, effective as of the Effective Date.  AQUESTIVE THERAPEUTICS, INC.    By:    Name:   Title:     ATNAHS PHARMA UK LIMITED     By:    Name:  Title:      

 

     PRODUCT SCHEDULE 1  Product Schedule to the License and Supply Agreement (the “Agreement”) dated as of  September 26, 2022 by and between Aquestive Therapeutics, Inc. (“Aquestive”) and Atnahs  Pharma UK Limited (“Pharmanovia”).    Capitalized terms used herein and not otherwise defined shall have the meanings given them in  the Agreement.     1. PRODUCT, API, DOSAGE STRENGTH, FIELD, TERRITORY  1.1  “API” means the active pharmaceutical ingredient diazepam.  1.2 “Commercialization Year” shall mean the one year period from the First Commercial  Sale, and each annual period thereafter.  1.3 “Dosage Strength” means the 5mg, 7.5mg, 10mg, 12.5 mg, 15mg, 17.5mg, and 20mg  dosage strengths of the Product.  1.4  “Field” means the treatment of prolonged or acute, convulsive seizures in all ages, or such  other definition that is consistent with the foregoing and agreed upon in good faith by the  Parties in writing).   1.5 “Product” means diazepam buccal film.  1.6  “Manufacturing Facility” means, as of the Effective Date, Aquestive’s manufacturing site  located at 6465 Ameriplex Drive, Portage, Indiana (IN) 46368, United States (USA), FDA  Establishment Number 3004395604.  1.7 “Territory” means: (i) the countries of the European Union (as of the Effective Date),  Sweden, Switzerland and Norway; (ii) the United  Kingdom (England, Scotland, Wales  and Northern Ireland); and (iii) the Middle East and North Africa (Algeria, Bahrain, Egypt,  Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia,  Syria, Tunisia, United Arab Emirates and Yemen).  2. PRODUCT TRANSFER PRICE  Aquestive shall Supply quantities of each Unit of the Product to Pharmanovia at the initial  Product Transfer Prices below, further to adjustment pursuant to Section 5.2 of the Agreement:  Dosage Strength Product Transfer Price   Low Dose (5mg, 7.5mg, 10mg) $[****]/per Carton*  Medium Dose (12.5mg, 15mg) $[****]/per Carton  High Dose (17.5mg, 20mg) $[****]/per Carton    

 

     *each Carton contains two Units.    3. AQUESTIVE PRODUCT MARKS  The Aquestive Product Marks are set forth below:  LibervantTM  4. PHARMANVOIA  MARKS  ValiumTM  5. PRODUCT SHELF LIFE  [****]% of approved shelf life  6. AQUESTIVE PRODUCT PATENTS  The Aquestive Product Patents are set forth below:    None.  7. PAYMENTS  6.1 Milestone Payments  Non-refundable payments will be due from Pharmanovia to Aquestive as set forth in the  table below:  Milestone  Milestone Payment  (U.S. Dollars) Milestone Payment Due Date  1.    Agreement Execution $3,500,000 September 30, 2022  2. Receipt of First Ex-US  Marketing Authorization  $[****] Within [****] Business Days of receipt  of the first Marketing Authorization for  the Product within the Territory.    3. Pricing and Reimbursement  Milestone  $[****] Within [****] Business Days of pricing  and reimbursement approval being  obtained for the Product from the  applicable Regulatory Authority in the  first country in the Territory.     Pharmanovia shall give Aquestive written notice of the achievement of each milestone event in  respect of which a milestone payment is due (with the exception of the first milestone event).  Following receipt of such notice, Aquestive shall submit an invoice to Pharmanovia, and  Pharmanovia and shall pay the corresponding Milestone Payment no later than five (5) Business  Days after receipt of such invoice.  

 

     5.1 Royalty Fees    Subject to Section 5.3 of the Agreement, Pharmanovia shall pay to Aquestive for each  Payment Period a Royalty Fee during the Term with respect to the Product in the Territory  in an amount equal to [****] of Net Sales on a quarterly basis.    5.2 Profit Share    In the event that the Profit Share is payable by Pharmanovia, Pharmanovia shall pay to  Aquestive for each Payment Period [****]% of Profits on all Products sold in the  Territory on a quarterly basis.    5.3 Minimum Volume Commitments     The Minimum Volume Commitment with respect to the Product is as set forth in the table  below:    Time Period Minimum Volume Commitment    1. Commercialization Year 1 None  2. Commercialization Year 2  [****] Units  3. Commercialization Year 3 [****] Units  4. Commercialization  Year 4 [****] Units  5.  Commercialization  Year 5 and beyond To be discussed in good faith by  the Parties. The Parties agree if the  Minimum Volume Commitment in  Commercialization Year [****] is  less than in Commercialization  Year [****], to discuss the  Product Transfer Price in good  faith.    In the event Pharmanovia fails to meet the Minimum Volume Commitment set forth above for a  given time period, Pharmanovia shall have the option to make up the shortfall in the number of  Units purchased by no later than June 30 following the end of the time period.   8. ADDITIONAL TERMS   Pharmanovia shall issue purchase orders in whole batch increments of the following number of  Units:  Dosage Strength Number of Units  5mg [****]  7.5mg [****]  10mg [****]  12.5mg [****]  15mg [****]  17.5mg [****]  

 

     20mg [****]    If required by Pharmanovia, Aquestive can carton up to [****] different printed cartons, or SKUs,  per manufacturing film batch, for a $[****] charge for the first [****] SKUs and another $[****]  for any additional SKUs and up to a maximum of [****] SKUs. The minimum secondary quantity  per SKU is [****] cartons.  

 

  1.13-1  Schedule 1.13  Aquestive Patents    Docket No. Country Status Title Appln No.  Appln Date Publn.  No. Publn. Date  1199-4 PCT/EPO/DIV (2)  European  Patent  Convention -  (EP)  Filed - (F)  THIN FILM WITH NON-SELF- AGGREGATING UNIFORM  HETEROGENEITY  19169349.8 10/11/2002 3542793 9/25/2019  1199-26 PCT/EPO/DIV II  European  Patent  Convention -  (EP)  Filed - (F)  POLYETHYLENE OXIDE-BASED FILMS  AND DRUG DELIVERY SYSTEMS  MADE THEREFROM   17151005.0 5/28/2004 3210601 8/30/2017  [****] [****] [****] [****] [****] [****]      AQU-013WOEP  European  Patent  Convention -  (EP)  Filed - (F) PHARMACEUTICAL COMPOSITIONS  WITH ENHANCED PERMEATION 17723617.1 12/05/2018 3452024 03/13/2019  [****] [****] [****] [****] [****] [****]      AQU-023WOEP  European  Patent  Convention -  (EP)  Filed - (F) PHARMACEUTICAL COMPOSITIONS  WITH ENHANCED PERMEATION 18786591.0 4/16/2020 3687509 08/05/2020  [****] [****] [****] [****] [****] [****]      

 

  1.13-2    Docket No. Country Status Exp. Date Title Appln. No. Appln.  Date  Publn.  No.  Publn.  Date Pat. No. Issue Date  1199-4  B/PCT/EPO/Denm ark  Denmark -  (DK)  Granted  - (G) 1/30/2024  Thin Film With Non-Self  Aggregating Uniform  Heterogeneity And Drug  Delivery Systems Made  Therefrom  04707004.0 1/30/2004 1587504 10/26/2005 1587504 4/18/2012  1199-4  B/PCT/EPO/Franc e  France -  (FR)  Granted  - (G) 1/30/2024  Thin Film With Non-Self  Aggregating Uniform  Heterogeneity And Drug  Delivery Systems Made  Therefrom  04707004.0 1/30/2004 1587504 10/26/2005 1587504 4/18/2012  1199-4  B/PCT/EPO/Germ any  Germany -  (DE)  Granted  - (G) 1/30/2024  Thin Film With Non-Self  Aggregating Uniform  Heterogeneity And Drug  Delivery Systems Made  Therefrom  04707004.0 1/30/2004 6020040 37401.6 10/26/2005 1587504 4/18/2012  1199-4  B/PCT/EPO/Hung ary  Hungary -  (HU)  Granted  - (G) 1/30/2024  Thin Film With Non-Self  Aggregating Uniform  Heterogeneity And Drug  Delivery Systems Made  Therefrom  04707004.0 1/30/2004 1587504 10/26/2005 1587504 4/18/2012  1199-4  B/PCT/EPO/Irelan d  Ireland -  (IE)  Granted  - (G) 1/30/2024  Thin Film With Non-Self  Aggregating Uniform  Heterogeneity And Drug  Delivery Systems Made  Therefrom  04707004.0 1/30/2004 1587504 10/26/2005 1587504 4/18/2012  1199-4  B/PCT/EPO/Switz erland  Switzerland  - (CH)  Granted  - (G) 1/30/2024  Thin Film With Non-Self  Aggregating Uniform  Heterogeneity And Drug  Delivery Systems Made  Therefrom  04707004.0 1/30/2004 1587504 10/26/2005 1587504 4/18/2012  1199-4  B/PCT/EPO/UK  Great  Britain -  (GB)  Granted  - (G) 1/30/2024  Thin Film With Non-Self  Aggregating Uniform  Heterogeneity And Drug  Delivery Systems Made  Therefrom  04707004.0 1/30/2004 1587504 10/26/2005 1587504 4/18/2012  1199-4  PCT/EPO/DIV/DE  Germany -  (DE)  Granted  - (G) 10/11/2022  Thin Film With Non-Self  Aggregating Uniform  Heterogeneity And Drug  Delivery Made Therefrom  60249871.6 10/11/2002 2351557 8/3/2011 2351557 4/17/2019  

 

  1.13-3  Docket No. Country Status Exp. Date Title Appln. No. Appln.  Date  Publn.  No.  Publn.  Date Pat. No. Issue Date  1199-4  PCT/EPO/DIV/ES  Spain -  (ES)  Granted  - (G) 10/11/2022  Thin Film With Non-Self  Aggregating Uniform  Heterogeneity And Drug  Delivery Made Therefrom  10182204.7 10/11/2002 2735512 12/19/2019 2351557 4/17/2019  1199-4  PCT/EPO/DIV/FR  France -  (FR)  Granted  - (G) 10/11/2022  Thin Film With Non-Self  Aggregating Uniform  Heterogeneity And Drug  Delivery Made Therefrom  10182204.7 10/11/2002 2351557 8/3/2011 2351557 4/17/2019  1199-4  PCT/EPO/DIV/IE  Ireland -  (IE)  Granted  - (G) 10/11/2022  Thin Film With Non-Self  Aggregating Uniform  Heterogeneity And Drug  Delivery Made Therefrom  10182204.7 10/11/2002 2351557 8/3/2011 2351557 4/17/2019  1199-4  PCT/EPO/DIV/IT Italy - (IT) Granted  - (G) 10/11/2022  Thin Film With Non-Self  Aggregating Uniform  Heterogeneity And Drug  Delivery Made Therefrom  50201900004 4094 10/11/2002 2351557 8/3/2011 2351557 4/17/2019  1199-4  PCT/EPO/DIV/U K  Great  Britain -  (GB)  Granted  - (G) 10/11/2022  Thin Film With Non-Self  Aggregating Uniform  Heterogeneity And Drug  Delivery Made Therefrom  10182204.7 10/11/2002 2351557 8/3/2011 2351557 4/17/2019  1199-15  PCT/EPO/DIV/CH  Switzerland  - (CH)  Granted  - (G) 10/11/2022  Uniform Films For Rapid  Dissolve Dosage Form  Incorporating Taste- Masking Compositions  11157819.1 10/11/2002 2332523 6/15/2011 2332523 9/11/2013  1199-15  PCT/EPO/DIV/De nmark  Denmark -  (DK)  Granted  - (G) 10/11/2022  Uniform Films For Rapid  Dissolve Dosage Form  Incorporating Taste- Masking Compositions  11157819.1 10/11/2002 2332523 6/15/2011 2332523 9/11/2013  

 

  1.13-4  Docket No. Country Status Exp. Date Title Appln. No. Appln.  Date  Publn.  No.  Publn.  Date Pat. No. Issue Date  1199-15  PCT/EPO/DIV/Fra nce  France -  (FR)  Granted  - (G) 10/11/2022  Uniform Films For Rapid  Dissolve Dosage Form  Incorporating Taste- Masking Compositions  11157819.1 10/11/2002 2332523 6/15/2011 2332523 9/11/2013  1199-15  PCT/EPO/DIV/Ge rmany  Germany -  (DE)  Granted  - (G) 10/11/2022  Uniform Films For Rapid  Dissolve Dosage Form  Incorporating Taste- Masking Compositions  11157819.1 10/11/2002 6024553 3.2 6/15/2011 2332523 9/11/2013  1199-15  PCT/EPO/DIV/Ital y  Italy - (IT) Granted  - (G) 10/11/2022  Uniform Films For Rapid  Dissolve Dosage Form  Incorporating Taste- Masking Compositions  50201390221 3865 10/11/2002 1115781 9.1 6/15/2011 2332523 9/11/2013  1199-15  PCT/EPO/DIV/Sp ain  Spain -  (ES)  Granted  - (G) 10/11/2022  Uniform Films For Rapid  Dissolve Dosage Form  Incorporating Taste- Masking Compositions  11157819.1 10/11/2002 2332523 6/15/2011 2332523 9/11/2013  1199-15  PCT/EPO/DIV/Sw eden  Sweden -  (SE)  Granted  - (G) 10/11/2022  Uniform Films For Rapid  Dissolve Dosage Form  Incorporating Taste- Masking Compositions  11157819.1 10/11/2002 2332523 6/15/2011 2332523 9/11/2013  

 

  1.13-5  Docket No. Country Status Exp. Date Title Appln. No. Appln.  Date  Publn.  No.  Publn.  Date Pat. No. Issue Date  1199-15  PCT/EPO/DIV/U. K.  Great  Britain -  (GB)  Granted  - (G) 10/11/2022  Uniform Films For Rapid  Dissolve Dosage Form  Incorporating Taste- Masking Compositions  11157819.1 10/11/2002 2332523 6/15/2011 2332523 9/11/2013  1199-15  PCT/EPO/France  France -  (FR)  Granted  - (G) 10/11/2022  Uniform Films For Rapid  Dissolve Dosage Form  Incorporating Taste- Masking Compositions  02801042.9 10/11/2002 1458367 4/17/2003 1458367 12/14/2011  1199-15  PCT/EPO/German y  Germany -  (DE)  Granted  - (G) 10/11/2022  Uniform Films For Rapid  Dissolve Dosage Form  Incorporating Taste- Masking Compositions  02801042.9 10/11/2002 6024176 7.8 4/17/2003 1458367 12/14/2011  1199-15  PCT/EPO/Ireland  Ireland -  (IE)  Granted  - (G) 10/11/2022  Uniform Films For Rapid  Dissolve Dosage Form  Incorporating Taste- Masking Compositions  02801042.9 10/11/2002 1458367 4/17/2003 1458367 12/14/2011  1199-15  PCT/EPO/Switzerl and  Switzerland  - (CH)  Granted  - (G) 10/11/2022  Uniform Films For Rapid  Dissolve Dosage Form  Incorporating Taste- Masking Compositions  02801042.9 10/11/2002 1458367 4/17/2003 1458367 12/14/2011  

 

  1.13-6  Docket No. Country Status Exp. Date Title Appln. No. Appln.  Date  Publn.  No.  Publn.  Date Pat. No. Issue Date  1199-15  PCT/EPO/UK  Great  Britain -  (GB)  Granted  - (G) 10/11/2022  Uniform Films For Rapid  Dissolve Dosage Form  Incorporating Taste- Masking Compositions  02801042.9 10/11/2002 1458367 4/17/2003 1458367 12/14/2011      

 

    Schedule 1.47A  Aquestive Housemark        

 

    Schedule 1.47B  Pharmanovia Housemark

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