Document:

Exhibit 4.1

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

PLACEMENT AGENT COMMON STOCK PURCHASE WARRANT

 

JAGUAR HEALTH, INC.

 

	
Warrant   Shares:             
    	
Initial Exercise Date:   March    , 2019
    

 

 

THIS PLACEMENT AGENT COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Ladenburg Thalmann & Co. Inc. or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to the Termination Date (as defined in Section 5 below) but not thereafter, to subscribe for and purchase from Jaguar Health, Inc., a Delaware corporation (the “Company”), up to        shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).  This Warrant is issued by the Company as of the date hereof pursuant to the Placement Agency Agreement, dated as of March    , 2019, between the Company and the Holder.

 

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

 

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

 

“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if OTCQB or OTCQX is not a

 

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Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

“Board of Directors” means the board of directors of the Company.

 

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

 

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

 

“Common Stock” means the common stock of the Company, par value $0.0001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

 

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

 

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

 

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

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

 

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

 

“Subsidiary” means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

 

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

 

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

 

“Transfer Agent” means Issuer Direct Corporation, with offices located at 500 Perimeter Park Drive, Morrisville, North Carolina 27560, and any successor transfer agent of the Company.

 

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

 

Section 2.                                           Exercise.

 

a)                                     Exercise of Warrant.  Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy or PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required.  Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available

 

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hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.  The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice.  The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

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

 

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

 

(A) = as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day;

 

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

 

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

 

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

 

Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c). Other than cash payments pursuant to Section 2(d)(i) and 2(d)(iv) herein and the right of a Holder to receive Warrant Shares upon a cashless exercise pursuant to this Section 2(c) herein, under no circumstances shall the Company be obligated to provide the Holder with a net cash settlement payment.

 

d)                                     Mechanics of Exercise.

 

i.     Delivery of Warrant Shares Upon Exercise.  The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144 (assuming cashless exercise of the Warrants), and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise and, in the case of each of (i) and (iii), subject to the Company’s receipt of the aggregate Exercise Price (such date, the “Warrant Share Delivery Date”).   Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided  that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days and (ii) the

 

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number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise.  If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a properly completed Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. Promptly upon request by the Holder, the counsel to the Company shall provide an opinion in connection with the availability of Rule 144 in connection with the issuance of Warrant Shares. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 3.                                           Certain Adjustments.

 

a)                                     Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged.  Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record

 

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date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

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

 

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

 

d)                                     Notice to Holder.

 

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

 

ii.               Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring

 

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cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice.  To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.  The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

Section 4.                                           Piggy-Back Registrations. If, at any time while this Warrant is outstanding, there is not an effective registration statement covering all of the Warrant Shares and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the Company’s stock option or other employee benefit plans, then the Company shall deliver to each Holder a written notice of such determination and, if within fifteen days after the date of the delivery of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Warrant Shares such

 

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Holder requests to be registered; provided, however, that the Company shall not be required to register any Warrant Shares pursuant to this Section 4 that are eligible for resale pursuant to Rule 144 (without volume restrictions or current public information requirements) or that are the subject of a then effective registration statement that is available for resales or other dispositions by such Holder.

 

Section 5.                                           Transfer of Warrant.

 

a)                                     Transferability.  Pursuant to FINRA Rule 5110(g)(1), neither this Warrant nor any Warrant Shares issued upon exercise of this Warrant shall be sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of the securities by any person for a period of 180 days immediately following the date of effectiveness or commencement of sales of the offering pursuant to which this Warrant is being issued, except the transfer of any security:

 

(i)                                     by operation of law or by reason of reorganization of the Company;

 

(ii)                                  to any FINRA member firm participating in the offering and the officers and partners thereof, if all securities so transferred remain subject to the lock-up restriction in this Section 5(a) for the remainder of the time period;

 

(iii)                               if the aggregate amount of securities of the Company held by the Holder or related person do not exceed 1% of the securities being offered;

 

(iv)                              that is beneficially owned on a pro-rata basis by all equity owners of an investment fund, provided that no participating member manages or otherwise directs investments by the fund, and participating members in the aggregate do not own more than 10% of the equity in the fund; or

 

(v)                                 the exercise or conversion of any security, if all securities received remain subject to the lock-up restriction in this Section 5(a) for the remainder of the time period.

 

Subject to the foregoing restriction, any applicable securities laws and the conditions set forth in Section 5(c), this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.  Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the

 

12

 

Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning this Warrant in full.  The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

b)             New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney.  Subject to compliance with Section 5(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

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

 

d)             Restrictive Legends.

 

i.      The Warrant Shares issuable upon exercise of this Warrant (unless registered under the Securities Act of 1933, as amended (the “Securities Act”)) shall be stamped or imprinted with legends in substantially the following form:

 

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT AND THE OFFER AND SALE OF SUCH SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH SALE, OFFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN

 

13

 

REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.

 

ii.   The Company need not register a transfer of Warrant Shares bearing the restrictive legends set forth in this Section 4, unless the conditions specified in such legends are satisfied. The Company may also instruct its transfer agent not to register the transfer of the Warrant Shares, unless all of the conditions specified in the legends set forth in this Section 4 are satisfied.

 

e)              Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder provide to the Company an opinion of counsel selected by the Holder and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Warrant under the Securities Act.

 

f)               Representation by the Holder.  The Holder, by the acceptance hereof, represents and warrants that (i) it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act, and (ii) it is an “accredited” investor as that term is defined under Regulation D promulgated under the Securities Act of 1933, as amended, and neither the Holder nor any person or entity with whom the Holder shares beneficial ownership of the Company’s securities, is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act.

 

Section 6.                                           Expiration of Warrant. This Warrant shall expire and shall no longer be exercisable prior to the first to occur of the following (the “Termination Date”):

 

(a)                                 after 5:30 p.m., Pacific time, on [·], 2024;

 

(b)                                 the closing of (i) a merger, reorganization, tender offer or similar transaction involving the Company or its securities with or into another entity in which the holders of voting securities of the Company immediately prior to such transaction will hold less than 50% of the voting securities of the surviving entity immediately following such transaction as a result of shares held prior to such transaction or (ii) a sale or license of all or substantially all of the assets of the Company (each, a “Fundamental Transaction”),  provided that, such termination shall be effected by delivery of written notice to the Holder regarding such

 

14

 

termination, and such written notice shall include an option for the Holder to choose, in its sole discretion, to exercise this Warrant in lieu of termination at that time; and

 

(c)                                  a “Liquidation Event” as defined in the Company’s Certificate of Designation of Series A Convertible Participating Preferred Stock, provided that, such termination shall be effected by delivery of written notice to the Holder regarding such termination, and such written notice shall include an option for the Holder to choose, in its sole discretion, to exercise this Warrant in lieu of termination at that time.

 

Section 7.                                           Miscellaneous.

 

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

 

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

 

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

 

d)                                     Authorized Shares.

 

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

 

15

 

validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.  Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

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

 

e)                                      Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of

 

16

 

process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

 

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

 

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

 

h)                                     Notices.  Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Exercise, shall be in writing and delivered personally, by facsimile or e-mail, or sent by a nationally recognized overnight courier service, addressed to the Company, at 201 Mission Street, Suite 2375, San Francisco, California 94105, Attention: Karen Wright, facsimile number: (415) 371-8311, email address: kwright@jaguar.health, or such other facsimile number, email address or address as the Company may specify for such purposes by notice to the Holders. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile or e-mail, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number, e-mail address or address of such Holder appearing on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or via e-mail at the e-mail address set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or via e-mail at the e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.  To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.

 

17

 

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

 

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

 

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

 

l)                                         Amendment.  This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand, and the Holder, on the other hand.

 

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

 

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

 

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

 

(Signature Page Follows)

 

18

 

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

 

	
 
    	
JAGUAR HEALTH, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

19

 

NOTICE OF EXERCISE

 

TO:                           JAGUAR HEALTH, INC.

 

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

 

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

 

o in lawful money of the United States; or

 

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

 

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

 

 

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

 

 

(4)         Accredited Investor.  The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

 

	
[SIGNATURE OF HOLDER]
    
	
 
    	
 
    
	
Name of Investing   Entity:
    	
 
    
	
Signature of Authorized   Signatory of Investing Entity:
    	
 
    
	
Name of Authorized   Signatory:
    	
 
    
	
Title of Authorized   Signatory:
    	
 
    
	
Date:
    	
 
    
						

 

 

ASSIGNMENT FORM

 

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

 

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

 

	
Name:
    	
 
    
	
 
    	
(Please Print)
    
	
 
    	
 
    
	
Address:
    	
 
    
	
 
    	
(Please Print)
    
	
 
    	
 
    
	
Phone Number:
    	
 
    
	
 
    	
 
    
	
Email Address:
    	
 
    
	
 
    	
 
    
	
Dated:                                          ,      
    	
 
    
	
 
    	
 
    	
 
    
	
Holder’s Signature:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Holder’s Address:EXHIBIT A

 

SUBSCRIPTION
AGREEMENT

 

SUBSCRIPTION
AGREEMENT (this “Subscription Agreement”) made as of the last date set forth on the signature page hereof between
Avant Diagnostics, Inc., a Nevada corporation (the “Company”), and the undersigned (the “Subscriber”).

 

W
I T N E S S E T H:

 

WHEREAS,
the Company is conducting a private offering (the “Offering”) consisting of up to 2,000,000 shares of the Company’s
series D convertible preferred stock, par value $0.001 per share (the “Preferred Stock”), each share of Preferred
Stock having a stated value of $1.00 per share (the “Stated Value”) and convertible into shares of the Company’s
common stock, par value $0.00001 per share (the “Common Stock”) at a conversion price of later determined by the board
of directors of the Company, subject to adjustment, with each share to be sold at a negotiated price of $1.00 per share (the “Offering
Price”);

 

WHEREAS,
the Offering is on a “reasonable efforts” basis as to the shares of Preferred Stock to be sold up to the maximum offering
amount of $2,000,000 (the “Maximum Offering”) to a limited number of “accredited investors” (as that term
is defined by Rule 501(a) of Regulation D (“Regulation D”) promulgated under the Securities Act of 1933, as amended
(the “Securities Act”);

 

WHEREAS,
the Company and each Subscriber is executing and delivering this agreement in reliance upon the exemption from securities registration
afforded by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D as promulgated by the SEC under the Securities
Act; and

 

WHEREAS
the subscription for the Securities will be made in accordance with and subject to the terms and conditions of this Subscription
Agreement and the Company’s Confidential Private Placement Memorandum dated March 13, 2019, together with all amendments
thereof and supplements and exhibits thereto and as such may be amended from time to time (the “Memorandum”); and

 

WHEREAS,
the Subscriber desires to purchase such number of shares of Preferred Stock as set forth on the signature page hereof on the terms
and conditions hereinafter set forth.

 

NOW,
THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

    	 	-1-	 

     

    

 

I.
SUBSCRIPTION FOR SHARES AND REPRESENTATIONS BY SUBSCRIBER

 

1.1
Subject to the terms and conditions hereinafter set forth (including Section

1.19
hereof) and as set forth in the Memorandum, the Subscriber hereby subscribes for and agrees to purchase from the Company, and
the Company agrees to sell to the Subscriber, such number of shares of Preferred Stock as is set forth on the signature page hereof.
The purchase price is payable by wire transfer, to be held in escrow until a closing occurs, to the Company as follows:

 

Bank:

Address:

ABA
#:

Account
#:

FBO:

 

1.2
The Subscriber understands, acknowledges, and agrees that, except as otherwise set forth in Section 3.2 herein or otherwise required
by law, that once irrevocable, the Subscriber is not entitled to cancel, terminate or revoke this Subscription Agreement or any
agreements of the Subscriber hereunder and that this Subscription Agreement and such other agreements shall survive the death
or disability of the Subscriber and shall be binding upon and inure to the benefit of the parties and their heirs, executors,
administrators, successors, legal representatives and permitted assigns. If the Subscriber is more than one person, the obligations
of the Subscriber hereunder shall be joint and several and the agreements, representations, warranties and acknowledgments herein
contained shall be deemed to be made by and be binding upon each such person and his/her heirs, executors, administrators, successors,
legal representatives and permitted assigns

 

1.3
The Subscriber recognizes that the purchase of the Securities involves a high degree of risk including, but not limited to, the
following: (a) the Company requires substantial funds in addition to the proceeds of the Offering; (b) an investment in the Company
is highly speculative, and only investors who can afford the loss of their entire investment should consider investing in the
Company and the Securities; (c) the Subscriber may not be able to liquidate his, her or its investment; (d) transferability of
the Securities (including any securities issuable upon conversion and/or exercise of the Securities) is extremely limited; (e)
in the event of a disposition, the Subscriber could sustain the loss of its entire investment; and (f) the Company has not paid
any dividends since its inception and does not anticipate paying any dividends.

 

1.4
At the time such Subscriber was offered the Securities, it was, and as of the date hereof it is, and on each date on which it
converts the Preferred Stock, it will be an “accredited investor” as defined in Rule 501(a) under the Securities Act,
as indicated by the Subscriber’s responses to the investor questionnaire attached as Exhibit A to this Subscription Agreement,
and that the Subscriber is able to bear the economic risk of an investment in the Securities.

 

    	 	-2-	 

     

    

 

1.5 The Subscriber
hereby acknowledges and represents that (a) the Subscriber has adequate means of providing for the Subscriber’s current
financial needs and contingencies, (b) the Subscriber has knowledge and experience in business and financial matters, prior investment
experience, including investment in securities that are non-listed, unregistered and/or not traded on a national securities exchange
or the Subscriber has employed the services of a “purchaser representative” (as defined in Rule 501 of Regulation
D), attorney and/or accountant to read all of the documents furnished or made available by the Company both to the Subscriber
and to all other prospective investors in the Securities to evaluate the merits and risks of such an investment on the Subscriber’s
behalf; (c) the Subscriber recognizes the highly speculative nature of this investment; (d) the Subscriber is able to bear the
economic risk that the Subscriber hereby assumes, (e) the Subscriber could afford a complete loss of such investment in the Securities.

 

1.6
The Subscriber hereby acknowledges receipt and careful review of this Subscription Agreement, the Memorandum, the certificate
of designation to be filed with the Secretary of State of the State of Nevada for the Preferred Stock (the “Certificate
of Designations”) and all other exhibits, annexes and appendices thereto (collectively referred to as the “Offering
Materials”), and has had access to the Company’s periodic and current reports filed with the United States Securities
and Exchange Commission (the “SEC”), including the Company’s Annual Report on Form 10-K for the year ended September
30, 2018, a copy of which is attached as an exhibit to the Memorandum, as publicly filed with and available at the website of
the SEC which can be accessed at www.sec.gov, and hereby represents that the Subscriber has been furnished by the Company during
the course of the Offering with all information regarding the Company, the terms and conditions of the Offering and any additional
information that the Subscriber has requested or desired to know, and has been afforded the opportunity to ask questions of and
receive answers from duly authorized officers or other representatives of the Company concerning the Company and the terms and
conditions of the Offering; provided, however that no investigation performed by or on behalf of the Subscriber shall limit or
otherwise affect its right to rely on the representations and warranties of the Company contained herein. By the date of signature
to this Subscription Agreement, the Subscriber (along with its advisors) acknowledges its ability to conduct its own due diligence,
research and evaluation of the financial condition and integrity of the parties involved and the particular transaction, and affirms
it has made its own appraisal of, and investigation into, the Company’s business, property, financial and other condition
and creditworthiness which has been completed to the Subscriber’s total satisfaction.

 

1.7
(a) In making the decision to invest in the Securities, the Subscriber has relied solely upon the information provided by the
Company in the Offering Materials. To the extent necessary, the Subscriber has retained, at its own expense, and relied upon appropriate
professional advice regarding the investment, tax and legal merits and consequences of this Subscription Agreement and the purchase
of the Securities hereunder. The Subscriber disclaims reliance on any statements made or information provided by any person or
entity in the course of Subscriber’s consideration of an investment in the Securities other than the Offering Materials
and the results of Subscriber’s own independent investigation.

 

    	 	-3-	 

     

    

 

(b)
The Subscriber represents that (i) the Subscriber was contacted regarding the sale of the Securities by the Company (or another
person whom the Subscriber believed to be an authorized agent or representative thereof) with whom the Subscriber had a prior
substantial pre-existing relationship and (ii) it did not learn of the offering of the Securities by means of any form of general
solicitation or general advertising, and in connection therewith, the Subscriber did not (A) receive or review any advertisement,
article, notice or other communication published in a newspaper or magazine or similar media or broadcast over television or radio,
whether closed circuit, or generally available; or (B) attend any seminar meeting or industry investor conference whose attendees
were invited by any general solicitation or general advertising.

 

1.8
The Subscriber hereby acknowledges that the Offering has not been reviewed by the SEC nor any state regulatory authority since
the Offering is intended to be exempt from the registration requirements of Section 5 of the Securities Act, pursuant to Section
4(a)(2) of the Securities Act and Rule 506 of Regulation D. The Subscriber understands that the Securities have not been registered
under the Securities Act or under any state securities or “blue sky” laws and agrees not to sell, pledge, assign or
otherwise transfer or dispose of the Securities unless they are registered under the Securities Act and under any applicable state
securities or “blue sky” laws or unless an exemption from such registration is available.

 

1.9
The Subscriber understands that the Securities (have not been registered under the Securities Act by reason of a claimed exemption
under the provisions of the Securities Act that depends, in part, upon the Subscriber’s investment intention. In this connection,
the Subscriber hereby represents that the Subscriber is purchasing the Securities for the Subscriber’s own account for investment
and not with a view toward the resale or distribution to others; provided, however, that nothing contained herein shall constitute
an agreement by the Subscriber to hold the Securities for any particular length of time and the Company acknowledges that the
Subscriber shall at all times retain the right to dispose of its property as it may determine in its sole discretion, subject
to any restrictions imposed by applicable law. The Subscriber, if an entity, further represents that it was not formed for the
purpose of purchasing the Securities.

 

1.10
The Subscriber consents to the placement of a legend on any certificate or other document evidencing the Securities and, that
such securities have not been registered under the Securities Act or any state securities or “blue sky” laws and setting
forth or referring to the restrictions on transferability and sale thereof contained in this Subscription Agreement. The Subscriber
is aware that the Company will make a notation in its appropriate records with respect to the restrictions on the transferability
of such Securities. The legend to be placed on each certificate shall be in form substantially similar to the following:

 

“THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”)
OR ANY STATE SECURITIES OR “BLUE SKY LAWS,” AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED
ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS
NOT REQUIRED.”

 

    	 	-4-	 

     

    

 

1.11
The Subscriber hereby represents that the address of the Subscriber furnished by Subscriber on the signature page hereof is the
Subscriber’s principal residence if Subscriber is an individual or its principal business address if it is a corporation
or other entity.

 

1.12
The Subscriber represents that the Subscriber has full power and authority (corporate, statutory and otherwise) to execute and
deliver this Subscription Agreement and to purchase the Securities. This Subscription Agreement constitutes the legal, valid and
binding obligation of the Subscriber, enforceable against the Subscriber in accordance with its terms.

 

1.13
If the Subscriber is a corporation, partnership, limited liability company, trust, employee benefit plan, individual retirement
account, Keogh Plan, or other tax-exempt entity, it is authorized and qualified to invest in the Company and the person signing
this Subscription Agreement on behalf of such entity has been duly authorized by such entity to do so.

 

1.14
The Subscriber acknowledges that if he or she is a Registered Representative of a Financial Industry Regulatory Authority (“FINRA”)
member firm, he or she must give such firm the notice required by the FINRA’s Rules of Fair Practice, receipt of which must
be acknowledged by such firm.

 

1.15
To effectuate the terms and provisions hereof, until the consummation of the Reverse Split (as defined herein), the Subscriber
hereby appoint AVDX Investors Group LLC (the “Investor Representative”) as its attorney-in-fact (and the Investor
Representative hereby accepts such appointment) for the purpose of carrying out the Shareholder Approval (as defined herein) including,
without limitation, taking any action on behalf of, or at the instruction of, the Subscriber and executing any documentation required
and taking any action and executing any instrument that the Investor Representative may deem necessary or advisable (and lawful)
to accomplish the purposes hereof. All acts done under the foregoing authorization are hereby ratified and approved and neither
the Investor Representative nor any designee nor agent thereof shall be liable for any acts of commission or omission, for any
error of judgment, for any mistake of fact or law except for acts of gross negligence or willful misconduct. This power of attorney,
being coupled with an interest, is irrevocable until the Reverse Split is consummated.

 

1.16
The Subscriber agrees not to issue any public statement with respect to the Offering, Subscriber’s investment or proposed
investment in the Company or the terms of any agreement or covenant between them and the Company without the Company’s prior
written consent, except such disclosures as may be required under applicable law.

 

1.17
The Subscriber understands, acknowledges and agrees with the Company that this subscription may be rejected, in whole or in part,
by the Company, in the sole and absolute discretion of the Company, at any time before any Closing notwithstanding prior receipt
by the Subscriber of notice of acceptance of the Subscriber’s subscription.

 

    	 	-5-	 

     

    

 

1.18
The Subscriber acknowledges that the information contained in the Offering Materials or otherwise made available to the Subscriber
is confidential and non- public, has been delivered to it in reliance upon agreement to maintain the confidentiality of the information
and upon Regulation FD promulgated by the Commission, and agrees that all such information shall be kept in confidence by the
Subscriber and neither used by the Subscriber for the Subscriber’s personal benefit (other than in connection with this
subscription) nor disclosed to any third party for any reason, notwithstanding that a Subscriber’s subscription may not
be accepted by the Company; provided, however, that (a) the Subscriber may disclose such information to its affiliates and advisors
who may have a need for such information in connection with providing advice to the Subscriber with respect to its investment
in the Company so long as such affiliates and advisors have an obligation of confidentiality, and (b) this obligation shall not
apply to any such information that (i) is part of the public knowledge or literature and readily accessible at the date hereof,
(ii) becomes part of the public knowledge or literature and readily accessible by publication (except as a result of a breach
of this provision) or (iii) is received from third parties without an obligation of confidentiality (except third parties who
disclose such information in violation of any confidentiality agreements or obligations, including, without limitation, any subscription
or other similar agreement entered into with the Company).

 

1.19
The Subscriber understands that the Securities 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 such Subscriber’s compliance with, the representations, warranties, agreements, acknowledgements and understandings
of such Subscriber set forth herein in order to determine the availability of such exemptions and the eligibility of such Subscriber
to acquire the Securities. The Subscriber agrees to supply the Company, within five (5) days after the Subscriber receives the
request therefor from the Company, with such additional information concerning the Subscriber as the Company deems necessary or
advisable

 

1.20
The Subscriber understands that Rule 144 promulgated under the Act (“Rule 144”) requires, among other conditions,
a minimum holding period of six-months prior to the resale of securities acquired in a non-public offering without having to satisfy
the registration requirements under the Act. The Subscriber understands and hereby acknowledges that the Company is under no obligation
to register the Securities under the Act or any state securities or “blue sky” laws or to assist the Subscriber in
obtaining an exemption from various registration requirements, other than as set forth herein.

 

1.21
The Subscriber agrees to hold the Company and its directors, officers, employees, controlling persons and agents (including
its managers, members, officers, directors, employees, counsel, controlling persons and agents) and their respective heirs,
representatives, successors and assigns harmless from and to indemnify them against all liabilities, costs and expenses
incurred by them as a result of (i) any misrepresentation made by the Subscriber contained in this Subscription Agreement
(including Article VII hereunder) or breach of any warranty by the Subscriber in this Subscription Agreement or in any
Exhibits or Schedules attached hereto; (ii) any untrue statement of a material fact made by the Subscriber and contained
herein; or (iii) after any applicable notice and/or cure periods, any breach or default in performance by the Subscriber of
any covenant or undertaking to be performed by the Subscriber hereunder, or any other Offering Materials entered into by the
Company and Subscriber relating hereto. Notwithstanding the foregoing, in no event shall the liability of the Subscriber
hereunder be greater than the aggregate subscription amount paid for the Securities as set forth on the signature page
hereto.

 

    	 	-6-	 

     

    

 

1.22
If the Subscriber is purchasing the Securities in a fiduciary capacity for another person or entity, including without limitation
a corporation, partnership, trust or any other entity, the Subscriber has been duly authorized and empowered to execute this Subscription
Agreement and all other subscription documents, and such other person fulfills all the requirements for purchase of the Securities
as such requirements are set forth herein, concurs in the purchase of the Securities and agrees to be bound by the obligations,
representations, warranties and covenants contained herein. Upon request of the Company, the Subscriber will provide true, complete
and current copies of all relevant documents creating the Subscriber, authorizing its investment in the Company and/or evidencing
the satisfaction of the foregoing.

 

1.23
Neither the Subscriber nor, to the Subscriber’s knowledge, any of its directors, executive officers, other officers that
may serve as a director or officer of any company in which it invests, general partners or managing members is subject to any
Disqualification Events, except for Disqualification Events covered by Rule 506(d)(2)(ii) or (iii) under the Securities Act, and
disclosed in writing in reasonable detail to the Company.

 

1.24
Each Subscriber understands that the Company is not current in its reporting obligations with the SEC and that the Company was
previously was a “shell company” as defined in Rule 12b-2 under the Exchange Act. Pursuant to Rule 144(i), securities
issued by a current or former shell company that otherwise meet the holding period and other requirements of Rule 144 nevertheless
cannot be sold in reliance on Rule 144 until one year after the Company (a) is no longer a shell company; and (b) has filed
current “Form 10 information” (as defined in Rule 144(i)) with the SEC reflecting that it is no longer a shell company,
and provided that at the time of a proposed sale pursuant to Rule 144, the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act and has filed all reports and other materials required to be filed by Section 13 or 15(d)
of the Exchange Act, as applicable, during the preceding 12 months (or for such shorter period that the issuer was required to
file such reports and materials), other than Form 8-K reports. As a result, the restrictive legends on certificates for the
Preferred Stock and any Common Stock to be issued in exchange of such shares, cannot be removed except in connection with an actual
sale meeting the foregoing requirements or pursuant to an effective registration statement.

 

    	 	-7-	 

     

    

 

II.
REPRESENTATIONS BY AND COVENANTS OF THE COMPANY

 

The
Company hereby represents and warrants to the Subscriber that:

 

2.1
Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada and has full corporate power and authority to own and use its properties and its
assets and conduct its business as currently conducted. The Company is not in violation of any of the provisions of their respective
articles of incorporation, by-laws or other organizational or charter documents, including, but not limited to the Charter Documents
(as defined below). The Company is duly qualified to conduct business and is in good standing as a foreign corporation in each
jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be, would not result in a direct and/or indirect (i)
material adverse effect on the legality, validity or enforceability of any of the Securities and/or this Subscription Agreement,
(ii) material adverse effect on the results of operations, assets, business, condition (financial and other) or prospects of the
Company and its Subsidiaries, taken as a whole, or (iii) material adverse effect on the Company’s ability to perform in
any material respect on a timely basis its obligations under the Offering Materials (as defined below) (any of (i), (ii) or (iii),
a “Material Adverse Effect”).

 

2.2 Authorization;
Enforceability. The Company has all corporate right, power and authority to enter into, execute and deliver this
Subscription Agreement and each other agreement, document, instrument and certificate to be executed by the Company in
connection with the consummation of the transactions contemplated hereby, including, but not limited to the Offering
Materials, and to perform fully its obligations hereunder and thereunder. All corporate action on the part of the Company,
its directors and stockholders necessary for the (a) authorization execution, delivery and performance of this Subscription
Agreement and the Offering Materials by the Company; and (b) authorization, sale, issuance and delivery of the Securities
contemplated hereby and the performance of the Company’s obligations under this Subscription Agreement and the Offering
Materials has been taken. This Subscription Agreement and the Offering Materials have been duly executed and delivered by the
Company and each constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in
accordance with its respective terms, subject to laws of general application relating to bankruptcy, insolvency and the
relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies, and to
limitations of public policy. The Securities are duly authorized and, when issued and paid for in accordance with the
applicable Offering Materials, will be duly and validly issued, fully paid and nonassessable, free and clear of all
encumbrances other than restrictions on transfer provided for in the Offering Materials. Except as set forth on Schedule
2.3 hereto, the issuance and sale of the Securities contemplated hereby will not give rise to any preemptive rights or
rights of first refusal on behalf of any person.

 

    	 	-8-	 

     

    

 

2.3
No Conflict; Governmental Consents.

 

 (a) The execution and delivery by the Company of this Subscription Agreement and the Offering Materials, the issuance and sale of the Securities and the consummation of the other transactions contemplated hereby or thereby do not and will not (i) result in the violation of any law, statute, rule, regulation, order, writ, injunction, judgment or decree of any court or governmental authority to or by which the Company is bound including without limitation all foreign, federal, state and local laws applicable to its business and all such laws that affect the environment, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect, (ii) conflict with or violate any provision of the Company’s Articles of Incorporation (the “Articles”), as amended or the Bylaws, (and collectively with the Articles, the “Charter Documents”) of the Company, and (iii) conflict with, or result in a material breach or violation of, any of the terms or provisions of, or constitute (with or without due notice or lapse of time or both) a default or give to others any rights of termination, amendment, acceleration or cancellation (with or without due notice, lapse of time or both) under any agreement, credit facility, lease, loan agreement, mortgage, security agreement, trust indenture or other agreement or instrument to which the Company or any Subsidiary is a party or by which any of them is bound or to which any of their respective properties or assets is subject, nor result in the creation or imposition of any Encumbrances upon any of the properties or assets of the Company or any Subsidiary.

 

(b)
Except for the Charter Amendment and the Reverse Stock Split as discussed in the Memorandum, no approval by the holders of Common
Stock, or other equity securities of the Company is required to be obtained by the Company in connection with the authorization,
execution, delivery and performance of this Subscription Agreement and the other Offering Materials or in connection with the
authorization, issue and sale of the Securities, except as has been previously obtained.

 

(c)
Except as set forth on Schedule 2.4 hereto, no consent, approval, authorization or other order of any governmental authority
or any other person is required to be obtained by the Company in connection with the authorization, execution, delivery and performance
of this Subscription Agreement and the other Offering Materials or in connection with the authorization, issue and sale of the
Securities and, upon issuance, the Underlying Shares, except such post-sale filings as may be required to be made with the SEC,
FINRA and with any state or foreign blue sky or securities regulatory authority, all of which shall be made when required.

 

2.4
Consents of Third Parties. No vote, approval or consent of any holder of capital stock of the Company or any other third
parties is required or necessary to be obtained by the Company in connection with the authorization, execution, deliver and performance
of this Subscription Agreement and the other Offering Materials or in connection with the authorization, issue and sale of the
Securities and, upon issuance, the Warrant Shares, except as previously obtained, each of which is in full force and effect.

 

2.5
Brokers. Except as defined in the memorandum, neither the Company nor any of the Company’s officers, directors, employees
or stockholders has employed or engaged any broker or finder in connection with the transactions contemplated by this Subscription
Agreement and no fee or other compensation is or will be due and owing to any broker, finder, underwriter, placement agent or
similar person in connection with the transactions contemplated by this Subscription Agreement. Except as defined in the memorandum,
the Company is not party to any other agreement, arrangement or understanding whereby any person has an exclusive right to raise
funds and/or place or purchase any debt or equity securities for or on behalf of the Company.

 

    	 	-9-	 

     

    

 

2.6
Bad Actor Disqualification

 

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

 

(b)
Other Covered Persons. The Company is not aware of any person that (i) has been or will be paid (directly or indirectly)
remuneration for solicitation of purchasers in connection with the sale of the Securities and (ii) who is subject to a Disqualification
Event.

 

(c)
Notice of Disqualification Events. The Company will notify in writing of (i) any Disqualification Event relating to any
Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification Event relating to any
Issuer Covered Person, prior to any Closing of this Offering.

 

III.
TERMS OF SUBSCRIPTION

 

3.1
The Securities will be offered for sale until the earlier of (i) the date upon which subscriptions for the Maximum Offering offered
hereunder have been accepted, (ii) May 31, 2019, which period may be extended without further notice to prospective investors
by the Company, in their mutual discretion, until July 31, 2019, or (iii) the date upon which the Company elects to terminate
the Offering (the “Termination Date”). The Offering is being conducted on a “reasonable efforts” basis
for the Maximum Offering.

 

    	 	-10-	 

     

    

 

3.2
The Company may hold an initial closing (“Initial Closing”) at any time after the receipt of accepted subscriptions
by the Company. After the Initial Closing, subsequent closings with respect to additional Securities may take place at any time
prior to the Termination Date as determined by the Company, with respect to subscriptions accepted prior to the Termination Date
(each such closing, together with the Initial Closing, being referred to as a “Closing”). The last Closing of the
Offering, occurring on or prior to the Termination Date, shall be referred to as the “Final Closing”. Any subscription
documents or funds received after the Final Closing will be returned, without interest or deduction. In the event that the any
Closing does not occur prior to the Termination Date, all amounts paid by the Subscriber shall be returned to the Subscriber,
without interest or deduction. The Subscriber may revoke its subscription and obtain a return of the subscription amount paid
to the Company’s bank account at any time before the date of the Initial Closing by providing written notice to the Company
as provided in Section 6.1 below. Upon receipt of a revocation notice from the Subscriber prior to the date of the Initial Closing,
all amounts paid by the Subscriber shall be returned to the Subscriber, without interest or deduction. The Subscriber may not
revoke this subscription or obtain a return of the subscription amount paid to the Escrow Agent on or after the date of the Initial
Closing. Any subscription received after the Initial Closing but prior to the Termination Date shall be irrevocable. Subscriber
acknowledges that funds from any Closing will be held in a control account and will not be able to be used by the Company without
the consent of the Investor Representative.

 

3.3
The minimum purchase that may be made by any prospective investor shall be $50,000. Subscriptions for investment below the minimum
investment may be accepted at the discretion of the Company. The Company reserve the right to reject any subscription made hereby,
in whole or in part, in their sole discretion. The Company’s agreement with each Subscriber is a separate agreement and
the sale of the Securities to each Subscriber is a separate sale.

 

3.4
All funds shall be deposited in the account identified in Section 1.1 hereof.

 

3.5
Certificates representing the Preferred Stock purchased by the Subscriber pursuant to this Subscription Agreement will be prepared
for delivery to the Subscriber as soon as practicable following the Closing (but in no event later than seven (7) days after a
Closing) at which such purchase takes place. The Subscriber hereby authorizes and directs the Company to deliver the certificates
representing the Securities purchased by the Subscriber pursuant to this Subscription Agreement directly to the Subscriber’s
residential or business or brokerage house address indicated on the signature page hereto.

 

3.6
The Company’s agreement with each Subscriber is a separate agreement and the sale of Securities to each Subscriber is a
separate sale.

 

IV.
CONDITIONS TO OBLIGATIONS OF THE SUBSCRIBER

 

4.1
The Subscriber’s obligation to purchase the Securities at the Closing at which such purchase is to be consummated is subject
to the fulfillment on or prior to such Closing of the following conditions, which conditions may be waived at the option of each
Subscriber to the extent permitted by law:

 

    	 	-11-	 

     

    

 

(a)
Representations and Warranties; Covenants. The representations and warranties made by the Company in Section 2 hereof qualified
as to materiality shall be true and correct at all times prior to and on the Closing Date(s), except to the extent any such representation
or warranty expressly speaks as of an earlier date, in which case such representation or warranty shall be true and correct as
of such earlier date, and, the representations and warranties made by the Company in Section 2 hereof not qualified as to materiality
shall be true and correct in all material respects at all times prior to and on the Closing Date, except to the extent any such
representation or warranty expressly speaks as of an earlier date, in which case such representation or warranty shall be true
and correct in all material respects as of such earlier date. All covenants, agreements and conditions contained in this Subscription
Agreement to be performed by the Company on or prior to the date of such Closing shall have been performed or complied with in
all material respects.

 

(b)
No Legal Order Pending. There shall not then be in effect any legal or other order enjoining or restraining the transactions
contemplated by this Subscription Agreement.

 

(c)
No Law Prohibiting or Restricting Such Sale. There shall not be in effect any law, rule or regulation prohibiting or restricting
such sale or requiring any consent or approval of any person, which shall not have been obtained, to issue the Securities (except
as otherwise provided in this Subscription Agreement).

 

(d)
Required Consents. The Company shall have obtained any and all consents, permits, approvals, registrations and waivers
necessary or appropriate for consummation of the purchase and sale of the Securities and the consummation of the other transactions
contemplated by the Offering Materials, all of which shall be in full force and effect.

 

(e)
Adverse Changes. As of the date of execution of this Subscription Agreement, no event or series of events shall have occurred
that reasonably could have or result in a Material Adverse Effect.

 

(f)
Blue Sky. The Company shall have completed qualification for the Securities under applicable Blue Sky laws.

 

(g)
Conditions Precedent. As of the date of the Memorandum, all conditions precedent are completed for the commencement of
the Offering.

 

V.
COVENANTS OF THE COMPANY

 

5.1
Listing of Securities. The Company agrees, (i) if the Company applies to have the Common Stock traded on any other trading
market and (ii) it will take all action reasonably necessary to continue the listing and trading of its Common Stock on a trading
market and will comply in all material respects with the Company’s reporting, filing and other obligations under the bylaws
or rules of the trading market.

 

    	 	-12-	 

     

    

 

5.2
Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and
substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company
of such loss, theft or destruction and customary and reasonable indemnity, if requested. The applicants for a new certificate
or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement
securities. If a replacement certificate or instrument evidencing any securities is requested due to a mutilation thereof, the
Company may require delivery of such mutilated certificate or instrument as a condition precedent to any issuance of a replacement.

 

5.3
Furnishing of Information. As long as Subscriber owns Securities, if the Company is not required to file reports pursuant
to the Exchange Act, it will prepare and furnish to Subscriber and make publicly available in accordance with Rule 144(c) such
information as is required for the Subscribers to sell the Securities under Rule 144. The Company further covenants that it will
take such further action as any holder of Securities may reasonably request, to the extent required from time to time to enable
such person to sell such Securities without registration under the Securities Act within the requirements of the exemption provided
by Rule 144.

 

5.4
Securities Laws; Publicity. The Company shall, by 8:30 a.m. (New York City time) on the fourth Trading Day immediately
following a Closing hereunder, issue a Current Report on Form 8-K disclosing the material terms of the transactions contemplated
hereby and including the Offering Materials as exhibits thereto. The Company shall not publicly disclose the name of Subscriber,
or include the name of any Subscriber in any filing with the Commission or any regulatory agency or trading market, without the
prior written consent of Subscriber, except: (a) as required by federal securities law in connection with (i) any registration
statement contemplated by this Subscription Agreement and (ii) the filing of final Offering Materials (including signature pages
thereto) with the SEC and (b) to the extent such disclosure is required by law, in which case the Company shall provide the Subscriber
with prior notice of such disclosure permitted under this clause (b).

 

5.5
Blue Sky Filings. The Company shall take such action as the Company shall reasonably determine is necessary in order to
obtain an exemption for, or to qualify the Securities for, sale to the Subscriber at the Closing under applicable securities or
“Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request
of any Subscriber.

 

5.6
Use of Proceeds. Except as set forth in the Memorandum, the Company shall not use the net proceeds from the sale of the
Securities hereunder for the redemption of any Common Stock or Common Stock equivalents.

 

    	 	-13-	 

     

    

 

5.7
Stockholder Approval. As soon as practicable after the Final Closing, the Company shall use commercially reasonable efforts
to take all necessary actions and to obtain such approvals of the Company’s stockholders as may be required to increase
the Company’s authorized shares of Common Stock such that the Company can issue all of the shares of Common Stock issuable
upon completion of the restructuring and undertake a reverse stock split at such ratio where the number of shares of Common Stock
outstanding after consummation of such reverse stock split shall be approximately 1,500,000 shares (the “Reverse Split”)
before the conversion of the Series D Convertible Preferred securities of the Offering, all in accordance with the Nevada Revised
Statutes (the “Stockholder Approval”). The Company shall furnish to each Buyer and its legal counsel promptly (but
in no event less than one (1) business days) before the same is filed with the SEC, one copy of the proxy or information statement
and any amendment thereto, and shall deliver to each Buyer promptly each letter written by or on behalf of the Company to the
SEC or the staff of the SEC, and each item of correspondence from the SEC or the staff of the SEC, in each case relating to such
proxy or information statement (other than any portion thereof which contains information for which the Company has sought confidential
treatment).

 

VI
REGISTRATION RIGHTS

 

6.1
Definitions. As used in this Section, the following terms shall have the following meanings:

 

“Effectiveness
Date” means, with respect to the Initial Registration Statement required to be filed hereunder, as soon as commercially
practicable following the filing of the Initial Registration Statement, and with respect to any additional Registration Statements
which may be required pursuant to Section 5.3(c), as soon as commercially practicable following the date on which an additional
Registration Statement is required to be filed hereunder.

 

“Effectiveness
Period” means the period from the Effectiveness Date of a Registration Statement through the date that all Registrable
Securities covered by such Registration Statement have been sold, or may be sold without volume restrictions pursuant to Rule
144, as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable
to the Company’s transfer agent and the affected Holders.

 

“Initial
Registration Statement” means the initial Registration Statement filed pursuant to this Subscription Agreement.

 

“Legal
Counsel” means one (1) counsel as designated by a majority of the holders of the Registrable Securities.

 

“Prospectus”
means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated
by the Commission pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments
and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to
be incorporated by reference in such Prospectus.

 

    	 	-14-	 

     

    

 

“Registrable
Securities” means (a) all of the shares of Common Stock issuable upon exchange of the Preferred Stock (b) all shares
of Common Stock issuable for any series of Preferred Stock issued prior to the date of this Offering and (c) any securities issued
or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing;
provided, however, that the Company shall not be required to maintain the effectiveness, or file another Registration Statement
hereunder with respect to any Registrable Securities that are (i) not subject to the current public information requirement under
Rule 144 and that are eligible for resale without volume or manner-of-sale restrictions without current public information pursuant
to Rule 144 promulgated by the Commission or (ii) not required to be registered in reliance upon the exemption in Section 4(1)
under the Securities Act, in either case pursuant to a written opinion letter to such effect, addressed, delivered and acceptable
to the affected Subscribers.

 

“Registration
Statement” means any registration statement required to be filed hereunder pursuant to Section 5.2(a) and any additional
registration statements contemplated by Section 5.3(c), including (in each case) the Prospectus, amendments and supplements to
any such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material
incorporated by reference or deemed to be incorporated by reference in any such registration statement.

 

“Rule
415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.

 

“Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.

 

“SEC
Guidance” means (i) any publicly-available written or oral guidance, comments, requirements or requests of the Commission
staff and (ii) the Securities Act.

 

6.2
Demand Registration.

 

(a)
Beginning on the six month anniversary of the Final Closing, on or prior to the sixth (60th) calendar day after the date of receipt
of written demand from Subscribers holding at least 51% of Registrable Securities, the Company shall prepare and file with the
Commission a Registration Statement covering the resale of all of the Registrable Securities that are not then registered on an
effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415. Subject to the terms of
this Subscription Agreement, the Company shall use its best efforts to cause a Registration Statement filed under this Subscription
Agreement to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event
no later than the applicable Effectiveness Date, and shall use its best efforts to keep such Registration Statement continuously
effective during the Effectiveness Period.

 

    	 	-15-	 

     

    

 

(b)
Notwithstanding the registration obligations set forth in Section 6.2(a), if the Commission informs the Company that all of the
Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on
a single registration statement, the Company agrees to promptly inform each of the Holders thereof and use its commercially reasonable
efforts to file amendments to the Initial Registration Statement as required by the Commission, covering the maximum number of
Registrable Securities permitted to be registered by the Commission, provided, however, that, prior to filing such
amendment, the Company shall be obligated to use diligent efforts to advocate with the Commission for the registration of all
of the Registrable Securities in accordance with the SEC Guidance, including without limitation, Compliance and Disclosure Interpretation
612.09.

 

(c)
Notwithstanding any other provision of this Subscription Agreement, if the Commission or any SEC Guidance sets forth a limitation
on the number of Registrable Securities permitted to be registered on a particular Registration Statement as a secondary offering
(and notwithstanding that the Company used diligent efforts to advocate with the Commission for the registration of all or a greater
portion of Registrable Securities), unless otherwise directed in writing by a Holder as to its Registrable Securities, the number
of Registrable Securities to be registered on such Registration Statement will eliminate any securities to be included other than
Registrable Securities; and Second, the Company shall reduce or eliminate any securities issued as warrants.

 

(d)
In the event the Company amends the Initial Registration Statement in accordance with the foregoing, the Company will use its
best efforts to file with the Commission, as promptly as allowed by Commission or SEC Guidance provided to the Company or to registrants
of securities in general, one or more registration statements on Form S-1 or such other form available to register for resale
those Registrable Securities that were not registered for resale on the Initial Registration Statement, as amended. Notwithstanding
anything to the contrary contained herein, in no event shall the Company be permitted to name any Holder or affiliate of a Holder
as any Underwriter without the prior written consent of such Holder.

 

6.3
Piggy Back Registration.

 

(a)
At any time the Registrable Securities are owned by a Subscriber and there is not an effective registration statement covering
all of the Registrable Securities, and if the Company shall determine to prepare and file with the SEC a registration statement
relating to an offering for its own account or the account of others under the Act, of any of its equity securities, other than
on Form S-4 or Form S-8 (each as promulgated under the Act) or their then equivalents, relating to equity securities to be issued
solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the Company’s
stock option or other employee benefit plans, then the Company shall deliver to each Subscriber a written notice of such determination
and, if within fifteen (15) days after the date of the delivery of such notice, any such Subscriber shall so request in writing,
the Company shall include in such registration statement all or any part of such Registrable Securities such Subscriber requests
to be registered; provided, however, that Registrable Securities will not be included if the underwriter(s) associated with the
offering which is the subject of the registration statement believes, in good faith, that the inclusion of such Registrable Securities
will have an adverse effect on the sale of the securities for which such registration statement was filed, and further provided,
however, that the Company shall not be required to register any Registrable Securities pursuant to this Section 6.2
that are eligible for resale pursuant to Rule 144 promulgated by the SEC pursuant to the Act or that are the subject of a
then effective registration statement. If any SEC Guidance sets forth a limitation on the number of securities permitted to be
registered on a particular registration statement (and notwithstanding that the Company used diligent efforts to advocate with
the SEC for the registration of all or a greater portion of Registrable Securities), unless otherwise directed in writing by a
Subscriber as to its Registrable Securities, the number of Registrable Securities to be registered on such registration statement
will be reduced on a pro rata basis with such other securities being registered on the applicable registration after as
full an allocation as possible has been afforded for the securities for which the registration statement has been filed.

 

    	 	-16-	 

     

    

 

(b)
Reserved.

 

(c)
Subject to the terms and conditions of this Subscription Agreement, Subscribers shall have the right to select Legal Counsel to
review and oversee, solely on its behalf, any Registration Statement pursuant to this Subscription Agreement, if such Registration
Statement is filed. The Company shall also reimburse Legal Counsel for its documented fees and disbursements in connection with
registration, filing or qualification pursuant to this Subscription Agreement which amount shall be limited to $5,000.

 

6.4
Registration Procedures. In connection with the Company’s registration obligations hereunder, the Company shall:

 

(a)
Not less than five (5) Trading days prior to the filing of each Registration Statement and not less than one (1) Trading day prior
to the filing of any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated
or deemed to be incorporated therein by reference), the Company shall (i) furnish to Legal Counsel copies of the Registration
Statement proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will
be subject to the review of Legal Counsel; and (ii) cause its officers and directors, counsel and independent registered public
accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of Legal Counsel, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not file a Registration Statement or any such Prospectus
or any amendments or supplements thereto to which the Subscribers of a majority of the Registrable Securities or Legal Counsel
shall reasonably object in good faith, provided that, the Company is notified of such objection in writing no later than three
(3) Trading days after Legal Counsel has been so furnished a copy of a Registration Statement or one (1) Trading day after Legal
Counsel has been so furnished copies of any related Prospectus or amendments or supplements thereto. Each Subscriber agrees to
furnish to the Company a completed questionnaire in the form attached to this Subscription Agreement as Annex B (a “Selling
Stockholder Questionnaire”) on a date that is not less than two (2) Trading days prior to the Filing Date or by the
end of the fourth (4th) Trading day following the date on which such Subscriber receives draft materials in accordance with this
Section.

 

    	 	-17-	 

     

    

 

(b)
(i) Prepare and file with the Commission such amendments, including post-effective amendments, to a Registration Statement and
the Prospectus used in connection therewith as may be necessary to keep a Registration Statement continuously effective as to
the applicable Registrable Securities for the Effectiveness Period and prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all of the Registrable Securities, (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Subscription Agreement),
and, as so supplemented or amended, to be filed pursuant to Rule 424, (iii) respond as promptly as reasonably possible to any
comments received from the Commission with respect to a Registration Statement or any amendment thereto and provide as promptly
as reasonably possible to the Subscriber’s true and complete copies of all correspondence from and to the Commission relating
to a Registration Statement (provided that, the Company may excise any information contained therein which would constitute material
non-public information as to any Subscriber which has not executed a confidentiality agreement with the Company), and (iv) comply
in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by a Registration Statement during the applicable period in accordance (subject to the terms of
this Subscription Agreement) with the intended methods of disposition by the Subscribers thereof set forth in such Registration
Statement as so amended or in such Prospectus as so supplemented.

 

Notify
the Subscribers of Registrable Securities to be sold (which notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied
by an instruction to suspend the use of the Prospectus until the requisite changes have been made) as promptly as reasonably possible
(and, in the case of (i)(A) below, not less than one trading day prior to such filing) and (if requested by any such Person) confirm
such notice in writing no later than one Trading day following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to a Registration Statement is proposed to be filed, (B) when the Commission notifies the Company whether
there will be a “review” of such Registration Statement and whenever the Commission comments in writing on such Registration
Statement, and (C) with respect to a Registration Statement or any post-effective amendment, when the same has become effective,
(ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a
Registration Statement or Prospectus or for additional information, (iii) of the issuance by the Commission or any other federal
or state governmental authority of any stop order suspending the effectiveness of a Registration Statement covering any or all
of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities
for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose, (v) of the occurrence of any
event or passage of time that makes the financial statements included in a Registration Statement ineligible for inclusion therein
or any statement made in a Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein
by reference untrue in any material respect or that requires any revisions to a Registration Statement, Prospectus or other documents
so that, in the case of a Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading and (vi) of the occurrence or existence of any pending
corporate development with respect to the Company that the Company believes may be material and that, in the determination of
the Company, makes it not in the best interest of the Company to allow continued availability of a Registration Statement or Prospectus,
provided that, any and all of such information shall remain confidential to each Subscriber until such information otherwise becomes
public, unless disclosure by a Subscriber is required by law.

 

    	 	-18-	 

     

    

 

(c)
Use its commercially reasonable efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order stopping
or suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification)
of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.

 

(d)
Furnish to Legal Counsel, without charge, at least one conformed copy of each such Registration Statement and each amendment thereto,
including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to
the extent requested by such person, and all exhibits to the extent requested by such Person (including those previously furnished
or incorporated by reference) promptly after the filing of such documents with the Commission; provided, that any such item which
is available on the EDGAR system need not be furnished in physical form.

 

(e)
Subject to the terms of this Subscription Agreement, the Company hereby consents to the use of such Prospectus and each amendment
or supplement thereto by each of the selling Subscribers in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto, except after the giving of any notice pursuant to Section
3(c).

 

(f)
The Company shall effect a filing with respect to the public offering contemplated by the Registration Statement (an “Issuer
Filing”) with the Financial Industry Regulatory Authority, Inc. (“FINRA”) Corporate Financing Department
pursuant to FINRA Rule 5110 within one Trading Day of the date that the Registration Statement is first filed with the Commission
and pay the filing fee required by such Issuer Filing. The Company, shall use commercially reasonable efforts to pursue the Issuer
Filing until the FINRA issues a letter confirming that it does not object to the terms of the offering contemplated by the Registration
Statement. A copy of the Issuer Filing and all related correspondence with respect thereto shall be provided to the Company.

 

(g)
Prior to any resale of Registrable Securities by a Subscriber, use its commercially reasonable efforts to register or qualify
or cooperate with the selling Subscribers in connection with the registration or qualification (or exemption from the Registration
or qualification) of such Registrable Securities for the resale by the Subscriber under the securities or Blue Sky laws of such
jurisdictions within the United States as any Subscriber reasonably requests in writing, to keep each registration or qualification
(or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary
to enable the disposition in such jurisdictions of the Registrable Securities covered by each Registration Statement; provided,
that, the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified,
subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to
service of process in any such jurisdiction.

 

    	 	-19-	 

     

    

 

(h)
If requested by a Subscriber, cooperate with such Subscribers to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be delivered to a transferee pursuant to an effective Registration Statement, which certificates
shall be free, to the extent permitted by the Subscription Agreement, of all restrictive legends, and to enable such Registrable
Securities to be in such denominations and registered in such names as any such Subscriber may request.

 

The
Company will, as promptly as reasonably possible under the circumstances taking into account the Company’s good faith assessment
of any adverse consequences to the Company and its stockholders of the premature disclosure of such event, prepare a supplement
or amendment, including a post-effective amendment, to a Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter
delivered, neither a Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. If the Company notifies the Subscribers in accordance with clauses (iii) through (vi)
of Section 6.3(c) above to suspend the use of any Prospectus until the requisite changes to such Prospectus have been made, then
the Subscribers shall suspend use of such Prospectus. The Company will use its best efforts to ensure that the use of the Prospectus
may be resumed as promptly as is practicable.

 

(i)
Comply with all applicable rules and regulations of the Commission.

 

(j)
The Company may require each selling Subscriber to furnish to the Company a certified statement as to the number of shares of
Common Stock beneficially owned by such Subscriber and, if required by the Commission, the natural persons thereof that have voting
and dispositive control over the shares. During any periods that the Company is unable to meet its obligations hereunder with
respect to the registration of the Registrable Securities solely because any Subscriber fails to furnish such information within
three Trading days of the Company’s request, any liquidated damages that are accruing at such time as to such Subscriber
only shall be tolled and any Event that may otherwise occur solely because of such delay shall be suspended as to such Subscriber
only, until such information is delivered to the Company.

 

6.5.
Registration Expenses. All fees and expenses incident to the performance of or compliance with Section by the Company shall
be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. In no event shall
the Company be responsible for any broker or similar commissions of any Subscriber or, except to the extent provided for in the
Offering Materials, any legal fees (except per section 6.3(c)) or other costs of the Subscribers.

 

    	 	-20-	 

     

    

 

VII.
MISCELLANEOUS

 

7.1
Any notice or other communication given hereunder shall be deemed sufficient if in writing and sent by registered or certified
mail, return receipt requested, or delivered by hand against written receipt therefor, addressed as follows:

 

if
to the Company, to it at:

 

Avant
Diagnostics, Inc.

1050
30th Street NW Suite 107

Washington,
D.C. 20007 Attn: Secretary

With
a copy to (which shall not constitute notice): Sheppard, Mullin, Richter & Hampton LLP

30
Rockefeller Plaza, 39th Floor

New
York, NY 10112

Attn:
Stephen A. Cohen, Esq.

 

if
to the Subscriber, to the Subscriber’s address indicated on the signature page of this Subscription Agreement.

 

7.2
Notices shall be deemed to have been given or delivered on the date of receipt. Except as otherwise provided herein, this Subscription
Agreement shall not be changed, modified or amended except by a writing signed by the parties to be charged, and this Subscription
Agreement may not be discharged except by performance in accordance with its terms or by a writing signed by the party to be charged.
No waiver of any default with respect to any provision, condition or requirement of this Subscription Agreement shall be deemed
to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise
of any such right.

 

7.3
This Subscription Agreement shall be binding upon and inure to the benefit of the parties hereto and to their respective heirs,
legal representatives, successors and assigns. The Company may not assign this Subscription Agreement or any rights or obligations
hereunder without the prior written consent of Subscriber (other than by merger). Subscriber may assign any or all of its rights
under this Subscription Agreement to any person to whom Subscriber assigns or transfers any Securities, provided that such transferee
agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Offering Materials and this
Subscription Agreement.

 

7.4
The Offering Materials, together with the exhibits and schedules thereto, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such
matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

    	 	-21-	 

     

    

 

7.5
Upon the execution and delivery of this Subscription Agreement by the Subscriber and the Company, this Subscription Agreement
shall become a binding obligation of the Subscriber with respect to the purchase of Securities as herein provided, subject, however,
to the right hereby reserved by the Company to enter into the same agreements with other Subscriber and to reject any subscription,
in whole or in part, provided the Company returns to Subscriber any funds paid by Subscriber with respect to such rejected subscription
or portion thereof, without interest or deduction.

 

All
questions concerning the construction, validity, enforcement and interpretation of the Offering Materials shall be governed by
and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of
conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense
of the transactions contemplated by this Subscription Agreement and any other Offering Materials (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in
the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in the City of New York, borough of Manhattan for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement
of any of the Offering Materials), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper
or is an inconvenient venue for such proceeding.

 

7.6
In order to discourage frivolous claims the parties agree that unless a claimant in any proceeding arising out of this Subscription
Agreement succeeds in establishing his claim and recovering a judgment against another party (regardless of whether such claimant
succeeds against one of the other parties to the action), then the other party shall be entitled to recover from such claimant
all of its/their reasonable legal costs and expenses relating to such proceeding and/or incurred in preparation therefor.

 

7.7
The holding of any provision of this Subscription Agreement to be invalid or unenforceable by a court of competent jurisdiction
shall not affect any other provision of this Subscription Agreement, which shall remain in full force and effect. If any provision
of this Agreement shall be declared by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced
in whole or in part, such provision shall be interpreted so as to remain enforceable to the maximum extent permissible consistent
with applicable law and the remaining conditions and provisions or portions thereof shall nevertheless remain in full force and
effect and enforceable to the extent they are valid, legal and enforceable, and no provisions shall be deemed dependent upon any
other covenant or provision unless so expressed herein.

 

7.8
The representations, warranties, covenants and agreements contained in this Agreement, shall survive the Closing of the transactions
contemplated by this Subscription Agreement and the delivery of the Securities for the applicable statute of limitations.

 

7.9
It is agreed that a waiver by either party of a breach of any provision of this Subscription Agreement shall not operate, or be
construed, as a waiver of any subsequent breach by that same party.

 

    	 	-22-	 

     

    

 

7.10
The Company agrees to execute and deliver all such further documents, agreements and instruments and take such other and further
action as may be necessary or appropriate to carry out the purposes and intent of this Subscription Agreement.

 

7.11
This Subscription Agreement may be executed in two or more counterparts each of which shall be deemed an original, but all of
which shall together constitute one and the same instrument. In the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of
the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.

 

7.12
Nothing in this Subscription Agreement shall create or be deemed to create any rights in any person or entity not a party to this
Subscription Agreement.

 

7.13
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Subscriber
and the Company will be entitled to specific performance under this Subscription Agreement. The parties agree that monetary damages
may not be adequate compensation for any loss incurred by reason of any breach of obligations described in this Subscription Agreement
and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would
be adequate.

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 

    	 	-23-	 

     

    

 

	DOLLAR SUBSCRIPTION_______	 	/
    $1.00 = ______________________	 	NUMBER
    OF SHARES OF PREFERRED
    STOCK

 

	 	 	 	 	 
	Signature
    	 	Signature
    (if purchasing jointly)	 	 
	 	 	 	 	 
	 	 	 	 	 
	Name
Typed
    or Printed    	 	 Name Typed or Printed	 	 
	 	 	 	 	 
	 	 	 	 	 
	Title
    (if Subscriber is an Entity) 	 	Title
    (if Subscriber is an Entity)	 	 
	 	 	 	 	 
	 	 	 	 	 
	Entity
    Name (if applicable)	 	 Entity
    Name (if applicable	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	Address
    	 	Address	 	 
	 	 	 	 	 
	 	 	 	 	 
	City,
    State and Zip Code 	 	City,
    State and Zip Code	 	 
	 	 	 	 	 
	 	 	 	 	 
	Telephone-Business
    	 	Telephone-Business	 	 
	 	 	 	 	 
	 	 	 	 	 
	Telephone-Residence
    	 	Telephone-Residence	 	 
	 	 	 	 	 
	 	 	 	 	 
	Facsimile-Business
    	 	Facsimile-Business	 	 
	 	 	 	 	 
	 	 	 	 	 
	Facsimile-Residence
    	 	Facsimile-Residence	 	 
	 	 	 	 	 
	 	 	 	 	 
	Tax
    ID # or Social Security # 	 	Tax
    ID # or Social Security #	 	 
	 	 	 	 	 
	 	 	 	 	 
	E-Mail
    Address 	 	E-Mail
    Address	 	 
	 	 	 	 	 
	Name
    in which securities should be issued: 	 	 	 	 
	 	 	 	 	 
	Dated:
     __________________, 2019	 	 	 	 

 

This
Subscription Agreement is agreed to and accepted as of ___________, 2019. 

 

	 	AVANT DIAGNOSTICS, INC.
	 	 	 
	 	By:	                        
	 	Name:	 
	 	Title:	 

 

    	 	-24-	 

     

    

 

CERTIFICATE
OF SIGNATORY

 

(To
be completed if Securities are being subscribed for by an entity)

 

I,______________________________________________
, am the ______________________________________ of ___________________________________________(the
“Entity”).

 

I
certify that I am empowered and duly authorized by the Entity to execute and carry out the terms of the Subscription Agreement
and to purchase and hold the Securities (and, upon issuance, the Underlying Shares), and certify further that the Subscription
Agreement has been duly and validly executed on behalf of the Entity and constitutes a legal and binding obligation of the Entity.

 

IN
WITNESS WHEREOF, I have set my hand this ___________________________day of _____________________, 20__

 

	 	 
	 	(Signature)

 

    	 	-25-	 

     

    

 

EXHIBIT
A

 

INVESTOR
QUESTIONNAIRE AVANT DIAGNOSTICS, INC.

 

For
Individual Investors Only

(All
individual investors must INITIAL where appropriate.

Where there are joint investors both parties must INITIAL):

 

	Initial _______   	I
    certify that I have a “net worth” of at least $1 million either individually or through aggregating my individual
    holdings and those in which I have a joint, community property or other similar shared ownership interest with my spouse.
    For purposes of calculating net worth under this paragraph, (i) the primary residence shall not be included as an asset, (ii)
    to the extent that the indebtedness that is secured by the primary residence is in excess of the fair market value of the
    primary residence, the excess amount shall be included as a liability, and (iii) if the amount of outstanding indebtedness
    that is secured by the primary residence exceeds the amount outstanding 60 days prior to the execution of this Subscription
    Agreement, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included
    as a liability.

 

	Initial
    _______	I
    certify that I have had an annual gross income for the past two years of at least$200,000 (or $300,000 jointly with my spouse)
    and expect my income (or joint income, as appropriate) to reach the same level in the current year.

 

For
Non-Individual Investors

(all
Non-Individual Investors must INITIAL where appropriate):

 

	Initial
_______    	The
    undersigned certifies that it is a partnership, corporation, limited liability company or business trust that is 100% owned
    by persons who meet either of the criteria for Individual Investors, above.

 

	Initial
    _______	The
    undersigned certifies that it is a partnership, corporation, limited liability company or business trust that has total assets
    of at least $5 million and was not formed for the purpose of investing in Company.

 

	Initial
    _______	The
    undersigned certifies that it is an employee benefit plan whose investment decision is made by a plan fiduciary (as defined
    in ERISA §3(21)) that is a bank, savings and loan association, insurance company or registered investment adviser.

 

	Initial
    _______	The
    undersigned certifies that it is an employee benefit plan whose total assets exceed $5,000,000 as of the date of the Subscription
    Agreement

 

	Initial
    _______	The
    undersigned certifies that it is a self-directed employee benefit plan whose investment decisions are made solely by persons
    who meet either of the criteria for Individual Investors, above.

 

    	 	-1-	 

     

    

 

	Initial
_______    	The
    undersigned certifies that it is a U.S. bank, U.S. savings and loan association or other similar U.S. institution acting in
    its individual or fiduciary capacity.

 

	Initial
    _______	The
    undersigned certifies that it is a broker-dealer registered pursuant to §15 of the Securities Exchange Act of 1934.

 

	Initial
    _______	The
    undersigned certifies that it is an organization described in §501(c)(3) of the Internal Revenue Code with total assets
    exceeding $5,000,000 and not formed for the specific purpose of investing in Company.

 

	Initial
    _______	The
    undersigned certifies that it is a trust with total assets of at least $5,000,000, not formed for the specific purpose of
    investing in Company, and whose purchase is directed by a person with such knowledge and experience in financial and business
    matters that he is capable of evaluating the merits and risks of the prospective investment.

 

	Initial
    _______	The
    undersigned certifies that it is a plan established and maintained by a state or its political subdivisions, or any agency
    or instrumentality thereof, for the benefit of its employees, and which has total assets in excess of $5,000,000.

 

	Initial
    _______	The
    undersigned certifies that it is an insurance company as defined in §2(a)(13) of the Securities Act of 1933, as amended,
    or a registered investment company.

 

 

Printed
Name of Subscriber (Individual OR Non-Individual Entity)

 

    	 	-2-

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