Document:

Ex10-8

Exhibit 10.8

 

SECURITY AGREEMENT

 

THIS
SECURITY AGREEMENT (as amended, restated, supplemented or otherwise
modified from time to time, this “Agreement”) dated as
of September 26, 2017, by and among Medite Cancer Diagnostics,
Inc., a Delaware corporation (the “Company”, and
together with each of the undersigned direct and indirect
Subsidiaries from time to time and any other Person who becomes a
party to this Agreement by execution of a joinder in the form of
Exhibit A attached
hereto being hereinafter sometimes referred to individually as a
“Debtor” and, collectively, as the
“Debtors”), and GPB Debt Holdings II, LLC, a Delaware
limited liability company, in its capacity as Collateral Agent (the
“Collateral Agent”), for the Purchasers (collectively
with their successors and permitted assigns, the “Secured
Party”).

 

W I T N E S S E T H:

 

WHEREAS, pursuant
to the Purchase Agreement (as hereafter defined), the Secured Party
will purchase that certain senior secured convertible note issued
by the Company (such note, together with any promissory notes or
other securities issued in exchange or substitution therefor or
replacement thereof, and as any of the same may be amended,
supplemented, restated or modified and in effect from time to time,
the “Notes”);

 

AND
WHEREAS, the Notes are being acquired by the Secured Party, and the
Secured Party has made certain financial accommodations to the
Company pursuant to a Purchase Agreement dated as of the date
hereof between the Company and the Secured Party (as the same may
be amended, restated, supplemented or otherwise modified from time
to time, the “Purchase Agreement”);

 

AND
WHEREAS, each Debtor will derive substantial benefit and advantage
from the financial accommodations to the Company set forth in the
Purchase Agreement and the Notes, and it will be to each such
Debtor’s direct interest and economic benefit to assist the
Company in procuring said financial accommodations from the Secured
Party;

 

AND
WHEREAS, to induce the Secured Party to enter into the Purchase
Agreement and purchase the Notes, Debtor will pledge and grant a
security interest in all of its right, title and interest in and to
the Collateral (as hereinafter defined) as security for its
Obligations for the benefit of the Secured Party and its successors
and permitted assigns;

 

NOW,
THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as
follows:

 

Section
1. Definitions. Capitalized terms
used herein without definition and defined in the Purchase
Agreement are used herein as defined therein. In addition, as used
herein:

 

“Accounts”
means any “account,” as such term is defined in the
UCC, and, in any event, shall include, without limitation,
“supporting obligations” as defined in the
UCC.

 

“Chattel
Paper” means any “chattel paper,” as such term is
defined in the UCC.

 

“Collateral”
shall have the meaning ascribed thereto in Section 3
hereof.

 

“Commercial
Tort Claims” means “commercial tort claims”, as
such term is defined in the UCC.

 

“Contracts”
means all contracts, undertakings, or other agreements (other than
rights evidenced by Chattel Paper, Documents or Instruments) in or
under which a Debtor may now or hereafter have any right, title or
interest, including, without limitation, with respect to an
Account, any agreement relating to the terms of payment or the
terms of performance thereof.

 

 

 

-1-

 

 

“Copyrights”
means any copyrights, rights and interests in copyrights, works
protectable by copyrights, copyright registrations and copyright
applications, including, without limitation, the copyright
registrations and applications listed on Schedule III attached hereto
(if any), and all renewals of any of the foregoing, all income,
royalties, damages and payments now and hereafter due and/or
payable under or with respect to any of the foregoing, including,
without limitation, damages and payments for past, present and
future infringements of any of the foregoing and the right to sue
for past, present and future infringements of any of the
foregoing.

 

“Deposit
Accounts” means all “deposit accounts” as such
term is defined in the UCC, now or hereafter held in the name of a
Debtor.

 

“Documents”
means any “documents,” as such term is defined in the
UCC, and shall include, without limitation, all documents of title
(as defined in the UCC), bills of lading or other receipts
evidencing or representing Inventory or Equipment.

 

“Equipment”
means any “equipment,” as such term is defined in the
UCC and, in any event, shall include, Motor Vehicles.

 

“Event of
Default” shall have the meaning set forth in the
Notes.

 

“Excluded
Assets” means each of the following: (1) any lease, license
or other agreement or any property subject to a capital lease,
purchase money security interest or similar arrangement, to the
extent that a grant of a Lien thereon in favor of Secured Party
would violate or invalidate such lease, license, agreement or
capital lease, purchase money security interest or similar
arrangement or create a right of termination in favor of any other
party thereto (other than the Debtors), so long as such provision
exists and so long as such lease, license or agreement was not
entered into in contemplation of circumventing the obligation to
provide Collateral hereunder or in violation of the Purchase
Agreement, other than to the extent that any such term would be
rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or
9-409 of the UCC (or any successor provision or provisions) of any
relevant jurisdiction or any other applicable law including the
bankruptcy code, or principles of equity, (2) any of the
outstanding equity interests in a Foreign Subsidiary to the extent
that the pledge thereof is prohibited by the laws of the
jurisdiction of such Foreign Subsidiary’s organization and
(3) any application to register any trademark or service mark prior
to the filing under applicable law of a verified statement of use
(or the equivalent) for such trademark or service mark to the
extent the creation of a security interest therein or the grant of
a lien thereon would void or invalidate such trademark or service
mark.

 

“General
Intangibles” means any “general intangibles,” as
such term is defined in the UCC, and, in any event, shall include,
without limitation, all right, title and interest in or under any
Contract, models, drawings, materials and records, claims, literary
rights, goodwill, rights of performance, Copyrights, Trademarks,
Patents, warranties, rights under insurance policies and rights of
indemnification.

 

“Goods”
means any “goods”, as such term is defined in the UCC,
including, without limitation, fixtures and embedded Software to
the extent included in “goods” as defined in the
UCC.

 

“Governmental
Authority” means the government of the United States of
America or any other nation, or any political subdivision thereof,
whether state or local, or any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or
administration powers or functions of or pertaining to government
over any Debtor or any of its subsidiaries, or any of their
respective properties, assets or undertakings.

 

“Instruments”
means any “instrument,” as such term is defined in the
UCC, and shall include, without limitation, promissory notes,
drafts, bills of exchange, trade acceptances, letters of credit,
letter of credit rights (as defined in the UCC), and Chattel
Paper.

 

“Inventory”
means any “inventory,” as such term is defined in the
UCC.

 

“Investment
Property” means any “investment property”, as
such term is defined in the UCC.

 

 

   

	
 

	

 

	
 

 

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“Obligations”
means all obligations, liabilities and indebtedness of every nature
of Debtors from time to time owed or owing under or in respect of
this Agreement, the Purchase Agreement, the Notes, any of the other
Security Documents and any of the other Transaction Documents, as
the case may be, including, without limitation, the principal
amount of all debts, claims and indebtedness, accrued and unpaid
interest and all fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore, now
and/or from time to time hereafter owing, due or payable whether
before or after the filing of a bankruptcy, insolvency or similar
proceeding under applicable federal, state, foreign or other law
and whether or not an allowed claim in any such
proceeding.

 

“Lien”
has the meaning set forth in the Purchase Agreement.

 

“Motor
Vehicles” shall mean motor vehicles, tractors, trailers and
other like property, whether or not the title thereto is governed
by a certificate of title or ownership.

 

“Mortgage”
has the meaning set forth in Section 2(h).

 

“Patents”
means any patents and patent applications, including, without
limitation, the inventions and improvements described and claimed
therein, all inventions subject to the patents and patent
applications listed on Schedule IV attached
hereto (if any), and the reissues, divisions, continuations,
renewals, extensions and continuations-in-part of any of the
foregoing, and all income, royalties, damages and payments now or
hereafter due and/or payable under or with respect to any of the
foregoing, including, without limitation, damages and payments for
past, present and future infringements of any of the foregoing and
the right to sue for past, present and future infringements of any
of the foregoing.

 

“Permitted
Indebtedness” has the meaning set forth in the
Notes.

 

“Proceeds”
means “proceeds,” as such term is defined in the UCC
and, in any event, includes, without limitation, (a) any and all
proceeds of any insurance, indemnity, warranty or guaranty payable
with respect to any of the Collateral, (b) any and all payments (in
any form whatsoever) made or due and payable from time to time in
connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any
Governmental Authority (or any person acting under color of
Governmental Authority), and (c) any and all other amounts from
time to time paid or payable under, in respect of or in connection
with any of the Collateral.

 

“Representative”
means any Person acting as agent, representative or trustee on
behalf of the Secured Party from time to time.

 

“Security
Documents” means this Agreement and any other documents
securing the Liens of the Secured Party hereunder.

 

“Software”
means all “software” as such term is defined in the
UCC, now owned or hereafter acquired by a Debtor, other than
software embedded in any category of Goods, including, without
limitation, all computer programs and all supporting information
provided in connection with a transaction related to any
program.

 

“Trademarks”
means any trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service
marks, logos, other business identifiers, prints and labels on
which any of the foregoing have appeared or appear, all
registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, the trademarks
and applications listed in Schedule V attached hereto (if
any) and renewals thereof, and all income, royalties, damages and
payments now or hereafter due and/or payable under or with respect
to any of the foregoing, including, without limitation, damages and
payments for past, present and future infringements of any of the
foregoing and the right to sue for past, present and future
infringements of any of the foregoing.

 

“Transaction
Documents” means the Purchase Agreement, the Notes, the
Security Documents, the Warrants and any other related agreements
delivered to and in favor of the Purchaser.

 

 

   

	
 

	

 

	
 

 

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“UCC”
shall mean the Uniform Commercial Code as in effect from time to
time in the State of New York; provided, that to the extent that
the Uniform Commercial Code is used to define any term herein and
such term is defined differently in different Articles or Divisions
of the Uniform Commercial Code, the definition of such term
contained in Article or Division 9 shall govern.

 

Section
2. Representations, Warranties and
Covenants of Debtors. Each Debtor represents and warrants
to, and covenants with, the Secured Party as follows:

 

(a)            Such
Debtor has or will have rights in and the power to grant a security
interest in the Collateral in which it purports to grant a security
interest pursuant to Section 3 hereof (subject, with respect to
after acquired Collateral, to such Debtor acquiring the same) and
no Lien other than Permitted Liens exist or will exist upon such
Collateral at any time.

 

(b) This
Agreement is effective to create in favor of Secured Party a valid
security interest in and Lien upon all of such Debtor’s
right, title and interest in and to the Collateral, and upon (i)
the filing of appropriate UCC financing statements in the
jurisdictions listed on Schedule I attached hereto, ,
such security interest will be a duly perfected second priority
perfected security interest (subject to Permitted Liens) in the
Collateral that can be perfected by the filing of a UCC financing
statement, and is subordinate to the first priority security
interest of GBP Debt Holdings II, LLC (“GPB”) or any
assignor of GPB’s interest pursuant to the terms of the
Senior Documents (as defined in the Notes).

 

(c) All of the
Equipment, Inventory and Goods owned by such Debtor is located at
the places as specified on Schedule I attached hereto.
Except as disclosed on Schedule I, none of the
Collateral is in the possession of any bailee, warehousemen,
processor or consignee, other than Collateral in transit, out for
repair or with an employee in ordinary course of business.
Schedule I
discloses such Debtor’s name as of the date hereof as it
appears in official filings in the state or province, as
applicable, of its incorporation, formation or organization, such
Debtor’s state or province, as applicable, of incorporation,
formation or organization and the chief place of business, chief
executive office and the office where such Debtor keeps its books
and records and the states in which such Debtor conducts its
business. Such Debtor has only one state or province, as
applicable, of incorporation, formation or organization. Such
Debtor does not do business and has not done business during the
past five (5) years under any trade name or fictitious business
name except as disclosed on Schedule II attached
hereto.

 

(d) Schedules III, IV and V contain complete and accurate
lists as of the date hereof of all (i) registered copyrights and
applications therefor; (ii) patents and pending applications
therefor; (iii) registered trademarks and service marks and
applications therefor; and (iv) all unregistered trademarks
and service marks that are material to the operations of the
business of such Debtor; in each case owned by such Debtor. No
Copyrights, Patents or Trademarks listed on Schedules III, IV and V,
respectively, if any, have been adjudged invalid or unenforceable
or have been canceled, in whole or in part, or are not presently
subsisting. Each of such Copyrights, Patents and Trademarks (if
any) is valid and enforceable. Such Debtor is the sole and
exclusive owner of the entire and unencumbered right, title and
interest in and to each of such Copyrights, Patents and Trademarks,
identified on Schedules
III, IV and V, as applicable, as being owned by such Debtor,
free and clear of any liens, charges and encumbrances, including
without limitation licenses, shop rights and covenants by such
Debtor not to sue third persons. Such Debtor has adopted, used and
is currently using, or has a current bona fide intention to use,
all of such Trademarks. Such Debtor has no notice of any suits or
actions commenced or threatened in writing with reference to the
Copyrights, Patents or Trademarks owned by it.

 

(e) Each Debtor agrees
to deliver to the Secured Party an updated Schedule I, II, III, IV and/or
V within five (5) Business Days of any change
thereto.

 

 

   

	
 

	

 

	
 

 

-4-

 

 

(f) All depositary and
other accounts including, without limitation, Deposit Accounts,
securities accounts, brokerage accounts and other similar accounts,
maintained by each Debtor are described on Schedule VI hereto, which
description includes for each such account the name of the Debtor
maintaining such account, the name, address and telephone and
telecopy numbers of the financial institution at which such account
is maintained, the account number and the account officer, if any,
of such account. No Debtor shall open any new Deposit Accounts,
securities accounts, brokerage accounts or other accounts unless
such Debtor shall have given Secured Party ten (10) Business
Days’ prior written notice of its intention to open any such
new accounts. Each Debtor shall deliver to Secured Party a revised
version of Schedule
VI showing any changes thereto within five (5) Business Days
of any such change. Each Debtor hereby authorizes the financial
institutions at which such Debtor maintains an account to provide
Secured Party with such information with respect to such account as
Secured Party from time to time may request, and each Debtor hereby
consents to such information being provided to Secured Party. In
addition, all of such Debtor’s depositary, security,
brokerage and other accounts including, without limitation, Deposit
Accounts shall be subject to the provisions of Section 4.5
hereof.

 

(g) Such Debtor does
not own any Commercial Tort Claim except for those disclosed on
Schedule VII hereto
(if any).

 

(h) Such Debtor does
not have any interest in real property with respect to real
property except as disclosed on Schedule VIII (if any). Each
Debtor shall deliver to Secured Party a revised version of
Schedule VIII
showing any changes thereto within ten (10) Business Days of any
such change. Except as otherwise agreed to by Secured Party, all
such interests in real property with respect to such real property
are subject to a mortgage or deed of trust, as applicable in
accordance with the custom in the relevant jurisdiction, in form
and substance satisfactory to Secured Party, in favor of Secured
Party (hereinafter, a “Mortgage”).

 

(i) Each Debtor shall
duly and properly record each interest in real property held
by such Debtor except with respect to easements, rights of
way, access agreements, surface damage agreements, surface use
agreements or similar agreements that such Debtor, using
prudent customs and practices in the industry in which it operates,
does not believe are of material value or material to the operation
of such Debtor’s business or, with respect to state and
federal rights of way, are not capable of being recorded as a
matter of state and federal law.

 

(j) All Equipment
(including, without limitation, Motor Vehicles) owned by a Debtor
and subject to a certificate of title or ownership statute is
described on Schedule
IX hereto.

 

Section
3. Collateral. As collateral
security for the prompt payment in full when due (whether at stated
maturity, by acceleration or otherwise) of the Obligations, each
Debtor hereby pledges and grants to the Secured Party a Lien on and
security interest in and to all of such Debtor’s right, title
and interest in the following properties and assets of such Debtor,
whether now owned by such Debtor or hereafter acquired and whether
now existing or hereafter coming into existence and wherever
located (all being collectively referred to herein as
“Collateral”):

 

(a)    
all Instruments,
together with all payments thereon or thereunder:

 

(b) all
Accounts;

 

(c) all
Inventory;

 

(d) all General
Intangibles (including payment intangibles (as defined in the UCC)
and Software);

 

(e) all
Equipment;

 

(f) all
Documents;

 

(g) all
Contracts;

 

(h) all
Goods;

 

 

   

	
 

	

 

	
 

 

-5-

 

 

(i) all Investment
Property, including without limitation all equity interests now
owned or hereafter acquired by such Debtor;

 

(j) all Deposit
Accounts, including, without limitation, the balance from time to
time in all bank accounts maintained by such Debtor;

 

(k) all Commercial Tort
Claims specified on Schedule VII;

 

(l) all Trademarks,
Patents and Copyrights;

 

(m) all books and
records pertaining to the other Collateral; and

 

(n) all other tangible
and intangible property of such Debtor, including, without
limitation, all interests in real property, Proceeds, tort claims,
products, accessions, rents, profits, income, benefits,
substitutions, additions and replacements of and to any of the
property of such Debtor described in the preceding clauses of this
Section 3 (including, without limitation, any proceeds of insurance
thereon, insurance claims and all rights, claims and benefits
against any Person relating thereto), other rights to payments not
otherwise included in the foregoing, and all books, correspondence,
files, records, invoices and other papers, including without
limitation all tapes, cards, computer runs, computer programs,
computer files and other papers, documents and records in the
possession or under the control of such Debtor, any computer bureau
or service company from time to time acting for such
Debtor.

 

Notwithstanding
anything to the contrary contained herein or in any Transaction
Document, in no event shall the security interest granted herein or
therein attach to any Excluded Assets.

 

Section
4. Covenants; Remedies. In
furtherance of the grant of the pledge and security interest
pursuant to Section 3 hereof, each Debtor hereby agrees with the
Secured Party as follows:

 

4.1 Delivery
and Other Perfection; Maintenance, etc.

 

(a) Intentionally
Omitted

 

(b) Other Documents and Actions.
Subject to the rights of holders of Permitted Liens, each Debtor
shall give, execute, deliver, file and/or record any financing
statement, that may be necessary or desirable (in the reasonable
judgment of the Secured Party or its Representative) to create,
preserve, perfect or validate the security interest granted
pursuant hereto or to enable the Secured Party or its
Representative to exercise and enforce the rights of the Secured
Party hereunder with respect to such pledge and security interest.
Notwithstanding the foregoing each Debtor hereby irrevocably
authorizes the Secured Party at any time and from time to time to
file in any filing office in any jurisdiction any initial financing
statements (and other similar filings or registrations under other
applicable laws and regulations pertaining to the creation,
attachment, or perfection of security interests) and amendments
thereto that (a) indicate the Collateral (i) as all assets of such
Debtor or words of similar effect, regardless of whether any
particular asset comprised in the Collateral falls within the scope
of Article 9 of the UCC, or (ii) as being of an equal or lesser
scope or with greater detail, and (b) contain any other information
required by part 5 of Article 9 of the UCC for the sufficiency or
filing office acceptance of any financing statement or amendment,
including (i) whether such Debtor is an organization, the type of
organization and any organization identification number issued to
such Debtor, and (ii) in the case of a financing statement filed as
a fixture filing, a sufficient description of real property to
which the Collateral relates. Each Debtor agrees to furnish any
such information to the Secured Party promptly upon request. No
filings in or documentation governed by any foreign jurisdictions
will be required.

 

(c) Books and Records. Each Debtor
(or a Company on behalf of a Debtor) shall maintain at its own cost
and expense complete and accurate books and records of the
Collateral, including, without limitation, a record of all payments
received and all credits granted with respect to the Collateral and
all other dealings with the Collateral. Each Debtor shall permit
any Representative of the Secured Party, in accordance with Section
8.13 of the Purchase Agreement, to inspect such books and records
at any time during reasonable business hours and will provide
photocopies thereof at such Debtor’s expense to the Secured
Party upon request of the Secured Party.

 

 

   

	
 

	

 

	
 

 

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(d) Motor Vehicles. Each Debtor
shall, promptly upon acquiring same, cause the Collateral Agent,
for the Secured Party, at the request of the Secured Party, to be
listed as the lienholder subordinate to GPB on each certificate of
title or ownership covering any items of Equipment, including Motor
Vehicles, having a value in excess of $100,000 individually or in
the aggregate for all such items of Equipment of the Debtor, or
otherwise comply with the certificate of title or ownership laws of
the relevant jurisdiction issuing such certificate of title or
ownership in order to properly evidence and perfect Secured
Party’s security interest in the assets represented by such
certificate of title or ownership.

 

(e)  Intentionally
Omitted

 

(f) Intellectual Property. If such
Debtor shall (i) obtain rights to any new patentable inventions,
any registered Copyrights or any Patents or Trademarks, or (ii)
become entitled to the benefit of any registered Copyrights or any
Patents or any registered Trademarks or unregistered Trademarks
material to the operations of the business of such Debtor or any
improvement on any Patent, the provisions of this Agreement above
shall automatically apply thereto and such Debtor shall give to
Secured Party prompt written notice thereof. Each Debtor hereby
authorizes Secured Party to modify this Agreement by amending
Schedules III, IV and
V, as applicable, to include any such registered Copyrights
or any such Patents and Trademarks. Each Debtor shall have the duty
(i) to prosecute diligently any patent, trademark, or service mark
applications pending as of the date hereof or hereafter, (ii) to
preserve and maintain all rights in the Copyrights, Patents and
Trademarks, to the extent material to the operations of the
business of such Debtor and (iii) to ensure that the Copyrights,
Patents and Trademarks are and remain enforceable, in each case to
the extent material to the operations of the business of such
Debtor. Any expenses incurred in connection with such
Debtor’s obligations under this Section 4.1(f) shall be borne
by such Debtor. Except for any such items that a Debtor reasonably
believes (using prudent industry customs and practices) are no
longer necessary for the on-going operations of its business, no
Debtor shall abandon any material right to file a patent, trademark
or service mark application, or abandon any pending patent,
trademark or service mark application or any other Copyright,
Patent or Trademark without the prior written consent of Secured
Party, which consent shall not be unreasonably
withheld.

 

(g) Further Identification of
Collateral. Each Debtor will, when and as often as requested
by the Secured Party or its Representative, furnish to the Secured
Party or such Representative, statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the Secured Party or its
Representative may reasonably request, all in reasonable
detail.

 

(h) Intentionally
Omitted

 

(i) Commercial Tort Claims. Each
Debtor shall promptly notify Secured Party of any Commercial Tort
Claim acquired by it that concerns a claim in excess of $50,000 and
unless otherwise consented to by Secured Party, such Debtor shall
enter into a supplement to this Agreement granting to Secured Party
a Lien on and security interest in such Commercial Tort
Claim.

 

4.2 Other Liens. Debtors will not
create, permit or suffer to exist, and will defend the Collateral
against and take such other action as is necessary to remove, any
Lien on the Collateral except Permitted Liens, and will defend the
right, title and interest of the Secured Party in and to the
Collateral and in and to all Proceeds thereof against the claims
and demands of all Persons whatsoever, except holders of Permitted
Liens.

 

4.3 Preservation of Rights. Whether
or not any Event of Default has occurred or is continuing, the
Secured Party and its Representative may, but shall not be required
to, take any steps the Secured Party or its Representative deems
necessary or appropriate to preserve any Collateral or any rights
against third parties to any of the Collateral, including obtaining
insurance for the Collateral at any time when such Debtor has
failed to do so, and Debtors shall promptly pay, or reimburse the
Secured Party for, all expenses incurred in connection
therewith.

 

 

   

	
 

	

 

	
 

 

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4.4 Formation
of Subsidiaries; Name Change; Location; Bailees.

 

(a) No Debtor shall
form or acquire any subsidiary unless (i) such subsidiary becomes a
party to this Agreement and all other applicable Security Documents
and (ii) the formation or acquisition of such Subsidiary is not
prohibited by the terms of the Transaction Documents.

 

(b) No Debtor shall (i)
reincorporate or reorganize itself under the laws of any
jurisdiction other than the jurisdiction in which it is
incorporated or organized as of the date hereof, or (ii) otherwise
change its identity or corporate structure, in each case, without
the prior written consent of Secured Party, which consent shall not
be unreasonably withheld, or (iii) change its name without
delivering twenty (20) days prior notice of such change to Secured
Party. Each Debtor will notify Secured Party promptly in writing
prior to any such change in the proposed use by such Debtor of any
tradename or fictitious business name other than any such name set
forth on Schedule
II attached hereto.

 

(c) Except
for the sale of Inventory in the ordinary course of business and
other sales of assets expressly permitted by the terms of the
Purchase Agreement, Collateral in transit, our for repair or with
an employee in the ordinary course of business, each Debtor will
keep the Collateral at the locations specified in Schedule I. Each Debtor will
give Secured Party thirty (30) day’s prior written notice of
any change in such Debtor’s chief place of business or of any
new location for any of the Collateral.

 

(d) If any Collateral
is at any time in the possession or control of any warehousemen,
bailee, consignee or processor in an aggregate amount of at least
$100,000, such Debtor shall, upon the request of Secured Party or
its Representative, notify such warehousemen, bailee, consignee or
processor of the Lien and security interest created hereby and
shall instruct such Person to hold all such Collateral for Secured
Party’s account subject to Secured Party’s
instructions.

 

(e) Each Debtor
acknowledges that it is not authorized to file any financing
statement or amendment or termination statement with respect to any
financing statement relating to Secured Party’s security
interests hereunder without the prior written consent of Secured
Party and agrees that it will not do so without the prior written
consent of Secured Party, subject to such Debtor’s rights
under Section 9-509(d)(2) to the UCC.

 

(f) Subject to the
rights of holders of Permitted Liens, no Debtor shall enter into
any Contract that restricts or prohibits the grant to Secured Party
of a security interest in material Accounts, Chattel Paper,
Instruments or payment intangibles or the proceeds of the
foregoing.

 

4.5 Events of Default,
Etc. During the period during which an Event of Default shall have
occurred and be continuing, subject to the rights of holders of
Permitted Liens and subject to the rights of GPB under the
Subordination and Intercreditor Agreement by and among GPB, the
Company and the Secured Party:

 

(a) each Debtor shall,
at the request of the Secured Party or its Representative, assemble
the Collateral and make it available to Secured Party or its
Representative at a place or places designated by the Secured Party
or its Representative which are reasonably convenient to Secured
Party or its Representative, as applicable, and such
Debtor;

 

(b) the Secured Party
or its Representative may make any reasonable compromise or
settlement deemed desirable with respect to any of the Collateral
and may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, any of the
Collateral;

 

 

   

	
 

	

 

	
 

 

-8-

 

 

(c) the Secured Party
shall have all of the rights and remedies with respect to the
Collateral of a secured party under the UCC (whether or not said
UCC is in effect in the jurisdiction where the rights and remedies
are asserted) and such additional rights and remedies to which a
secured party is entitled under the laws in effect in any
jurisdiction where any rights and remedies hereunder may be
asserted, including, without limitation, the right, to the maximum
extent permitted by law, to: (i) exercise all voting, consensual
and other powers of ownership pertaining to the Collateral as if
the Secured Party were the sole and absolute owner thereof (and
each Debtor agrees to take all such action as may be appropriate to
give effect to such right) and (ii) to the appointment of a
receiver or receivers for all or any part of the Collateral or
business of a Debtor, whether such receivership be incident to a
proposed sale or sales of such Collateral or otherwise and without
regard to the value of the Collateral or the solvency of any person
or persons liable for the payment of the Obligations secured by
such Collateral. Each Debtor hereby consents to the appointment of
such receiver or receivers, waives any and all defenses to such
appointment and agrees that such appointment shall in no manner
impair, prejudice or otherwise affect the rights of Secured Party
under this Agreement. Each Debtor hereby expressly waives notice of
a hearing for appointment of a receiver and the necessity for bond
or an accounting by the receiver;

 

(d) the Secured Party
or its Representative in its discretion may, in the name of the
Secured Party or in the name of a Debtor or otherwise, demand, sue
for, collect or receive any money or property at any time payable
or receivable on account of or in exchange for any of the
Collateral, but shall be under no obligation to do so;

 

(e) the Secured Party
or its Representative may take immediate possession and occupancy
of any premises owned, used or leased by a Debtor and exercise all
other rights and remedies which may be available to the Secured
Party;

 

(f) the Secured Party
may, upon reasonable notice (such reasonable notice to be
determined by Secured Party in its sole and absolute discretion,
which shall not be less than ten (10) days), with respect to the
Collateral or any part thereof which shall then be or shall
thereafter come into the possession, custody or control of the
Secured Party or its Representative, sell, lease, license, assign
or otherwise dispose of all or any part of such Collateral, at such
place or places as the Secured Party deems best, and for cash or
for credit or for future delivery (without thereby assuming any
credit risk), at public or private sale, without demand of
performance or notice of intention to effect any such disposition
or of the time or place thereof (except such notice as is required
above or by applicable statute and cannot be waived), and the
Secured Party or anyone else may be the purchaser, lessee,
licensee, assignee or recipient of any or all of the Collateral so
disposed of at any public sale (or, to the extent permitted by law,
at any private sale) and thereafter hold the same absolutely, free
from any claim or right of whatsoever kind, including any right or
equity of redemption (statutory or otherwise), of Debtors, any such
demand, notice and right or equity being hereby expressly waived
and released. The Secured Party may, without notice or publication,
adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place
to which the sale may be so adjourned;

 

(g) the rights,
remedies and powers conferred by this Section 4.5 are in addition
to, and not in substitution for, any other rights, remedies or
powers that the Secured Party may have under any Transaction
Document, at law, in equity or by or under the UCC or any other
statute or agreement. The Secured Party may proceed by way of any
action, suit or other proceeding at law or in equity and no right,
remedy or power of the Secured Party will be exclusive of or
dependent on any other. The Secured Party may exercise any of its
rights, remedies or powers separately or in combination and at any
time; and

 

(h) each Debtor,
Secured Party and each Debtor’s bank shall enter into a
deposit account control agreement in form and substance
satisfactory to Secured Party that is sufficient to give Secured
Party “control” (for purposes of Articles 8 and 9 of
the Uniform Commercial Code) over such account and which directs
such bank to transfer such funds so deposited on a daily basis, or
at other times acceptable to Secured Party, to Secured Party,
either to any account maintained by Secured Party at said bank or
by wire transfer to appropriate account(s) at Secured Party. All
funds deposited in such Deposit Accounts shall immediately become
subject to the security interest of Secured Party for its own
benefit, and Secured Party shall obtain the agreement by such bank
to waive any offset rights against the funds so deposited. Secured
Party shall apply all funds received by it from the Deposit
Accounts to the satisfaction of the Obligations.

 

 

   

	
 

	

 

	
 

 

-9-

 

 

The
proceeds of each collection, sale or other disposition under this
Section 4.5 shall be applied in accordance with Section 4.8
hereof.

 

It
being agreed and acknowledged that Secured Party shall not have any
rights and shall not take any action that will impair GPB’s
first priority lien and its rights under the agreements it has
entered into with the Company as described in the Subordination and
Intercreditor Agreement.

 

4.6 Deficiency. If the proceeds of
sale, collection or other realization of or upon the Collateral are
insufficient to cover the costs and expenses of such realization
and the payment in full of the Obligations, Debtors shall remain
jointly and severally liable for any deficiency.

 

4.7 Private Sale. Each Debtor
recognizes that the Secured Party may be unable to effect a public
sale of any or all of the Collateral consisting of securities by
reason of certain prohibitions contained in the Securities Act of
1933, as amended (the “Act”), and applicable state
securities laws, but may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers who will
be obliged to agree, among other things, to acquire such Collateral
for their own account for investment and not with a view to the
distribution or resale thereof. Each Debtor acknowledges and agrees
that any such private sale may result in prices and other terms
less favorable to the seller than if such sale were a public sale
and each Debtor agrees that it is not commercially unreasonable for
Secured Party to engage in any such private sales or dispositions
under such circumstances. The Secured Party shall be under no
obligation to delay a sale of any of the Collateral to permit a
Debtor to register such Collateral for public sale under the Act,
or under applicable state securities laws, even if Debtors would
agree to do so. The Secured Party shall not incur any liability as
a result of the sale of any such Collateral unless it does so in
violation of the rights of GPB, or any part thereof, at any private
sale provided for in this Agreement conducted in a commercially
reasonable manner, and so long as Secured Party conducts such sale
in a commercially reasonable manner each Debtor hereby waives any
claims against the Secured Party arising by reason of the fact that
the price at which the Collateral may have been sold at such a
private sale was less than the price which might have been obtained
at a public sale or was less than the aggregate amount of the
Obligations, even if the Secured Party accepts the first offer
received and does not offer the Collateral to more than one
offeree.

 

Each
Debtor further agrees to do or cause to be done all such other acts
and things as may be necessary to make such sale or sales of any
portion or all of any such Collateral valid and binding and in
compliance with any and all applicable laws, regulations, orders,
writs, injunctions, decrees or awards of any and all courts,
arbitrators or governmental instrumentalities, domestic or foreign,
having jurisdiction over any such sale or sales, all at such
Debtor’s expense. Each Debtor further agrees that a breach of
any of the covenants contained in this Section 4.7 will cause
irreparable injury to the Secured Party, that the Secured Party has
no adequate remedy at law in respect of such breach and, as a
consequence, agrees that each and every covenant contained in this
Section 4.7 shall be specifically enforceable against Debtors, and
each Debtor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except
for a defense that no Event of Default has occurred and is
continuing.

 

4.8 Application of Proceeds. The
proceeds of any collection, sale or other realization of all or any
part of the Collateral, and any other cash at the time held by the
Secured Party under this Agreement, shall be applied, after the
payment in full of all obligations owed to GPB under the Senior
Documents, to the Obligations in such order as Secured Party shall
elect.

 

4.9 Attorney-in-Fact.
Each Debtor hereby irrevocably constitutes and appoints the Secured
Party, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the
place and stead of such Debtor and in the name of such Debtor or in
its own name, from time to time in the discretion of the Secured
Party, for the purpose of carrying out the terms of this Agreement,
to take any and all appropriate action and to execute and deliver
any and all documents and instruments which may be necessary or
desirable to perfect or protect any security interest granted
hereunder, to maintain the perfection or priority of any security
interest granted hereunder, or to otherwise accomplish the purposes
of this Agreement, and, without limiting the generality of the
foregoing, hereby gives the Secured Party the power and right, on
behalf of such Debtor, without notice to or assent by such Debtor
(to the extent permitted by applicable law), subject to the rights
of holders of Permitted Liens and subject to the rights of GPB
under the Senior Documents, to do the following:

 

 

   

	
 

	

 

	
 

 

-10-

 

 

(a) to take any and all
appropriate action and to execute and deliver any and all documents
and instruments which may be necessary or desirable to accomplish
the purposes of this Agreement;

 

(b) upon the occurrence
and during the continuation of an Event of Default, to ask, demand,
collect, receive and give acquittance and receipts for any and all
moneys due and to become due under any Collateral and, in the name
of such Debtor or its own name or otherwise, to take possession of
and endorse and collect any checks, drafts, notes, acceptances or
other Instruments for the payment of moneys due under any
Collateral and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by the Secured Party for the purpose of collecting any
and all such moneys due under any Collateral whenever payable and
to file any claim or to take any other action or proceeding in any
court of law or equity or otherwise deemed appropriate by the
Secured Party for the purpose of collecting any and all such moneys
due under any Collateral whenever payable;

 

(c) to pay or discharge
charges or liens levied or placed on or threatened against the
Collateral, to effect any insurance called for by the terms of this
Agreement and to pay all or any part of the premiums
therefor;

 

(d) to direct any party
liable for any payment under any of the Collateral to make payment
of any and all moneys due, and to become due thereunder, directly
to the Secured Party or as the Secured Party shall direct, and to
receive payment of and receipt for any and all moneys, claims and
other amounts due, and to become due at any time, in respect of or
arising out of any Collateral;

 

(e) upon the occurrence
and during the continuation of an Event of Default, to sign and
indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts and other
Documents constituting or relating to the Collateral;

 

(f) upon the occurrence
and during the continuation of an Event of Default, to commence and
prosecute any suits, actions or proceedings at law or in equity in
any court of competent jurisdiction to collect the Collateral or
any part thereof and to enforce any other right in respect of any
Collateral;

 

(g) upon the occurrence
and during the continuation of an Event of Default, to defend any
suit, action or proceeding brought against a Debtor with respect to
any Collateral;

 

(h) upon the occurrence
and during the continuation of an Event of Default, to settle,
compromise or adjust any suit, action or proceeding described above
and, in connection therewith, to give such discharges or releases
as the Secured Party may deem appropriate;

 

(i) to the extent that
a Debtor’s authorization given in Section 4.1(b) of this
Agreement is not sufficient to file such financing statements with
respect to this Agreement, with or without such Debtor’s
signature, or to file a photocopy of this Agreement in substitution
for a financing statement, as the Secured Party may deem
appropriate and to execute in such Debtor’s name such
financing statements and amendments thereto and continuation
statements which may require such Debtor’s
signature;

 

(j) upon the occurrence
and during the continuation of an Event of Default, generally to
sell, transfer, pledge, make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely
as though the Secured Party were the absolute owners thereof for
all purposes; and

 

(k) to do, at the
Secured Party’s option and at such Debtor’s expense, at
any time, or from time to time, all acts and things which the
Secured Party reasonably deems necessary to protect or preserve or,
upon the occurrence and during the continuation of an Event of
Default, realize upon the Collateral and the Secured Party’s
lien therein, in order to effect the intent of this Agreement, all
as fully and effectively as such Debtor might do.

 

 

   

	
 

	

 

	
 

 

-11-

 

 

Each
Debtor hereby ratifies, to the extent permitted by law, all that
such attorneys lawfully do or cause to be done by virtue hereof
provided the same is performed in a commercially reasonable manner.
The power of attorney granted hereunder is a power coupled with an
interest and shall be irrevocable until the Obligations are
indefeasibly paid in full in cash and this Agreement is terminated
in accordance with Section 4.11 hereof.

 

Each
Debtor also authorizes the Secured Party, at any time from and
after the occurrence and during the continuation of any Event of
Default, (x) to communicate in its own name with any party to any
Contract with regard to the assignment of the right, title and
interest of such Debtor in and under the Contracts hereunder and
other matters relating thereto and (y) to execute, in
connection with any sale of Collateral provided for in Section 4.5
hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.

 

4.10 Intentionally
Omitted.

 

 

 

4.11 Termination;
Partial Release of Collateral. This Agreement and the Liens
and security interests granted hereunder shall not terminate until
the termination of the Purchase Agreement and the Notes and the
full and complete performance and indefeasible satisfaction of all
the Obligations (i) in respect of the Transaction Documents
(including, without limitation, the indefeasible payment in full in
cash of all such Obligations) and (ii) with respect to which claims
have been asserted by the Collateral Agent/ and or Purchaser,
whereupon the Secured Party shall forthwith cause to be assigned,
transferred and delivered, against receipt but without any
recourse, warranty or representation whatsoever, any remaining
Collateral to or on the order of Debtors. The Secured Party shall
also execute and deliver to Debtors upon such termination or in
connection with a Permitted Disposition and at Debtors’
expense such UCC termination statements, certificates for
terminating the liens on the Motor Vehicles (if any), possessory
collateral (if any) and such other documentation as shall be
reasonably requested by Debtors to effect the termination and
release of the Liens and security interests in favor of the Secured
Party affecting the Collateral.

 

4.12 Further
Assurances. At any time and from time to time, upon the
written request of the Secured Party or its Representative, and at
the sole expense of Debtors, subject to the rights of holders of
Permitted Liens, Debtors will promptly and duly execute and deliver
any and all such further instruments, documents and agreements and
take such further actions as the Secured Party or its
Representative may reasonably require in order for the Secured
Party to obtain the full benefits of this Agreement and of the
rights and powers herein granted in favor of the Secured Party or
the Collateral Agent on behalf of the Secured Party, including,
without limitation, using Debtors’ best efforts to secure all
consents and approvals necessary or appropriate for the assignment
to the Secured Party of any Collateral held by Debtors or in which
a Debtor has any rights not heretofore assigned, the filing of any
financing or continuation statements under the UCC with respect to
the liens and security interests granted hereby, placing the
interest of the Collateral Agent on behalf of the Secured Party as
lienholder on the certificate of title of any Motor Vehicle in
accordance with the terms hereof, and obtaining waivers of liens
from landlords in accordance with the terms hereof. Each Debtor
also hereby authorizes the Secured Party and its Representative to
file any such financing or continuation statement without the
signature of such Debtor to the extent permitted by applicable
law.

 

4.13 Limitation
on Duty of Secured Party. The powers conferred on the
Secured Party under this Agreement are solely to protect the
Secured Party’s interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. The Secured
Party shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers, and neither the Secured Party
nor its Representative nor any of their respective officers,
directors, employees or agents shall be responsible to Debtors for
any act or failure to act, except for gross negligence or willful
misconduct. Without limiting the foregoing, the Secured Party and
any Representative shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in their
possession if such Collateral is accorded treatment substantially
equivalent to that which the relevant Secured Party or any
Representative, in its individual capacity, accords its own
property consisting of the type of Collateral involved, it being
understood and agreed that neither the Secured Party nor any
Representative shall have any responsibility for taking any
necessary steps (other than steps taken in accordance with the
standard of care set forth above) to preserve rights against any
Person with respect to any Collateral.

 

 

   

	
 

	

 

	
 

 

-12-

 

 

Also
without limiting the generality of the foregoing, neither the
Secured Party nor any Representative shall have any obligation or
liability under any Contract or license by reason of or arising out
of this Agreement or the granting to the Secured Party of a
security interest therein or assignment thereof or the receipt by
the Secured Party or any Representative of any payment relating to
any Contract or license pursuant hereto, nor shall the Secured
Party or any Representative be required or obligated in any manner
to perform or fulfill any of the obligations of Debtors under or
pursuant to any Contract or license, or to make any payment, or to
make any inquiry as to the nature or the sufficiency of any payment
received by it or the sufficiency of any performance by any party
under any Contract or license, or to present or file any claim, or
to take any action to collect or enforce any performance or the
payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.

 

Section
5. Miscellaneous.

 

5.1 No Waiver. No failure on the
part of the Secured Party or any of its Representatives to
exercise, and no course of dealing with respect to, and no delay in
exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by the
Secured Party or any of its Representatives of any right, power or
remedy hereunder preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The rights and
remedies hereunder provided are cumulative and may be exercised
singly or concurrently, and are not exclusive of any rights and
remedies provided by law.

 

5.2 Governing Law. All questions
concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal
laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
New York.

 

5.3 Notices. All notices,
approvals, requests, demands and other communications hereunder
shall be delivered or made in the manner set forth in, and shall be
effective in accordance with the terms of, the Purchase Agreement;
provided, that, to the extent any such communication is being made
or sent to a Debtor that is not the Company, such communication
shall be effective as to such Debtor if made or sent to the Company
in accordance with the foregoing. Debtors and Secured Party may change their
respective notice addresses by written notice given to each other
party five (5) days prior to the effectiveness of such
change.

 

5.4 Amendments, Etc. The terms of
this Agreement may be waived, altered or amended only by an
instrument in writing duly executed by the Debtor sought to be
charged or benefited thereby and the Secured Party. Any such
amendment or waiver shall be binding upon the Secured Party and the
Debtor sought to be charged or benefited thereby and their
respective successors and assigns.

 

5.5 Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the
respective successors and assigns of each of the parties hereto,
provided, that no Debtor shall assign or transfer its rights
hereunder without the prior written consent of the Secured Party.
Secured Party may assign its rights hereunder without the consent
of Debtors, in which event such assignee shall be deemed to be
Secured Party hereunder with respect to such assigned rights;
provided, so long as no Event of Default has occurred and is
continuing, the Secured Party shall not assign any of its rights
hereunder to a competitor of the Company.

 

5.6 Counterparts; Headings. This
Agreement may be authenticated in any number of counterparts, all
of which taken together shall constitute one and the same
instrument and any of the parties hereto may authenticate this
Agreement by signing any such counterpart. This Agreement may be
authenticated by manual signature or facsimile, .pdf or similar
electronic signature, all of which shall be equally valid. The
headings in this Agreement are for convenience of reference only
and shall not alter or otherwise affect the meaning
hereof.

 

5.7 Severability. If any provision
hereof is invalid and unenforceable in any jurisdiction, then, to
the fullest extent permitted by law, (a) the other provisions
hereof shall remain in full force and effect in such jurisdiction
and shall be liberally construed in favor of the Secured Party and
its Representative in order to carry out the intentions of the
parties hereto as nearly as may be possible and (b) the invalidity
or unenforceability of any provision hereof in any jurisdiction
shall not affect the validity or enforceability of such provision
in any other jurisdiction.

 

 

   

	
 

	

 

	
 

 

-13-

 

 

5.8 SUBMISSION
TO JURISDICTION; WAIVER OF VENUE; SERVICE OF PROCESS.
EACH DEBTOR HEREBY IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL
OR NEW YORK STATE COURT SITTING IN THE CITY OF NEW YORK, BOROUGH OF
MANHATTAN IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT AND EACH DEBTOR HEREBY IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS
AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF
SECURED PARTY TO BRING PROCEEDINGS AGAINST ANY DEBTOR IN THE COURTS
OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY A DEBTOR
AGAINST SECURED PARTY OR ANY AFFILIATE THEREOF INVOLVING, DIRECTLY
OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN
NEW YORK, NEW YORK (AND SECURED PARTY HEREBY SUBMITS TO THE
JURISDICTION OF SUCH COURT). NOTHING CONTAINED HEREIN SHALL BE
DEEMED TO LIMIT IN ANY WAY ANY RIGHT OF SECURED PARTY TO SERVE
PROCESS IN ANY MANNER PERMITTED BY LAW.

 

5.9 WAIVER
OF RIGHT TO TRIAL BY JURY.
EACH DEBTOR AND SECURED PARTY WAIVE THEIR RESPECTIVE RIGHTS TO A
TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION
OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY
OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS,
OR OTHERWISE. EACH DEBTOR AND SECURED PARTY AGREE THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE
THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION 5.9 AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE
VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION
HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT.

 

5.10 Joint
and Several. The obligations, covenants and agreements of
Debtors hereunder shall be the joint and several obligations,
covenants and agreements of each Debtor, whether or not
specifically stated herein without preferences or distinction among
them.

 

5.11 Concerning
Collateral Agent. Collateral
Agent shall act in accordance with the terms of the Purchase
Agreement. The Collateral Agent may exercise or refrain from
exercising any rights (including making demands and giving notices)
and take or refrain from taking any action, in accordance with this
Agreement and the Purchase Agreement. The Collateral Agent may
employ agents and attorneys-in-fact in connection herewith and
shall not be liable for the negligence or misconduct of any such
agents or attorneys-in-fact selected by it in good faith. The
Collateral Agent may resign with 10 days’ written notice to
Company and a successor Collateral Agent may be appointed by the
Purchasers in consultation with Company. On the acceptance of
appointment as the successor Collateral Agent, that successor
Collateral Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring
Collateral Agent under this Agreement, and the retiring Collateral
Agent shall thereupon be discharged from its duties and obligations
under this Agreement. After any retiring Collateral Agent's
resignation, the provisions hereof shall inure to its benefit as to
any actions taken or omitted to be taken by it under this Agreement
while it was the Collateral Agent.

 

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

 

 

   

	
 

	

 

	
 

 

-14-

 

 

5.13 ENTIRE
AGREEMENT; AMENDMENT. THIS AGREEMENT, TOGETHER WITH THE
OTHER TRANSACTION DOCUMENTS, SUPERSEDES ALL OTHER PRIOR ORAL OR
WRITTEN AGREEMENTS BETWEEN SECURED PARTY, THE DEBTORS, THEIR
AFFILIATES AND PERSONS ACTING ON THEIR BEHALF WITH RESPECT TO THE
MATTERS DISCUSSED HEREIN, AND THIS AGREEMENT, TOGETHER WITH THE
OTHER TRANSACTION DOCUMENTS AND THE OTHER INSTRUMENTS REFERENCED
HEREIN AND THEREIN, CONTAIN THE ENTIRE UNDERSTANDING OF THE PARTIES
WITH RESPECT TO THE MATTERS COVERED HEREIN AND THEREIN AND, EXCEPT
AS SPECIFICALLY SET FORTH HEREIN OR THEREIN, NEITHER THE SECURED
PARTY NOR ANY DEBTOR MAKES ANY REPRESENTATION, WARRANTY, COVENANT
OR UNDERTAKING WITH RESPECT TO SUCH MATTERS. AS OF THE DATE OF THIS
AGREEMENT, THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES
WITH RESPECT TO THE MATTERS DISCUSSED HEREIN. NO PROVISION OF THIS
AGREEMENT MAY BE AMENDED, MODIFIED OR SUPPLEMENTED OTHER THAN BY AN
INSTRUMENT IN WRITING SIGNED BY THE DEBTORS AND THE SECURED
PARTY.

 

[Remainder of Page Intentionally Left Blank; Signature Page
Follows]

 

   

	
 

	

 

	
 

 

-15-

Execution Version

 

 

IN
WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed and delivered as of the day and year
first above written.

 

DEBTORS:

 

MEDITE CANCER DIAGNOSTICS, INC., a
Delaware corporation

 

By:                                                                       

Name:
David Patterson

Title:
Chief Executive Officer

 

 

MEDITE
Enterprise Inc.

 

By:                                                                       

Name:
David Patterson

Title:
Director

 

 

MEDITE
Lab Soltuions, Inc.

 

By:                                                                       

Name:
David Patterson

Title:
Chief Executive Officer

 

 

MEDITE
GmbH

 

By:                                                                       

Name:
Stephen Von Rump

Title:
Managing Director

 

 

CytoGlobe
GmbH

 

By:                                                                       

Name:
Stephen Von Rump

Title:
Managing Director

 

 

 

 

-16-

 

 

MEDITE
GmbH

 

 

By:                                                                       

Name:
Stephen Von Rump

Title:
Manging Director

 

 

MEDITE
sp. zo.o

 

 

By:                                                                       

Name:
Joerg Herrman-Rauls

Title:
Liquidator

 

 

 

 

 

 

 

-17-

 

 

COLLATERAL AGENT:

 

 

GPB
DEBT HOLDINGS II, LLC

 

 

By:                                                                       

Name:
David Gentile

Title:
Manager

 

Notice
Address:

 

535
West 24th
Street, Floor 4

New
York, NY 10011

 

 

 

 

 

 

 

-18-

Execution Version

 

 

[Signature Page to
Subordinated Security Agreement]

 

PURCHASER

 

 

 

______________________________

 

Lisa
Fortunoff

 

-19-

Execution Version

 

 

[Signature Page to
Subordinated Security Agreement]

 

PURCHASER

 

NEDLOG
INVESTMENTS LLC

 

______________________________

By:

Name:

Title:

 

 

-20-

Execution Version

 

 

[Signature Page to
Subordinated Security Agreement]

 

PURCHASER

 

KANTER
FAMILY FOUNDATION

 

______________________________

By:

Name:

Title:

 

 

 

 

 

 

-21-

Execution Version

 

 

[Signature Page to
Subordinated Security Agreement]

 

PURCHASER

 

RICKY
SOLOMON

 

______________________________

 

 

-22-

Execution Version

 

 

[Signature Page to
Subordinated Security Agreement]

 

PURCHASER

 

AUSTIN
LEWIS

 

______________________________

 

 

 

-23-

 

 

EXHIBIT A

 

Form of
Joinder

Joinder
to Security Agreement

 

The
undersigned, ______________________________, hereby joins in the
execution of that certain Security Agreement dated as of September
26, 2017 (as amended, restated, supplemented or otherwise modified
from time to time, the “Security Agreement”) by Medite
Cancer Diagnostics, Inc., a Delaware corporation, GPB Debt Holdings
II LLC, a Delaware limited liability company, as Collateral Agent
for the Secured Party, and each other Person that becomes a Debtor
(as defined therein) thereunder after the date thereof and hereof
and pursuant to the terms thereof, to and in favor of the Secured
Party. By executing this Joinder, the undersigned hereby agrees
that it is a Debtor thereunder and agrees to be bound by all of the
terms and provisions of the Security Agreement. The undersigned
represents and warrants that the representations and warranties set
forth in the Security Agreement are, with respect to the
undersigned, true and correct in all material respects as of the
date hereof.

 

The
undersigned represents and warrants to Secured Party
that:

 

(a) all of the
Equipment, Inventory and Goods owned by such Debtor is located at
the places as specified on Schedule I and such Debtor
conducts business in the jurisdiction set forth on Schedule I;

 

(b) except as disclosed
on Schedule I, none
of such Collateral is in the possession of any bailee,
warehousemen, processor or consignee;

 

(c) the chief place of
business, chief executive office and the office where such Debtor
keeps its books and records are located at the place specified on
Schedule
I;

 

(d) such Debtor
(including any Person acquired by such Debtor) does not do business
or has not done business during the past five years under any
tradename or fictitious business name, except as disclosed on
Schedule
II;

 

(e) all registered
Copyrights, Patents and Trademarks owned or licensed by the
undersigned are listed in Schedules III, IV and V, respectively;

 

(f) all Deposit
Accounts, securities accounts, brokerage accounts and other similar
accounts maintained by such Debtor, and the financial institutions
at which such accounts are maintained, are listed on Schedule VI;

 

(g) all Commercial Tort
Claims of such Debtor are listed on Schedule VII;

 

(h) all interests in
real property and mining rights held by such Debtor are listed on
Schedule
VIII;

(i) all Equipment
(including Motor Vehicles) owned by such debtor are listed on
Schedule
IX.

  , a
______________

 

By: 

 Title:

  FEIN:

 

-24-Ex10-9

Exhibit
10.9

 

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 AS EVIDENCED BY
A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
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.

 

COMMON STOCK PURCHASE WARRANT

 

MEDITE CANCER DIAGNOSTICS, INC.

 

	

Warrant
Shares: _________  Issue Date: September 26,
2017

 

  

	
Issue Date:
September 26, 2017

 

Initial Exercise
Date: March 26, 2018

 

THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies
that, for value received, _____________________, or its successors
and assigns (the “Holder”) is entitled, upon the terms
and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time six (6) months after the date
hereof (the “Initial Exercise Date”) and on or prior to
the close of business on the five (5) year anniversary of the Issue
Date (the “Termination Date”) but not thereafter, to
subscribe for and purchase from MEDITE CANCER DIAGNOSTICS, INC., a
Delaware corporation (the “Company”), up to ___________
shares of Common Stock (subject to adjustment hereunder, the
“Warrant Shares”). The initial exercise price per share
of the Common Stock under this Warrant (the “Exercise
Price”) shall be equal to $0.70, subject to adjustment as
provided below. The purchase price of one Warrant Share under this
Warrant shall be equal to the Exercise Price.

 

Section
1.                      Definitions.
Capitalized terms used and not otherwise defined herein shall have
the meanings set forth in that certain Securities Purchase
Agreement (as it may be amended, restated, supplemented or
otherwise modified from time to time in accordance with its terms,
the “Purchase Agreement”), dated August , 2017, among
the Company and the Purchaser.

 

Section
2.                      Exercise.

 

(a)           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 (or such other office or agency of the Company as it
may designate by notice in writing to the registered Holder at the
address of the Holder appearing on the books of the Company) of a
duly executed facsimile (or other electronic method) copy of the
Notice of Exercise Form annexed hereto. Within two (2) Business
Days 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. Notwithstanding
anything herein to the contrary (although the Holder may surrender
the Warrant to, and receive a replacement Warrant from, the
Company), the Holder shall not be required to physically surrender
this Warrant to the Company until the Holder has purchased all of
the Warrant Shares available hereunder and the Warrant has been
exercised in full, in which case, the Holder shall surrender this
Warrant to the Company for cancellation within three (3) Business
Days of the date 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 Form within one (1)
Business Day of delivery of such notice. The Holder by acceptance
of this Warrant, acknowledges and agrees 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.

 

 

 

-1-

 

 

(b)                      Reserved.

 

(c)                      Cashless
Exercise. If at the time of any exercise of this Warrant a
registration statement is not available for the issuance of the
Warrant Shares, then this Warrant may also be exercised at the
Holder’s election, in whole or in part and in lieu of making
the cash payment otherwise contemplated to be made to the Company
upon such exercise, 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) =
the VWAP on the trading day immediately preceding the date on which
Holder elects to exercise this Warrant by means of a
“cashless exercise,” as set forth in the applicable
Notice of Exercise;

 

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

 

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

 

For
purposes of this Section 2(c), “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
the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market,
the Nasdaq Global Select Market, the New York Stock Exchange, 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. (“Bloomberg”) (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 the Common Stock is quoted on the OTCQB or OTCQX, 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, 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 the case may be, as
determined by an independent appraiser selected in good faith by
the Holder and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.

 

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.  The Company agrees
not to take any position contrary to this Section
2(c).

 

(d)            

Mechanics of
Exercise.

 

(i)           Delivery
of Certificates Upon Exercise. Certificates for shares
purchased hereunder shall be transmitted to the Holder by the
Transfer Agent to the Holder by crediting the account of the
Holder’s prime broker 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) this Warrant is being exercised
via cashless exercise and Rule 144 is available, and otherwise by
physical delivery to the address specified by the Holder in the
Notice of Exercise by the date that is three (3) Business Days
after the latest of (A) the delivery to the Company of the Notice
of Exercise and (B) payment of the aggregate Exercise Price as set
forth above (unless by cashless exercise, if permitted) (such date,
the “Warrant Share Delivery Date”). The Warrant Shares
shall be deemed to have been issued, and Holder or any other Person
so designated to be named therein shall be deemed to have become a
holder of record of such shares for all purposes, as of the date
the Warrant has been exercised, with payment to the Company of the
Exercise Price (or by cashless exercise, if permitted) and all
taxes required to be paid by the Holder, if any, pursuant to
Section 2(d)(vi) prior to the issuance of such shares, having been
paid. The Company understands that a
delay in the delivery of the Warrant Shares after the Warrant Share
Delivery Date (a “Delivery Failure”) could result in
economic loss to the Holder. If the Company fails for
any

 

 

 

-2-

 

 

reason
to credit Holder’s or its designees’ account with DTC
or issue and deliver to the Holder such certificate or certificates
pursuant to this Section 2(d)(i) by the Warrant Share Delivery Date
(a “Delivery Failure”), and if on or after such Warrant
Share Delivery Date the Holder purchases (in an open market
transaction or otherwise) shares of the Company’s Common
Stock to deliver in satisfaction of a sale by the Holder of all or
any portion of the number of shares of Common Stock issuable upon
such conversion that the Holder anticipated receiving from the
Company (a “Buy-In”), then, in addition to all other
remedies available to the Holder, the Company shall, within three
(3) Business Days after receipt of the Holder’s request and
in the Holder’s sole discretion, either, at the
Holder’s option (I) pay cash to the Holder in an amount equal
to the Holder’s total purchase price (including brokerage
commissions and other out-of-pocket expenses, if any) for the
shares of Common Stock so purchased (including, without limitation,
by any other Person in respect, or on behalf, of the Holder) (the
“Buy-In Price”), at which point the Company’s
obligation to so issue and deliver such certificate or credit the
balance account of the Holder or the Holder’s designee, as
applicable, with DTC for the number of shares of Common Stock to
which the Holder is entitled upon the Holder’s conversion of
the applicable Conversion Amount shall terminate, or (II) promptly
(but in no event later than five two (2) Business Days following
the request by the Holder) honor its obligation to so issue and
deliver to the Holder a certificate or certificates representing
such shares of Common Stock or credit the balance account of such
Holder or such Holder’s designee, as applicable, with DTC for
the number of shares of Common Stock to which the Holder
anticipated receiving from the Company and pay cash to the Holder
in an amount equal to the excess (if any) of the Buy-In Price over
the product of (x) such number of shares of Common Stock multiplied
by (y) the lowest closing sale price or closing bid price (as the
case may be) of the Common Stock on any Business Day during the
period commencing on the date of the applicable Conversion Notice
and ending on the date of such issuance and payout under this
clause II (the “Buy-In Payment Amount”). Nothing herein
or elsewhere shall limit the Holder’s right to pursue any
other remedies available to it hereunder, at law or in equity,
including, without limitation, a decree of specific performance
and/or injunctive relief with respect to the Company’s
failure to timely deliver certificates representing shares of
Common Stock (or to timely electronically deliver such shares of
Common Stock) upon the conversion of this Note as required pursuant
to the terms hereof. In addition, as
compensation to the Holder for such loss, the Company agrees to pay
(as liquidated damages and not as a penalty) to the Holder for late
issuance of Warrant Shares upon exercise of this Warrant the
proportionate amount of $10 per Business Day (increasing to $20 per
Business Day after the fifth (5th)
Business Day) after the Warrant Share Delivery Date for each $1,000
of Exercise Price of Warrant Shares for which this Warrant is
exercised which are not timely delivered. The Company shall pay any
payments incurred under this Section 2(d)(i) in immediately
available funds upon demand. Furthermore, in addition to any other
remedies which may be available to the Holder, in the event that
the Company fails for any reason to effect delivery of the Warrant
Shares by the Warrant Share Delivery Date, the Holder may revoke
all or part of the relevant Warrant exercise by delivery of a
notice to such effect to the Company, whereupon the Company and the
Holder shall each be restored to their respective positions
immediately prior to the exercise of the relevant portion of this
Warrant, except that the liquidated damages described above shall
be payable through the date notice of revocation or rescission is
given to the Company.

 

(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 certificate or certificates representing 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 to this Warrant.

 

(iii)           Rescission
Rights. If the Company fails to deliver the Warrant Shares
cause the Transfer Agent to transmit to the Holder a certificate or
the certificates representing the Warrant Shares pursuant to
Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder
will have the right, at any time prior to issuance of such Warrant
Shares, to rescind such exercise.

 

(iv)           Reserved.

 

(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.

 

 

 

-3-

 

 

(vi)           Charges,
Taxes and Expenses. Issuance of certificates for 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 certificate including any charges of any clearing firm, all
of which taxes and expenses shall be paid by the Company, and such
certificates 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
certificates for Warrant Shares are to be issued in a name other
than the name of the Holder, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached
hereto duly executed by the Holder and the Company may require, as
a condition thereto, the payment of a sum sufficient to reimburse
it for any transfer tax incidental thereto. The Company shall pay
all Transfer Agent fees required for same-day processing of any
Notice of Exercise.

 

(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), 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 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 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.  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 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 of which portion of this Warrant is
exercisable, in each case subject to the Beneficial Ownership
Limitation, and the Company shall have no obligation to verify or
confirm the accuracy of such determination. In addition, a
determination as to any group status as contemplated above shall be
determined in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder. For purposes of
this Section 2(e), in determining the number of outstanding shares
of Common Stock, a Holder may rely on the number of outstanding
shares of Common Stock as reflected in (A) the Company’s most
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 one Business Day 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 since the date as of which
such number of outstanding shares of Common Stock was reported. The
“Beneficial Ownership Limitation” shall be 4.99% 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 not less than 61
days’ prior notice to the Company, may increase the
Beneficial Ownership Limitation provisions of this Section 2(e)
solely with respect to the Holder’s Warrant, provided that
the Beneficial Ownership Limitation in no event exceeds 9.99% of
the number of shares of 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 such increase will
not be effective until the 61st day after such
notice is delivered to the Company. The Holder may also decrease
the Beneficial Ownership Limitation provisions of this Section 2(e)
solely with respect to the Holder’s Warrant at any time,
which decrease shall be effectively

 

 

 

-4-

 

 

immediately
upon delivery of notice 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 or pursuant to any of the other
Transaction Documents), (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
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)           Adjustments
for Issuance of Additional Securities. If the Company, at
any time while this Warrant is outstanding, issue or sell any
additional shares of Common Stock or Common Stock Equivalents
(hereafter defined) (“Additional Shares of Common
Stock”), in a transaction other than an Exempt Issuance, at a
price per share less
 than the Exercise Price then in effect or without
consideration (a “Dilutive Issuance” based on a
“Dilutive Issuance Price”), then the (i) Exercise Price
upon each such issuance shall be reduced to an amount equal to the
greater of the Dilutive Issuance Price or $0.40 and (ii) the number
of Warrant Shares (excluding Warrant Shares previously exercised)
shall be increased on a full ratchet basis to the number of shares
of Common Stock determined by multiplying the Exercise Price then
in effect immediately prior to such adjustment by the number of
Warrant Shares (excluding Warrant Shares previously exercised)
acquirable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price
resulting from such adjustment. By way of example, if E is the
total number of Warrant Shares in effect immediately prior to such
Dilutive Issuance, F is the Exercise Price in effect immediately
prior to such Dilutive Issuance, and G is the Dilutive Issuance
Price, the adjustment to the. [number of Warrant Shares can be
expressed in the following formula: Total number of Warrant Shares
after such Dilutive Issuance = the quotient obtained from dividing
[E x F] by G.

 

If the
price per share for which Additional Shares of Common Stock are
sold, or may be issuable pursuant to any such Common Stock
Equivalent, is less than the applicable Exercise Price then in
effect, or if, after any such issuance of Common Stock Equivalents,
the price per share for which Additional Shares of Common Stock may
be issuable thereafter is amended or adjusted, and such price as so
amended shall be less than the applicable Exercise Price in effect
at the time of such amendment or adjustment, then the applicable
Exercise Price and number of Warrant Shares shall be adjusted upon
each such issuance or amendment as provided in this Section
3(b).   If any shares of Common Stock or Common Stock
Equivalents are issued or sold or deemed to have been issued or
sold for cash, the amount of such consideration received by the
Company will be deemed to be the net amount received by the Company
therefor. If any shares of Common Stock or Common Stock Equivalents
are issued or sold for a consideration other than cash, the amount
of such consideration received by the Company will be the fair
value of such consideration, except where such consideration
consists of publicly traded securities, in which case the amount of
consideration received by the Company will be the VWAP of such
public traded securities on the date of receipt. If any shares of
Common Stock or Common Stock Equivalents are issued to the owners
of the non-surviving entity in connection with any merger in which
the Company is the surviving entity, the amount of consideration
therefor will be deemed to be the fair value of such portion of the
net assets and business of the non-surviving entity as is
attributable to such shares of Common Stock or Common Stock
Equivalents, as the case may be.

 

 

 

-5-

 

 

 “Common
Stock Equivalents” means any rights or warrants or options to
purchase any Common Stock or Convertible Securities.

 

The
provisions of this Section 3(b) shall apply each time a Dilutive
Issuance occurs after the Original Issuance Date.  No
adjustment shall be made pursuant to this Section 3(b) with respect
to an Exempt Issuance.

 

(c)           Reserved.

 

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

 

(e)           Pro
Rata Distributions. If the Company, at any time while this
Warrant is outstanding, shall distribute to all holders of Common
Stock (and not to the Holder) evidences of its indebtedness or
assets (including cash and cash dividends) or rights or warrants to
subscribe for or purchase any security other than the Common Stock
(which shall be subject to Section 3(c)), then in each such case
the Exercise Price shall be adjusted by multiplying the Exercise
Price in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution
by a fraction of which the denominator shall be the VWAP determined
as of the record date mentioned above, and of which the numerator
shall be such VWAP on such record date less the then per share fair
market value at such record date of the portion of such assets or
evidence of indebtedness so distributed applicable to one
outstanding share of the Common Stock as determined by the Board of
Directors in good faith. In either case the adjustments shall be
described in a statement provided to the Holder of the portion of
assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such
adjustment shall be made whenever any such distribution is made and
shall become effective immediately after the record date mentioned
above.

 

(f)           Fundamental
Transaction. If, at any time while this Warrant is
outstanding, (i) the Company, directly or indirectly, in one or
more related transactions effects any merger or consolidation of
the Company with or into another Person, (ii) the Company, directly
or indirectly, effects any sale, lease, license, assignment,
transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii)
any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed
pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or
property and has been accepted by the holders of 50% or more of the
outstanding Common Stock, (iv) the Company, directly or indirectly,
in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash
or property, (v) the Company, directly or indirectly, in one or
more related transactions consummates a stock or share purchase
agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme
of arrangement) with another Person or group of Persons whereby
such other Person or group acquires more than 50% of the
outstanding shares of Common Stock (not including any shares of
Common Stock held by the other Person or other Persons making or
party to, or associated or affiliated with the other Persons making
or party to, such stock or share purchase agreement or other
business combination) (each a “Fundamental
Transaction”), then, upon any subsequent exercise of this
Warrant, the Holder shall have the right to receive, for each
Warrant Share that would have been issuable (without regard to any
limitation on the exercise of this Warrant), at the option of the
Holder, the number, class, and series of shares of stock of the
successor or acquiring corporation or of the Company, if it is
the

 

 

 

-6-

 

 

surviving
corporation, and any additional consideration (the “Alternate
Consideration”) receivable as a result of such Fundamental
Transaction by a holder of the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such
Fundamental Transaction (without regard to any limitation on the
exercise of this Warrant). For purposes of any such exercise, the
determination of the Exercise Price shall be appropriately adjusted
to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall
apportion the Exercise Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different
components of the Alternate Consideration. If holders of Common
Stock are given any choice as to the securities, cash or property
to be received in a Fundamental Transaction, then the Holder shall
be given the same choice as to the Alternate Consideration it
receives upon any exercise of this Warrant following such
Fundamental Transaction. Notwithstanding anything to the contrary,
in the event of a Fundamental Transaction, the Company or any
Successor Entity (as defined below) shall, at the Holder’s
option, exercisable at any time concurrently with, the consummation
of the Fundamental Transaction, purchase this Warrant from the
Holder by paying to the Holder an amount of cash equal to the Black
Scholes Value of the remaining unexercised portion of this Warrant
on the date of the consummation of such Fundamental Transaction or
(ii) the positive difference between the cash per share paid in
such Fundamental Transaction minus the then in effect Exercise
Price. “Black Scholes Value” means the value of the
unexercised portion of this Warrant based on the Black and Scholes
Option Pricing Model obtained from the “OV” function on
Bloomberg determined as of the day immediately prior to
consummation of the applicable Fundamental Transaction for pricing
purposes and reflecting (A) a risk-free interest rate corresponding
to the U.S. Treasury rate for a period equal to the time between
the date of the public announcement of the applicable Fundamental
Transaction and the Termination Date, (B) an expected volatility
equal to the 100 day volatility obtained from the HVT function on
Bloomberg as of the Trading Day immediately preceding the public
announcement of the applicable Fundamental Transaction, (C) the
underlying price per share used in such calculation shall be the
sum of the price per share being offered in cash, if any, plus the
value of any non-cash consideration, if any, being offered in such
Fundamental Transaction and (D) a remaining option time equal to
the time between the date of the public announcement of the
applicable Fundamental Transaction and the Termination Date. The
Company shall cause any successor entity in a Fundamental
Transaction in which the Company is not the survivor (the
“Successor Entity”) to assume in writing all of the
obligations of the Company under this Warrant and the other
Transaction Documents in accordance with the provisions of this
Section 3(f) pursuant to written agreements in form and substance
reasonably satisfactory to the Holder and approved by the Holder
(without unreasonable delay) prior to such Fundamental Transaction
and shall, at the option of the Holder, deliver to the Holder in
exchange for this Warrant a security of the Successor Entity
evidenced by a written instrument substantially similar in form and
substance to this Warrant which is exercisable for a corresponding
number of shares of capital stock of such Successor Entity (or its
parent entity) equivalent to the shares of Common Stock acquirable
and receivable upon exercise of this Warrant (without regard to any
limitations on the exercise of this Warrant) prior to such
Fundamental Transaction, and with an exercise price which applies
the exercise price hereunder to such shares of capital stock (but
taking into account the relative value of the shares of Common
Stock pursuant to such Fundamental Transaction and the value of
such shares of capital stock, such number of shares of capital
stock and such exercise price being for the purpose of protecting
the economic value of this Warrant immediately prior to the
consummation of such Fundamental Transaction), and which is
reasonably satisfactory in form and substance to the Holder. Upon
the occurrence of any such Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for (so that from and
after the date of such Fundamental Transaction, the provisions of
this Warrant and the other Transaction Documents referring to the
“Company” shall refer instead to the Successor Entity),
and may exercise every right and power of the Company and shall
assume all of the obligations of the Company under this Warrant and
the other Transaction Documents with the same effect as if such
Successor Entity had been named as the Company herein.

 

(g)           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.

 

 

 

-7-

 

 

(h)           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 email to the Holder 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. The Holder may supply an email
address to the Company and change such address.

 

(ii)           Notice
to Allow Exercise by Holder. If (A) the Company shall
declare a dividend (or any other distribution in whatever form) on
the Common Stock, (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock,
(C) the Company shall authorize the granting to all holders of the
Common Stock rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights, (D) the
approval of any stockholders of the Company shall be required in
connection with any reclassification of the Common Stock, any
consolidation or merger to which the Company is a party, any sale
or transfer of all or substantially all of the assets of the
Company, or any compulsory share exchange whereby the Common Stock
is converted into other securities, 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 deliver to the Holder at its last 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
email such notice or any defect therein or in the emailing thereof
shall not affect the validity of the corporate action required to
be specified in such notice. The Holder shall remain entitled to
exercise this Warrant during the period commencing on the date of
such notice to the effective date of the event triggering such
notice except as may otherwise be expressly set forth
herein.

 

Section
4.                      Transfer
of Warrant.

 

(a)           Transferability.
Subject to compliance with any applicable securities laws and the
provisions of the Purchase Agreement, 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. 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
4(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or
combined in accordance with such notice. All Warrants issued on
transfers or exchanges shall be dated the initial issuance date of
this Warrant and shall be identical with this Warrant except as to
the number of Warrant Shares issuable pursuant
thereto.

 

(c)           Warrant
Register. The 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.

 

 

 

-8-

 

 

Section
5.                      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 other
than as explicitly 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, 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, then, such action may
be taken or such right may be exercised on the next succeeding
Business Day.

 

(d)           Authorized
Shares.

 

The Company covenants that, during the period the
Warrant is outstanding, it will reserve from its authorized and
unissued Common Stock, free of preemptive rights, a sufficient
number of shares equal to two
times the number of Warrant Shares issuable under the Purchase
Agreement to all Purchasers thereunder (without regard to any
limitations on exercise hereof, including without limitation, the
Beneficial Ownership Limitation). The Company further covenants
that its issuance of this Warrant shall constitute full authority
to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for
the Warrant Shares upon the exercise of the purchase rights under
this Warrant. The Company will take all such commercially
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 any Trading
Market upon which the Common Stock may be listed. The Company
covenants that all Warrant Shares which may be issued upon the
exercise of the purchase rights represented by this Warrant will,
upon exercise of the purchase rights represented by this Warrant
and payment for such Warrant Shares in accordance herewith, be duly
authorized, validly issued, fully paid and non-assessable 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 use commercially reasonable
efforts to 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)           Jurisdiction.
All questions concerning the construction, validity, enforcement
and interpretation of this Warrant shall be determined in
accordance with the provisions of the Purchase
Agreement.

 

 

 

-9-

 

 

(f)           Restrictions.
The Holder acknowledges that the Warrant Shares acquired upon the
exercise of this Warrant, if not registered or if not exercised on
a cashless basis when Rule 144 is available, may have restrictions
upon resale imposed by state and federal securities
laws.

 

(g)           Non-waiver
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 or the Purchase Agreement, 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 notice, request or other document required or permitted to be
given or delivered to the Holder by the Company shall be delivered
in accordance with the notice provisions of the Purchase
Agreement.

 

(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 or that there is no irreparable harm and not to
require the posting of a bond or other security.

 

(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 and Holders of at least a majority of the
outstanding Warrants issued pursuant to the Purchase
Agreement.

 

(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.

 

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

 

(Signature Page Follows)

 

 

 

-10-

 

 

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.

 

 

 

	

MEDITE CANCER DIAGNOSTICS, INC.

 

	

 

 

By:__________________________________________
Name: David Patterson Title: Chief Executive Officer

 

 

 

	
 

 

 

 

 

 

-11-

 

 

NOTICE OF EXERCISE

 

TO:            

MEDITE CANCER
DIAGNOSTICS, INC.

 

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

 

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

 

[ ] in
lawful money of the United States; or

 

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

 

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

 

_______________________________

 

(4)           After
giving effect to this Notice of Exercise, the undersigned will not
have exceeded the Beneficial Ownership Limitation.

 

 

The
Warrant Shares shall be delivered to the following DWAC Account
Number or by physical delivery of a certificate to:

 

 

_______________________________

 

_______________________________

 

_______________________________

 

[SIGNATURE
OF HOLDER]

 

Name of
Investing Entity:
______________________________________________________________________

Signature of Authorized Signatory of Investing
Entity:
________________________________________________

Name of
Authorized Signatory:
__________________________________________________________________

Title
of Authorized Signatory:
___________________________________________________________________

Date:
_______________________________________________________________________________________

 

 

-12-

 

 

ASSIGNMENT FORM

 

(To
assign the foregoing warrant, execute

this
form and supply required information.

Do not
use this form to exercise the warrant.)

 

_____________________

 

FOR
VALUE RECEIVED, [____] all of or [_______] shares of the foregoing
Warrant and all rights evidenced thereby are hereby assigned
to

 

_______________________________________________
whose address is

 

_______________________________________________________________

 

_______________________________________________________________

 

Dated:
______________, _______

 

 

Holder’s
Signature:                             
_____________________________

 

Holder’s
Address:                               
_____________________________

 

                                                             
_____________________________

 

 

 

Signature
Guaranteed:
___________________________________________

 

 

NOTE:
The signature to this Assignment Form must correspond with the name
as it appears on the face of the Warrant, without alteration or
enlargement or any change whatsoever, and must be guaranteed by a
bank or trust company. Officers of corporations and those acting in
a fiduciary or other representative capacity should file proper
evidence of authority to assign the foregoing Warrant.

 

 

 

-13-

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