Document:

Blueprint

  Exhibit 10.1

 

PLACEMENT AGENCY AGREEMENT

 

October
11, 2019

 

Ladenburg
Thalmann & Co. Inc.

999
Vanderbilt Beach Road, Suite 200

Naples,
Florida 34105

 

Ladies
and Gentlemen:

 

Introduction. Subject to the terms and
conditions herein (this “Agreement”), Aytu
BioScience, Inc., a Delaware corporation (the “Company”), hereby agrees
to sell up to an aggregate of $10,000,000 of securities of the
Company, including, but not limited to unregistered shares of
Series F Convertible Preferred Stock (the “Preferred Stock”), and
Common Stock Purchase Warrants (the “Warrants”) and the shares
of Common Stock issuable upon exercise of the Warrants (the
“Warrant
Shares”) (the Shares, Preferred Stock, the shares of
Common Stock underlying the Preferred Stock, the Warrants, and the
Warrant Shares, collectively, the “Securities”) directly to
various investors (each, an “Investor” and,
collectively, the “Investors”) through
Ladenburg Thalmann & Co. Inc. (the “Placement Agent”) as
placement agent. The documents executed and delivered by the
Company and the Investors in connection with the Offering (as
defined below), including, without limitation, a securities
purchase agreement(s) (the “Purchase Agreement”),
shall be collectively referred to herein as the “Transaction Documents.”
The Placement Agent may retain other brokers or dealers to act as
sub-agents or selected-dealers on its behalf in connection with the
Offering (as defined below).

 

The
Company hereby confirms its agreement with the Placement Agent as
follows:

 

Section
1. Agreement to Act as Placement
Agent.

 

(a) On the basis of the
representations, warranties and agreements of the Company herein
contained, and subject to all the terms and conditions of this
Agreement, the Placement Agent shall be the exclusive placement
agent in connection with the offering and sale by the Company of
the Securities, with the terms of such offering (the
“Offering”) to be subject
to market conditions and negotiations between the Company, the
Placement Agent and the prospective Investors. The Placement Agent
will act on a reasonable best efforts basis and the Company agrees
and acknowledges that there is no guarantee of the successful
placement of the Securities, or any portion thereof, in the
prospective Offering. Under no circumstances will the Placement
Agent or any of its “Affiliates” (as defined below) be
obligated to underwrite or purchase any of the Securities for its
own account or otherwise provide any financing. The Placement Agent
shall act solely as the Company’s agent and not as principal.
The Placement Agent shall have no authority to bind the Company
with respect to any prospective offer to purchase Securities and
the Company shall have the sole right to accept offers to purchase
Securities and may reject any such offer, in whole or in part.
Subject to the terms and conditions hereof, payment of the purchase
price for, and delivery of, the Securities shall be made at one or
more closings (each a “Closing” and the date on
which each Closing occurs, a “Closing Date”). As
compensation for services rendered, on each Closing Date, the
Company shall pay to the Placement Agent the fees and expenses set
forth below:

 

 

 

 

(i) A cash fee equal to
8% of the gross proceeds received by the Company from the sale of
the Securities at the closing of the Offering (the
“Closing”), subject to
reduction to 5% pursuant to the terms of the Investment Banking
Agreement (as defined below).

 

(ii) The
Company also agrees to reimburse Placement Agent’s expenses
(with supporting invoices/receipts) up to $65,000, which shall be
payable immediately upon (but only in the event of) a Closing of
the Offering, provided that such expense cap in no way limits or
impairs the indemnification and contribution provisions of this
Agreement.

 

(b) The term of the
Placement Agent's exclusive engagement will be as provided in
Section 2 of that certain Investment Banking Agreement dated June
14, 2019 between the Company and the Placement Agent (the
“Investment Banking
Agreement”). Notwithstanding anything to the contrary
contained herein, the provisions concerning confidentiality,
indemnification and contribution contained herein and the
Company’s obligations contained in the indemnification
provisions will survive any expiration or termination of this
Agreement, and the Company’s obligation to pay fees actually
earned and payable and to reimburse expenses actually incurred and
reimbursable pursuant to Section 1 hereof and which are permitted
to be reimbursed under FINRA Rule 5110(f)(2)(D)(i), will survive
any expiration or termination of this Agreement. Nothing in this
Agreement shall be construed to limit the ability of the Placement
Agent or its Affiliates to pursue, investigate, analyze, invest in,
or engage in investment banking, financial advisory or any other
business relationship with Persons (as defined below) other than
the Company. As used herein (i) “Persons” means an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind and (ii)
“Affiliate” means any Person that, directly or
indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a Person as such
terms are used in and construed under Rule 405 under the Securities
Act of 1933, as amended (the “Securities
Act”).

 

Section
2. Representations, Warranties and Covenants of
the Company. The Company hereby represents, warrants and
covenants to the Placement Agent as of the date hereof, and as of
each Closing Date, as follows:

 

(a) Authorization; Enforcement. The
Company has the requisite corporate power and authority to enter
into and to consummate the transactions contemplated by this
Agreement and the Transaction Documents and otherwise to carry out
its obligations hereunder and thereunder. The execution and
delivery of each of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby and
thereby and under the Transaction Documents have been duly
authorized by all necessary action on the part of the Company and
no further action is required by the Company, the Company’s
Board of Directors (the “Board of Directors”) or
the Company’s stockholders in connection therewith other than
in connection with the Required Approvals (as defined in the
Purchase Agreement). This Agreement has been duly executed by the
Company and, when delivered in accordance with the terms hereof,
will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms,
except (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or
other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable
law.

 

 

2

 

(b) No Conflicts. The execution,
delivery and performance by the Company of this Agreement and the
transactions contemplated pursuant to the Transaction Documents,
the issuance and sale of the Securities and the consummation by it
of the transactions contemplated hereby and thereby to which it is
a party do not and will not (i) conflict with or violate any
provision of the Company’s or any Subsidiary’s
certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time
or both would become a default) under, result in the creation of
any Lien (as defined in the Purchase Agreement) upon any of the
properties or assets of the Company or any Subsidiary, or give to
others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or
by which any property or asset of the Company or any Subsidiary is
bound or affected, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the
Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset
of the Company or a Subsidiary is bound or affected; except in the
case of each of clauses (ii) and (iii), such as could not have or
reasonably be expected to result in a Material Adverse Effect (as
defined in the Purchase Agreement).

 

(c) Certificates. Any certificate
signed by an officer of the Company and delivered to
the Placement Agent or to counsel for the Placement Agent
shall be deemed to be a representation and warranty by the Company
to the Placement Agent as to the matters set forth
therein.

 

(d) Reliance.
The Company acknowledges that the Placement Agent will rely
upon the accuracy and truthfulness of the foregoing representations
and warranties and hereby consents to such reliance.

 

(e) FINRA Affiliations. There are
no affiliations with any FINRA member firm that is participating in
the Registered Offering among the Company’s officers or
directors.

 

(f) Private
Placement. Assuming the accuracy of the Investors’
representations and warranties set forth in Purchase Agreement, no
registration under the Securities Act is required for the offer and
sale of the Securities by the Company to the Investors as
contemplated in the Transaction Documents. The issuance and sale of
the Securities pursuant to the Transaction Documents does not
contravene the rules and regulations of the Trading
Market.

 

(g) No
General Solicitation. Neither the Company nor any Person
acting on behalf of the Company has offered or sold any of the
Securities by any form of general solicitation or general
advertising. The Company has offered the Securities for sale only
to the Investors and certain other “accredited
investors” within the meaning of Rule 501 under the
Securities Act,

 

 

3

 

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

 

(i) Other
Covered Persons. Other than the Placement Agent, the Company
is not aware of any person that has been or will be paid (directly
or indirectly) remuneration for solicitation of purchasers in
connection with the sale of the Securities

 

(j) Notice
of Disqualification Events. The Company will notify the
Placement Agent in writing, prior to the Closing Date of (i) any
Disqualification Event relating to any Issuer Covered Person and
(ii) any event that would, with the passage of time, reasonably be
expected to become a Disqualification Event relating to any Issuer
Covered Person.

 

(k) Representations
and Warranties Incorporated by Reference. Each of the
representations and warranties (together with any related
disclosure schedules thereto) made by the Company to the Investors
in the Purchase Agreement is hereby incorporated herein by
reference (as though fully restated herein) and is hereby made to,
and in favor of, the Placement Agent.

 

Section
3. Delivery and Payment. Each Closing shall
occur at the offices of Ellenoff Grossman & Schole LLP, 1345
Avenue of the Americas, New York, New York 10105
(“Placement Agent
Counsel”) (or at such other place as shall be agreed
upon by the Placement Agent and the Company). Subject to the terms
and conditions hereof, at each Closing payment of the purchase
price for the Securities sold on such Closing Date shall be made by
Federal Funds wire transfer, against delivery of such Securities,
and such Securities shall be registered in such name or names and
shall be in such denominations, as the Placement Agent may request
at least one business day before the time of purchase (as defined
below).

 

Deliveries of the
documents with respect to the purchase of the Securities, if any,
shall be made at the offices of Placement Agent Counsel. All
actions taken at a Closing shall be deemed to have occurred
simultaneously.

 

Section
4. Covenants and Agreements of the Company.
The Company further covenants and agrees with the Placement Agent
as follows:

 

(a) Securities Laws Disclosure;
Publicity. The Company shall (a) by 9:00 a.m. (New York City
time) on the Trading Day immediately following the date hereof,
issue a press release disclosing the material terms of the
transactions contemplated hereby, and (b) file a Current Report on
Form 8-K, including the Transaction Documents as exhibits thereto,
with the Commission within the time required by the Exchange
Act.

 

 

4

 

 

(b) Form D; Blue Sky Filings. The
Company agrees to timely file a Form D with respect to the
Securities as required under Regulation D and to provide a copy
thereof upon request of the Placement Agent. The Company shall take
such action as the Company shall reasonably determine is necessary
in order to obtain an exemption for, or to qualify the Securities
for, sale to the Investors under applicable securities or
“Blue Sky” laws of the states of the United States and
shall provide evidence of such actions upon request of the
Placement Agent.

 

(c) Integration. The Company shall
not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of
the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities or that
would be integrated with the offer or sale of the Securities for
purposes of the rules and regulations of any Trading Market such
that it would require shareholder approval prior to the closing of
such other transaction unless shareholder approval is obtained
before the closing of such subsequent transaction.

 

(d) Use of Proceeds. The Company
shall use the net proceeds from the sale of the Securities pursuant
to the Transaction Documents for working capital purposes and shall
not use such proceeds: (a) for the satisfaction of any portion of
the Company’s debt (other than payment of trade payables in
the ordinary course of the Company’s business and prior
practices), (b) for the redemption of any Common Stock or Common
Stock Equivalents, (c) for the settlement of any outstanding
litigation or (d) in violation of FCPA or OFAC
regulations.

 

(e) Periodic Reporting Obligations.
Until such date that no Investors hold any Securities, the Company
shall duly file, on a timely basis, with the Commission and the
Trading Market all reports and documents required to be filed under
the Exchange Act within the time periods and in the manner required
by the Exchange Act.

 

(f) Additional
Documents. The
Company will enter into any subscription, purchase or other
customary agreements as the Placement Agent or the Investors deem
necessary or appropriate to consummate the Offering, all of which
will be in form and substance reasonably acceptable to the
Placement Agent and the Investors. The Company agrees that the
Placement Agent may rely upon, and is a third party beneficiary of,
the representations and warranties, and applicable covenants, set
forth in any such purchase, subscription or other agreement with
Investors in the Offering.

 

(g) Transfer Agent. The Company
will maintain, at its expense, a registrar and transfer agent for
the Common Stock.

 

(h) No Manipulation of
Price.  The
Company will not take, directly or indirectly, any action designed
to cause or result in, or that has constituted or might reasonably
be expected to constitute, the stabilization or manipulation of the
price of any securities of the Company.

 

(i) Acknowledgment. The Company
acknowledges that any advice given by the Placement Agent to the
Company is solely for the benefit and use of the Board of Directors
of the Company and may not be used, reproduced, disseminated,
quoted or referred to, without the Placement Agent's prior written
consent.

 

(j) Announcement of Offering. The
Company acknowledges and agrees that the Placement Agent may,
subsequent to the Closing, make public its involvement with the
Offering.

 

 

5

 

 

(k) Reliance on Others. The Company
confirms that it will rely on its own counsel and accountants for
legal and accounting advice.

 

(l) Research Matters. By entering into this
Agreement, the Placement Agent does not provide any promise, either
explicitly or implicitly, of favorable or continued research
coverage of the Company and the Company hereby acknowledges and
agrees that the Placement Agent’s selection as a placement
agent for the Offering was in no way conditioned, explicitly or
implicitly, on the Placement Agent providing favorable or any
research coverage of the Company. In accordance with FINRA Rule
2711(e), the parties acknowledge and agree that the Placement Agent
has not directly or indirectly offered
favorable research, a specific rating or a specific price target,
or threatened to change research, a rating or a price target, to
the Company or inducement for the receipt of business or
compensation.

 

Section
5. Conditions of the Obligations of the Placement
Agent. The obligations of the Placement Agent hereunder
shall be subject to the accuracy of the representations and
warranties on the part of the Company set forth in Section 2
hereof, in each case as of the date hereof and as of each Closing
Date as though then made, to the timely performance by each of the
Company of its covenants and other obligations hereunder on and as
of such dates, and to each of the following additional
conditions:

 

(a) Corporate Proceedings. All
corporate proceedings and other legal matters in connection with
this Agreement, the Transaction Documents, and the sale and
delivery of the Securities, shall have been completed or resolved
in a manner reasonably satisfactory to the Placement Agent's
counsel, and such counsel shall have been furnished with such
papers and information as it may reasonably have requested to
enable such counsel to pass upon the matters referred to in this
Section 5.

 

(b) No Material Adverse Effect.
Subsequent to the execution and delivery of this Agreement and
prior to each Closing Date, in the Placement Agent's sole judgment
after consultation with the Company, there shall not have occurred
any Material Adverse Effect (as defined in the Purchase Agreement)
or development involving a prospective material adverse change in
the condition or the business activities, financial or otherwise,
of the Company from the latest dates as of which such condition is
set forth in the Transaction Documents.

 

(c) Opinion of Counsel for the
Company. The Placement Agent shall have received on each
Closing Date the favorable opinion of legal counsel to the Company,
dated as of such Closing Date, addressed to the Placement Agent and
in form and substance satisfactory to the Placement
Agent.

 

(d) Officers’ Certificate.
The Placement Agent shall have received on each Closing Date a
certificate of the Company, dated as of such Closing Date, signed
by the Chief Executive Officer and Chief Financial Officer of the
Company, to the effect that, and the Placement Agent shall be
satisfied that, the signers of such certificate have reviewed this
Agreement and the Transaction Documents and to the further effect
that:

 

(i) The representations
and warranties of the Company in this Agreement are true and
correct, as if made on and as of such Closing Date, and the Company
has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to
such Closing Date;

 

 

6

 

 

(ii) Subsequent
to the respective dates as of which information is given in the SEC
Reports and the Transaction Documents, there has not been: (a) any
Material Adverse Effect; (b) any transaction that is material to
the Company and the Subsidiaries taken as a whole, except
transactions entered into in the ordinary course of business; (c)
any obligation, direct or contingent, that is material to the
Company and the Subsidiaries taken as a whole, incurred by the
Company or any Subsidiary, except obligations incurred in the
ordinary course of business; (d) any material change in the capital
stock (except changes thereto resulting from the exercise of
outstanding stock options or warrants) or outstanding indebtedness
of the Company or any Subsidiary; (e) any dividend or distribution
of any kind declared, paid or made on the capital stock of the
Company; or (f) any loss or damage (whether or not insured) to the
property of the Company or any Subsidiary which has been sustained
or will have been sustained which has a Material Adverse
Effect.

 

(e) Stock Exchange Listing. The
Common Stock shall be registered under the Exchange Act and shall
be listed on the Trading Market, and the Company shall not have
taken any action designed to terminate, or likely to have the
effect of terminating, the registration of the Common Stock
under the Exchange Act or delisting or suspending from trading the
Common Stock from the Trading Market, nor shall the Company have
received any information suggesting that the Commission or the
Trading Market is contemplating terminating such registration or
listing.

 

(f) Lock-Up Agreements. On the
Closing Date, the Placement Agent shall have received the executed
lock-up agreement, in the form attached hereto as Exhibit A, from each of the
directors and officers of the Company and certain shareholders set
forth on Exhibit B
hereto.

 

(g) Additional Documents. On or
before each Closing Date, the Placement Agent and counsel for the
Placement Agent shall have received such information and documents
as they may reasonably require for the purposes of enabling them to
pass upon the issuance and sale of the Securities as contemplated
herein, or in order to evidence the accuracy of any of the
representations and warranties, or the satisfaction of any of the
conditions or agreements, herein contained.

 

If any
condition specified in this Section 5 is not satisfied when and as
required to be satisfied, this Agreement may be terminated by the
Placement Agent by notice to the Company at any time on or prior to
a Closing Date, which termination shall be without liability on the
part of any party to any other party, except that Section 6
(Payment of Expenses), Section 7 (Indemnification and Contribution)
and Section 8 (Representations and Indemnities to Survive Delivery)
shall at all times be effective and shall survive such
termination.

 

 

7

 

Section
6. Payment of Expenses. The Company agrees
to pay all costs, fees and expenses incurred by the Company in
connection with the performance of its obligations hereunder and in
connection with the transactions contemplated hereby, including,
without limitation: (i) all expenses incident to the issuance,
delivery and qualification of the Securities (including all
printing and engraving costs); (ii) all fees and expenses of the
registrar and transfer agent of the Common Stock; (iii) all
necessary issue, transfer and other stamp taxes in connection with
the issuance and sale of the Securities; (iv) all fees and
expenses of the Company’s counsel, independent public or
certified public accountants and other advisors; (v) the fees and
expenses associated with including the Shares and Warrant Shares on
the Trading Market; (vi) all costs and expenses incident to the
travel and accommodation of the Company’s and the Placement
Agent's employees on the “roadshow,” if any; and
(vii) all other fees, costs and expenses of the Company related to
the Offering.

 

Section
7. Indemnification and Contribution. The
Company agrees to indemnify the Placement Agent in accordance with
the provisions of Exhibit
A to the Investment Banking Agreement, which is incorporated
by reference herein and made a part hereof.

 

Section
8. Representations and Indemnities to Survive
Delivery. The respective indemnities, agreements,
representations, warranties and other statements of the Company or
any person controlling the Company, of its officers, and of the
Placement Agent set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any
investigation made by or on behalf of the Placement Agent, the
Company, or any of its or their partners, officers or directors or
any controlling person, as the case may be, and will survive
delivery of and payment for the Securities sold hereunder and any
termination of this Agreement. A successor to a Placement Agent, or
to the Company, its directors or officers or any person controlling
the Company, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this
Agreement.

 

Section
9. Notices. All communications hereunder
shall be in writing and shall be mailed, hand delivered, telecopied
or e-mailed and confirmed to the parties hereto as
follows:

 

If to
the Placement Agent to the address set forth above, attention:
General Counsel, facsimile: (305) 572-4220

 

With a copy to:

 

Ellenoff
Grossman & Schole LLP

1345
Avenue of the Americas, 11th Floor

New
York, New York 10105

E-Mail:
capmkts@egsllp.com

Attention:
Michael Nertney

 

If to
the Company:

 

373
Inverness Parkway, Suite 206

Englewood,
Colorado 80112

E-Mail:
josh.disbrow@aytubio.com

Attention:
Joshua Disbrow, CEO

 

With a copy to:

 

 

8

 

 

Any
party hereto may change the address for receipt of communications
by giving written notice to the others.

 

Section
10. Successors. This Agreement will inure to
the benefit of and be binding upon the parties hereto, and to the
benefit of the employees, officers and directors and controlling
persons referred to in Section 7 hereof, and to their respective
successors, and personal representative, and no other person will
have any right or obligation hereunder.

 

Section
11. Partial Unenforceability. The invalidity
or unenforceability of any section, paragraph or provision of this
Agreement shall not affect the validity or enforceability of any
other section, paragraph or provision hereof. If any Section,
paragraph or provision of this Agreement is for any reason
determined to be invalid or unenforceable, there shall be deemed to
be made such minor changes (and only such minor changes) as are
necessary to make it valid and enforceable.

 

Section
12. Governing Law Provisions. This Agreement
shall be deemed to have been made and delivered in New York City
and both this Agreement and the transactions contemplated hereby
shall be governed as to validity, interpretation, construction,
effect and in all other respects by the internal laws of the State
of New York, without regard to the conflict of laws principles
thereof. Each of the Placement Agent and the Company: (i) agrees
that any legal suit, action or proceeding arising out of or
relating to this Agreement and/or the transactions contemplated
hereby shall be instituted exclusively in New York Supreme Court,
County of New York, or in the United States District Court for the
Southern District of New York, (ii) waives any objection which it
may have or hereafter to the venue of any such suit, action or
proceeding, and (iii) irrevocably consents to the jurisdiction of
the New York Supreme Court, County of New York, and the United
States District Court for the Southern District of New York in any
such suit, action or proceeding. Each of the Placement Agent and
the Company further agrees to accept and acknowledge service of any
and all process which may be served in any such suit, action or
proceeding in the New York Supreme Court, County of New York, or in
the United States District Court for the Southern District of New
York and agrees that service of process upon the Company mailed by
certified mail to the Company’s address shall be deemed in
every respect effective service of process upon the Company, in any
such suit, action or proceeding, and service of process upon the
Placement Agent mailed by certified mail to the Placement
Agent’s address shall be deemed in every respect effective
service process upon the Placement Agent, in any such suit, action
or proceeding. Notwithstanding any provision of this Agreement to
the contrary, the Company agrees that neither the Placement Agent
nor its affiliates, and the respective officers, directors,
employees, agents and representatives of the Placement Agent, its
affiliates and each other person, if any, controlling the Placement
Agent or any of its affiliates, shall have any liability (whether
direct or indirect, in contract or tort or otherwise) to the
Company for or in connection with the engagement and transaction
described herein except for any such liability for losses, claims,
damages or liabilities incurred by us that are finally judicially
determined to have resulted from the willful misconduct or gross
negligence of such individuals or entities. If either party shall
commence an action or proceeding to enforce any provision of this
Agreement, then the prevailing party in such action or proceeding
shall be reimbursed by the other party for its reasonable
attorney’s fees and other costs and expenses incurred with
the investigation, preparation and prosecution of such action or
proceeding.

 

 

9

 

 

Section
13. General Provisions.

 

(a)           This
Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. Notwithstanding anything
herein to the contrary, the Investment Banking Agreement between
the Company and the Placement Agent, shall continue to be effective
and the terms therein shall continue to survive and be enforceable
by the Placement Agent in accordance with its terms, including,
without limitation, Section 5(b) and Section 6 therein with respect
to future offerings. This Agreement may be executed in two or more
counterparts, each one of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement may not be amended or modified unless in
writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each
party whom the condition is meant to benefit. Section headings
herein are for the convenience of the parties only and shall not
affect the construction or interpretation of this
Agreement.

 

(b)           The
Company acknowledges that in connection with the offering of the
Securities: (i) the Placement Agent has acted at arms length, are
not agents of, and owe no fiduciary duties to the Company or any
other person, (ii) the Placement Agent owes the Company only those
duties and obligations set forth in this Agreement and (iii) the
Placement Agent may have interests that differ from those of the
Company. The Company waives to the full extent permitted by
applicable law any claims it may have against the Placement Agent
arising from an alleged breach of fiduciary duty in connection with
the offering of the Securities

 

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remainder of this page has been intentionally left
blank.]

 

 

 

 

 

 

 

 

 

10

 

 

If the
foregoing is in accordance with your understanding of our
agreement, please sign below whereupon this instrument, along with
all counterparts hereof, shall become a binding agreement in
accordance with its terms.

 

Very
truly yours,

 

AYTU BIOSCIENCE, INC.,

a
Delaware corporation

 

 

By:                                                           

Name:

Title:

 

 

 

The
foregoing Placement Agency Agreement is hereby confirmed and
accepted as of the date first above written.

 

LADENBURG THALMANN & CO. INC.

 

 

By:                                                         

Name:

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

11

 

 

Exhibit B – Lock-Up Parties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12Blueprint

  Exhibit 10.2

 

SECURITIES
PURCHASE AGREEMENT

 

This
Securities Purchase Agreement (this “Agreement”) is dated as
of October 11, 2019, between Aytu BioScience, Inc., a Delaware
corporation (the “Company”), and each
purchaser identified on the signature pages hereto (each, including
its successors and assigns, a “Purchaser” and
collectively the “Purchasers”).

 

WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant
to Section 4(a)(2) of the Securities Act of 1933, as amended (the
“Securities
Act”), and Rule 506 promulgated thereunder, the
Company desires to issue and sell to each Purchaser, and each
Purchaser, severally and not jointly, desires to purchase from the
Company, securities of the Company as more fully described in this
Agreement.

 

NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the
receipt and adequacy of which are hereby acknowledged, the Company
and each Purchaser agree as follows:

 

ARTICLE I.

 DEFINITIONS

 

1.1  Definitions.
In addition to the terms defined elsewhere in this Agreement, for
all purposes of this Agreement, (a) capitalized terms that are not
otherwise defined herein have the meanings given to such terms in
the Certificate of Designation (as defined herein), and (b) the
following terms have the meanings set forth in this Section
1.1:

 

“Acquiring
Person” shall have the
meaning ascribed to such term in Section 4.5.

 

“Action” shall have the
meaning ascribed to such term in Section 3.1(j).

 

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

 

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

 

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

 

“Cerecor Transaction”
means the Company’s acquisition of certain assets of Cerecor,
Inc. (“Cerecor”) pursuant to an
Asset Purchase Agreement dated October 10, 2019, the material terms
of which are described on Schedule A hereto.

 

“Certificate of
Designation” means the Certificate of Designation to
be filed prior to the Closing by the Company with the Secretary of
State of Delaware, defining the rights, preferences and privileges
of the Series F Preferred Stock in the form of Exhibit A attached
hereto.

 

 

 

1

 

 

“Closing” means the
closing of the purchase and sale of the Securities pursuant to
Section 2.1.

 

“Closing Date” means the
Trading Day on which all of the Transaction Documents have been
executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchasers’ obligations to
pay the Subscription Amount and (ii) the Company’s
obligations to deliver the Securities, in each case, have been
satisfied or waived, but in no event later than the third
(3rd)
Trading Day following the date hereof.

 

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

 

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

 

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

 

“Company Counsel” means
Dorsey & Whitney LLP, with offices located at 111 South Main
Street, 21st Floor, Salt Lake
City, Utah 84111.

 

 “Conversion
Price” shall have the meaning ascribed to such term in
the Certificate of Designation.

 

“Conversion Shares” means,
collectively, the shares of Common Stock issuable upon conversion
of the shares of Preferred Stock in accordance with the terms
hereof.

 

“Disclosure Schedules”
means the Disclosure Schedules of the Company delivered
concurrently herewith.

 

“Disclosure Time” means,
(i) if this Agreement is signed on a day that is not a Trading Day
or after 9:00 a.m. (New York City time) and before midnight (New
York City time) on any Trading Day, 9:01 a.m. (New York City time)
on the Trading Day immediately following the date hereof, unless
otherwise instructed as to an earlier time by the Placement Agent,
and (ii) if this Agreement is signed between midnight (New York
City time) and 9:00 a.m. (New York City time) on any Trading Day,
no later than 9:01 a.m. (New York City time) on the date hereof,
unless otherwise instructed as to an earlier time by the Placement
Agent.

 

 

2

 

 

“Effective Date” means the
earliest of the date that (a) the initial Registration Statement
has been declared effective by the Commission, (b) all of the
Conversion Shares and Warrant Shares have been sold pursuant to
Rule 144 or may be sold pursuant to Rule 144 without the
requirement for the Company to be in compliance with the current
public information required under Rule 144 and without volume or
manner-of-sale restrictions, (c) following the one year anniversary
of the Closing Date provided that a holder of Conversion Shares or
Warrant Shares is not an Affiliate of the Company, or (d) all of
the Conversion Shares and Warrant Shares may be sold pursuant to an
exemption from registration under Section 4(a)(1) of the Securities
Act without volume or manner-of-sale restrictions and Company
Counsel has delivered to such holders a standing written
unqualified opinion that resales may then be made by such holders
of the Conversion Shares and Warrant Shares pursuant to such
exemption which opinion shall be in form and substance reasonably
acceptable to such holders.

 

“EGS” means Ellenoff
Grossman & Schole LLP, with offices located at 1345 Avenue of
the Americas, New York, New York 10105-0302.

 

“Escrow Agent” means
Signature Bank, a New York State chartered bank, with offices at
261 Madison Avenue, New York, New York 10016.

 

“Escrow Agreement” means
the escrow agreement entered into prior to the date hereof, by and
among the Company, the Escrow Agent and the Placement Agent,
pursuant to which the Purchasers shall deposit Subscription Amounts
with the Escrow Agent to be applied to the transactions
contemplated hereunder.

 

“Evaluation Date” shall
have the meaning ascribed to such term in Section
3.1(s).

 

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

 

“Exempt Issuance” means
the issuance of (a) shares of Common Stock or options to employees,
officers or directors of the Company pursuant to any stock or
option plan duly adopted for such purpose, by a majority of the
non-employee members of the Board of Directors or a majority of the
members of a committee of non-employee directors established for
such purpose for services rendered to the Company, (b) securities
upon the exercise or exchange of or conversion of any Securities
issued hereunder and/or other securities exercisable or
exchangeable for or convertible into shares of Common Stock issued
and outstanding on the date of this Agreement, provided that such
securities have not been amended since the date of this Agreement
to increase the number of such securities or to decrease the
exercise price, exchange price or conversion price of such
securities (other than in connection with stock splits or
combinations) or to extend the term of such securities, (c)
securities issued pursuant to acquisitions or strategic
transactions approved by a majority of the disinterested directors
of the Company, provided that, such securities are issued as
“restricted securities” (as defined in Rule 144) and
carry no registration rights that require or permit the filing of
any registration statement in connection therewith during the
prohibition period in Section 4.11(a) herein, and provided that any
such issuance shall only be to a Person (or to the equityholders of
a Person) which is, itself or through its subsidiaries, an
operating company or an owner of an asset in a business synergistic
with the business of the Company and shall provide to the Company
additional benefits in addition to the investment of funds, but
shall not include a transaction in which the Company is issuing
securities primarily for the purpose of raising capital or to an
entity whose primary business is investing in securities, (d) up to
9,000,000 shares issued in
connection with the Innovus Transaction, and (e) up to 12,500,000 shares issued pursuant to the
Cerecor Transaction, provided that, such shares are issued as
“restricted securities” (as defined in Rule 144) and
carry no registration rights that require or permit the filing of
any registration statement in connection therewith prior to the
earlier of (i) the six (6) month anniversary of the effective date
of the Registration Statement, and (ii) the one (1) year
anniversary of the Closing Date.

 

 

3

 

 

“FCPA” means the Foreign
Corrupt Practices Act of 1977, as amended.

 

“FDA” shall have the
meaning ascribed to such term in Section 3.1(hh).

 

“FDCA” shall have the
meaning ascribed to such term in Section 3.1(hh).

 

“GAAP” shall have the
meaning ascribed to such term in Section 3.1(h).

 

“Indebtedness” shall have
the meaning ascribed to such term in Section 3.1(aa).

 

“Innovus Transaction”
means the merger between the Company and Innovus Pharmaceuticals,
Inc. pursuant to a Merger Agreement dated September 12,
2019.

 

“Intellectual Property
Rights” shall have the meaning ascribed to such term
in Section 3.1(p).

 

“Legend Removal Date”
shall have the meaning ascribed to such term in Section
4.1(c).

 

“Liens” means a lien,
charge, pledge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.

 

“Material Adverse Effect”
shall have the meaning assigned to such term in Section
3.1(b).

 

“Material Permits” shall
have the meaning ascribed to such term in Section
3.1(n).

 

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

 

“Pharmaceutical Product”
shall have the meaning ascribed to such term in Section
3.1(hh).

 

“Placement Agent” means
Ladenburg Thalmann & Co. Inc.

 

“Preferred Stock” means
the up to 10,000 shares of the Company’s Series F Convertible
Preferred Stock issued hereunder having the rights, preferences and
privileges set forth in the Certificate of
Designation.

 

 “Proceeding”
means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or
partial proceeding, such as a deposition), whether commenced or
threatened.

 

“Public Information
Failure” shall have the meaning ascribed to such term
in Section 4.2(b).

 

“Public Information Failure
Payments” shall have the meaning ascribed to such term
in Section 4.2(b).

 

 

4

 

 

“Purchaser Party” shall
have the meaning ascribed to such term in Section 4.8.

 

“Registration Rights
Agreement” means the Registration Rights Agreement,
dated on or about the date hereof, among the Company and the
Purchasers, in the form of Exhibit D attached
hereto.

 

“Registration Statement”
means a registration statement meeting the requirements set forth
in the Registration Rights Agreement and covering the resale by the
Purchasers of the Conversion Shares and the Warrant
Shares.

 

 “Required
Approvals” shall have the meaning ascribed to such
term in Section 3.1(e).

 

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

 

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

 

“SEC Reports” shall have
the meaning ascribed to such term in Section 3.1(h).

 

“Securities” means the
Preferred Stock, the Warrants and the Underlying
Shares.

 

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

 

“Shareholder Approval”
means such approval as may be required by the applicable rules and
regulations of the Nasdaq Stock Market (or any successor entity)
from the shareholders of the Company with respect to the
transactions contemplated by the Transaction Documents, including
the issuance of all of the Underlying Shares in excess of 19.99% of
the issued and outstanding Common Stock on the Closing
Date.

 

 “Short
Sales” means all “short sales” as defined
in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include
locating and/or borrowing shares of
Common Stock). 

 

“Stated Value” means
$1,000 per share of Series D
Preferred.

 

 “Subscription
Amount” means, as to each Purchaser, the aggregate
amount to be paid for the Securities being purchased hereunder as
specified below such Purchaser’s name on the signature page
of this Agreement and next to the heading “Subscription
Amount,” in United States dollars and in immediately
available funds.

 

 

5

 

 

“Subsidiary” means any
subsidiary of the Company as set forth on Schedule 3.1(a), and shall,
where applicable, also include any direct or indirect subsidiary of
the Company formed or acquired after the date hereof.

 

“Trading Day” means a day
on which the principal Trading Market is open for
trading.

 

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

 

“Transaction Documents”
means this Agreement, the Registration Rights Agreement, the
Certificate of Designation, the Warrants, all exhibits and
schedules thereto and hereto and any other documents or agreements
executed in connection with the transactions contemplated
hereunder.

 

“Transfer Agent” means
Issuer Direct Corporation, the current transfer agent of the
Company, with a mailing address of 500 Perimeter Park Dr., Suite D,
Morrisville, North Carolina 27560 and a facsimile number of
919-481-6222, and any successor transfer agent of the
Company.

 

 “Underlying
Shares” means, collectively, the Conversion Shares and
the Warrant Shares.

 

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

 

“Warrants” means,
collectively, the Common Stock purchase warrants delivered to the
Purchasers at the Closing in accordance with Section 2.2(a) hereof,
which Warrants shall be exercisable following Shareholder Approval
and have a term of exercise expiring five years from the Effective
Date, in the form of Exhibit B attached
hereto.

 

“Warrant Shares” means the
shares of Common Stock issuable upon exercise of the
Warrants.

 

 

6

 

 

ARTICLE II.

 PURCHASE
AND SALE

 

2.1 Closing.
On the Closing Date, upon the terms and subject to the conditions
set forth herein, substantially concurrent with the execution and
delivery of this Agreement by the parties hereto, the Company
agrees to sell, and the Purchasers, severally and not jointly,
agree to purchase, up to an aggregate of $10,000,000.00
of Securities. Unless otherwise
directed by the Placement Agent, each Purchaser shall deliver, via
wire transfer, immediately available funds equal to its
Subscription Amount to the Escrow Agent, and the Company shall
deliver to each Purchaser its respective shares of Preferred Stock
and Warrants, as determined pursuant to Section 2.2(a), and the
Company and each Purchaser shall deliver the other items set forth
in Section 2.2 deliverable at the Closing. Upon satisfaction of the
covenants and conditions set forth in Sections 2.2 and 2.3, the
Closing shall occur at the offices of EGS or such other location as
the parties shall mutually agree.

 

2.2 Deliveries.

 

(a)            On
or prior to the Closing Date, the Company shall deliver or cause to
be delivered to each Purchaser the following:

 

(i) this Agreement duly
executed by the Company;

 

(ii) a
legal opinion of Company Counsel, substantially in the form of
Exhibit C attached
hereto;

 

(iii) the
Company shall have provided each Purchaser with the Escrow Account
wire instructions, on Company letterhead and executed by the Chief
Executive Officer or Chief Financial Officer;

 

(iv) a
certificate evidencing a number of shares of Preferred Stock equal
to such Purchaser’s Subscription Amount divided by the Stated
Value, registered in the name of such Purchaser, which certificates
may be delivered to each Purchaser within three (3) Business Day of
the Closing, and evidence of the filing and acceptance of the
Certificate of Designation from the Secretary of State of
Delaware;

 

(v) a Warrant
registered in the name of each such Purchaser to purchase up to a
number of shares of Common Stock equal to 100% of the number of
Conversion Shares underlying the Preferred Stock initially issuable
on the Closing Date, purchased by such Purchaser with an exercise
price equal to $1.25,
subject to adjustment therein; and

 

(vi) the
Registration Rights Agreement duly executed by the
Company.

 

(b) On or prior to the
Closing Date, each Purchaser shall deliver or cause to be delivered
to the Company or the Escrow Agent, as applicable, the
following:

 

(i) this Agreement duly
executed by such Purchaser;

 

 

7

 

 

(ii) to
the Escrow Agent, such Purchaser’s Subscription Amount by
wire transfer to the account specified in writing by the Company;
and

 

(iii) the
Registration Rights Agreement duly executed by such
Purchaser.

 

2.3 Closing
Conditions.

 

(a)           The
obligations of the Company hereunder in connection with the Closing
are subject to the following conditions being
met:

 

(i) the accuracy in all
material respects (or, to the extent representations or warranties
are qualified by materiality or Material Adverse Effect, in all
respects) on the Closing Date of the representations and warranties
of the Purchasers contained herein (unless as of a specific date
therein in which case they shall be accurate as of such
date);

 

(ii) all
obligations, covenants and agreements of each Purchaser required to
be performed at or prior to the Closing Date shall have been
performed; and

 

(iii) the
delivery by each Purchaser of the items set forth in Section 2.2(b)
of this Agreement.

 

(b) The respective
obligations of the Purchasers hereunder in connection with the
Closing are subject to the following conditions being
met:

 

(i) the accuracy in all
material respects (or, to the extent representations or warranties
are qualified by materiality or Material Adverse Effect, in all
respects) when made and on the Closing Date of the representations
and warranties of the Company contained herein (unless as of a
specific date therein in which case they shall be accurate as of
such date);

 

(ii) all
obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing Date shall have been
performed;

 

(iii) the
delivery of a lock-up agreement, in the form attached hereto as
Exhibit E, duly
executed by Cerecor;

 

(iv) the
delivery by the Company of the items set forth in Section 2.2(a) of
this Agreement;

 

(v) there shall have
been no Material Adverse Effect with respect to the Company since
the date hereof; and

 

(vi) from
the date hereof to the Closing Date, trading in the Common Stock
shall not have been suspended by the Commission or the
Company’s principal Trading Market, and, at any time prior to
the Closing Date, trading in securities generally as reported by
Bloomberg L.P. shall not have been suspended or limited, or minimum
prices shall not have been established on securities whose trades
are reported by such service, or on any Trading Market, nor shall a
banking moratorium have been declared either by the United States
or New York State authorities nor shall there have occurred any
material outbreak or escalation of hostilities or other national or
international calamity of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each
case, in the reasonable judgment of such Purchaser, makes it
impracticable or inadvisable to purchase the Securities at the
Closing.

 

 

8

 

 

ARTICLE III.

 REPRESENTATIONS
AND WARRANTIES

 

3.1 Representations
and Warranties of the Company.
Except as set forth in the Disclosure Schedules, which Disclosure
Schedules shall be deemed a part hereof and shall qualify any
representation or otherwise made herein to the extent of the
disclosure contained in the corresponding section of the Disclosure
Schedules, the Company hereby makes the following representations
and warranties to each Purchaser:

 

(a)            Subsidiaries.
All of the direct and indirect subsidiaries of the Company are set
forth on Schedule
3.1(a). The Company owns,
directly or indirectly, all of the capital stock or other equity
interests of each Subsidiary free and clear of any Liens, and all
of the issued and outstanding shares of capital stock of each
Subsidiary are validly issued and are fully paid, non-assessable
and free of preemptive and similar rights to subscribe for or
purchase securities. If the Company has no subsidiaries, all other
references to the Subsidiaries or any of them in the Transaction
Documents shall be disregarded.

 

(b)            Organization
and Qualification. The Company and each of the Subsidiaries
is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of
its incorporation or organization, with the requisite power and
authority to own and use its properties and assets and to carry on
its business as currently conducted. Neither the Company nor any
Subsidiary is in violation nor default of any of the provisions of
its respective certificate or articles of incorporation, bylaws or
other organizational or charter documents. Each of the Company and
the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each
jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the
case may be, could not have or reasonably be expected to result in:
(i) a material adverse effect on the legality, validity or
enforceability of any Transaction Document, (ii) a material adverse
effect on the results of operations, assets, business, prospects or
condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect
on the Company’s ability to perform in any material respect
on a timely basis its obligations under any Transaction Document
(any of (i), (ii) or (iii), a “Material Adverse Effect”)
and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.

 

(c) Authorization; Enforcement. The
Company has the requisite corporate power and authority to enter
into and to consummate the transactions contemplated by this
Agreement and each of the other Transaction Documents and otherwise
to carry out its obligations hereunder and thereunder. The
execution and delivery of this Agreement and each of the other
Transaction Documents by the Company and the consummation by it of
the transactions contemplated hereby and thereby have been duly
authorized by all necessary action on the part of the Company and
no further action is required by the Company, the Board of
Directors or the Company’s stockholders in connection
herewith or therewith other than in connection with the Required
Approvals. This Agreement and each other Transaction Document to
which it is a party has been (or upon delivery will have been) duly
executed by the Company and, when delivered in accordance with the
terms hereof and thereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms, except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and
(iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

 

 

9

 

 

(d) No Conflicts. The execution,
delivery and performance by the Company of this Agreement and the
other Transaction Documents to which it is a party, the issuance
and sale of the Securities and the consummation by it of the
transactions contemplated hereby and thereby do not and will not
(i) conflict with or violate any provision of the Company’s
or any Subsidiary’s certificate or articles of incorporation,
bylaws or other organizational or charter documents, or (ii)
conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under,
result in the creation of any Lien upon any of the properties or
assets of the Company or any Subsidiary, or give to others any
rights of termination, amendment, anti-dilution or similar
adjustments, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or
other instrument (evidencing a Company or Subsidiary debt or
otherwise) or other understanding to which the Company or any
Subsidiary is a party or by which any property or asset of the
Company or any Subsidiary is bound or affected, or (iii) subject to
the Required Approvals, conflict with or result in a violation of
any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which
the Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset
of the Company or a Subsidiary is bound or affected; except in the
case of each of clauses (ii) and (iii), such as could not have or
reasonably be expected to result in a Material Adverse
Effect.

 

(e) Filings, Consents and
Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal,
state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the
Company of the Transaction Documents, other than: (i) the filings
required pursuant to Section 4.4 of this Agreement, (ii) the filing
with the Commission pursuant to the Registration Rights Agreement,
(iii) the notice and/or application(s) to each applicable Trading
Market for the issuance and sale of the Securities and the listing
of the and the Underlying shares for trading thereon in the time
and manner required thereby (iv) the filing of Form D with the
Commission and such filings as are required to be made under
applicable state securities laws and (v) the Shareholder Approval
(collectively, the “Required
Approvals”).

 

(f) Issuance of the Securities;
Registration. The Securities are duly authorized and, when
issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens imposed by the Company
other than restrictions on transfer provided for in the Transaction
Documents. The Underlying Shares, when issued in accordance with
the terms of the Transaction Documents, will be validly issued,
fully paid and nonassessable, free and clear of all Liens imposed
by the Company other than restrictions on transfer provided for in
the Transaction Documents. The Company has reserved from its duly
authorized capital stock the maximum number of shares of Common
Stock issuable pursuant to this Agreement, the Certificate of
Designation, and the Warrants.

 

 

10

 

 

(g) Capitalization. The
capitalization of the Company as of the date hereof is as set forth
on Schedule 3.1(g),
which Schedule
3.1(g) shall also include the number of shares of Common
Stock owned beneficially, and of record, by Affiliates of the
Company as of the date hereof. Except as set forth on Schedule 3.1(g), the Company
has not issued any capital stock since its most recently filed
periodic report under the Exchange Act, other than pursuant to the
exercise of employee stock options under the Company’s stock
option plans, the issuance of shares of Common Stock to employees
pursuant to the Company’s employee stock purchase plans and
pursuant to the conversion and/or exercise of Common Stock
Equivalents outstanding as of the date of the most recently filed
periodic report under the Exchange Act. No Person has any right of
first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by
the Transaction Documents. Except as a result of the purchase and
sale of the Securities, there are no outstanding options, warrants,
scrip rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire, any shares of Common
Stock or the capital stock of any Subsidiary, or contracts,
commitments, understandings or arrangements by which the Company or
any Subsidiary is or may become bound to issue additional shares of
Common Stock or Common Stock Equivalents or capital stock of any
Subsidiary. The issuance and sale of the Securities will not
obligate the Company or any Subsidiary to issue shares of Common
Stock or other securities to any Person (other than the
Purchasers). There are no outstanding securities or instruments of
the Company or any Subsidiary with any provision that adjusts the
exercise, conversion, exchange or reset price of such security or
instrument upon an issuance of securities by the Company or any
Subsidiary. Except as set forth on Schedule 3.1(g), there are no
outstanding securities or instruments of the Company or any
Subsidiary that contain any redemption or similar provisions, and
there are no contracts, commitments, understandings or arrangements
by which the Company or any Subsidiary is or may become bound to
redeem a security of the Company or such Subsidiary. The Company
does not have any stock appreciation rights or “phantom
stock” plans or agreements or any similar plan or agreement.
All of the outstanding shares of capital stock of the Company are
duly authorized, validly issued, fully paid and nonassessable, have
been issued in compliance with all federal and state securities
laws, and none of such outstanding shares was issued in violation
of any preemptive rights or similar rights to subscribe for or
purchase securities. No further approval or authorization of any
stockholder, the Board of Directors or others is required for the
issuance and sale of the Securities. Except as set forth on
Schedule 3.1(g),
there are no stockholders agreements, voting agreements or other
similar agreements with respect to the Company’s capital
stock to which the Company is a party or, to the knowledge of the
Company, between or among any of the Company’s
stockholders.

 

 

11

 

 

(h) SEC Reports; Financial
Statements. The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by the
Company under the Securities Act and the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company
was required by law or regulation to file such material) (the
foregoing materials, including the exhibits thereto and documents
incorporated by reference therein being collectively referred to
herein as the “SEC
Reports”) on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports
prior to the expiration of any such extension. As of their
respective dates, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act,
as applicable, and none of the SEC Reports, when filed, contained
any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The Company has never
been an issuer subject to Rule 144(i) under the Securities Act. The
financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial
statements have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent
basis during the periods involved (“GAAP”), except as may be
otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not
contain all footnotes required by GAAP, and fairly present in all
material respects the financial position of the Company and its
consolidated Subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.

 

(i) Material Changes; Undisclosed Events,
Liabilities or Developments. Since the date of the latest
audited financial statements included within the SEC Reports,
except as set forth on Schedule 3.1(i), (i) there has
been no event, occurrence or development that has had or that could
reasonably be expected to result in a Material Adverse Effect, (ii)
the Company has not incurred any liabilities (contingent or
otherwise) other than (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in the
Company’s financial statements pursuant to GAAP or disclosed
in filings made with the Commission, (iii) the Company has not
altered its method of accounting, (iv) the Company has not declared
or made any dividend or distribution of cash or other property to
its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock and (v) the
Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock
option plans. The Company does not have pending before the
Commission any request for confidential treatment of information.
Except for the issuance of the Securities contemplated by this
Agreement or as set forth on Schedule 3.1(i), no event,
liability, fact, circumstance, occurrence or development has
occurred or exists or is reasonably expected to occur or exist with
respect to the Company or its Subsidiaries or their respective
businesses, prospects, properties, operations, assets or financial
condition that would be required to be disclosed by the Company
under applicable securities laws at the time this representation is
made or deemed made that has not been publicly disclosed at least 1
Trading Day prior to the date that this representation is
made.

 

 

12

 

 

(j) Litigation. Except as set forth
on Schedule 3.1(j),
there is no action, suit, inquiry, notice of violation, proceeding
or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any
of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an
“Action”) which (i)
adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the
Securities or (ii) could, if there were an unfavorable decision,
have or reasonably be expected to result in a Material Adverse
Effect. Neither the Company nor any Subsidiary, nor any director or
officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has
not been, and to the knowledge of the Company, there is not pending
or contemplated, any investigation by the Commission involving the
Company or any current or former director or officer of the
Company. The Commission has not issued any stop order or other
order suspending the effectiveness of any registration statement
filed by the Company or any Subsidiary under the Exchange Act or
the Securities Act.

 

(k) Labor Relations. No labor
dispute exists or, to the knowledge of the Company, is imminent
with respect to any of the employees of the Company, which could
reasonably be expected to result in a Material Adverse Effect. None
of the Company’s or its Subsidiaries’ employees is a
member of a union that relates to such employee’s
relationship with the Company or such Subsidiary, and neither the
Company nor any of its Subsidiaries is a party to a collective
bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. To the
knowledge of the Company, no executive officer of the Company or
any Subsidiary, is, or is now expected to be, in violation of any
material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or non-competition
agreement, or any other contract or agreement or any restrictive
covenant in favor of any third party, and the continued employment
of each such executive officer does not subject the Company or any
of its Subsidiaries to any liability with respect to any of the
foregoing matters. The Company and its Subsidiaries are in
compliance with all U.S. federal, state, local and foreign laws and
regulations relating to employment and employment practices, terms
and conditions of employment and wages and hours, except where the
failure to be in compliance could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.

 

(l) Compliance.
Neither the Company nor any Subsidiary: (i) is in default under or
in violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a
default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or
credit agreement or any other agreement or instrument to which it
is a party or by which it or any of its properties is bound
(whether or not such default or violation has been waived), (ii) is
in violation of any judgment, decree or order of any court,
arbitrator or other governmental authority or (iii) is or has been
in violation of any statute, rule, ordinance or regulation of any
governmental authority, including without limitation all foreign,
federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and
safety and employment and labor matters, except in each case as
could not have or reasonably be expected to result in a Material
Adverse Effect.

 

 

13

 

 

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

 

(n) Regulatory Permits. The Company
and the Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate federal, state, local or foreign
regulatory authorities necessary to conduct their respective
businesses as described in the SEC Reports, except where the
failure to possess such permits could not reasonably be expected to
result in a Material Adverse Effect (“Material Permits”), and
neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any
Material Permit.

 

(o) Title to Assets. The Company
and the Subsidiaries have good and marketable title in fee simple
to all real property owned by them and good and marketable title in
all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and
clear of all Liens, except for (i) Liens as do not materially
affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the
Company and the Subsidiaries and (ii) Liens for the payment of
federal, state or other taxes, for which appropriate reserves have
been made therefor in accordance with GAAP and, the payment of
which is neither delinquent nor subject to penalties. Any real
property and facilities held under lease by the Company and the
Subsidiaries are held by them under valid, subsisting and
enforceable leases with which the Company and the Subsidiaries are
in compliance.

 

(p) Intellectual Property. The
Company and the Subsidiaries have, or have rights to use, all
patents, patent applications, trademarks, trademark applications,
service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights
necessary or required for use in connection with their respective
businesses as described in the SEC Reports and which the failure to
so have could have a Material Adverse Effect (collectively, the
“Intellectual
Property Rights”). None of, and neither the Company
nor any Subsidiary has received a notice (written or otherwise)
that any of, the Intellectual Property Rights has expired,
terminated or been abandoned, or is expected to expire or terminate
or be abandoned, within two (2) years from the date of this
Agreement. Neither the Company nor any Subsidiary has received,
since the date of the latest audited financial statements included
within the SEC Reports, a written notice of a claim or otherwise
has any knowledge that the Intellectual Property Rights violate or
infringe upon the rights of any Person, except as could not have or
reasonably be expected to not have a Material Adverse Effect. To
the knowledge of the Company, all such Intellectual Property Rights
are enforceable and there is no existing infringement by another
Person of any of the Intellectual Property Rights. The Company and
its Subsidiaries have taken reasonable security measures to protect
the secrecy, confidentiality and value of all of their intellectual
properties, except where failure to do so could not, individually
or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

 

14

 

 

(q) Insurance. The Company and the
Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as
are prudent and customary in the businesses in which the Company
and the Subsidiaries are engaged, including, but not limited to,
directors and officers insurance coverage at least equal to the
aggregate Subscription Amount. Neither the Company nor any
Subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business without a significant
increase in cost.

 

(r) Transactions With Affiliates and
Employees. Except as set forth on Schedule 3.1(r), none of the
officers or directors of the Company or any Subsidiary and, to the
knowledge of the Company, none of the employees of the Company or
any Subsidiary is presently a party to any transaction with the
Company or any Subsidiary (other than for services as employees,
officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from,
providing for the borrowing of money from or lending of money to or
otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee, stockholder, member
or partner, in each case in excess of $120,000 other than for (i)
payment of salary or consulting fees for services rendered, (ii)
reimbursement for expenses incurred on behalf of the Company and
(iii) other employee benefits, including stock option agreements
under any stock option plan of the Company.

 

(s) Sarbanes-Oxley; Internal Accounting
Controls. The Company and the Subsidiaries are in compliance
with any and all applicable requirements of the Sarbanes-Oxley Act
of 2002 that are effective as of the date hereof, and any and all
applicable rules and regulations promulgated by the Commission
thereunder that are effective as of the date hereof and as of the
Closing Date. The Company and the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain asset
accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. The
Company and the Subsidiaries have established disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and the Subsidiaries and designed such
disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it files or
submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the
Commission’s rules and forms. The Company’s certifying
officers have evaluated the effectiveness of the disclosure
controls and procedures of the Company and the Subsidiaries as of
the end of the period covered by the most recently filed periodic
report under the Exchange Act (such date, the “Evaluation Date”). The
Company presented in its most recently filed periodic report under
the Exchange Act the conclusions of the certifying officers about
the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date. Since the
Evaluation Date, there have been no changes in the internal control
over financial reporting (as such term is defined in the Exchange
Act) of the Company and its Subsidiaries that have materially
affected, or is reasonably likely to materially affect, the
internal control over financial reporting of the Company and its
Subsidiaries.

 

 

15

 

 

(t) Certain Fees. No brokerage or
finder’s fees or commissions are or will be payable by the
Company or any Subsidiary to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or
other Person with respect to the transactions contemplated by the
Transaction Documents. The Purchasers shall have no obligation with
respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this
Section that may be due in connection with the transactions
contemplated by the Transaction Documents.

 

(u) Investment Company. The Company
is not, and immediately after receipt of payment for the Securities
will not be, required to register as an “investment
company,” as defined in the Investment Company Act of 1940,
as amended.

 

(v) Private Placement. Assuming the
accuracy of the Purchasers’ representations and warranties
set forth in Section 3.2, no registration under the Securities Act
is required for the offer and sale of the Securities by the Company
to the Purchasers as contemplated hereby. The issuance and sale of
the Securities hereunder does not contravene the rules and
regulations of the Trading Market.

 

(w) Registration Rights. Except as
set forth on Schedule
3.1(w), and other than each of the Purchasers, no Person has
any right to cause the Company or any Subsidiary to effect the
registration under the Securities Act of any securities of the
Company or any Subsidiary.

 

(x) Listing and Maintenance
Requirements. The Common Stock is registered pursuant to
Section 12(b) or 12(g) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to
have the effect of, terminating the registration of the Common
Stock under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such
registration. The Company has not, in the 12 months preceding the
date hereof, received notice from any Trading Market on which the
Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Company is, and has no
reason to believe that it will not in the foreseeable future
continue to be, in compliance with all such listing and maintenance
requirements. The Common Stock is currently eligible for electronic
transfer through the Depository Trust Company or another
established clearing corporation and the Company is current in
payment of the fees to the Depository Trust Company (or such other
established clearing corporation) in connection with such
electronic transfer.

 

(y) Application of Takeover
Protections. The Company and the Board of Directors have
taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other
similar anti-takeover provision under the Company’s
certificate of incorporation (or similar charter documents) or the
laws of its state of incorporation that is or could become
applicable to the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights
under the Transaction Documents, including without limitation as a
result of the Company’s issuance of the Securities and the
Purchasers’ ownership of the Securities.

 

 

16

 

 

(z) Disclosure. Except with respect
to the material terms and conditions of the transactions
contemplated by the Transaction Documents, the Company confirms
that neither it nor any other Person acting on its behalf has
provided any of the Purchasers or their agents or counsel with any
information that it believes constitutes or might constitute
material, non-public information. The Company understands and
confirms that the Purchasers will rely on the foregoing
representation in effecting transactions in securities of the
Company. All of the disclosure furnished by or on behalf of the
Company to the Purchasers regarding the Company and its
Subsidiaries, their respective businesses and the transactions
contemplated hereby, including the Disclosure Schedules to this
Agreement, is true and correct and does not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not
misleading. The press releases disseminated by the Company during
the twelve months preceding the date of this Agreement taken as a
whole do not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of
the circumstances under which they were made and when made, not
misleading. The Company acknowledges and agrees that no Purchaser
makes or has made any representations or warranties with respect to
the transactions contemplated hereby other than those specifically
set forth in Section 3.2 hereof.

 

(aa) No Integrated Offering.
Assuming the accuracy of the Purchasers’ representations and
warranties set forth in Section 3.2, neither the Company, nor any
of its Affiliates, nor any Person acting on its or their behalf
has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under
circumstances that would cause this offering of the Securities to
be integrated with prior offerings by the Company for purposes of
(i) the Securities Act which would require the registration of any
such securities under the Securities Act, or (ii) any applicable
shareholder approval provisions of any Trading Market on which any
of the securities of the Company are listed or
designated.

 

(bb) Solvency.
Based on the consolidated financial condition of the Company as of
the Closing Date, after giving effect to the receipt by the Company
of the proceeds from the sale of the Securities hereunder, (i) the
fair saleable value of the Company’s assets exceeds the
amount that will be required to be paid on or in respect of the
Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the
Company’s assets do not constitute unreasonably small capital
to carry on its business as now conducted and as proposed to be
conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the
Company, consolidated and projected capital requirements and
capital availability thereof, and (iii) the current cash flow of
the Company, together with the proceeds the Company would receive,
were it to liquidate all of its assets, after taking into account
all anticipated uses of the cash, would be sufficient to pay all
amounts on or in respect of its liabilities when such amounts are
required to be paid. The Company does not intend to incur debts
beyond its ability to pay such debts as they mature (taking into
account the timing and amounts of cash to be payable on or in
respect of its debt). The Company has no knowledge of any facts or
circumstances which lead it to believe that it will file for
reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the
Closing Date. Schedule
3.1(bb) sets forth as of the date hereof all outstanding
secured and unsecured Indebtedness of the Company or any
Subsidiary, or for which the Company or any Subsidiary has
commitments. For the purposes of this Agreement,
“Indebtedness”
means (x) any liabilities for borrowed money or amounts owed in
excess of $50,000 (other than trade accounts payable incurred in
the ordinary course of business), (y) all guaranties, endorsements
and other contingent obligations in respect of indebtedness of
others, whether or not the same are or should be reflected in the
Company’s consolidated balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary
course of business; and (z) the present value of any lease payments
in excess of $50,000 due under leases required to be capitalized in
accordance with GAAP. Neither the Company nor any Subsidiary is in
default with respect to any Indebtedness.

 

 

17

 

 

(cc) Tax
Status. Except for matters that would not, individually or
in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company and its Subsidiaries each (i)
has made or filed all United States federal, state and local income
and all foreign income and franchise tax returns, reports and
declarations required by any jurisdiction to which it is subject,
(ii) has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due
on such returns, reports and declarations and (iii) has set aside
on its books provision reasonably adequate for the payment of all
material taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes
in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company or of any
Subsidiary know of no basis for any such claim.

 

(dd) Foreign
Corrupt Practices. Neither the Company nor any Subsidiary,
nor to the knowledge of the Company or any Subsidiary, any agent or
other person acting on behalf of the Company or any Subsidiary, has
(i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses
related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or
employees or to any foreign or domestic political parties or
campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company or any Subsidiary (or made by any
person acting on its behalf of which the Company is aware) which is
in violation of law, or (iv) violated in any material respect any
provision of FCPA.

 

(ee) Accountants.
The Company’s accounting firm is set forth on Schedule 3.1(ee) of the
Disclosure Schedules. To the knowledge and belief of the Company,
such accounting firm (i) is a registered public accounting firm as
required by the Exchange Act and (ii) shall express its opinion
with respect to the financial statements to be included in the
Company’s Annual Report for the fiscal year ending June 30,
2020.

 

(ff) No
General Solicitation. Neither the Company nor any Person
acting on behalf of the Company has offered or sold any of the
Securities by any form of general solicitation or general
advertising. The Company has offered the Securities for sale only
to the Purchasers and certain other “accredited
investors” within the meaning of Rule 501 under the
Securities Act.

 

(gg)  Acknowledgment
Regarding Purchasers’ Purchase of Securities. The
Company acknowledges and agrees that each of the Purchasers is
acting solely in the capacity of an arm’s length purchaser
with respect to the Transaction Documents and the transactions
contemplated thereby. The Company further acknowledges that no
Purchaser is acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated thereby and
any advice given by any Purchaser or any of their respective
representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely
incidental to the Purchasers’ purchase of the Securities. The
Company further represents to each Purchaser that the
Company’s decision to enter into this Agreement and the other
Transaction Documents has been based solely on the independent
evaluation of the transactions contemplated hereby by the Company
and its representatives.

 

 

18

 

 

(hh) Acknowledgment
Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein
to the contrary notwithstanding (except for Sections 3.2(f) and
4.13 hereof), it is understood and acknowledged by the Company
that: (i) none of the Purchasers has been asked by the Company to
agree, nor has any Purchaser agreed, to desist from purchasing or
selling, long and/or short, securities of the Company, or
“derivative” securities based on securities issued by
the Company or to hold the Securities for any specified term; (ii)
past or future open market or other transactions by any Purchaser,
specifically including, without limitation, Short Sales or
“derivative” transactions, before or after the closing
of this or future private placement transactions, may negatively
impact the market price of the Company’s publicly-traded
securities; (iii) any Purchaser, and counter-parties in
“derivative” transactions to which any such Purchaser
is a party, directly or indirectly, presently may have a
“short” position in the Common Stock, and (iv) each
Purchaser shall not be deemed to have any affiliation with or
control over any arm’s length counter-party in any
“derivative” transaction. The Company further
understands and acknowledges that (y) one or more Purchasers may
engage in hedging activities at various times during the period
that the Securities are outstanding, including, without limitation,
during the periods that the value of the Underlying Shares
deliverable with respect to Securities are being determined, and
(z) such hedging activities (if any) could reduce the value of the
existing stockholders' equity interests in the Company at and after
the time that the hedging activities are being conducted.  The
Company acknowledges that such aforementioned hedging activities do
not constitute a breach of any of the Transaction
Documents.

 

(ii) Regulation
M Compliance.  The Company has not, and to its
knowledge no one acting on its behalf has, (i) taken, directly or
indirectly, any action designed to cause or to result in the
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of any of the Securities,
(ii) sold, bid for, purchased, or, paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or
agreed to pay to any Person any compensation for soliciting another
to purchase any other securities of the Company, other than, in the
case of clauses (ii) and (iii), compensation paid to the
Company’s placement agent in connection with the placement of
the Securities.

 

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

 

 

19

 

 

(kk) Stock
Option Plans. Each stock option granted by the Company under
the Company’s stock option plan was granted (i) in accordance
with the terms of the Company’s stock option plan and (ii)
with an exercise price at least equal to the fair market value of
the Common Stock on the date such stock option would be considered
granted under GAAP and applicable law. No stock option granted
under the Company’s stock option plan has been backdated. The
Company has not knowingly granted, and there is no and has been no
Company policy or practice to knowingly grant, stock options prior
to, or otherwise knowingly coordinate the grant of stock options
with, the release or other public announcement of material
information regarding the Company or its Subsidiaries or their
financial results or prospects.

 

(ll) Office
of Foreign Assets Control. Neither the Company nor any
Subsidiary nor, to the Company's knowledge, any director, officer,
agent, employee or affiliate of the Company or any Subsidiary is
currently subject to any U.S. sanctions administered by the Office
of Foreign Assets Control of the U.S. Treasury Department
(“OFAC”).

 

(mm) U.S.
Real Property Holding Corporation. The Company is not and
has never been a U.S. real property holding corporation within the
meaning of Section 897 of the Internal Revenue Code of 1986, as
amended, and the Company shall so certify upon Purchaser’s
request.

 

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

 

(oo) Form
S-3 Eligibility. The Company is eligible to register the
resale of the Securities for resale by the Purchaser on Form S-3
promulgated under the Securities Act.

 

(pp) Money
Laundering. The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance
with applicable financial record-keeping and reporting requirements
of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, applicable money laundering statutes and applicable rules
and regulations thereunder (collectively, the “Money Laundering Laws”),
and no Action or Proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company
or any Subsidiary with respect to the Money Laundering Laws is
pending or, to the knowledge of the Company or any Subsidiary,
threatened.

 

 

20

 

 

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

 

(rr) Other
Covered Persons. Other than the Placement Agent, the Company
is not aware of any person (other than any Issuer Covered Person)
that has been or will be paid (directly or indirectly) remuneration
for solicitation of purchasers in connection with the sale of any
Securities.

 

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

 

3.2 Representations
and Warranties of the Purchasers. Each Purchaser, for itself and for no other
Purchaser, hereby represents and warrants as of the date hereof and
as of the Closing Date to the Company as follows (unless as of a
specific date therein, in which case they shall be accurate as of
such date):

 

(a)  Organization;
Authority. Such Purchaser is
either an individual or an entity duly incorporated or formed,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation with full right,
corporate, partnership, limited liability company or similar power
and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry
out its obligations hereunder and thereunder. The execution and
delivery of the Transaction Documents and performance by such
Purchaser of the transactions contemplated by the Transaction
Documents have been duly authorized by all necessary corporate,
partnership, limited liability company or similar action, as
applicable, on the part of such Purchaser. Each Transaction
Document to which it is a party has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with
the terms hereof, will constitute the valid and legally binding
obligation of such Purchaser, enforceable against it in accordance
with its terms, except: (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited
by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by
applicable law.

 

 

 

21

 

 

(b) Own
Account. Such Purchaser
understands that the Securities are “restricted
securities” and have not been registered under the Securities
Act or any applicable state securities law and is acquiring the
Securities as principal for its own account and not with a view to
or for distributing or reselling such Securities or any part
thereof in violation of the Securities Act or any applicable state
securities law, has no present intention of distributing any of
such Securities in violation of the Securities Act or any
applicable state securities law and has no direct or indirect
arrangement or understandings with any other persons to distribute
or regarding the distribution of such Securities in violation of
the Securities Act or any applicable state securities law (this
representation and warranty not limiting such Purchaser’s
right to sell the Securities pursuant to the Registration Statement
or otherwise in compliance with applicable federal and state
securities laws). Such Purchaser is acquiring the Securities
hereunder in the ordinary course of its
business.

 

(c)    Purchaser
Status. At the time such
Purchaser was offered the Securities, it was, and as of the date
hereof it is, and on each date on which it exercises any Warrants
or converts any shares of Preferred Stock, it will be an
“accredited investor” as defined in Rule 501(a)(1),
(a)(2), (a)(3), (a)(7) or (a)(8) under the Securities
Act.

 

(d)    Purchaser
Status. At the time such
Purchaser was offered the Securities, it was, and as of the date
hereof it is, and on each date on which it exercises any Warrants
or converts Preferred Stock, it will be an “accredited
investor” as defined in Rule 501(a)(1), (a)(2), (a)(3),
(a)(7) or (a)(8) under the Securities Act.

 

(e)    General
Solicitation. Such Purchaser is
not, to such Purchaser’s knowledge, purchasing the Securities
as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or
presented at any seminar or, to the knowledge of such Purchaser,
any other general solicitation or general
advertisement.

 

(f)    Access to
Information. Such Purchaser
acknowledges that it has had the opportunity to review the
Transaction Documents (including all exhibits and schedules
thereto) and the SEC Reports and has been afforded, (i) the
opportunity to ask such questions as it has deemed necessary of,
and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the
Securities and the merits and risks of investing in the Securities;
(ii) access to information about the Company and its financial
condition, results of operations, business, properties, management
and prospects sufficient to enable it to evaluate its investment;
and (iii) the opportunity to obtain such additional information
that the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment
decision with respect to the investment.  Such Purchaser
acknowledges and agrees that neither the Placement Agent nor any
Affiliate of the Placement Agent have provided such Purchaser with
any information or advice with respect to the Securities nor is
such information or advice necessary or desired.  Neither the
Placement Agent nor any Affiliate have made or makes any
representation as to the Company or the quality of the Securities
and the Placement Agent and any Affiliate may have acquired
non-public information with respect to the Company which such
Purchaser agrees need not be provided to it.  In connection
with the issuance of the Securities to such Purchaser, neither the
Placement Agent nor any of their Affiliates has acted as a
financial advisor or fiduciary to such
Purchaser.

 

 

 

22

 

 

(g) Certain
Transactions and Confidentiality. Other than consummating the transactions
contemplated hereunder, such Purchaser has not, nor has any Person
acting on behalf of or pursuant to any understanding with such
Purchaser, directly or indirectly executed any purchases or sales,
including Short Sales, of the securities of the Company during
the period commencing as of the time that such Purchaser first
received a term sheet (written or oral) from the Company or any
other Person representing the Company setting forth the material
terms of the transactions contemplated hereunder and ending
immediately prior to the execution hereof. Notwithstanding the
foregoing, in the case of a Purchaser that is a multi-managed
investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the
portfolio managers have no direct knowledge of the investment
decisions made by the portfolio managers managing other portions of
such Purchaser’s assets, the representation set forth above
shall only apply with respect to the portion of assets managed by
the portfolio manager that made the investment decision to purchase
the Securities covered by this Agreement. Other than to other
Persons party to this Agreement or to such Purchaser’s
representatives, including, without limitation, its officers,
directors, partners, legal and other advisors, employees, agents
and Affiliates, such Purchaser has maintained the confidentiality
of all disclosures made to it in connection with this transaction
(including the existence and terms of this transaction).
Notwithstanding the foregoing, for the avoidance of doubt, nothing
contained herein shall constitute a representation or warranty, or
preclude any actions, with respect to locating or borrowing shares
in order to effect Short Sales or similar transactions in the
future.

 

The
Company acknowledges and agrees that the representations contained
in this Section 3.2 shall not modify, amend or affect such
Purchaser’s right to rely on the Company’s
representations and warranties contained in this Agreement or any
representations and warranties contained in any other Transaction
Document or any other document or instrument executed and/or
delivered in connection with this Agreement or the consummation of
the transactions contemplated hereby. Notwithstanding the
foregoing, for the avoidance of doubt, nothing contained herein
shall constitute a representation or warranty, or preclude any
actions, with respect to locating or borrowing shares in order to
effect Short Sales or similar transactions in the
future.

 

ARTICLE IV.

 OTHER
AGREEMENTS OF THE PARTIES

 

4.1 Transfer
Restrictions.

 

(a) The Securities may
only be disposed of in compliance with state and federal securities
laws. In connection with any transfer of Securities other than
pursuant to an effective registration statement or Rule 144, to the
Company or to an Affiliate of a Purchaser or in connection with a
pledge as contemplated in Section 4.1(b), the Company may require
the transferor thereof to provide to the Company an opinion of
counsel selected by the transferor and reasonably acceptable to the
Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred
Securities under the Securities Act. As a condition of transfer,
any such transferee shall agree in writing to be bound by the terms
of this Agreement and the Registration Rights Agreement and shall
have the rights and obligations of a Purchaser under this Agreement
and the Registration Rights Agreement.

 

 

 

23

 

 

(b) The Purchasers
agree to the imprinting, so long as is required by this Section
4.1, of a legend on any of the Securities in the following
form:

 

THIS
SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A
REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION
THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE
501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH
SECURITIES.

 

The
Company acknowledges and agrees that a Purchaser may from time to
time pledge pursuant to a bona fide margin agreement with a
registered broker-dealer or grant a security interest in some or
all of the Securities to a financial institution that is an
“accredited investor” as defined in Rule 501(a) under
the Securities Act and, if required under the terms of such
arrangement, such Purchaser may transfer pledged or secured
Securities to the pledgees or secured parties. Such a pledge or
transfer would not be subject to approval of the Company and no
legal opinion of legal counsel of the pledgee, secured party or
pledgor shall be required in connection therewith. Further, no
notice shall be required of such pledge. At the appropriate
Purchaser’s expense, the Company will execute and deliver
such reasonable documentation as a pledgee or secured party of
Securities may reasonably request in connection with a pledge or
transfer of the Securities, including, if the Securities are
subject to registration pursuant to the Registration Rights
Agreement, the preparation and filing of any required prospectus
supplement under Rule 424(b)(3) under the Securities Act or other
applicable provision of the Securities Act to appropriately amend
the list of Selling Stockholders (as defined in the Registration
Rights Agreement) thereunder.

 

 

24

 

 

(c) Certificates
evidencing the Conversion Shares and Warrant Shares shall not
contain any legend (including the legend set forth in Section
4.1(b) hereof), (i) while a registration statement (including the
Registration Statement) covering the resale of such security is
effective under the Securities Act, (ii) following any sale of such
Underlying Shares pursuant to Rule 144 (assuming cashless exercise
of the Warrants), (iii) if such Underlying Shares are eligible for
sale under Rule 144 (assuming cashless exercise of the Warrants),
without the requirement for the Company to be in compliance with
the current public information required under Rule 144 as to such
Underlying Shares and without volume or manner-of-sale
restrictions, or (iv) if such legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the
Commission). The Company shall cause its counsel to issue a legal
opinion to the Transfer Agent or the Purchaser promptly after the
Effective Date if required by the Transfer Agent to effect the
removal of the legend hereunder, or if requested by a Purchaser,
respectively. If all or any portion of Preferred Stock is converted
or a Warrant is exercised at a time when there is an effective
registration statement to cover the resale of the Conversion Share
or Warrant Shares, as applicable, or if such Conversion Shares or
Warrant Shares may be sold under Rule 144 and the Company is then
in compliance with the current public information required under
Rule 144 (assuming cashless exercise of the Warrants), or if the
Underlying Shares may be sold under Rule 144 without the
requirement for the Company to be in compliance with the current
public information required under Rule 144 as to such Underlying
Shares or if such legend is not otherwise required under applicable
requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the
Commission) then such Underlying Shares shall be issued free of all
legends. The Company agrees that following the Effective Date or at
such time as such legend is no longer required under this Section
4.1(c), it will, no later than the earlier of (i) two (2) Trading
Days and (ii) the number of Trading Days comprising the Standard
Settlement Period (as defined below) following the delivery by a
Purchaser to the Company or the Transfer Agent of a certificate
representing Underlying Shares, as the case may be, issued with a
restrictive legend (such date, the “Legend Removal Date”),
deliver or cause to be delivered to such Purchaser a certificate
representing such shares that is free from all restrictive and
other legends. The Company may not make any notation on its records
or give instructions to the Transfer Agent that enlarge the
restrictions on transfer set forth in this Section 4. Certificates
for Securities subject to legend removal hereunder shall be
transmitted by the Transfer Agent to the Purchaser by crediting the
account of the Purchaser’s prime broker with the Depository
Trust Company System as directed by such Purchaser. As used herein,
“Standard Settlement
Period” means the standard settlement period,
expressed in a number of Trading Days, on the Company’s
primary Trading Market with respect to the Common Stock as in
effect on the date of delivery of a certificate representing
Underlying Shares issued with a restrictive legend.

 

 

25

 

 

(d) In addition to such
Purchaser’s other available remedies, the Company shall pay
to a Purchaser, in cash, (i) as partial liquidated damages and not
as a penalty, for each $1,000 of Underlying Shares (based on the
VWAP of the Common Stock on the date such Securities are submitted
to the Transfer Agent) delivered for removal of the restrictive
legend and subject to Section 4.1(c), $10 per Trading Day
(increasing to $20 per Trading Day five (5) Trading Days after such
damages have begun to accrue) for each Trading Day after the Legend
Removal Date until such certificate is delivered without a legend
and (ii) if the Company fails to (a) issue and deliver (or cause to
be delivered) to a Purchaser by the Legend Removal Date a
certificate representing the Securities so delivered to the Company
by such Purchaser that is free from all restrictive and other
legends and (b) if after the Legend Removal Date such Purchaser
purchases (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by such Purchaser
of all or any portion of the number of shares of Common Stock, or a
sale of a number of shares of Common Stock equal to all or any
portion of the number of shares of Common Stock that such Purchaser
anticipated receiving from the Company without any restrictive
legend, then, an amount equal to the excess of such
Purchaser’s total purchase price (including brokerage
commissions and other out-of-pocket expenses, if any) for the
shares of Common Stock so purchased (including brokerage
commissions and other out-of-pocket expenses, if any) (the
“Buy-In
Price”) over the product of (A) such number of
Underlying Shares that the Company was required to deliver to such
Purchaser by the Legend Removal Date multiplied by (B) the lowest
closing sale price of the Common Stock on any Trading Day during
the period commencing on the date of the delivery by such Purchaser
to the Company of the applicable Underlying Shares (as the case may
be) and ending on the date of such delivery and payment under this
clause (ii).

 

(e) Each Purchaser,
severally and not jointly with the other Purchasers, agrees with
the Company that such Purchaser will sell any Securities pursuant
to either the registration requirements of the Securities Act,
including any applicable prospectus delivery requirements, or an
exemption therefrom, and that if Securities are sold pursuant to a
Registration Statement, they will be sold in compliance with the
plan of distribution set forth therein, and acknowledges that the
removal of the restrictive legend from certificates representing
Securities as set forth in this Section 4.1 is predicated upon the
Company’s reliance upon this understanding.

 

4.2 Furnishing
of Information; Public Information.

 

(a) If the Common Stock
is not registered under Section 12(b) or 12(g) of the Exchange Act
on the date hereof, the Company agrees to cause the Common Stock to
be registered under Section 12(g) of the Exchange Act on or before
the 60th
calendar day following the date hereof. Until the earliest of the
time that (i) no Purchaser owns Securities or (ii) the Warrants
have expired, the Company covenants to maintain the registration of
the Common Stock under Section 12(b) or 12(g) of the Exchange Act
and to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be
filed by the Company after the date hereof pursuant to the Exchange
Act even if the Company is not then subject to the reporting
requirements of the Exchange Act.

 

 

26

 

 

(b) At any time during
the period commencing from the six (6) month anniversary of the
date hereof and ending at such time that all of the Securities may
be sold without the requirement for the Company to be in compliance
with Rule 144(c)(1) and otherwise without restriction or limitation
pursuant to Rule 144, if the Company (i) shall fail for any reason
to satisfy the current public information requirement under Rule
144(c) or (ii) has ever been an issuer described in Rule
144(i)(1)(i) or becomes an issuer in the future, and the Company
shall fail to satisfy any condition set forth in Rule 144(i)(2) (a
“Public Information
Failure”) then, in addition to such Purchaser’s
other available remedies, the Company shall pay to a Purchaser, in
cash, as partial liquidated damages and not as a penalty, by reason
of any such delay in or reduction of its ability to sell the
Securities, an amount in cash equal to two percent (2.0%) of the
aggregate Subscription Amount of such Purchaser’s Securities
on the day of a Public Information Failure and on every thirtieth
(30th) day
(pro rated for periods totaling less than thirty days) thereafter
until the earlier of (a) the date such Public Information Failure
is cured and (b) such time that such public information is no
longer required  for the Purchasers to transfer the Underlying
Shares pursuant to Rule 144.  The payments to which a
Purchaser shall be entitled pursuant to this Section 4.2(b) are
referred to herein as “Public Information Failure
Payments.”  Public Information
Failure Payments shall
be paid on the earlier of (i) the last day of the calendar month
during which such Public Information Failure Payments are incurred and (ii) the
third (3rd) Business Day after
the event or failure giving rise to the Public Information
Failure Payments is
cured.  In the event the Company fails to make Public
Information Failure Payments in a timely manner, such
Public Information Failure Payments shall bear interest at
the rate of 1.5% per month (prorated for partial months) until paid
in full. Nothing herein shall limit such Purchaser’s right to
pursue actual damages for the Public Information Failure, and such
Purchaser shall have the right to pursue all remedies available to
it at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief.

 

4.3 Integration.
The Company shall not sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Securities in a manner that would require the
registration under the Securities Act of the sale of the Securities
or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading
Market such that it would require shareholder approval prior to the
closing of such other transaction unless shareholder approval is
obtained before the closing of such subsequent
transaction.

 

 

27

 

 

4.4 Securities
Laws Disclosure; Publicity. The
Company shall (a) by the Disclosure Time, issue a press release
disclosing the material terms of the transactions contemplated
hereby, and (b) file a Current Report on Form 8-K, including the
Transaction Documents as exhibits thereto, with the Commission
within the time required by the Exchange Act. From and after the
issuance of such press release, the Company represents to the
Purchasers that it shall have publicly disclosed all material,
non-public information delivered to any of the Purchasers by the
Company or any of its Subsidiaries, or any of their respective
officers, directors, employees or agents in connection with the
transactions contemplated by the Transaction Documents. In
addition, effective upon the issuance of such press release, the
Company acknowledges and agrees that any and all confidentiality or
similar obligations under any agreement, whether written or oral,
between the Company, any of its Subsidiaries or any of their
respective officers, directors, agents, employees or Affiliates on
the one hand, and any of the Purchasers or any of their Affiliates
on the other hand, shall terminate. The Company and each Purchaser
shall consult with each other in issuing any other press releases
with respect to the transactions contemplated hereby, and neither
the Company nor any Purchaser shall issue any such press release
nor otherwise make any such public statement without the prior
consent of the Company, with respect to any press release of any
Purchaser, or without the prior consent of each Purchaser, with
respect to any press release of the Company, which consent shall
not unreasonably be withheld or delayed, except if such disclosure
is required by law, in which case the disclosing party shall
promptly provide the other party with prior notice of such public
statement or communication. Notwithstanding the foregoing, the
Company shall not publicly disclose the name of any Purchaser, or
include the name of any Purchaser in any filing with the Commission
or any regulatory agency or Trading Market, without the prior
written consent of such Purchaser, except (a) as required by
federal securities law in connection with (i) any registration
statement contemplated by the Registration Rights Agreement and
(ii) the filing of final Transaction Documents with the Commission
and (b) to the extent such disclosure is required by law or Trading
Market regulations, in which case the Company
shall provide the Purchasers with prior notice of such disclosure
permitted under this clause (b).

 

4.5 Shareholder
Rights Plan. No claim will be
made or enforced by the Company or, with the consent of the
Company, any other Person, that any Purchaser is an
“Acquiring
Person” under any control
share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or similar anti-takeover
plan or arrangement in effect or hereafter adopted by the Company,
or that any Purchaser could be deemed to trigger the provisions of
any such plan or arrangement, by virtue of receiving Securities
under the Transaction Documents or under any other agreement
between the Company and the Purchasers.

 

4.6 Non-Public
Information. Except with
respect to the material terms and conditions of the transactions
contemplated by the Transaction Documents, which shall be disclosed
pursuant to Section 4.4, the Company covenants and agrees that
neither it, nor any other Person acting on its behalf will provide
any Purchaser or its agents or counsel with any information that
constitutes, or the Company reasonably believes constitutes,
material non-public information, unless prior thereto such
Purchaser shall have consented to the receipt of such information
and agreed with the Company to keep such information confidential.
The Company understands and confirms that each Purchaser shall be
relying on the foregoing covenant in effecting transactions in
securities of the Company. To the extent that the Company delivers
any material, non-public information to a Purchaser without such
Purchaser’s consent, the Company hereby covenants and agrees
that such Purchaser shall not have any duty of confidentiality to
the Company, any of its Subsidiaries, or any of their respective
officers, directors, agents, employees or Affiliates, or a duty to
the Company, any of its Subsidiaries or any of their respective
officers, directors, agents, employees or Affiliates not to trade
on the basis of, such material, non-public information, provided
that the Purchaser shall remain subject to applicable law. To the
extent that any notice provided pursuant to any Transaction
Document constitutes, or contains, material, non-public information
regarding the Company or any Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K. The Company understands and confirms
that each Purchaser shall be relying on the foregoing covenant in
effecting transactions in securities of the
Company.

 

 

28

 

 

4.7 Use of
Proceeds. Except as set forth
on Schedule 4.7
attached hereto, the Company shall use
the net proceeds from the sale of the Securities hereunder for
working capital purposes and shall not use such proceeds: (a) for
the satisfaction of any portion of the Company’s debt (other
than payment of trade payables in the ordinary course of the
Company’s business and prior practices), (b) for the
redemption of any Common Stock or Common Stock Equivalents, (c) for
the settlement of any outstanding litigation or (d) in violation of
FCPA or OFAC regulations.

 

4.8 Indemnification
of Purchasers. Subject to the
provisions of this Section 4.8, the Company will indemnify and hold
each Purchaser and its directors, officers, shareholders, members,
partners, employees and agents (and any other Persons with a
functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each
Person who controls such Purchaser (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and
the directors, officers, shareholders, agents, members, partners or
employees (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such
title or any other title) of such controlling persons (each, a
“Purchaser
Party”) harmless from any
and all losses, liabilities, obligations, claims, contingencies,
damages, costs and expenses, including all judgments, amounts paid
in settlements, court costs and reasonable attorneys’ fees
and costs of investigation that any such Purchaser Party may suffer
or incur as a result of or relating to (a) any breach of any of the
representations, warranties, covenants or agreements made by the
Company in this Agreement or in the other Transaction Documents or
(b) any action instituted against the Purchaser Parties in any
capacity, or any of them or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of such
Purchaser Party, with respect to any of the transactions
contemplated by the Transaction Documents (unless such action is
solely based upon a material breach of such Purchaser Party’s
representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser Party
may have with any such stockholder or any violations by such
Purchaser Party of state or federal securities laws or any conduct
by such Purchaser Party which is finally judicially determined to
constitute fraud, gross negligence or willful misconduct). If any
action shall be brought against any Purchaser Party in respect of
which indemnity may be sought pursuant to this Agreement, such
Purchaser Party shall promptly notify the Company in writing, and
the Company shall have the right to assume the defense thereof with
counsel of its own choosing reasonably acceptable to the Purchaser
Party. Any Purchaser Party shall have the right to employ separate
counsel in any such action and participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense
of such Purchaser Party except to the extent that (i) the
employment thereof has been specifically authorized by the Company
in writing, (ii) the Company has failed after a reasonable period
of time to assume such defense and to employ counsel or (iii) in
such action there is, in the reasonable opinion of counsel, a
material conflict on any material issue between the position of the
Company and the position of such Purchaser Party, in which case the
Company shall be responsible for the reasonable fees and expenses
of no more than one such separate counsel. The Company will not be
liable to any Purchaser Party under this Agreement (y) for any
settlement by a Purchaser Party effected without the
Company’s prior written consent, which shall not be
unreasonably withheld or delayed; or (z) to the extent, but only to
the extent that a loss, claim, damage or liability is attributable
to any Purchaser Party’s breach of any of the
representations, warranties, covenants or agreements made by such
Purchaser Party in this Agreement or in the other Transaction
Documents. The indemnification
required by this Section 4.8 shall be made by periodic payments of
the amount thereof during the course of the investigation or
defense, as and when bills are received or are incurred. The
indemnity agreements contained herein shall be in addition to any
cause of action or similar right of any Purchaser Party against the
Company or others and any liabilities the Company may be subject to
pursuant to law.

 

 

29

 

 

4.9 Reservation
of Common Stock. As of the date
hereof, the Company has reserved and the Company shall continue to
reserve and keep available at all times, free of preemptive rights,
a sufficient number of shares of Common Stock for the purpose of
enabling the Company to issue Warrant Shares pursuant to any
exercise of the Warrants, and Conversion Shares pursuant to any
conversion of the Preferred Stock.

 

4.10 Listing
of Common Stock. The Company
hereby agrees to use best efforts to maintain the listing or
quotation of the Common Stock on the Trading Market on which it is
currently listed, and concurrently with the Closing, the Company
shall apply to list or quote all of the Underlying Shares on such
Trading Market and promptly secure the listing of all of the
Underlying Shares on such Trading Market. The Company further
agrees, if the Company applies to have the Common Stock traded on
any other Trading Market, it will then include in such application
all of the Underlying Shares, and will take such other action as is
necessary to cause all of the Underlying Shares to be listed or
quoted on such other Trading Market as promptly as possible. The
Company will then take all action reasonably necessary to continue
the listing and trading of its Common Stock on a Trading Market and
will comply in all respects with the Company’s reporting,
filing and other obligations under the bylaws or rules of the
Trading Market. The Company agrees to maintain the eligibility of
the Common Stock for electronic transfer through the Depository
Trust Company or another established clearing corporation,
including, without limitation, by timely payment of fees to the
Depository Trust Company or such other established clearing
corporation in connection with such electronic transfer. In
addition, the Company shall hold a special meeting of shareholders
(which may also be at the annual meeting of shareholders) on or
before December 15, 2019 for the purpose of obtaining Shareholder
Approval, with the recommendation of the Company’s Board of
Directors that such proposal be approved, and the Company shall
solicit proxies from its shareholders in connection therewith in
the same manner as all other management proposals in such proxy
statement and all management-appointed proxyholders shall vote
their proxies in favor of such proposal. The Company shall use its
reasonable best efforts to obtain such Shareholder Approval. If the
Company does not obtain Shareholder Approval at the first meeting,
the Company shall call a meeting every two months thereafter to
seek Shareholder Approval until the earlier of the date Shareholder
Approval is obtained or the Preferred Stock is no longer
outstanding.

 

4.11 Subsequent
Equity Sales.

 

(a)            From
the date hereof until ninety (90) days after the Effective Date,
neither the Company nor any Subsidiary shall issue, enter into any
agreement to issue or announce the issuance or proposed issuance of
any shares of Common Stock or Common Stock
Equivalents.

 

(b) Unless Shareholder
Approval has been obtained and deemed effective, neither the
Company nor any Subsidiary shall make any issuance whatsoever of
Common Stock or Common Stock Equivalents. Any Purchaser shall be
entitled to obtain injunctive relief against the Company to
preclude any such issuance, which remedy shall be in addition to
any right to collect damages. Notwithstanding the foregoing, this
provision shall not apply to Common Stock Equivalents issued in
connection with the Cerecor Transaction.

 

 

30

 

 

(c) Notwithstanding the
foregoing, Section 4.11(a) shall not apply in respect of an Exempt
Issuance.

 

4.12 Equal
Treatment of Purchasers. No
consideration (including any modification of any Transaction
Document) shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of the
Transaction Documents unless the same consideration is also offered
to all of the parties to the Transaction Documents. For
clarification purposes, this provision constitutes a separate right
granted to each Purchaser by the Company and negotiated separately
by each Purchaser, and is intended for the Company to treat the
Purchasers as a class and shall not in any way be construed as the
Purchasers acting in concert or as a group with respect to the
purchase, disposition or voting of Securities or
otherwise.

 

4.13 Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly with
the other Purchasers, covenants that neither it nor any Affiliate
acting on its behalf or pursuant to any understanding with it will
execute any purchases or sales, including Short Sales of any of the
Company’s securities during the period commencing with the
execution of this Agreement and ending at such time that the
transactions contemplated by this Agreement are first publicly
announced pursuant to the initial press release as described in
Section 4.4.  Each Purchaser, severally and not jointly with
the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed
by the Company pursuant to the initial press release as described
in Section 4.4, such Purchaser will maintain the confidentiality of
the existence and terms of this transaction and the information
included in the Disclosure Schedules.  Notwithstanding the
foregoing and notwithstanding anything contained in this Agreement
to the contrary, the Company expressly acknowledges and agrees that
(i) no Purchaser makes any representation, warranty or covenant
hereby that it will not engage in effecting transactions in any
securities of the Company after the time that the transactions
contemplated by this Agreement are first publicly announced
pursuant to the initial press release as described in Section 4.4,
(ii) no Purchaser shall be restricted or prohibited from effecting
any transactions in any securities of the Company in accordance
with applicable securities laws from and after the time that the
transactions contemplated by this Agreement are first publicly
announced pursuant to the initial press release as described in
Section 4.4 and (iii) no Purchaser shall have any duty of
confidentiality or duty not to trade in the securities of the
Company to the Company or its Subsidiaries after the issuance of
the initial press release as described in Section 4.4. 
Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser’s assets
and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other
portions of such Purchaser’s assets, the covenant set forth
above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision
to purchase the Securities covered by this
Agreement.

 

4.14 Form
D; Blue Sky Filings. The
Company agrees to timely file a Form D with respect to the
Securities as required under Regulation D and to provide a copy
thereof, promptly upon request of any Purchaser. The Company shall
take such action as the Company shall reasonably determine is
necessary in order to obtain an exemption for, or to qualify the
Securities for, sale to the Purchasers at the Closing under
applicable securities or “Blue Sky” laws of the states
of the United States, and shall provide evidence of such actions
promptly upon request of any Purchaser.

 

 

31

 

 

4.15 Conversion
and Exercise Procedures. Each
of the form of Notice of Exercise included in the Warrants and the
form of Notice of Conversion included in the Certificate of
Designation set forth the totality of the procedures required of
the Purchasers in order to exercise the Warrants or convert the
Preferred Stock. Without limiting the preceding sentences, no
ink-original Notice of Exercise or Notice of Conversion shall be
required, nor shall any medallion guarantee (or other type of
guarantee or notarization) of any Notice of Exercise or Notice of
Conversion form be required in order to exercise the Warrants or
convert the Preferred Stock. No additional legal opinion, other
information or instructions shall be required of the Purchasers to
exercise their Warrants or convert their Preferred Stock. The
Company shall honor exercises of the Warrants and conversions of
the Preferred Stock and shall deliver Underlying Shares in
accordance with the terms, conditions and time periods set forth in
the Transaction Documents.

 

4.16 Acknowledgment
of Dilution. The Company
acknowledges that the issuance of the Securities may result in
dilution of the outstanding shares of Common Stock, which dilution
may be substantial under certain market conditions. The Company
further acknowledges that its obligations under the Transaction
Documents, including, without limitation, its obligation to issue
the Underlying Shares pursuant to the Transaction Documents, are
unconditional and absolute and not subject to any right of set off,
counterclaim, delay or reduction, regardless of the effect of any
such dilution or any claim the Company may have against any
Purchaser and regardless of the dilutive effect that such issuance
may have on the ownership of the other stockholders of the
Company.

 

ARTICLE V.

 MISCELLANEOUS

 

5.1 Termination. 
This Agreement may be terminated by any Purchaser, as to such
Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other
Purchasers, by written notice to the other parties, if the Closing
has not been consummated on or before the fifth
(5th)
Trading Day following the date hereof; provided,
however,
that no such termination will affect the right of any party to sue
for any breach by any other party (or parties).

 

5.2 Fees
and Expenses. Except as
expressly set forth in the Transaction Documents to the contrary,
each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement.
The Company shall pay all Transfer Agent fees (including, without
limitation, any fees required for same-day processing of any
instruction letter delivered by the Company and any conversion or
exercise notice delivered by a Purchaser), stamp taxes and other
taxes and duties levied in connection with the delivery of any
Securities to the Purchasers.

 

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

 

 

32

 

 

5.4 Notices.
Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective on the earliest of: (a) the time of
transmission, if such notice or communication is delivered via
facsimile at the facsimile number or email attachment at the email
address as set forth on the signature pages attached hereto at or
prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the
next Trading Day after the time of transmission, if such notice or
communication is delivered via facsimile at the facsimile number or
email attachment at the email address as set forth on the signature
pages attached hereto on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (c) the
second (2nd)
Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service or (d) upon actual
receipt by the party to whom such notice is required to be given.
The address for such notices and communications shall be as set
forth on the signature pages attached hereto. To the extent that
any notice provided pursuant to any Transaction Document
constitutes, or contains, material, non-public information
regarding the Company or any Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K.

 

5.5 Amendments;
Waivers. No provision of this
Agreement may be waived, modified, supplemented or amended except
in a written instrument signed, in the case of an amendment, by the
Company and Purchasers which purchased at least 50.1% in interest
of the Securities based on the initial Subscription Amounts
hereunder or, in the case of a waiver, by the party against whom
enforcement of any such waived provision is sought, provided that
if any amendment, modification or waiver disproportionately and
adversely impacts a Purchaser (or group of Purchasers), the consent
of such disproportionately impacted Purchaser (or group of
Purchasers) shall also be required. No waiver of any default with
respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future
or a waiver of any subsequent default or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right. Any proposed amendment or
waiver that disproportionately, materially and adversely affects
the rights and obligations of any Purchaser relative to the
comparable rights and obligations of the other Purchasers shall
require the prior written consent of such adversely affected
Purchaser. Any amendment effected in accordance with this Section
5.5 shall be binding upon each Purchaser and holder of Securities
and the Company.

 

5.6 Headings.
The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.

 

5.7 Successors
and Assigns. This Agreement
shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The Company may not assign
this Agreement or any rights or obligations hereunder without the
prior written consent of each Purchaser (other than by merger). Any
Purchaser may assign any or all of its rights under this Agreement
to any Person to whom such Purchaser assigns or transfers any
Securities, provided that such transferee agrees in writing to be
bound, with respect to the transferred Securities, by the
provisions of the Transaction Documents that apply to the
“Purchasers.”

 

 

33

 

 

5.8 No
Third-Party Beneficiaries. The
Placement Agent shall be a third party beneficiary of the
representations and warranties of the Company in Section 3.1 and
the representations and warranties of the Purchasers in Section
3.2. This Agreement is intended for the benefit of the parties
hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.8
and this Section 5.8.

 

5.9 Governing
Law. All questions concerning
the construction, validity, enforcement and interpretation of the
Transaction Documents shall be governed by and construed and
enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof.
Each party agrees that all legal Proceedings concerning the
interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, partners, members,
employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of New York. Each party
hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, Borough
of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of any
of the Transaction Documents), and hereby irrevocably waives, and
agrees not to assert in any Action or Proceeding, any claim that it
is not personally subject to the jurisdiction of any such court,
that such Action or Proceeding is improper or is an inconvenient
venue for such Proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in
any such Action or Proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to
it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by
law. If any party shall commence an Action or Proceeding to enforce
any provisions of the Transaction Documents, then, in addition to
the obligations of the Company under Section 4.8, the prevailing
party in such Action or Proceeding shall be reimbursed by the
non-prevailing party for its reasonable attorneys’ fees and
other costs and expenses incurred with the investigation,
preparation and prosecution of such Action or
Proceeding.

 

5.10 Survival.
The representations and warranties contained herein shall survive
the Closing and the delivery of the Securities.

 

5.11 Execution.
This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each party and delivered to each other party, it being
understood that the parties need not sign the same counterpart. In
the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a “.pdf” format data file,
such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed)
with the same force and effect as if such facsimile or
“.pdf” signature page were an original
thereof.

 

 

34

 

 

5.12 Severability.
If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their
commercially reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It
is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or
unenforceable.

 

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

 

5.14 Replacement
of Securities. If any
certificate or instrument evidencing any Securities is mutilated,
lost, stolen or destroyed, the Company shall issue or cause to be
issued in exchange and substitution for and upon cancellation
thereof (in the case of mutilation), or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft
or destruction. The applicant for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party
costs (including customary indemnity) associated with the issuance
of such replacement Securities.

 

5.15 Remedies.
In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of
the Purchasers and the Company will be entitled to specific
performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agree to waive and not to assert
in any Action for specific performance of any such obligation the
defense that a remedy at law would be adequate.

 

5.16 Payment
Set Aside. To the extent that
the Company makes a payment or payments to any Purchaser pursuant
to any Transaction Document or a Purchaser enforces or exercises
its rights thereunder, and such payment or payments or the proceeds
of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or
preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the
Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the
extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.

 

 

35

 

 

5.17 Independent
Nature of Purchasers’ Obligations and
Rights. The obligations of each
Purchaser under any Transaction Document are several and not joint
with the obligations of any other Purchaser, and no Purchaser shall
be responsible in any way for the performance or non-performance of
the obligations of any other Purchaser under any Transaction
Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Purchaser pursuant hereto or
thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Purchasers are in any way
acting in concert or as a group with respect to such obligations or
the transactions contemplated by the Transaction Documents. Each
Purchaser shall be entitled to independently protect and enforce
its rights including, without limitation, the rights arising out of
this Agreement or out of the other Transaction Documents, and it
shall not be necessary for any other Purchaser to be joined as an
additional party in any Proceeding for such purpose. Each Purchaser
has been represented by its own separate legal counsel in its
review and negotiation of the Transaction Documents. For reasons of
administrative convenience only, each Purchaser and its respective
counsel have chosen to communicate with the Company through EGS.
EGS does not represent any of the Purchasers and only represents
the Placement Agent. The Company has elected to provide all
Purchasers with the same terms and Transaction Documents for the
convenience of the Company and not because it was required or
requested to do so by any of the Purchasers. It is expressly
understood and agreed that each provision contained in this
Agreement and in each other Transaction Document is between the
Company and a Purchaser, solely, and not between the Company and
the Purchasers collectively and not between and among the
Purchasers.

 

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

 

5.19 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.

 

5.20 Construction.
The parties agree that each of them and/or their respective counsel
have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the
Transaction Documents or any amendments thereto. In addition, each
and every reference to share prices and shares of Common Stock in
any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and
other similar transactions of the Common Stock that occur after the
date of this Agreement.

 

5.21 WAIVER
OF JURY TRIAL.
IN ANY
ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY
PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND
INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY
WAIVES FOREVER TRIAL BY JURY.

 

 

(Signature Pages Follow)

 

 

 

36

 

IN
WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective
authorized signatories as of the date first indicated
above.

 

 

	

AYTU BIOSCIENCE, INC.

 

 

	

Address
for Notice:

373
Inverness Parkway, Suite 306

Attn:
David Green

Englewood,
CO 81112

E-Mail:
dgreen@aytubio.com

Fax:

	

By:__________________________________________

     Name:

     Title:

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

	

 

E-Mail:

Fax:

	

 

 

Dorsey
& Whitney LLP

Attn:
Nolan Taylor

111
South Main Street, 21st Floor

Salt
Lake City, UT 84111

 

 

	
 

 

 

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE
PAGE FOR PURCHASER FOLLOWS]

 

 

37

 

 

[PURCHASER
SIGNATURE PAGES TO AYTU SECURITIES PURCHASE AGREEMENT]

 

IN
WITNESS WHEREOF, the undersigned have caused this Securities
Purchase Agreement to be duly executed by their respective
authorized signatories as of the date first indicated
above.

 

Name of
Purchaser:
________________________________________________________

Signature of Authorized Signatory of
Purchaser: _________________________________

Name of
Authorized Signatory:
_______________________________________________

Title
of Authorized Signatory:
________________________________________________

Email
Address of Authorized Signatory:
_________________________________________

Facsimile Number of
Authorized Signatory:
__________________________________________

Address
for Notice to Purchaser:

 

 

Address
for Delivery of Securities to Purchaser (if not same as address for
notice):

 

 

Subscription
Amount: $_________________

 

Warrant
Shares: _________________

 

EIN
Number: ____________________

 

 

38

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