Document:

Exhibit 10.1

 

PLACEMENT AGENCY AGREEMENT

 

 

 

Dawson James Securities,
Inc.

1 North Federal Highway

Boca Raton, Florida 33432

 

November 26, 2019

 

Ladies and Gentlemen:

 

This letter (this “Agreement”)
constitutes the agreement between Sonoma Pharmaceuticals, Inc., a Delaware corporation (the “Company”) and Dawson
James Securities, Inc. (“Dawson”) pursuant to which Dawson shall serve as the placement agent (the “Placement
Agent”) (the “Services”), for the Company, on a reasonable “best efforts” basis, in connection
with the proposed offer and placement (the “Offering”) by the Company of its Securities (as defined Section
3 of this Agreement). The Company expressly acknowledges and agrees that Dawson’s obligations hereunder are on a reasonable
“best efforts” basis only and that the execution of this Agreement does not constitute a commitment by Dawson to purchase
the Securities and does not ensure the successful placement of the Securities or any portion thereof or the success of Dawson placing
the Securities.

 

		1.	Appointment of Dawson James Securities, Inc. as Exclusive Placement Agent. 

 

On the basis of the
representations, warranties, covenants and agreements of the Company herein contained, and subject to all the terms and conditions
of this Agreement, the Company hereby appoints the Placement Agent as its exclusive placement agent in connection with a distribution
of its Securities to be offered and sold by the Company pursuant to a registration statement filed under the Securities Act of
1933, as amended (the “Securities Act”) on Form S-3 (File No. 333-221477), and Dawson agrees to act as the Company’s
exclusive Placement Agent. Pursuant to this appointment, the Placement Agent will solicit offers for the purchase of or attempt
to place all or part of the Securities of the Company in the proposed Offering. Until the final closing or earlier upon termination
of this Agreement pursuant to Section 5 hereof, the Company shall not, without the prior written consent of the Placement Agent,
solicit or accept offers to purchase the Securities other than through the Placement Agent. The Company acknowledges that the Placement
Agent will act as an agent of the Company and use its reasonable “best efforts” to solicit offers to purchase the Securities
from the Company on the terms, and subject to the conditions, set forth in the Prospectus (as defined below). The Placement Agent
shall use commercially reasonable efforts to assist the Company in obtaining performance by each Purchaser whose offer to purchase
Securities has been solicited by the Placement Agent, but the Placement Agent shall not, except as otherwise provided in this Agreement,
be obligated to disclose the identity of any potential purchaser or have any liability to the Company in the event any such purchase
is not consummated for any reason. Under no circumstances will the Placement Agent be obligated to underwrite or purchase any Securities
for its own account and, in soliciting purchases of the Securities, the Placement Agent shall act solely as an agent of the Company.
The Services provided pursuant to this Agreement shall be on an “agency” basis and not on a “principal”
basis.

 

The Placement Agent
will solicit offers for the purchase of the Securities in the Offering at such times and in such amounts as the Placement Agent
deems advisable. The Company shall have the sole right to accept offers to purchase Securities and may reject any such offer, in
whole or in part. The Placement Agent may retain other brokers or dealers to act as sub-agents on its behalf in connection with
the Offering and may pay any sub-agent a solicitation fee with respect to any Securities placed by it. The Company and Placement
Agent shall negotiate the timing and terms of the Offering and acknowledge that the Offering and the provision of Placement Agent
services related to the Offering are subject to market conditions and the receipt of all required related clearances and approvals.

 

 

 

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		2.	Fees; Expenses; Other Arrangements.

 

A.              
Placement Agent’s Fee. As compensation for services rendered, the Company shall pay to the Placement Agent
in cash by wire transfer in immediately available funds to an account or accounts designated by the Placement Agent an amount (the
“Placement Fee”) equal to eight percent (8.0%) of the aggregate gross proceeds received by the Company from
the sale of the Securities, at the closing (the “Closing” and the date on which the Closing occurs, the “Closing
Date”); and the Company shall issue to the Placement Agent or its designees at the Closing five-year warrants to purchase
such number of Shares (as defined in Section 3) equal to 5.0% of the Shares sold in this Offering at an exercise price of $4.37
(125% of the price per Share), which warrants shall be exercisable at any time, during the period commencing six months from the
date of the Offering (the “Placement Agent Warrant” and together with the shares of Common Stock underlying
the Placement Agent Warrant, the “Placement Agent Securities”). The Placement Agent may deduct from the net
proceeds of the Offering payable to the Company on the Closing Date the Placement Fee set forth herein to be paid by the Company
to the Placement Agent.

 

B.              
Offering Expenses. The Company will be responsible for and will pay all expenses relating to the Offering, including,
without limitation, (a) all filing fees and expenses relating to the registration of the Securities with the Commission; (b) all
FINRA Public Offering filing fees; (c) all fees and expenses relating to the listing of the Company’s common stock on the
NASDAQ Stock Market; (d) all fees, expenses and disbursements relating to the registration or qualification of the Securities under
the “blue sky” securities laws of such states and other jurisdictions as Dawson may reasonably designate (including,
without limitation, all filing and registration fees, and the reasonable fees and disbursements of “blue sky” counsel);
(e) all fees, expenses and disbursements relating to the registration, qualification or exemption of the Securities under the securities
laws of such foreign jurisdictions as Dawson may reasonably designate; (f) the costs of all mailing and printing of the Offering
documents; (g) transfer and/or stamp taxes, if any, payable upon the transfer of Securities from the Company to Investors; (h)
the fees and expenses of the Company’s accountants; and (i) “road show” expenses, diligence expenses and legal
fees of Dawson’s counsel not to exceed in the aggregate $50,000. The Placement Agent may deduct from the net proceeds of
the Offering payable to the Company on the Closing Date the expenses set forth herein to be paid by the Company to the Placement
Agent, provided, however, that in the event that the Offering is terminated, the Company agrees to reimburse the Placement Agent
to the extent required by Section 5 hereof.

 

C.              
Tail Financing; Right of First Refusal. The Placement Agent shall be entitled to fees per Section 2.A. of this Agreement
with respect to any public or private offering or other financing or capital-raising transaction of any kind (“Tail Financing”)
to the extent that such Tail Financing is provided to the Company by any investors that the Placement Agent has introduced to the
Company during the term of the Placement Agent’s engagement for this offering, as well as any investors that participated
in the Offering, if such Tail Financing is consummated at any time within the 6-month period following the Closing Date. If the
Offering is completed, for a period of six months from the Closing Date, the Company agrees that Dawson has the right of first
refusal to act as lead managing underwriter or sole book runner, or as lead placement agent, for any and all future equity, equity-linked
or convertible debt (excluding: (i) revolving loan bank debt, or (ii) at the market sales made pursuant to the At Market Issuance
Sales Agreement between the Company and B. Riley FBR, Inc. dated December 8, 2017) offerings during such period, of the Company,
or any successor to or any subsidiary of the Company.

 

		3.	Description of the Offering. 

 

The
Securities to be offered directly to various investors (each, an “Investor” or “Purchaser”
and, collectively, the “Investors” or the “Purchasers”) in the Offering shall consist of
up to 448,949 shares of the Company’s common stock (“Common Stock”
or “Shares” or “Securities”). The purchase price for one Share shall be $3.50 per
Share (the “Purchase Price”). If the Company shall default in its obligations to deliver Securities to a Purchaser
whose offer it has accepted and who has tendered payment, the Company shall indemnify and hold the Placement Agent harmless against
any loss, claim, damage or expense arising from or as a result of such default by the Company under this Agreement. 

 

		4.	Delivery and Payment; Closing.

 

Settlement of the Securities
purchased by an Investor shall be made by 5:00 p.m. on the Closing Date by wire transfer from the Placement Agent in federal (same
day) funds, payable to the order of the Company after electronic delivery of the Shares via the DWAC system (or such other method
agreed to by the parties) in accordance with the Placement Agent’s instructions as requested in writing prior to the Closing
Date. The term “Business Day” means any day other than a Saturday, a Sunday or a legal holiday or a day on which
banking institutions are authorized or obligated by law to close in New York, New York.

 

 

 

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The Closing shall occur
at such place as shall be agreed upon by the Placement Agent and the Company. In the absence of an agreement to the contrary, each
Closing shall take place at the offices of Schiff Hardin LLP, 901 K Street, NW, Suite 700, Washington, DC 20001. Deliveries of
the documents with respect to the purchase of the Securities, if any, shall be made at the offices of Schiff Hardin, LLP, 901 K
Street, NW, Suite 700, Washington, DC 20001 on the Closing Date. All actions taken at a Closing shall be deemed to have occurred
simultaneously.

 

		5.	Term and Termination of Agreement. 

 

The term of this Agreement
will commence upon the execution of this Agreement and will terminate at the earlier of the Closing of the Offering or 11:59 p.m.
(New York Time) on the fifth Business Day after the date hereof. Notwithstanding anything to the contrary contained herein, any
provision in this Agreement concerning or relating to confidentiality, indemnification, contribution, advancement, the Company’s
representations and warranties and the Company’s obligations to pay fees and reimburse expenses will survive any expiration
or termination of this Agreement. If any condition specified in Section 8 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 those portions of this Agreement
specified in Section 19 shall at all times be effective and shall survive such termination. Notwithstanding anything to the
contrary in this Agreement, in the event that this Agreement shall not be carried out for any reason whatsoever, within the time
specified herein or any extensions thereof pursuant to the terms herein, the Company shall be obligated to pay to the Placement
Agent the expenses provided for in Section 2.B. above and upon demand the Company shall pay the full amount thereof to the Placement
Agent.

 

		6.	Permitted Acts. 

 

Nothing in this Agreement
shall be construed to limit the ability of the Placement Agent, its officers, directors, employees, agents, associated persons
and any individual or entity “controlling,” controlled by,” or “under common control” with the Placement
Agent (as those terms are defined in Rule 405 under the Securities Act) to conduct its business including without limitation the
ability to pursue, investigate, analyze, invest in, or engage in investment banking, financial advisory or any other business relationship
with any 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.

 

		7.	Representations, Warranties and Covenants of the Company.

 

As of the date and
time of the execution of this Agreement, the Closing Date and the Initial Sale Time (as defined herein), the Company represents,
warrants and covenants to the Placement Agent, other than as disclosed in any of its filings with the Securities and Exchange Commission
(the “Commission”), that:

 

A.              
Registration Matters.

 

		i.	The Company has filed with the Commission a registration statement on Form S-3 (File No. 333-221477)
including a related prospectus, for the registration of certain securities (the “Shelf Securities”), including
the Shares, under the Securities Act and the rules and regulations thereunder (the “Securities Act Regulations”).
The registration statement has been declared effective under the Securities Act by the Commission. The “Registration Statement,”
as of any time, means such registration statement as amended by any post-effective amendments thereto to such time, including the
exhibits and any schedules thereto at such time, the documents incorporated or deemed to be incorporated by reference therein at
such time pursuant to Form S-3 under the Securities Act and the documents otherwise deemed to be a part thereof as of such time
pursuant to Rule 430A (“Rule 430A”) or Rule 430B under the Securities Act Regulations (“Rule 430B”);
provided, however, that the “Registration Statement” without reference to a time means such registration statement
as amended by any post-effective amendments thereto as of the time of the first contract of sale for the Securities, which time
shall be considered the “new effective date” of such registration statement with respect to the Securities within the
meaning of paragraph (f)(2) of Rule 430B, including the exhibits and schedules thereto as of such time, the documents incorporated
or deemed incorporated by reference therein at such time pursuant to Form S-3 under the Securities Act and the documents otherwise
deemed to be a part thereof as of such time pursuant to Rule 430A or Rule 430B. Any registration statement filed pursuant to Rule
462(b) of the Securities Act Regulations is hereinafter called the “Rule 462(b) Registration Statement,” and
after such filing the term “Registration Statement” shall include the Rule 462(b) Registration Statement. The prospectus
covering the Shelf Securities in the form first used to confirm sales of the Securities (or in the form first made available to
the Placement Agent by the Company to meet requests of purchasers pursuant to Rule 173 under the Securities Act) is hereinafter
referred to as the “Base Prospectus.” The Base Prospectus, as supplemented by the prospectus supplement specifically
related to the Securities in the form first used to confirm sales of the Securities (or in the form first made available to the
Placement Agent by the Company to meet requests of purchasers pursuant to Rule 173 under the Securities Act), is hereinafter referred
to, collectively, as the “Prospectus,” and the term “Preliminary Prospectus” means any preliminary
form of the Prospectus, including any preliminary prospectus supplement specifically related to the Securities filed with the Commission
by the Company with the consent of the Placement Agent.

 

 

 

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		ii.	All references in this Agreement to financial statements and schedules and other information which
is “contained,” “included” or “stated” (or other references of like import) in the Registration
Statement, any Preliminary Prospectus or the Prospectus shall be deemed to include all such financial statements and schedules
and other information incorporated or deemed incorporated by reference in the Registration Statement, such Preliminary Prospectus
or the Prospectus, as the case may be, prior to the execution and delivery of this Agreement; and all references in this Agreement
to amendments or supplements to the Registration Statement, any Preliminary Prospectus or the Prospectus shall be deemed to include
the filing of any document under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the
rules and regulations thereunder (the “Exchange Act Regulations”), incorporated or deemed to be incorporated
by reference in the Registration Statement, such Preliminary Prospectus or the Prospectus, as the case may be, at or after the
execution and delivery of this Agreement.

 

		iii.	The term “Disclosure Package” means (i) the Preliminary Prospectus, as most
recently amended or supplemented immediately prior to the Initial Sale Time (as defined herein), and (ii) the Issuer Free Writing
Prospectuses (as defined below), if any, identified in Schedule I hereto. For purposes of clarity, the Company is not eligible
to use a Free Writing Prospectus.

 

		iv.	The term “Issuer Free Writing Prospectus” means any issuer free writing prospectus,
as defined in Rule 433 of the Securities Act Regulations. The term “Free Writing Prospectus” means any free
writing prospectus, as defined in Rule 405 of the Securities Act Regulations.

 

		v.	Any Preliminary Prospectus when filed with the Commission, and the Registration Statement as of
each effective date and as of the date hereof, complied or will comply, and the Prospectus and any further amendments or supplements
to the Registration Statement, any Preliminary Prospectus or the Prospectus will, when they become effective or are filed with
the Commission, as the case may be, comply, in all material respects, with the requirements of the Securities Act and the Securities
Act Regulations; and the documents incorporated by reference in the Registration Statement, any Preliminary Prospectus or the Prospectus
complied, and any further documents so incorporated will comply, when filed with the Commission, in all material respects to the
requirements of the Exchange Act and Exchange Act Regulations.

 

		vi.	The issuance by the Company of the Securities has been registered under the Securities Act. The
Securities will be issued pursuant to the Registration Statement and each of the Securities will be freely transferable and freely
tradable by each of the Investors without restriction, unless otherwise restricted by applicable law or regulation. The Company
is eligible to use Form S-3 under the Securities Act and it meets the transaction requirements with respect to the aggregate market
value of the Shares being sold pursuant to this offering and during the twelve (12) months prior to this offering, as set forth
in General Instruction I.B.6 of Form S-3. As of the date hereof and as of the Closing Date, the total aggregate amount of shares
of Common Stock sold by the Company pursuant to the At Market Issuance Sales Agreement between the Company and B. Riley FBR, Inc.
dated December 8, 2017 is and will be $2,032,566, of which $0 has been sold within the 12-month period referenced in General Instruction
I.B.6 of Form S-3.

 

B.              
Stock Exchange Listing. The Common Stock is approved for listing on the NASDAQ Capital Market (the “Exchange”)
and the Company has taken no action designed to, or likely to have the effect of, delisting the shares of Common Stock from the
Exchange, nor has the Company received any notification that the Exchange is contemplating terminating such listing.

 

C.              
No Stop Orders, etc. Neither the Commission nor, to the Company's knowledge, any state regulatory authority has issued
any order preventing or suspending the use of the Registration Statement, any Preliminary Prospectus or the Prospectus or has instituted
or, to the Company's knowledge, threatened to institute, any proceedings with respect to such an order. The Company has complied
with each request (if any) from the Commission for additional information.

 

 

 

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D.              
Subsidiaries. The Company's subsidiaries have been duly incorporated and are validly existing as entities in good
standing under the laws of jurisdictions of their respective organization, with power and authority to own, lease and operate their
respective properties and conduct their respective businesses as described in the Preliminary Prospectus, and have been duly qualified
as foreign corporations for the transaction of business and are in good standing under the laws of each other jurisdictions in
which they own or lease properties or conduct any business so as to require such qualification, except where the failure so to
qualify or be in good standing would not have a Material Adverse Change (as defined below); all of the issued and outstanding capital
stock (or other ownership interests) of such subsidiaries has been duly and validly authorized and issued, is fully paid and non-assessable
and is owned, directly and indirectly, by the Company free and clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity. Unless otherwise set forth, all references in this Section 7 to the “Company” shall include references
to all such subsidiaries.

 

E.               
Disclosures in Registration Statement.

 

		i.	Compliance with Securities Act and 10b-5 Representation. 

 

(a)             
Each of the Registration Statement and any post-effective amendment thereto, at the time it became effective, complied in
all material respects with the requirements of the Securities Act and the Securities Act Regulations. The Preliminary Prospectus
and the Prospectus, at the time each was or will be filed with the Commission, complied or will comply in all material respects
with the requirements of the Securities Act and the Securities Act Regulations. The Preliminary Prospectus delivered to the Placement
Agent for use in connection with this Offering and the Prospectus was or will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

 

(b)             
None of the Registration Statement, any amendment thereto, or the Preliminary Prospectus, as of 9:00 a.m. (Eastern time)
on November 26, 2019 (the “Initial Sale Time”), and at the Closing Date, contained, contains or will contain
an untrue statement of a material fact or omitted, omits or will omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply
to statements made or statements omitted in reliance upon and in conformity with written information furnished to the Company with
respect to the Placement Agent by the Placement Agent expressly for use in the Registration Statement or any amendment thereof
or supplement thereto. The parties acknowledge and agree that such information provided by or on behalf of any Placement Agent
consists solely of the following disclosure contained in the following paragraphs in the “Plan of Distribution” section
of the Prospectus: (i) the name of the Placement Agent, and (ii) the information under the subsection “Fees and Expenses”
(the “Placement Agent’s Information”).

 

(c)             
The Disclosure Package, as of the Initial Sale Time and at the Closing Date, did not, does not and will not include an untrue
statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and each Issuer Free Writing Prospectus does not conflict with the
information contained in the Registration Statement, any Preliminary Prospectus, or the Prospectus, and each such Issuer Free Writing
Prospectus, as supplemented by and taken together with the Preliminary Prospectus as of the Initial Sale Time, did not include
an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall
not apply to statements made or statements omitted in reliance upon and in conformity with written information furnished to the
Company with respect to the Placement Agent by the Placement Agent expressly for use in the Registration Statement, the Preliminary
Prospectus or the Prospectus or any amendment thereof or supplement thereto. The parties acknowledge and agree that such information
provided by or on behalf of any Placement Agent consists solely of the Placement Agent’s Information; and

 

(d)             
 Neither the Prospectus nor any amendment or supplement thereto, as of its issue date, at the time of any filing with the
Commission pursuant to Rule 424(b), or at the Closing Date, included, includes or will include an untrue statement of a material
fact or omitted, omits or will omit to state a material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not
apply to the Placement Agent's Information.

 

 

 

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		ii.	Disclosure of Agreements. The agreements and documents described in the Registration Statement,
the Disclosure Package and the Prospectus conform in all material respects to the descriptions thereof contained therein and there
are no agreements or other documents required by the Securities Act and the Securities Act Regulations to be described in the Registration
Statement, the Disclosure Package and the Prospectus or to be filed with the Commission as exhibits to the Registration Statement,
that have not been so described or filed. Each agreement or other instrument (however characterized or described) to which the
Company is a party or by which it is or may be bound or affected and (i) that is referred to in the Registration Statement, the
Disclosure Package and the Prospectus, and (ii) is material to the Company's business, has been duly authorized and validly executed
by the Company, is in full force and effect in all material respects and is enforceable against the Company and, to the Company's
knowledge, the other parties thereto, in accordance with its terms, except (x) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights generally, (y) as enforceability of any indemnification
or contribution provision may be limited under the federal and state securities laws, and (z) that the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought. None of such agreements or instruments has been assigned by the Company, and
neither the Company nor, to the Company's knowledge, any other party is in default thereunder and, to the Company's knowledge,
no event has occurred that, with the lapse of time or the giving of notice, or both, would constitute a default thereunder, except
as disclosed in the Registration Statement, the Disclosure Package and the Prospectus. To the Company's knowledge, performance
by the Company of the material provisions of such agreements or instruments will not result in a violation of any existing applicable
law, rule, regulation, judgment, order or decree of any governmental agency or court, domestic or foreign, having jurisdiction
over the Company or any of its assets or businesses (each, a “Governmental Entity”), including, without limitation,
those relating to environmental laws and regulations.

 

		iii.	Prior Securities Transactions. For the past three completed fiscal years through the date
hereof, no securities of the Company have been sold by the Company or, to the Company’s knowledge, by or on behalf of, or
for the benefit of, any person or persons controlling, controlled by or under common control with the Company, except as disclosed
in the Registration Statement, the Disclosure Package and the Preliminary Prospectus or, with respect to parties other than the
Company, other filings by such other persons with the Commission.

 

		iv.	Regulations. The disclosures in the Registration Statement, the Disclosure Package and the
Prospectus concerning the effects of federal, state, local and all foreign regulation on the Offering and the Company's business
as currently contemplated are correct in all material respects and no other such regulations are required to be disclosed in the
Registration Statement, the Disclosure Package and the Prospectus which are not so disclosed.

 

		v.	Changes After Dates in Registration Statement.

 

(a)             
No Material Adverse Change. Since the respective dates as of which information is given in the Registration Statement,
the Disclosure Package and the Prospectus, except as otherwise specifically stated therein: (i) there has been no material adverse
change in the financial position or results of operations of the Company, nor any change or development that, singularly or in
the aggregate, would involve a material adverse change, in or affecting the condition (financial or otherwise), results of operations,
business, assets or prospects of the Company (a “Material Adverse Change”); (ii) there have been no material
transactions entered into by the Company, other than as contemplated pursuant to this Agreement; and (iii) no officer or director
of the Company has resigned from any position with the Company.

 

(b)             
Recent Securities Transactions, etc. Subsequent to the respective dates as of which information is given in the Registration
Statement, the Disclosure Package and the Prospectus, and except as may otherwise be indicated or contemplated herein or disclosed
in the Registration Statement, the Disclosure Package and the Prospectus, the Company has not: (i) issued any securities (other
than (i) grants under any stock compensation plan and (ii) shares of common stock issued upon exercise or conversion of option,
warrants or convertible securities described in the Registration Statement, the Disclosure Package and the Prospectus) or incurred
any liability or obligation, direct or contingent, for borrowed money; or (ii) declared or paid any dividend or made any other
distribution on or in respect to its capital stock.

 

 

 

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F.               
Independent Accountants. To the knowledge of the Company, Marcum LLP, during such time as it was engaged by the Company
(the “Auditors”), has been an independent registered public accounting firm as required by the Securities Act
and the Securities Act Regulations and the Public Company Accounting Oversight Board. During such time period in which the Auditors
served as the Company's independent registered public accounting firm the Auditors did not or have not, during the periods covered
by the financial statements included in the Registration Statement, the Disclosure Package and the Prospectus, provided to the
Company any non-audit services, as such term is used in Section 10A(g) of the Exchange Act.

 

G.              
 SEC Reports; Financial Statements, etc. The Company has complied in all material respects with requirements to file
all reports, schedules, forms, statements and other documents required to be filed by it under the Securities Act and the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof (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 and the rules and regulations of the Commission promulgated thereunder, 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 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 year-end
audit adjustments that are not expected to be material in the aggregate. The financial statements, including the notes thereto
and supporting schedules included in the Registration Statement, the Disclosure Package and the Prospectus, fairly present in all
material respects the financial position and the results of operations of the Company at the dates and for the periods to which
they apply; and such financial statements have been prepared in conformity with GAAP, consistently applied throughout the periods
involved (provided that unaudited interim financial statements are subject to year-end audit adjustments that are not expected
to be material in the aggregate and do not contain all footnotes required by GAAP); and the supporting schedules included in the
Registration Statement present fairly in all material respects the information required to be stated therein. Except as included
therein, no historical or pro forma financial statements are required to be included in the Registration Statement, the Disclosure
Package or the Prospectus under the Securities Act or the Securities Act Regulations. The pro forma and pro forma as adjusted financial
information and the related notes, if any, included in the Registration Statement, the Disclosure Package and the Prospectus have
been properly compiled and prepared in all material respects in accordance with the applicable requirements of the Securities Act
and the Securities Act Regulations and present fairly in all material respects the information shown therein, and the assumptions
used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions
and circumstances referred to therein. All disclosures contained in the Registration Statement, the Disclosure Package or the Prospectus
regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of the Commission), if
any, comply with Regulation G of the Exchange Act and Item 10 of Regulation S-K of the Securities Act, to the extent applicable.
Each of the Registration Statement, the Disclosure Package and the Prospectus discloses all material off-balance sheet transactions,
arrangements, obligations (including contingent obligations), and other relationships of the Company with unconsolidated entities
or other persons that may have a material current or future effect on the Company's financial condition, changes in financial condition,
results of operations, liquidity, capital expenditures, capital resources, or significant components of revenues or expenses. Except
as disclosed in the Registration Statement, the Disclosure Package and the Prospectus, (a) the Company has not incurred any material
liabilities or obligations, direct or contingent, or entered into any material transactions other than in the ordinary course of
business, (b) the Company has not declared or paid any dividends or made any distribution of any kind with respect to its capital
stock, (c) there has not been any change in the capital stock of the Company (other than (i) grants under any stock compensation
plan and (ii) shares of common stock issued upon exercise or conversion of option, warrants or convertible securities described
in the Registration Statement, the Disclosure Package and the Prospectus), and (d) there has not been any Material Adverse Change
in the Company's long-term or short-term debt.

 

H.              
 Authorized Capital; Options, etc. The Company had, at the date or dates indicated in the Registration Statement,
the Disclosure Package and the Prospectus, the duly authorized, issued and outstanding capitalization as set forth therein. Based
on the assumptions stated in the Registration Statement, the Disclosure Package and the Prospectus, the Company will have on the
Closing Date the adjusted stock capitalization set forth therein. Except as set forth in, or contemplated by, the Registration
Statement, the Disclosure Package and the Prospectus, on the Effective Date, as of the Initial Sale Time, on the Closing Date,
there will be no stock options, warrants, or other rights to purchase or otherwise acquire any authorized, but unissued shares
of Common Stock of the Company or any security convertible or exercisable into shares of Common Stock of the Company, or any contracts
or commitments to issue or sell shares of Common Stock or any such options, warrants, rights or convertible securities.

 

 

 

    	 	7	 

     

    

 

I.                
Valid Issuance of Securities, etc.

 

i.                   
 Outstanding Securities. All issued and outstanding securities of the Company issued prior to the transactions contemplated
by this Agreement have been duly authorized and validly issued and are fully paid and non-assessable; the holders thereof have
no rights of rescission with respect thereto, and are not subject to personal liability by reason of being such holders; and except
as disclosed in the Registration Statement, the Disclosure Package and the Prospectus, none of such securities were issued in violation
of the preemptive rights of any holders of any security of the Company or similar contractual rights granted by the Company. The
authorized shares of Common Stock, Company preferred stock and other outstanding securities conform in all material respects to
all statements relating thereto contained in the Registration Statement, the Disclosure Package and the Prospectus. The offers
and sales of the outstanding shares of Common Stock were at all relevant times either registered under the Securities Act and the
applicable state securities or “blue sky” laws or, based in part on the representations and warranties of the purchasers
of such shares, exempt from such registration requirements.

 

ii.                   
Securities Sold Pursuant to this Agreement. The Common Stock and Placement Agent Securities have been duly authorized
for issuance and sale and, when issued and paid for, will be validly issued, fully paid and non-assessable; the holders thereof
are not and will not be subject to personal liability by reason of being such holders; the Common Stock and Placement Agent Securities
are not and will not be subject to the preemptive rights of any holders of any security of the Company or similar contractual rights
granted by the Company. All corporate action required to be taken for the authorization, issuance and sale of the Common Stock
and Placement Agent Securities has been duly and validly taken; the Common Stock underlying the Placement Agent Warrant has been
duly authorized and reserved for issuance by all necessary corporate action on the part of the Company and when paid for, if applicable,
and issued in accordance with the Placement Agent Warrants, such Common Stock will be validly issued, fully paid and non-assessable;
the holders thereof are not and will not be subject to personal liability by reason of being such holders; and such shares of Common
Stock are not and will not be subject to the preemptive rights of any holders of any security of the Company or similar contractual
rights granted by the Company. The Securities conform in all material respects to all statements with respect thereto contained
in the Registration Statement, the Disclosure Package and the Prospectus.

 

J.                
Registration Rights of Third Parties. No existing holders of any securities of the Company or any rights exercisable
for or convertible or exchangeable into securities of the Company have the right to require the Company to register any such securities
of the Company under the Securities Act or to include any such securities in a registration statement to be filed by the Company.
For purposes of clarity, the Company will issue the Placement Agent Warrant with such registration rights.

 

K.              
Validity and Binding Effect of Agreements. This Agreement and the Placement Agent Warrant each has been duly and
validly authorized by the Company, and, when executed and delivered, will constitute, the valid and binding agreement of the Company,
enforceable against the Company in accordance with its respective terms, except: (i) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights generally; (ii) as enforceability of any indemnification
or contribution provision may be limited under the federal and state securities laws; and (iii) that the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.

 

L.               
No Conflicts, etc. The execution, delivery and performance by the Company of this Agreement and the Placement Agent
Warrant and all ancillary documents, the consummation by the Company of the transactions herein and therein contemplated and the
compliance by the Company with the terms hereof and thereof do not and will not, with or without the giving of notice or the lapse
of time or both: (i) result in a material breach of, or conflict with any of the terms and provisions of, or constitute a material
default under, or result in the creation, modification, termination or imposition of any lien, charge or encumbrance upon any property
or assets of the Company pursuant to the terms of any agreement or instrument to which the Company is a party; (ii) result in any
violation of the provisions of the Company's Certificate of Incorporation (as the same may be amended or restated from time to
time, the “Charter”) or the by-laws of the Company (as the same may be amended or restated from time to time,
the “Bylaws”); or (iii) violate any existing applicable law, rule, regulation, judgment, order or decree of
any Governmental Entity as of the date hereof (including, without limitation, those promulgated by the Food and Drug Administration
of the U.S. Department of Health and Human Services (the “FDA”) or by any foreign, federal, state or local regulatory
authority performing functions similar to those performed by the FDA, except violations that would not be expected to have a Material
Adverse Change.

 

 

 

    	 	8	 

     

    

 

M.             
Regulatory. Except as described in the Registration Statement, the Disclosure Package and the Prospectus or as would
not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change: (i) the Company has not received
any FDA Form 483, notice of adverse finding, warning letter or other correspondence or notice from the FDA, the European Medicines
Agency (the “EMA”), or any other Governmental Entity alleging or asserting noncompliance with any Applicable
Laws (as defined in clause (ii) below) or Authorizations (as defined in clause (iii) below); (ii) the Company is and has been in
material compliance with statutes, laws, ordinances, rules and regulations applicable to the Company for the ownership, testing,
development, manufacture, packaging, processing, use, distribution, marketing, labeling, promotion, sale, offer for sale, storage,
import, export or disposal of any product manufactured or distributed by the Company, including without limitation, the Federal
Food, Drug, and Cosmetic Act, 21 U.S.C. § 301, et seq., laws of other Governmental Entities and the regulations promulgated
pursuant to such laws (collectively, “Applicable Laws”); (iii) the Company possesses all licenses, certificates,
approvals, clearances, consents, authorizations, qualifications, registrations, permits, and supplements or amendments thereto
required by any such Applicable Laws and/or to carry on its businesses as now conducted (“Authorizations”) and
such Authorizations are valid and in full force and effect and the Company is not in violation of any term of any such Authorizations;
(iv) the Company has not received notice of any claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration
or other action from any Governmental Entity or third party alleging that any product, operation or activity is in violation of
any Applicable Laws or Authorizations or has any knowledge that any such Governmental Entity or third party is considering any
such claim, litigation, arbitration, action, suit, investigation or proceeding, nor, to the best of the Company's knowledge, has
there been any material noncompliance with or violation of any Applicable Laws by the Company that could reasonably be expected
to require the issuance of any such communication or result in an investigation, corrective action, or enforcement action by FDA
or similar Governmental Entity; (v) the Company has not received notice that any Governmental Entity has taken, is taking or intends
to take action to limit, suspend, modify or revoke any Authorizations or has any knowledge that any such Governmental Entity has
threatened or is considering such action; (vi) the Company has filed, obtained, maintained or submitted all reports, documents,
forms, notices, applications, records, claims, submissions and supplements or amendments as required by any Applicable Laws or
Authorizations and that all such reports, documents, forms, notices, applications, records, claims, submissions and supplements
or amendments were complete, correct and not misleading on the date filed (or were corrected or supplemented by a subsequent submission);
and (vii) the Company has not, either voluntarily or involuntarily, initiated, conducted or issued, or caused to be initiated,
conducted or issued, any recall, market withdrawal or replacement, safety alert, post-sale warning, “dear doctor” letter,
or other notice or action relating to the alleged lack of safety or efficacy of any product or any alleged product defect or violation
and, to the Company's knowledge, no third party has initiated, conducted or intends to initiate or conduct such notice or action.
Neither the Company nor, to the Company's knowledge, any of its directors, officers, employees or agents has been convicted of
any crime under any Applicable Laws or has been the subject of an FDA debarment proceeding, except where the failure of any of
the foregoing (i) through (vii) would not be expected to have a Material Adverse Change. The Company has not been or is now subject
to FDA's Application Integrity Policy. To the Company's knowledge, neither the Company, nor any of its directors, officers, employees
or agents, has made, or caused the making of, any false statements on, or material omissions from, any other records or documentation
prepared or maintained to comply with the requirements of the FDA or any other Governmental Entity.

 

N.              
No Defaults; Violations. No material default exists in the due performance and observance of any term, covenant or
condition of any material license, contract, indenture, mortgage, deed of trust, note, loan or credit agreement, or any other agreement
or instrument evidencing an obligation for borrowed money, or any other material agreement or instrument to which the Company is
a party or by which the Company may be bound or to which any of the properties or assets of the Company is subject. The Company
is not (i) in violation of any term or provision of its Charter or Bylaws, or (ii) in violation of any franchise, license, permit,
applicable law, rule, regulation, judgment or decree of any Governmental Entity applicable to the Company.

 

O.              
Corporate Power; Licenses; Consents.

 

i.                   
Except as described in the Registration Statement, the Disclosure Package and the Prospectus, the Company has all requisite
corporate power and authority, and has all necessary authorizations, approvals, orders, licenses, certificates and permits of and
from all governmental regulatory officials and bodies that it needs as of the date hereof to conduct its business purpose as described
in the Registration Statement, the Disclosure Package and the Prospectus.

 

ii.                   
The Company has all corporate power and authority to enter into this Agreement and to carry out the provisions and conditions
hereof, and all consents, authorizations, approvals and orders required in connection therewith have been obtained. No consent,
authorization or order of, and no filing with, any court, government agency or other body is required for the valid issuance, sale
and delivery of the Common Stock, Placement Agent Warrants and shares of Common Stock underlying the Placement Agent Warrants,
and the consummation of the transactions and agreements contemplated by this Agreement and as contemplated by the Registration
Statement, the Disclosure Package and the Prospectus, except with respect to applicable federal and state securities laws and the
rules and regulations of the Financial Industry Regulatory Authority, Inc. (“FINRA”).

 

 

 

    	 	9	 

     

    

 

P.               
Litigation; Governmental Proceedings. There is no material action, suit, proceeding, inquiry, arbitration, investigation,
litigation or governmental proceeding pending or, to the Company's knowledge, threatened against, or involving the Company or,
to the Company's knowledge, any executive officer or director which has not been disclosed in the Registration Statement, the Disclosure
Package and the Prospectus or in connection with the Company's listing application for the additional listing of the Common Stock
(including the Common Stock underlying the Placement Agent Warrant) on the Exchange.

 

Q.              
Good Standing. The Company has been duly organized and is validly existing as a corporation and is in good standing
under the laws of the State of Delaware as of the date hereof, and is duly qualified to do business and is in good standing in
each other jurisdiction in which its ownership or lease of property or the conduct of business requires such qualification, except
where the failure to qualify, singularly or in the aggregate, would not have or reasonably be expected to result in a Material
Adverse Change.

 

R.              
Insurance. The Company carries or is entitled to the benefits of insurance, with, to the Company's knowledge, reputable
insurers, and in such amounts and covering such risks which the Company believes are reasonably adequate, and all such insurance
is in full force and effect. The Company has no reason to believe that it will not be able (i) to renew its existing insurance
coverage as and when such policies expire or (ii) to obtain comparable coverage from similar institutions as may be necessary or
appropriate to conduct its business as now conducted and at a cost that would not result in a Material Adverse Change.

 

S.               
Transactions Affecting Disclosure to FINRA.

 

i.                   
Finder's Fees. Except as described in the Registration Statement, the Disclosure Package and the Prospectus, there
are no claims, payments, arrangements, agreements or understandings relating to the payment of a finder's, consulting or origination
fee by the Company or any executive officer or director of the Company (each an, “Insider”) with respect to
the sale of the Securities hereunder or any other arrangements, agreements or understandings of the Company or, to the Company's
knowledge, any of its stockholders that may affect the Placement Agent’s compensation, as determined by FINRA.

 

ii.                   
Payments Within Twelve (12) Months. Except as described in the Registration Statement, the Disclosure Package and
the Prospectus, the Company has not made any direct or indirect payments (in cash, securities or otherwise) to: (i) any person,
as a finder's fee, consulting fee or otherwise, in consideration of such person raising capital for the Company or introducing
to the Company persons who raised or provided capital to the Company; (ii) any FINRA member; or (iii) any person or entity that
has any direct or indirect affiliation or association with any FINRA member, within the twelve (12) months prior to the date hereof,
other than (A) the payment to the Placement Agent as provided hereunder in connection with the Offering, and (B) other payments
to the Placement Agent under other engagement letters.

 

iii.                   
Use of Proceeds. None of the net proceeds of the Offering will be paid by the Company to any participating FINRA
member or its affiliates, except as specifically authorized herein.

 

iv.                   
FINRA Affiliation. There is no (i) officer or director of the Company, (ii) to the Company’s knowledge, beneficial
owner of 5% or more of any class of the Company's securities or (iii) to the Company’s knowledge, beneficial owner of the
Company's unregistered equity securities which were acquired during the 180-day period immediately preceding the filing of the
Registration Statement that is an affiliate or associated person of a FINRA member participating in the Offering (as determined
in accordance with the rules and regulations of FINRA).

 

v.                   
Information. To the Company's knowledge, all information provided by the Company's officers and directors in their
FINRA Questionnaires to counsel to the Placement Agent specifically for use by counsel to the Placement Agent in connection with
its Public Offering System filings (and related disclosure) with FINRA is true, correct and complete in all material respects.

 

 

 

    	 	10	 

     

    

 

T.               
Foreign Corrupt Practices Act. Neither the Company nor, to the Company's knowledge, any director, officer, agent,
employee or affiliate of the Company or any other person acting on behalf of the Company, has, directly or indirectly, given or
agreed to give any money, gift or similar benefit (other than legal price concessions to customers in the ordinary course of business)
to any customer, supplier, employee or agent of a customer or supplier, or official or employee of any Governmental Entity or any
political party or candidate for office (domestic or foreign) or other person who was, is, or may be in a position to help or hinder
the business of the Company (or assist it in connection with any actual or proposed transaction) that (i) might subject the Company
to any damage or penalty in any civil, criminal or governmental litigation or proceeding, (ii) if not given in the past, might
have had a Material Adverse Change or (iii) if not continued in the future, might adversely affect the assets, business, operations
or prospects of the Company. The Company has taken reasonable steps to ensure that its accounting controls and procedures are sufficient
to cause the Company to comply in all material respects with the Foreign Corrupt Practices Act of 1977, as amended.

 

U.              
Compliance with OFAC. Neither of the Company nor, to the Company's knowledge, any director, officer, agent, employee
or affiliate of the Company or any other person acting on behalf of the Company, is currently subject to any U.S. sanctions administered
by the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”), and the Company will
not, directly or indirectly, use the proceeds of the Offering hereunder, or lend, contribute or otherwise make available such proceeds
to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by OFAC.

 

V.              
Money Laundering Laws. The operations of the Company are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or
similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Entity (collectively, the “Money
Laundering Laws”); and no action, suit or proceeding by or before any Governmental Entity involving the Company with
respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.

 

W.             
Officers' Certificate. Any certificate signed by any duly authorized officer of the Company and delivered to you
or to Placement Agent Counsel shall be deemed a representation and warranty by the Company to the Placement Agent as to the matters
covered thereby.

 

X.              
Related Party Transactions. There are no business relationships or related party transactions involving the Company
or any other person required to be described in the Registration Statement, the Disclosure Package and the Prospectus that have
not been described as required.

 

Y.              
Board of Directors. The qualifications of the persons serving as board members and the overall composition of the
board comply with the Exchange Act, the Exchange Act Regulations, the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder
(the “Sarbanes-Oxley Act”) applicable to the Company and the listing rules of the Exchange. At least one member
of the Audit Committee of the Board of Directors of the Company qualifies as an “audit committee financial expert,”
as such term is defined under Regulation S-K and the listing rules of the Exchange. In addition, at least a majority of the persons
serving on the Board of Directors qualify as “independent,” as defined under the listing rules of the Exchange.

 

Z.               
Sarbanes-Oxley Compliance.

 

i.                   
The Company has developed and currently maintains disclosure controls and procedures that will comply with Rule 13a-15 or
15d-15 under the Exchange Act Regulations applicable to it, and such controls and procedures are effective to ensure that all material
information concerning the Company will be made known on a timely basis to the individuals responsible for the preparation of the
Company's Exchange Act filings and other public disclosure documents.

 

ii.                   
The Company is, or at the Initial Sale Time and on the Closing Date will be, in material compliance with the provisions
of the Sarbanes-Oxley Act applicable to it, and has implemented or will implement such programs and taken reasonable steps to ensure
the Company's future compliance (not later than the relevant statutory and regulatory deadlines therefor) with all of the material
provisions of the Sarbanes-Oxley Act.

 

 

 

    	 	11	 

     

    

 

AA.          
Accounting Controls. The Company maintains systems of “internal control over financial reporting” (as
defined under Rules 13a-15 and 15d-15 under the Exchange Act Regulations) that comply in all material respects with the requirements
of the Exchange Act and have been designed by, or under the supervision of, its principal executive and principal financial officers,
or persons performing similar functions, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with GAAP, including, but not limited to, 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. Except as disclosed in the Registration Statement, the Disclosure
Package and the Prospectus, the Company is not aware of any material weaknesses in its internal controls. The Auditors and the
Audit Committee of the Board of Directors of the Company have been advised of: (i) all significant deficiencies and material weaknesses,
if any, in the design or operation of internal controls over financial reporting which are known to the Company's management and
that have adversely affected or are reasonably likely to adversely affect the Company' ability to record, process, summarize and
report financial information; and (ii) any fraud, if any, known to the Company's management, whether or not material, that involves
management or other employees who have a significant role in the Company's internal controls over financial reporting.

 

BB.           
No Investment Company Status. The Company is not and, after giving effect to the Offering and the application of
the proceeds thereof as described in the Registration Statement, the Disclosure Package and the Prospectus, will not be, required
to register as an “investment company,” as defined in the Investment Company Act of 1940, as amended.

 

CC.           
No Labor Disputes. No labor dispute with the employees of the Company exists or, to the knowledge of the Company,
is imminent, except where such dispute would not be expected to have a Material Adverse Change.

 

DD.          
Intellectual Property Rights. To the Company's knowledge, the Company has, or can acquire on reasonable terms, ownership
of and/or license to, or otherwise has the right to use, all inventions, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or procedures), patents and patent rights trademarks, service
marks and trade names, copyrights, (collectively “Intellectual Property”) material to carrying on its business
as described in the Prospectus. The Company has not received any correspondence relating to (A) infringement or misappropriation
of, or conflict with, any Intellectual Property of a third party; (B) asserted rights of others with respect to any Intellectual
Property of the Company; or (C) assertions that any Intellectual Property of the Company is invalid or otherwise inadequate to
protect the interest of the Company, that in each case (if the subject of any unfavorable decision, ruling or finding), individually
or in the aggregate, would have or would reasonably be expected to have a Material Adverse Change. There are no third parties who
have been able to establish any material rights to any Intellectual Property, except for the retained rights of the owners or licensors
of any Intellectual Property that is licensed to the Company. There is no pending or, to the Company's knowledge, threatened action,
suit, proceeding or claim by others: (A) challenging the validity, enforceability or scope of any Intellectual Property of the
Company or (B) challenging the Company's rights in or to any Intellectual Property or (C) that the Company materially infringes,
misappropriates or otherwise violates or conflicts with any Intellectual Property or other proprietary rights of others. The Company
has complied in all material respects with the terms of each agreement described in the Registration Statement, Disclosure Package
or Prospectus pursuant to which any Intellectual Property is licensed to the Company, and all such agreements related to products
currently made or sold by the Company, or to product candidates currently under development, are in full force and effect. All
patents issued in the name of, or assigned to, the Company, and all patent applications made by or on behalf of the Company (collectively,
the “Company Patents”) have been duly and properly filed. The Company is not aware of any material information
that was required to be disclosed to the United States Patent and Trademark Office (the “PTO”) but that was
not disclosed to the PTO with respect to any issued Company Patent, or that is required to be disclosed and has not yet been disclosed
in any pending application in the Company Patents and that would preclude the grant of a patent on such application. To the Company's
knowledge, the Company is the sole owner of the Company Patents.

 

EE.           
Taxes. The Company has filed all returns (as hereinafter defined) required to be filed with taxing authorities prior
to the date hereof or has duly obtained extensions of time for the filing thereof. The Company has paid all taxes (as hereinafter
defined) shown as due on such returns that were filed and has paid all taxes imposed on or assessed against the Company, except
for such exceptions as could not be expected, individually or in the aggregate, to have a Material Adverse Change. The provisions
for taxes payable, if any, shown on the financial statements filed with or as part of the Registration Statement are sufficient
for all accrued and unpaid taxes, whether or not disputed, and for all periods to and including the dates of such consolidated
financial statements. Except as disclosed in writing to the Placement Agent, (i) no issues have been raised (and are currently
pending) by any taxing authority in connection with any of the returns or taxes asserted as due from the Company, and (ii) no waivers
of statutes of limitation with respect to the returns or collection of taxes have been given by or requested from the Company.
The term “taxes” mean all federal, state, local, foreign and other net income, gross income, gross receipts, sales,
use, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, windfall profits, customs, duties or other taxes, fees, assessments or charges
of any kind whatever, together with any interest and any penalties, additions to tax or additional amounts with respect thereto.
The term “returns” means all returns, declarations, reports, statements and other documents required to be filed in
respect to taxes.

 

 

 

    	 	12	 

     

    

 

FF.            
Employee Benefit Laws. To the extent applicable, the operations of the Company and its subsidiaries are and have
been conducted at all times in material compliance with the Employee Retirement Income Security Act of 1974, as amended, the rules
and regulations thereunder and any applicable related or similar rules, regulations or guidelines, issued, administered or enforced
by any governmental agency (collectively, the “Employee Benefit Laws”) and no action, suit or proceeding by
or before any court or governmental agency, authority or body or any arbitrator involving the Company or its subsidiaries with
respect to the Employee Benefit Laws is pending or, to the knowledge of the Company, threatened.

 

GG.          
Compliance with Laws. The Company: (A) is and at all times has been in compliance with all Applicable Laws, except
as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Change; (B) has not received
any correspondence from any Governmental Entity alleging or asserting noncompliance with any Applicable Laws or any Authorizations;
(C) possesses all material Authorizations and such Authorizations are valid and in full force and effect and the Company is not
in material violation of any term of any such Authorizations, in each case except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Change; (D) has not received written notice of any claim, action, suit, proceeding,
hearing, enforcement, investigation, arbitration or other action from any Governmental Entity or third party alleging that any
product operation or activity is in violation of any Applicable Laws or Authorizations and has no knowledge that any such Governmental
Entity or third party is considering any such claim, litigation, arbitration, action, suit, investigation or proceeding; (E) has
not received written notice that any Governmental Entity has taken, is taking or intends to take action to limit, suspend, modify
or revoke any Authorizations; (F) has filed, obtained, maintained or submitted all material reports, documents, forms, notices,
applications, records, claims, submissions and supplements or amendments as required by any Applicable Laws or Authorizations and
that all such reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments were
complete and correct in all material respects on the date filed (or were corrected or supplemented by a subsequent submission);
and (G) has not, either voluntarily or involuntarily, initiated, conducted, or issued or caused to be initiated, conducted or issued,
any recall, market withdrawal or replacement, safety alert, post-sale warning, “dear doctor” letter, or other notice
or action relating to the alleged lack of safety or efficacy of any product or any alleged product defect or violation and, to
the Company's knowledge, no third party has initiated, conducted or intends to initiate any such notice or action.

 

HH.          
[Reserved.]

 

II.              
Industry Data. The statistical and market-related data included in each of the Registration Statement, the Disclosure
Package and the Prospectus are based on or derived from sources that the Company reasonably and in good faith believes are reliable
and accurate or represent the Company's good faith estimates that are made on the basis of data derived from such sources.

 

JJ.              
Forward-Looking Statements. No forward-looking statement (within the meaning of Section 27A of the Securities Act
and Section 21E of the Exchange Act) contained in the Registration Statement, the Disclosure Package or the Prospectus has been
made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.

 

KK.          
Margin Securities. The Company owns no “margin securities” as that term is defined in Regulation U of
the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), and none of the proceeds
of Offering will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security, for the purpose
of reducing or retiring any indebtedness which was originally incurred to purchase or carry any margin security or for any other
purpose which might cause any of the shares of Common Stock to be considered a “purpose credit” within the meanings
of Regulation T, U or X of the Federal Reserve Board.

 

LL.           
Integration. 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 the Offering to be integrated with prior offerings by the Company for purposes of the Securities Act that would require the
registration of any such securities under the Securities Act.

 

MM.        
Confidentiality and Non-Competition. To the Company's knowledge, no director, officer, key employee or consultant
of the Company is subject to any confidentiality, non-disclosure, non-competition agreement or non-solicitation agreement with
any employer or prior employer that could reasonably be expected to materially affect his ability to be and act in his respective
capacity of the Company or be expected to result in a Material Adverse Change.

 

 

 

    	 	13	 

     

    

 

NN.          
Restriction on Sales of Capital Stock. The Company, on behalf of itself and any successor entity, agrees that it
will not, for a period of 60 days after the date of this Agreement (the “Lock-Up Period”), without the prior
written consent of the Placement Agent (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly
or indirectly, any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for
shares of capital stock of the Company; (ii) file or cause to be filed any registration statement with the Commission relating
to the offering of any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable
for shares of capital stock of the Company, other than pursuant to a registration statement on Form S-8 for employee benefit plans;,
whether any such transaction described in clause (i), (ii) or (iii) above is to be settled by delivery of shares of capital stock
of the Company or such other securities, in cash or otherwise; or (iv) publicly announce an intention to effect any transaction
specified in clause (i), (ii) or (iii). The restrictions contained in this section shall not apply to (i) the issuance by the Company
of Common Stock upon the exercise of stock options, warrants or the conversion of a security, in each case, that is outstanding
on the date hereof, or (ii) the grant by the Company of stock options or other stock-based awards, or the issuance of shares of
capital stock of the Company under any stock compensation plan of the Company in effect on the date hereof.

 

OO.          
Lock-Up Agreements. The Company has caused each of its officers and directors to deliver to the Placement Agent an
executed Lock-Up Agreement, in such form as approved by the Placement Agent (the “Lock-Up Agreement”), prior
to the execution of this Agreement.

 

		8.	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 7 hereof, in each case as of the date hereof and as of the 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.              
Regulatory Matters.

 

i.                   
Effectiveness of Registration Statement; Rule 424 Information. The Registration Statement is effective on the date
of this Agreement, and, on the Closing Date no stop order suspending the effectiveness of the Registration Statement or any post-effective
amendment thereto has been issued under the Securities Act, no order preventing or suspending the use of any Preliminary Prospectus
or the Prospectus has been issued and no proceedings for any of those purposes have been instituted or are pending or, to the Company’s
knowledge, contemplated by the Commission. The Company has complied with each request (if any) from the Commission for additional
information. All filings with the Commission required by Rule 424 under the Securities Act to have been filed by the Closing Date,
shall have been made within the applicable time period prescribed for such filing by Rule 424.

 

ii.                   
FINRA Clearance. On or before the Closing Date of this Agreement, the Placement Agent shall have received clearance
from FINRA as to the amount of compensation allowable or payable to the Placement Agent as described in the Registration Statement.

 

iii.                   
Listing of Additional Shares. On or before the Closing Date of this Agreement, the Company shall have received clearance
from The Nasdaq Stock Market, Inc. with respect to the Company’s application for the additional listing of the securities
sold in the Offering.

 

 

 

B.              
Company Counsel Matters.

 

i.                   
On the Closing Date, the Placement Agent shall have received the favorable opinion of Trombly Business Law, PC, outside
counsel for the Company, dated the Closing Date and addressed to the Placement Agent, substantially in form and substance reasonably
satisfactory to the Placement Agent.

 

 

 

    	 	14	 

     

    

 

C.              
Reserved.

 

D.              
Officers’ Certificates.

 

i.                   
Officers’ Certificate. The Company shall have furnished to the Placement Agent a certificate, dated the Closing
Date, of its Chief Executive Officer and its Chief Financial Officer stating that (i) such officers have carefully examined the
Registration Statement, the Disclosure Package, any Issuer Free Writing Prospectus and the Prospectus and, in their opinion, the
Registration Statement and each amendment thereto, as of the Initial Sale Time and through the Closing Date did not include any
untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, and the Disclosure Package, as of the Initial Sale Time through the Closing Date, any Issuer
Free Writing Prospectus as of its date and as of the Closing Date, the Prospectus and each amendment or supplement thereto, as
of the respective date thereof and as of the Closing Date, did not include any untrue statement of a material fact and did not
omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances in which they
were made, not misleading, (ii) since the filing of the most recent Form 10-Q, no event has occurred which should have been set
forth in a supplement or amendment to the Registration Statement, the Disclosure Package or the Prospectus, (iii) to their knowledge
after reasonable investigation, as of the Closing Date, the representations and warranties of the Company in this Agreement are
true and correct, and the Company has complied with all agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date, and (iv) there has not been, subsequent to the date of the most recent audited
financial statements included in the Disclosure Package, any Material Adverse Change in the financial position or results of operations
of the Company, or any change or development that, singularly or in the aggregate, would involve a Material Adverse Change or a
prospective Material Adverse Change, in or affecting the condition (financial or otherwise), results of operations, business, assets
or prospects of the Company, except as set forth in the Prospectus.

 

ii.                   
Secretary’s Certificate. As of the Closing Date the Placement Agent shall have received a certificate of the
Company signed by the Secretary of the Company, dated the Closing Date, certifying: (i) that each of the Company’s Charter
and Bylaws is true and complete, has not been modified and is in full force and effect; (ii) that the resolutions of the Company’s
Board of Directors relating to the Offering are in full force and effect and have not been modified; and (iii) the good standing
of the Company and its U.S. subsidiaries. The documents referred to in such certificate shall be attached to such certificate.

 

E.               
No Material Changes. Prior to and on the Closing Date: (i) there shall have been no Material Adverse Change or development
involving a prospective Material Adverse Change in the condition or prospects or the business activities, financial or otherwise,
of the Company from the latest dates as of which such condition is set forth in the Registration Statement, the Disclosure Package
and the Prospectus; (ii) no action, suit or proceeding, at law or in equity, shall have been pending or threatened against the
Company or any affiliates of the Company before or by any court or federal or state commission, board or other administrative agency
wherein an unfavorable decision, ruling or finding may materially adversely affect the business, operations, prospects or financial
condition or income of the Company, except as set forth in the Registration Statement, the Disclosure Package and the Prospectus;
(iii) no stop order shall have been issued under the Securities Act and no proceedings therefor shall have been initiated or threatened
by the Commission; and (iv) the Registration Statement, the Disclosure Package and the Prospectus and any amendments or supplements
thereto shall contain all material statements which are required to be stated therein in accordance with the Securities Act and
the Securities Act Regulations and shall conform in all material respects to the requirements of the Securities Act and the Securities
Act Regulations, and neither the Registration Statement, the Disclosure Package nor the Prospectus nor any amendment or supplement
thereto shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

F.               
Reservation of Common Stock. So long as any Placement Agent Warrants remain outstanding, the Company shall take all
action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than 100% of the maximum number
of shares of Common Stock issuable upon exercise of the Placement Agent Warrant.

 

 

 

    	 	15	 

     

    

 

G.              
Delivery of Agreements.

 

(i) Lock-Up
Agreements. On or before the date of this Agreement, the Company shall have delivered to the Placement Agent executed copies
of the Lock-Up Agreements from each of the Company’s officers and directors.

 

(ii) Placement
Agent Warrant. On the Closing Date, the Company shall have delivered to the Placement Agent an executed copy of the Placement
Agent Warrant(s) in such designations as requested by the Placement Agent.

 

H.              
Additional Documents. At the Closing Date, Placement Agent Counsel shall have been furnished with such documents
and opinions as they may require in order to evidence the accuracy of any of the representations or warranties, or the fulfillment
of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the issuance and sale of
the Securities as herein contemplated shall be satisfactory in form and substance to the Placement Agent and Placement Agent Counsel.

 

		9.	Indemnification and Contribution; Procedures. 

 

A.              
Indemnification of the Placement Agent. The Company agrees to indemnify and hold harmless the Placement Agent, its
affiliates and each person controlling such Placement Agent (within the meaning of Section 15 of the Securities Act), and the directors,
officers, agents and employees of the Placement Agent, its affiliates and each such controlling person (the Placement Agent, and
each such entity or person hereafter is referred to as an “Indemnified Person”) from and against any losses,
claims, damages, judgments, assessments, costs and other liabilities (collectively, the “Liabilities”), and
shall reimburse each Indemnified Person for all fees and expenses (including the reasonable fees and expenses of counsel for the
Indemnified Persons, except as otherwise expressly provided in this Agreement) (collectively, the “Expenses”)
and agrees to advance payment of such Expenses as they are incurred by an Indemnified Person in investigating, preparing, pursuing
or defending any actions, whether or not any Indemnified Person is a party thereto, arising out of or based upon any untrue statement
or alleged untrue statement of a material fact contained in (i) the Registration Statement, the Disclosure Package, the Preliminary
Prospectus, the Prospectus or in any Issuer Free Writing Prospectus (as from time to time each may be amended and supplemented);
(ii) any materials or information provided to investors by, or with the approval of, the Company in connection with the marketing
of the Offering, including any “road show” or investor presentations made to investors by the Company (whether in person
or electronically); or (iii) any application or other document or written communication (in this Section 9, collectively called
“application”) executed by the Company or based upon written information furnished by the Company in any jurisdiction
in order to qualify the Securities under the securities laws thereof or filed with the Commission, any state securities commission
or agency, any national securities exchange; or the omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading,
unless such statement or omission was made in reliance upon, and in conformity with, the Placement Agent’s information. The
Company also agrees to reimburse each Indemnified Person for all Expenses as they are incurred in connection with such Indemnified
Person’s enforcement of his or its rights under this Agreement. Each Indemnified Person is an intended third party beneficiary
with the same rights to enforce the indemnification that each Indemnified Person would have if he was a party to this Agreement.

 

B.              
Procedure. Upon receipt by an Indemnified Person of actual notice of an action against such Indemnified Person with
respect to which indemnity may reasonably be expected to be sought under this Agreement, such Indemnified Person shall promptly
notify the Company in writing; provided that failure by any Indemnified Person so to notify the Company shall not relieve the Company
from any obligation or liability which the Company may have on account of this Section 9 or otherwise to such Indemnified Person,
except to the extent (and only to the extent) that its ability to assume the defense is actually impaired by such failure or delay.
The Company shall, if requested by the Placement Agent, assume the defense of any such action (including the employment of counsel
and reasonably satisfactory to the Placement Agent). Any Indemnified Person 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
Indemnified Person unless: (i) the Company has failed promptly to assume the defense and employ counsel for the benefit of the
Placement Agent and the other Indemnified Persons or (ii) such Indemnified Person shall have been advised that in the opinion of
counsel that there is an actual or potential conflict of interest that prevents (or makes it imprudent for) the counsel engaged
by the Company for the purpose of representing the Indemnified Person, to represent both such Indemnified Person and any other
person represented or proposed to be represented by such counsel, it being understood, however, that
the Company shall not be liable for the expenses of more than one separate counsel
(together with local counsel), representing the Placement Agent and all Indemnified persons
who are parties to such action. The Company shall not be liable for any settlement of any action effected without its written
consent (which shall not be unreasonably withheld). In addition, the Company shall not, without the prior written consent of the
Placement Agent, settle, compromise or consent to the entry of any judgment in or otherwise seek to terminate any pending or threatened
action in respect of which advancement, reimbursement, indemnification or contribution may be sought hereunder (whether or not
such Indemnified Person is a party thereto) unless such settlement, compromise, consent or termination (i) includes an unconditional
release of each Indemnified Person, acceptable to such Indemnified Party, from all Liabilities arising out of such action for which
indemnification or contribution may be sought hereunder and (ii) does not include a statement as to or an admission of fault, culpability
or a failure to act, by or on behalf of any Indemnified Person. The advancement, reimbursement, indemnification and contribution
obligations of the Company required hereby shall be made by periodic payments of the amount thereof during the course of the investigation
or defense, as every Liability and Expense is incurred and is due and payable, and in such amounts as fully satisfy each and every
Liability and Expense as it is incurred (and in no event later than 30 days following the date of any invoice therefor).

 

 

 

    	 	16	 

     

    

 

C.              
Indemnification of the Company. The Placement Agent agrees to indemnify and hold harmless the Company, its directors,
its officers who signed the Registration Statement and persons who control the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act against any and all Liabilities, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions made in the Registration Statement, any Preliminary Prospectus, the Disclosure
Package or Prospectus or any amendment or supplement thereto, in reliance upon, and in strict conformity with, the Placement Agent’s
Information. In case any action shall be brought against the Company or any other person so indemnified based on any Preliminary
Prospectus, the Registration Statement, the Disclosure Package or Prospectus or any amendment or supplement thereto, and in respect
of which indemnity may be sought against the Placement Agent, the Placement Agent shall have the rights and duties given to the
Company, and the Company and each other person so indemnified shall have the rights and duties given to the Placement Agent by
the provisions of Section 9.B. The Company agrees promptly to notify the Placement Agent of the commencement of any litigation
or proceedings against the Company or any of its officers, directors or any person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, in connection with the issuance and sale of the
Securities or in connection with the Registration Statement, the Disclosure Package, the Prospectus or any Issuer Free Writing
Prospectus, provided, that failure by the Company so to notify the Placement Agent shall
not relieve the Placement Agent from any obligation or liability which the Placement Agent may have on account of this Section
9.C. or otherwise to the Company, except to the extent the Placement Agent is materially prejudiced as a proximate result of such
failure..

 

D.              
Contribution. In the event that a court of competent jurisdiction makes a finding that indemnity is unavailable to
any indemnified person, then each indemnifying party shall contribute to the Liabilities and Expenses paid or payable by such indemnified
person in such proportion as is appropriate to reflect (i) the relative benefits to the Company, on the one hand, and to the Placement
Agent and any other Indemnified Person, on the other hand, of the matters contemplated by this Agreement or (ii) if the allocation
provided by the immediately preceding clause is not permitted by applicable law, not only such relative benefits but also the relative
fault of the Company, on the one hand, and the Placement Agent and any other Indemnified Person, on the other hand, in connection
with the matters as to which such Liabilities or Expenses relate, as well as any other relevant equitable considerations; provided
that in no event shall the Company contribute less than the amount necessary to ensure that all Indemnified Persons, in the aggregate,
are not liable for any Liabilities and Expenses in excess of the amount of commissions actually received by the Placement Agent
pursuant to this Agreement. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied
by the Company on the one hand or the Placement Agent on the other and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission. The Company and the Placement Agent agree that it
would not be just and equitable if contributions pursuant to this subsection (D) were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable considerations referred to above in this subsection (D).
For purposes of this paragraph, the relative benefits to the Company, on the one hand, and to the Placement Agent on the other
hand, of the matters contemplated by this Agreement shall be deemed to be in the same proportion as: (a) the total value received
by the Company in the Offering, whether or not such Offering is consummated, bears to (b) the commissions paid to the Placement
Agent under this Agreement. Notwithstanding the above, no person guilty of fraudulent misrepresentation within the meaning of Section
11(f) of the Securities Act shall be entitled to contribution from a party who was not guilty of fraudulent misrepresentation.

 

E.               
Limitation. The Company also agrees that no Indemnified Person shall have any liability (whether direct or indirect,
in contract or tort or otherwise) to the Company for or in connection with advice or services rendered or to be rendered by any
Indemnified Person pursuant to this Agreement, the transactions contemplated thereby or any Indemnified Person’s actions
or inactions in connection with any such advice, services or transactions, except to the extent that a court of competent jurisdiction
has made a finding that Liabilities (and related Expenses) of the Company have resulted primarily from such Indemnified Person’s
gross negligence or willful misconduct in connection with any such advice, actions, inactions or services.

 

F.               
Survival. The advancement, reimbursement, indemnity and contribution obligations set forth in this Section 9 shall
remain in full force and effect regardless of any termination of, or the completion of any Indemnified Person’s services
under or in connection with, this Agreement. Each Indemnified Person is an intended third-party beneficiary of this Section 9,
and has the right to enforce the provisions of Section 9 as if he/she/it was a party to this Agreement.

 

		10.	Limitation of Dawson’s Liability to the Company. 

 

Dawson and the Company
further agree that neither Dawson nor any of its affiliates or any of their respective officers, directors, controlling persons
(within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), employees or agents shall have any
liability to the Company, its security holders or creditors, or any person asserting claims on behalf of or in the right of the
Company (whether direct or indirect, in contract or tort, for an act of negligence or otherwise) for any losses, fees, damages,
liabilities, costs, expenses or equitable relief arising out of or relating to this Agreement or the Services rendered hereunder,
except for losses, fees, damages, liabilities, costs or expenses that arise out of or are based on any action of or failure to
act by Dawson and that are finally judicially determined to have resulted solely from the gross negligence or willful misconduct
of Dawson.

 

 

 

    	 	17	 

     

    

 

		11.	Limitation of Engagement to the Company. 

 

The Company acknowledges
that Dawson has been retained only by the Company, that Dawson is providing services hereunder as an independent contractor (and
not in any fiduciary or agency capacity) and that the Company’s engagement of Dawson is not deemed to be on behalf of, and
is not intended to confer rights upon, any shareholder, owner or partner of the Company or any other person not a party hereto
as against Dawson or any of its affiliates, or any of its or their respective officers, directors, controlling persons (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), employees or agents. Unless otherwise expressly
agreed in writing by Dawson, no one other than the Company is authorized to rely upon any statement or conduct of Dawson in connection
with this Agreement. The Company acknowledges that any recommendation or advice, written or oral, given by Dawson to the Company
in connection with Dawson’s engagement is intended solely for the benefit and use of the Company’s management and directors
in considering a possible Offering, and any such recommendation or advice is not on behalf of, and shall not confer any rights
or remedies upon, any other person or be used or relied upon for any other purpose. Dawson shall not have the authority to make
any commitment binding on the Company. The Company, in its sole discretion, shall have the right to reject any investor introduced
to it by Dawson. If any purchase agreement and/or related transaction documents are entered into between the Company and the investors
in the Offering, Dawson will be entitled to rely on the representations, warranties, agreements and covenants of the Company contained
in any such purchase agreement and related transaction documents as if such representations, warranties, agreements and covenants
were made directly to Dawson by the Company.

 

		12.	Amendments and Waivers. 

 

No supplement, modification
or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby. The failure of a party
to exercise any right or remedy shall not be deemed or constitute a waiver of such right or remedy in the future. No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (regardless
of whether similar), nor shall any such waiver be deemed or constitute a continuing waiver unless otherwise expressly provided.

 

		13.	Confidentiality.

 

In the event of the
consummation or public announcement of any Offering, Dawson shall have the right to disclose its participation in such Offering,
including, without limitation, the placement at its cost of “tombstone” advertisements in financial and other newspapers
and journals. Dawson agrees not to use any confidential information concerning the Company provided to Dawson by the Company for
any purposes other than those contemplated under this Agreement.

 

		14.	Headings. 

 

The headings of the
various sections of this Agreement have been inserted for convenience of reference only and will not be deemed to be part of this
Agreement.

 

		15.	Counterparts. 

 

This Agreement may
be executed in one or more counterparts and, if executed in more than one counterpart, the executed counterparts shall each be
deemed to be an original and all such counterparts shall together constitute one and the same instrument.

 

		16.	Severability. 

 

In case any provision
contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability
of the remaining provisions contained herein will not in any way be affected or impaired thereby.

 

 

 

    	 	18	 

     

    

 

		17.	Use of Information. 

 

The Company will furnish
Dawson such written information as Dawson reasonably requests in connection with the performance of its services hereunder. The
Company understands, acknowledges and agrees that, in performing its services hereunder, Dawson will use and rely entirely upon
such information as well as publicly available information regarding the Company and other potential parties to an Offering and
that Dawson does not assume responsibility for independent verification of the accuracy or completeness of any information, whether
publicly available or otherwise furnished to it, concerning the Company or otherwise relevant to an Offering, including, without
limitation, any financial information, forecasts or projections considered by Dawson in connection with the provision of its services.

 

		18.	Absence of Fiduciary Relationship. 

 

The Company acknowledges
and agrees that: (a) the Placement Agent has been retained solely to act as Placement Agent in connection with the sale of the
Securities and that no fiduciary, advisory or agency relationship between the Company and the Placement Agent has been created
in respect of any of the transactions contemplated by this Agreement, irrespective of whether the Placement Agent has advised or
is advising the Company on other matters; (b) the Purchase Price and other terms of the Securities set forth in this Agreement
were established by the Company following discussions and arms-length negotiations with the Placement Agent and the Company is
capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated
by this Agreement; (c) it has been advised that the Placement Agent and its affiliates are engaged in a broad range of transactions
that may involve interests that differ from those of the Company and that the Placement Agent has no obligation to disclose such
interest and transactions to the Company by virtue of any fiduciary, advisory or agency relationship; and (d) it has been advised
that the Placement Agent is acting, in respect of the transactions contemplated by this Agreement, solely for the benefit of the
Placement Agent, and not on behalf of the Company and that the Placement Agents 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.

 

		19.	Survival Of Indemnities, Representations, Warranties, Etc. 

 

The respective indemnities,
covenants, agreements, representations, warranties and other statements of the Company and Placement Agent, as set forth in this
Agreement or made by them respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation
made by or on behalf of the Placement Agent, the Company, the Purchasers or any person controlling any of them and shall survive
delivery of and payment for the Securities. Notwithstanding any termination of this Agreement, including without limitation any
termination pursuant to Section 5, the payment, reimbursement, indemnity, contribution and advancement agreements contained in
Sections 2, 9, 10, and 11, respectively, and the Company’s covenants, representations, and warranties set forth in this Agreement
shall not terminate and shall remain in full force and effect at all times. The indemnity and contribution provisions contained
in Section 9 and the covenants, warranties and representations of the Company contained in this Agreement shall remain operative
and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of
any Placement Agent, any person who controls any Placement Agent within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act or any affiliate of any Placement Agent, or by or on behalf of the Company, its directors or
officers or any person who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, and (iii) the issuance and delivery of the Securities.

 

		20.	Governing Law. 

 

This Agreement shall
be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be fully
performed therein. Any disputes that arise under this Agreement, even after the termination of this Agreement, will be heard only
in the state or federal courts located in the City of New York, State of New York. The parties hereto expressly agree to submit
themselves to the jurisdiction of the foregoing courts in the City of New York, State of New York. The parties hereto expressly
waive any rights they may have to contest the jurisdiction, venue or authority of any court sitting in the City and State of New
York.

 

 

 

    	 	19	 

     

    

 

		21.	Notices. 

 

All communications
hereunder shall be in writing and shall be mailed or hand delivered and confirmed to the parties hereto as follows: 

 

If to the Company:

 

Sonoma Pharmaceuticals,
Inc.

1129 North McDowell
Blvd.

Petaluma, CA 94954

Attention: Chief Executive
Officer

 

If to the Placement
Agent:

 

Dawson James Securities,
Inc.

1 North Federal Highway
– 5th Floor

Boca Raton, FL 33432

Attention: Chief Executive
Officer

 

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

 

		22.	Miscellaneous. 

 

This Agreement shall
not be modified or amended except in writing signed by Dawson and the Company. This Agreement constitutes the entire agreement
of Dawson and the Company, and supersedes any prior agreements, with respect to the subject matter hereof. If any provision of
this Agreement is determined to be invalid or unenforceable in any respect, such determination will not affect such provision in
any other respect, and the remainder of this Agreement shall remain in full force and effect. This Agreement may be executed in
counterparts (including facsimile or .pdf counterparts), each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.

 

		23.	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 9 hereof, and to their respective successors, and personal representative, and, except
as set forth in Section 9 of this Agreement, no other person will have any right or obligation hereunder. 

 

		24.	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.

 

[SIGNATURE PAGE TO FOLLOW]

 

 

 

 

 

 

 

 

 

    	 	20	 

     

    

 

In acknowledgment that
the foregoing correctly sets forth the understanding reached by Dawson and the Company, and intending to be legally bound, please
sign in the space provided below, whereupon this letter shall constitute a binding Agreement as of the date executed.

 

Very truly yours,

 

SONOMA PHARMACEUTICALS,
INC.

 

 

 

By: /s/ Amy Trombly

       Name: Amy Trombly

       Title: Interim Chief
Executive Officer

 

Confirmed as of the
date first written above:

 

 

DAWSON JAMES SECURITIES,
INC.

 

 

 

By: /s/ Robert
D. Keyser, Jr.

       Name: Robert
D. Keyser, Jr.

       Title:  Chief
Executive Officer

 

 

 

    	 	21	 

     

    

 

SCHEDULE I

 

Issuer General Use
Free Writing Prospectuses

 

 

 

None.

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	22THIS CONVERTIBLE PROMISSORY NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED UNLESS THE SECURITIES ARE REGISTERED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR, BASED ON AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY, SUCH OFFER, SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.

 

APPLIFE DIGITAL SOLUTIONS INC.

CONVERTIBLE PROMISSORY NOTE

$170,000November 22nd, 2019 

For value received as specified in Section 2., APPLife Digital Solutions Inc., a Nevada corporation (the “Company”), hereby promises to pay to the order of ____________________or its registered assigns (hereinafter together with successors in title and assigns referred to as the “Lender”), the principal sum of One Hundred and Seventy Thousand Dollars (US$170,000), together with simple interest from the date hereof on the principal amount outstanding from time to time, as specified below. 

1.Interest.  This Convertible Promissory Note (this “Note”) shall bear interest at a rate of Twelve Percent (12%) per annum.  Interest shall be computed on the basis of a year of 365 days for the actual number of days elapsed.  Interest shall accrue and not be payable except in connection with repayment in full of the principal amount of this Note.  Notwithstanding anything herein to the contrary, payment of any interest, expense or other amount shall not be required if such payment would be unlawful.  In any such event, this Note shall automatically be deemed amended so that interest charges and all other payments required hereunder, individually and in the aggregate, shall be equal to but not greater than the maximum permitted by law. 

2.Amount Due.  Provided that the Lender has paid the full principal amount of the Note as follows: i) one hundred seventy thousand dollars (US$170,000) upon execution of the Note (the “Full Principal Amount”); and unless earlier converted into shares of the capital stock of the Company in accordance with Section 3 hereof and subject to the default provisions set forth herein, if (the sum of such principal and accrued interest being herein after referred to as the “Amount Due”) shall be due and payable in cash at the earlier of (a) any time on or after November 21st, 2021 (the “Maturity Date”) and (b) such time as is applicable pursuant to Section 3(e).  The Amount Due may be prepaid in whole or in part at any time by the Company without the consent of the Lender. 

3.Conversion of the Note.  This Note shall be convertible according to the following terms: 

(a)The following terms shall have the meanings assigned below: 

(i)“Change of Control” means the occurrence (whether in a single transaction or series of related transactions) of one or more of the following events: (A) the closing of the sale, lease, exclusive license, transfer or other disposition of all or substantially all of the Company’s assets, (B) the consummation of the reorganization, merger or consolidation of the Company with or into another entity (except a reorganization, merger or consolidation in which the holders of capital stock of the Company immediately prior to such reorganization, merger or consolidation continue to hold at least a majority of the voting power of the capital stock of the Company or the surviving or acquiring entity), or (C) the closing of the sale, transfer, or issuance, in one transaction or a series of related transactions, to a person or group of affiliated persons (other than an underwriter of the Company’s securities), of the Company’s securities if, after such closing, such person or group of affiliated persons would hold at least a majority of the outstanding voting power of the capital stock of the Company (or the surviving or acquiring entity), provided, however, that a transaction shall not constitute a Change of Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately prior to such transaction, provided further, however, that a transaction shall not constitute a Change of Control if it is consummated principally for bona fide equity financing purposes and is one in which cash is received by the Company or any successor or indebtedness of the Company is cancelled or converted or a combination thereof. 

(ii)“Common Stock” means the Company’s common stock, par value 0.001 per share. 

(iii)“Common Stock Conversion Price” means an amount equal to the quotient obtained by dividing (A) the Valuation Cap by (B) the Number of Fully Diluted Shares Outstanding as of the end of the day immediately prior to the Conversion Date. 

(iv)“Conversion Date” means the date upon which the conversion of this Note into shares of Conversion Stock is effective. 

(v)“Conversion Stock” means the Common Stock or the Qualified Preferred Stock or the other preferred stock of the Company this Note may be converted into pursuant to the terms hereof. 

(vi)“Conversion Price” means the Qualified Financing Stock Conversion Price or the Common Stock Conversion Price, as applicable.  

(vii)“Number of Fully Diluted Shares Outstanding” shall mean, as of any measurement date, all then outstanding shares of capital stock of the Company on an as-converted, as-exercised to Common Stock basis assuming the conversion, exercise or exchange of any other securities then outstanding and convertible into, or exercisable or exchangeable for, shares of capital stock of the Company on an as-converted to Common Stock basis (excluding this Note).  

(viii)“Public Offering” means the sale of shares of Common Stock to the public at a price of at least $5.00 per share (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Common Stock), in a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, resulting in at least $20,000,000 of gross proceeds to the Company.   

(ix)“Qualified Financing” means the sale and issuance of shares of the Qualified Preferred Stock in any venture capital, institutional or other bona fide financing, or any series of related financings, from which the Company receives aggregate gross proceeds of not less than $2,000,000 (excluding conversion or cancellation of any indebtedness and any other instruments which may be convertible into Qualified Preferred Stock).  

(x)“Qualified Financing Conversion Price” means an amount equal to the lesser of (A) 80% of the Qualified Financing Price Per Share and (B) the quotient obtained by dividing (x) the Valuation Cap by (y) the Number of Fully Diluted Shares Outstanding as of immediately prior to the consummation of the Qualified Financing.  

(xi)“Qualified Financing Price Per Share” means the lowest price per share paid for each share of Qualified Preferred Stock purchased by the other purchasers in the Qualified Financing (other than through the conversion of any of this Note). 

(xii)“Qualified Preferred Stock” means the series of preferred stock of the Company issued in a Qualified Financing.  

(xiii)“Valuation Cap” means the valuation of the Company at $50,000,000.  

(b)Automatic Conversion Upon Qualified Financing.  If this Note is outstanding immediately prior to the closing of a Qualified Financing, the unpaid principal amount of all of this Note, together with all accrued and unpaid interest on the principal amount outstanding from time to time, shall be automatically converted concurrently with the Qualified Financing into a number of fully paid and non-assessable shares of Qualified Preferred Stock equal to the quotient obtained by dividing (i) the unpaid principal amount of the this Note, together with all accrued and unpaid interest on the principal amount outstanding from time to time, as of the end of the day immediately prior to the Conversion Date by (ii) the Qualified Financing Conversion Price.  At the closing of the Qualified Financing resulting in the conversion of the unpaid principal amount of this Note, together with all accrued and unpaid interest on the principal amount, the Lender shall receive the Qualified Preferred Stock upon the same terms and conditions applicable to such other purchasers.  

(c)Voluntary Conversion into Common Stock.  If the Company does not consummate a Qualified Financing on or prior to the Maturity Date, upon the written demand of the Lender, the unpaid principal amount of all of this Note, together with all accrued and unpaid  

interest on the principal amount outstanding from time to time, shall be converted into that number of shares of Common Stock equal to the quotient obtained by dividing (i) the unpaid principal amount of the this Note, together with all accrued and unpaid interest on the principal amount outstanding from time to time, as of the end of the day immediately prior to the Conversion Date by (ii) the Common Stock Conversion Price.

(d)Change of Control and Public Offerings.  The Company shall notify the Lender in writing of the anticipated occurrence of a Change of Control or Public Offering at least 10 days prior to the closing date of such Change of Control or Public Offering.  If this Note is outstanding immediately prior to the closing of a Change of Control or a Public Offering, the unpaid principal amount of all of this Note, together with all accrued and unpaid interest on the principal amount outstanding from time to time, shall be converted into that number of shares of Common Stock equal to the quotient obtained by dividing (i) the unpaid principal amount of the this Note, together with all accrued and unpaid interest on the principal amount outstanding from time to time, as of the end of the day immediately prior to the Conversion Date by (ii) the Common Stock Conversion Price.   

(e)Upon the conversion of the unpaid principal amount, together with all accrued and unpaid interest on the principal amount outstanding from time to time, into Conversion Stock, in lieu of any fractional shares to which the Lender would otherwise be entitled, the Company shall pay the Lender an amount in cash equal to such fraction multiplied by the applicable Conversion Price. 

(f)Upon conversion of this Note pursuant to this Section 3, the Lender shall surrender this Note at the office of the Company or of its transfer agent for the applicable number of shares of Conversion Stock.  As promptly as practicable after the conversion of this Note, the Company at its expense will issue and deliver to the Lender, upon surrender of this Note, a certificate or certificates for the class or series and the full number of fully paid and non-assessable shares of Conversion Stock issuable upon such conversion.  The Company shall not be obligated to issue any certificate or other instrument evidencing any shares of Conversion Stock issuable upon such conversion unless this Note is either delivered to the Company or any such transfer agent or the Lender notifies the Company or any such transfer agent that this Note has been lost, stolen, destroyed or mutilated and executes an agreement reasonably satisfactory to the Company to indemnify the Company and any successor to the Company from any loss incurred by the Company or such successor in connection therewith. 

(g)Upon conversion of this Note pursuant to this Section 3 or repayment of the entire Amount Due, as applicable, this Note shall be canceled and, except for the obligations set forth in Section 3, shall no longer be an obligation of the Company. 

(h)Upon any conversion of this Note into shares of Qualified Preferred Stock, other Company preferred stock or Common Stock, as applicable, the holder of this Note shall become a party to any financing or shareholder-related agreement generally entered into by the Company and the other purchasers of shares of Company preferred stock, or holders of Common Stock, as applicable (excluding, for the avoidance of doubt, any agreements that impose vesting).  

(i)The Company shall give notice of any Qualified Financing as soon as is reasonably practical prior to the closing of such financing.  Such notice shall specify the proposed date of such closing and the amount of shares of Conversion Stock that may be issued upon such conversion. 

(j)Notwithstanding the conversion of this Note pursuant to this Section 3, in no event shall the Lender be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Conversion Stock beneficially owned by the Lender and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion of any other security of the Company subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Conversion Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Lender and its affiliates of more than 9.99% of the outstanding shares of Common Stock.  For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 

(k)If the Lender has not paid, the Full Principal Amount in accordance to Section 2, then any conversion of the unpaid principal amount of this Note pursuant to Section 3, together with all accrued and unpaid interest on such principal amount outstanding from time to time, shall be converted pro rata into that number of shares of Common Stock related to the Full Principal Amount actually paid by Lender. 

4.Representations and Warranties of Company.  

(a)Organization and Standing.  The Company is a corporation duly organized and validly existing under the laws of the state of Nevada.  The Company has all requisite corporate power and authority to own and operate its properties and assets, and to execute and deliver this Note and any other agreements or instruments required hereunder.  The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business. 

(b)Authority for Agreement.  All corporate action on the part of the Company necessary for the authorization of this Note, the performance of all obligations of the Company hereunder and the authorization, sale, issuance and delivery of this Note, has been taken.  This Note and any other agreements required hereunder when executed and delivered by the Company, will be the valid and binding obligations of the Company enforceable in accordance with its and their terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights, and (ii) general principles of equity that restrict the availability of equitable remedies.   

(c)Capitalization.  The authorized capital stock of the Company as of immediately prior to the date hereof consists of 500,000,000 shares of Common Stock, par value $0.001 per share, 123,337,531 of which are issued and outstanding as of the date hereof and 10,000,000 shares of Preferred Stock, par value $0.001 per share, 0 of which are issued and outstanding as of the date hereof.   

(d)Subsidiaries.  The Company has two (2) wholly-owned subsidiaries, B2BCHX SPV LLC, a Delaware limited liability company, and Rooster Essentials APP SPV LLC, a Delaware limited liability company and owns twenty-five percent (30%) of the common stock in Smartrade Inc., a Canadian corporation.  Other than the entities mentioned in this Section 4(d), the Company does not own or control, directly or indirectly, shares of capital stock of any other corporation or any interest in any partnership, joint venture or other non-corporate business entity or enterprise.    

(e)Consents.  No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any other party (including any governmental authority) is required on the part of the Company in connection with the execution, delivery and performance of this Note, the offer, issue, sale and delivery of this Note, or the other transaction contemplated by this Note or any other agreement to be executed in connection with the transactions contemplated hereby, except if required, qualifications or filings under any applicable Singapore laws, which qualifications or filings, if required, will be obtained or made and will be effective within the time periods required by law.   

(f)Proceeds.  The Company shall use the cash proceeds from the issuance and sale of this Note for working capital and for other general corporate purposes. 

(g)No Broker Fees.  There are no claims for brokerage commission, finders’ fees or similar compensation in connection with the transactions contemplated by the Agreement or related documents based on any arrangement or agreement binding upon the Company. 

5.Representations and Warranties of Lender. The Lender hereby represents and warrants to the Company that: 

(a)Requisite Power and Authority.  The Lender has all necessary power and authority under all applicable provisions of law to execute and deliver this Note and the other agreements required hereunder and to carry out its and their respective provisions.  All action on the Lender’s part required for the lawful execution and delivery of this Agreement and other agreements required hereunder have been effectively taken.  This Note and any other agreements required hereunder when executed and delivered by the Lender will be the valid and binding obligations of the Lender, enforceable in accordance with its and their terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights and (ii) as limited by general principles of equity that restrict the availability of equitable remedies. 

(b)Lender Bears Economic Risk.  The Lender understands that an investment in the Company involves significant risks.  The Lender has such knowledge, skill and experience  

in business, financial and investment matters so that the Lender is capable of evaluating the merits and risks of an investment in this Note.  

(c)Disclosure of Information.  The Lender has received all the information Lender considers necessary or appropriate for deciding whether to acquire this Note and any capital stock issuable upon conversion of the Note into common stock of the Company (the “Securities”). The Lender has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Securities.  

(d)Acquisition for Own Account.  The Lender is acquiring this Note for investment only and not with a view to or in connection with any resale or distribution thereof.  The Lender has no present intention of making any sale, assignment, pledge, gift, transfer or other disposition of this Note or any interest therein. 

(e)No Brokerage Fees.  There are no claims for brokerage commissions, finders’ fees or similar compensation in connection with the transactions contemplated by the Agreement or related documents based on any arrangement or agreement binding upon Lender. 

(f)Restricted Securities.  The Lender acknowledges and agrees that the Securities acquired upon conversion of this Note shall not be registered under the Securities Act, will constitute “restricted securities” within the meaning of Rule 144 promulgated under the Securities Act and will be subject to restrictions on resale imposed by the Securities Act and applicable state securities laws.  Lender further acknowledges and agrees that each certificate representing the Securities shall bear a restrictive legend or contain a notation, as applicable, substantially to the effect of the legend on the first page hereof.   

6.Company Covenants. 

(a)Information Rights.  For so long as this Note is outstanding and promptly upon the request of the Lender, the Company will deliver to the Lender audited annual and unaudited quarterly financial statements. 

(b)Information Provided to Stockholders.  For so long as this Note is outstanding, the Company shall deliver to the Lender, (i) contemporaneously with delivery to its stockholders (in their capacity as such), copies of all statements, reports and notices made available to its stockholders, and (ii) upon the Lender’s request any information a stockholder of the Company is entitled to receive, whether by law or the Company’s constituent documents. 

7.Default. 

(a)This Note shall, at the election of the Lender, become immediately due and payable without presentment, demand protest or notice, upon the occurrence of any of the following events of default (individually, an “Event of Default” and collectively, “Events of Default”): 

(i)the failure of the Company to pay any principal, interest or other amount due under this Note when due, subject to the Grace Period (as defined below), 

(ii)the failure of the Company to convert the unpaid principal amount of this Note, together with all accrued and unpaid interest hereunder, in accordance with the provisions of Section 3, 

(iii)the acknowledgment in writing by the Company of its inability to pay its debts as they mature, or the assignment or establishment of a trust for the benefit of creditors, 

(iv)the liquidation, dissolution or insolvency of the Company, or the appointment of a receiver or custodian for the Company of all or substantially all of its property, if such appointment is not terminated or dismissed within ninety (90) days, 

(v)the institution by or against the Company of any proceedings under the United States Bankruptcy Code or any other federal or state bankruptcy, reorganization, receivership, insolvency or other similar law affecting the rights of creditors generally, 

(vi)any commitment made or obligation incurred on the part of the Company to do or permit any of the foregoing clauses (i) - (v),  

(vii)any representation or warranty in this Note was untrue or inaccurate when made and written notice thereof is given to the Company by the Lender; or 

(viii)the Company’s breach or violation of any covenant or agreement in this Note, which breach or violation is not cured within 10 days after receiving written notice of such default from the Lender. 

(b)If the Company has not paid the principal amount plus interest accrued and unpaid on the Note prior to or on the Maturity Date, the Company shall have a period of twelve (12) months from the Maturity Date before an Event of Default occurs (the “Grace Period”) to cure such payment default.  

8.No Set-Off.  All payments by the Company under this Note shall be made without set-off or counterclaim and be without any deduction or withholding for any taxes or fees of any nature, unless the obligation to make such deduction or withholding is imposed by law. 

9.Waivers.  The Company hereby expressly and irrevocably waives presentment, demand, protest, notice of protest and all other notices in connection with the delivery, acceptance, performance, default or enforcement or this Note.  No delay or extension on the part of the Lender in exercising any right hereunder shall operate as a waiver of such right or of any other right under this Note, and a waiver of any right on any one occasion shall not operate as a waiver of such right on any future occasion. 

10.General. 

(a)Transfers; Successors and Assigns.  This Note, and the obligations and rights of the Company hereunder, shall be binding upon and inure to the benefit of the Company, the holder of this Note, and their respective heirs, successors and assigns; provided, however, that the Company may not transfer or assign its obligations hereunder, without the consent of the Lender.  

(b)Changes.  Changes in or additions to this Note may be made or compliance with any term, covenant, agreement, condition or provision set forth herein may be omitted or waived (either generally or in a particular instance and either retroactively or prospectively), upon written consent of the Company and the Lender. 

(c)Notices.  All notices and other communications given or made pursuant to this Note shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one (1) business day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.  All communications shall be sent to the respective parties at the following addresses, or to such e-mail address, facsimile number or address as subsequently modified by written notice given in accordance with this Section 10(c): 

If to the Company:APPLIFE DIGITAL SOLUTIONS INC. 

555 California St., #4925

San Francisco, CA 94104

Attention:  Matthew Reid

 

With an electronic copy, which shall not constitute notice, to:

mreid@applifedigital.com

legal@applifedigital.com

 

If to the Lender:

 

 

 

 

 

11.Enforceability.  In the event any one or more of the provisions of this Note shall for any reason be held to be invalid, illegal or unenforceable, then such provision(s) only shall be deemed null and void and shall not affect any other provision of this Note, and the remaining provisions of this Note shall remain operative and in full force and effect and in no way shall be affected, prejudiced or disturbed thereby. 

12.Expenses of Collection.  The Company agrees to pay all of the Lender’s reasonable costs in collecting and enforcing this Note, including all attorneys fees and disbursements. 

13.Governing Law.  This Note and the obligations of the Company hereunder shall be governed by and interpreted and determined in accordance with the laws of New York.   

14.Arbitration. Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this Agreement to arbitrate, shall be determined by arbitration in New York, New York, before one arbitrator selected by the American Arbitration Association.  In the event that the parties cannot reach an agreement on an arbitrator, the arbitrator shall be selected by the arbitrator selection procedures established by the American Arbitration Association.  The arbitration shall be held, and the award shall be rendered, in the English language.  The arbitration shall be administered in accordance with the American Arbitration Association’s Commercial Arbitration Rules in effect as of the Effective Date.  Judgment on the award may be entered in any court having jurisdiction.  Each party shall bear its own costs and split the arbitration fees.  If a party shall fail to pay its share of the arbitration costs, then the party advancing costs for arbitration may charge interest at the highest rate permissible by law on such non-payment amount and receive reimbursement for reasonable legal fees and collection costs.  Each party acknowledges and agrees that such non-payment provision is reasonable and necessary.  Notwithstanding the foregoing, no party shall be responsible for another party’s legal expenses incurred in relation to any arbitration.  

 

[Signature on following page] 

IN WITNESS WHEREOF, this Note has been duly executed on behalf of the undersigned on the day and in the year first written above.

 

COMPANY:

APPLIFE DIGITAL SOLUTIONS INC.

By: /s/_______________________________ 

Name:  Matthew Reid 

Title:  CEO 

 

 

 

AGREED AND ACKNOWLEDGED:

 

LENDER:

 

 

By: /s/____________________________

Name:

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