UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): March 16, 2015 (March 13, 2015)
BARFRESH
FOOD GROUP INC.
(Exact
name of registrant as specified in its charter)
Delaware |
|
000-55131 |
|
27-1994406 |
(State
or other jurisdiction
of incorporation) |
|
(Commission
File
Number) |
|
(IRS
Employer
Identification
No.) |
90
Madison Street, Suite 701
Denver,
CO 80206
(Address
of principal executive offices)
Registrant’s
telephone number, including area code: 303-329-3008
N/A
(Former
name or former address, if changed since last report.)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c))
Item
1.01 Entry into a Material Definitive Agreement
The
disclosures set forth in Item 3.02 are incorporated herein by this reference.
Item
3.02 Unregistered Sales of Equity Securities
On
March 13, 2015, Barfresh Food Group, Inc. (the “Company”) sold in a private placement to institutional and accredited
investors 10,550,000 shares of its common stock (“Shares”) and warrants to purchase up to 5,275,000 shares of common
stock (“Warrant Shares”) for gross proceeds to the Company of $5,275,000. The warrants are exercisable for a term
of five-years at a per share exercise price of $0.60 and are subject to customary protective provisions for price and certain
events. The Shares and Warrant Shares are subject to mandatory registration rights, set forth in the registration rights agreement
between the Company and the investors. The net proceeds of the offering will be used for working capital to rapidly scale new
contracts and expand its operations to meet demand for its unique line of Smoo® blended beverages.
The
Company believes that the issuance of the Shares and warrants is exempt from registration pursuant to Rule 506(b) of Regulation
D, promulgated under the Securities Act of 1933, as amended, on the basis that the offering is limited to accredited investors
and involves no general solicitation or advertising.
The
description of the financing transaction set forth herein is qualified by reference to the transaction documents, attached hereto
as Exhibits 4.1, 10.1 and 10.2. The Company’s Press Release dated March 16, 2015 announcing the closing of the private placement
is also attached hereto as Exhibit 99.1.
Item
9.01 Financial Statements and Exhibits
(d)
Exhibits
Exhibit
No. |
|
Document |
|
|
|
4.1 |
|
Form of Series
G Warrant |
|
|
|
10.1 |
|
Form of Securities
Purchase Agreement dated March 13, 2015 |
|
|
|
10.2 |
|
Form of Registration
Rights Agreement dated March 13, 2015 |
|
|
|
99.1 |
|
Form of Press
Release dated March 16, 2015 |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned duly authorized.
|
Barfresh Food Group Inc.
(Registrant)
|
|
|
|
Date: March 16,
2015 |
By: |
/s/ Arnold Tinter |
|
Name: |
Arnold Tinter |
|
Its: |
Chief Financial Officer |
[FORM
OF Series G WARRANT]
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM
REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD
PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
Barfresh
Food Group Inc.
Series
G Warrant To Purchase Common Stock
Warrant
No.: ___________
Date
of Issuance: March [___________], 2015 (“Issuance Date”)
Barfresh
Food Group Inc., a Delaware corporation (the “Company”), hereby certifies that, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, [BUYER], the registered
holder hereof or its permitted assigns (the “Holder”), is entitled, subject to the terms set forth below, to
purchase from the Company, at the Exercise Price (as defined below) then in effect, upon exercise of this Warrant to Purchase
Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, the “Warrant”),
at any time or times on or after the Issuance Date, but not after 11:59 p.m., New York time, on the Expiration Date (as defined
below), _________________1 (subject to adjustment as provided herein) fully paid and non-assessable shares of Common
Stock (as defined below) (the “Warrant Shares”, and such number of Warrant Shares, the “Warrant
Number”). Except as otherwise defined herein, capitalized terms in this Warrant shall have the meanings set forth in
Section 17. This Warrant is one of the Series G Warrants to Purchase Common Stock (the “SPA Warrants”) issued
pursuant to Section 1 of that certain Securities Purchase Agreement, dated as of [___________], 2015 (the “Subscription
Date”), by and among the Company and the investors (the “Buyers”) referred to therein, as amended
from time to time (the “Securities Purchase Agreement”).
1
50% warrant coverage
1.
EXERCISE OF WARRANT.
(a)
Mechanics of Exercise. Subject to the terms and conditions hereof (including, without limitation, the limitations set forth
in Section 1(f)), this Warrant may be exercised by the Holder on any day on or after the Issuance Date (an “Exercise
Date”), in whole or in part, by delivery (whether via facsimile or otherwise) of a written notice, in the form attached
hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election to exercise this
Warrant. Within one (1) Trading Day following an exercise of this Warrant as aforesaid, the Holder shall deliver payment to the
Company of an amount equal to the Exercise Price in effect on the date of such exercise multiplied by the number of Warrant Shares
as to which this Warrant was so exercised (the “Aggregate Exercise Price”) in cash or via wire transfer of
immediately available funds if the Holder did not notify the Company in such Exercise Notice that such exercise was made pursuant
to a Cashless Exercise (as defined in Section 1(c)). The Holder shall not be required to deliver the original of this Warrant
in order to effect an exercise hereunder. Execution and delivery of an Exercise Notice with respect to less than all of the Warrant
Shares shall have the same effect as cancellation of the original of this Warrant and issuance of a new Warrant evidencing the
right to purchase the remaining number of Warrant Shares. Execution and delivery of an Exercise Notice for all of the then-remaining
Warrant Shares shall have the same effect as cancellation of the original of this Warrant after delivery of the Warrant Shares
in accordance with the terms hereof. On or before the first (1st) Trading Day following the date on which the Company
has received an Exercise Notice, the Company shall transmit by facsimile an acknowledgment of confirmation of receipt of such
Exercise Notice, in the form attached hereto as Exhibit B, to the Holder and the Company’s transfer agent
(the “Transfer Agent”). On or before the third (3rd) Trading Day following the date on which the
Company has received such Exercise Notice (or such earlier date as required pursuant to the 1934 Act or other applicable law,
rule or regulation for the settlement of a trade of such Warrant Shares initiated on the applicable Exercise Date), the Company
shall (X) provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated
Securities Transfer Program, upon the request of the Holder, credit such aggregate number of shares of Common Stock to which the
Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its
Deposit/Withdrawal at Custodian system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program, issue and deliver to the Holder or, at the Holder’s instruction pursuant to the Exercise Notice, the Holder’s
agent or designee, in each case, sent by reputable overnight courier to the address as specified in the applicable Exercise Notice,
a certificate, registered in the Company’s share register in the name of the Holder or its designee (as indicated in the
applicable Exercise Notice), for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise.
Upon delivery of an Exercise Notice, the Holder shall be deemed for all corporate purposes to have become the holder of record
of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date such Warrant Shares are
credited to the Holder’s DTC account or the date of delivery of the certificates evidencing such Warrant Shares (as the
case may be). If this Warrant is submitted in connection with any exercise pursuant to this Section 1(a) and the number of Warrant
Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an
exercise, then, at the request of the Holder, the Company shall as soon as practicable and in no event later than three (3) Business
Days after any exercise and at its own expense, issue and deliver to the Holder (or its designee) a new Warrant (in accordance
with Section 7(d)) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise
under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised. No fractional shares of
Common Stock are to be issued upon the exercise of this Warrant, but rather the number of shares of Common Stock to be issued
shall be rounded up to the nearest whole number. The Company shall pay any and all taxes and fees which may be payable with respect
to the issuance and delivery of Warrant Shares upon exercise of this Warrant. Notwithstanding the foregoing, except in the case
where an exercise of this Warrant is validly made pursuant to a Cashless Exercise (as defined in Section 1(c)), the Company’s
failure to deliver Warrant Shares to the Holder on or prior to the first (1st) Trading Day after the Company’s receipt of
the Aggregate Exercise Price shall not be deemed to be a breach of this Warrant.
(b)
Exercise Price. For purposes of this Warrant, “Exercise Price” means $0.60, subject to adjustment as
provided herein.
(c)
Company’s Failure to Timely Deliver Securities. If after six (6) months from the Issuance Date, the Company shall
fail, for any reason or for no reason, within the later of (i) three (3) Trading Days after receipt of the applicable Exercise
Notice (or such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement
of a trade of such Warrant Shares initiated on the applicable Exercise Date) and (ii) one (1) Trading Day after the Company’s
receipt of the Aggregate Exercise Price (or valid notice of a Cashless Exercise) (such later date, the “Share Delivery
Deadline”), either (I) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program,
to issue and deliver to the Holder (or its designee) a certificate for the number of Warrant Shares to which the Holder is entitled
and register such Warrant Shares on the Company’s share register or, if the Transfer Agent is participating in the DTC Fast
Automated Securities Transfer Program, to credit the balance account of the Holder or the Holder’s designee with DTC for
such number of Warrant Shares to which the Holder is entitled upon the Holder’s exercise of this Warrant (as the case may
be) or (II) if a Registration Statement covering the resale of the Warrant Shares that are the subject of the Exercise Notice
(the “Unavailable Warrant Shares”) is not available for the resale of such Unavailable Warrant Shares and the
Company fails to promptly, but in no event later than as required pursuant to the Registration Rights Agreement (x) so notify
the Holder and (y) deliver the Warrant Shares electronically without any restrictive legend by crediting such aggregate number
of Warrant Shares to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance
account with DTC through its Deposit/Withdrawal At Custodian system (the event described in the immediately foregoing clause (II)
is hereinafter referred as a “Notice Failure” and together with the event described in clause (I) above, a
“Delivery Failure”), and if on or after such Trading Day the Holder purchases (in an open market transaction
or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock issuable upon
such exercise that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall,
within three (3) Trading Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the
Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions and other out-of-pocket
expenses, if any) for the shares of Common Stock so purchased) (the “Buy-In Price”), at which point the Company’s
obligation to so issue and deliver such certificate (and to issue such shares of Common Stock) or credit the balance account of
such Holder or such Holder’s designee with DTC for the number of Warrant Shares to which the Holder is entitled upon the
Holder’s exercise hereunder (as the case may be) (and to issue such Warrant Shares) shall terminate, or (ii) promptly honor
its obligation to so issue and deliver to the Holder a certificate or certificates representing such Warrant Shares or credit
the balance account of such Holder or such Holder’s designee with DTC for the number of Warrant Shares to which the Holder
is entitled upon the Holder’s exercise hereunder (as the case may be) and pay cash to the Holder in an amount equal to the
excess (if any) of the Buy-In Price over the product of (A) such number of Warrant Shares multiplied by (B) the lowest Closing
Sale Price of the Common Stock on any Trading Day during the period commencing on the date of the applicable Exercise Notice and
ending on the date of such issuance and payment under this clause (ii). Nothing shall limit the Holder’s right to pursue
any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance
and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common
Stock (or to electronically deliver such shares of Common Stock) upon the exercise of this Warrant as required pursuant to the
terms hereof.
(d)
Cashless Exercise. Notwithstanding anything contained herein to the contrary (other than Section 1(f) below), if at the
time of exercise hereof a Registration Statement (as defined in the Registration Rights Agreement) is not effective (or the prospectus
contained therein is not available for use) for the resale by the Holder of the Warrant Shares to be issued pursuant to an Exercise
Notice hereunder, then the Holder may, in its sole discretion, exercise this Warrant with respect to such Warrant Shares, in lieu
of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the Aggregate Exercise
Price, elect instead to receive upon such exercise the “Net Number” of shares of Common Stock determined according
to the following formula (a “Cashless Exercise”):
|
Net
Number = |
(A
x B) - (A x C) |
|
|
|
D |
|
For
purposes of the foregoing formula:
A=
the total number of shares with respect to which this Warrant is then being exercised.
B
= the quotient of (x) the sum of the VWAP of the Common Stock of each of the twenty (20) Trading Days ending at the close of business
on the Principal Market immediately prior to the time of exercise as set forth in the applicable Exercise Notice, divided by (y)
twenty (20).
C
= the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.
D
= as applicable: (i) the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the date of the applicable
Exercise Notice if such Exercise Notice is (1) both executed and delivered pursuant to Section 1(a) hereof on a day that is not
a Trading Day or (2) both executed and delivered pursuant to Section 1(a) hereof on a Trading Day prior to the opening of “regular
trading hours” (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such Trading
Day, (ii) the Bid Price of the Common Stock as of the time of the Holder’s execution of the applicable Exercise Notice if
such Exercise Notice is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours
thereafter pursuant to Section 1(a) hereof, or (iii) the Closing Sale Price of the Common Stock on the date of the applicable
Exercise Notice if the date of such Exercise Notice is a Trading Day and such Exercise Notice is both executed and delivered pursuant
to Section 1(a) hereof after the close of “regular trading hours” on such Trading Day.
For
purposes of Rule 144(d) promulgated under the 1933 Act, as in effect on the date hereof, it is intended that the Warrant Shares
issued in a Cashless Exercise shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares
shall be deemed to have commenced, on the date this Warrant was originally issued pursuant to the Securities Purchase Agreement.
(e)
Disputes. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the number
of Warrant Shares to be issued pursuant to the terms hereof, the Company shall promptly issue to the Holder the number of Warrant
Shares that are not disputed and resolve such dispute in accordance with Section 14.
(f)
Limitations on Exercises. The Company shall not effect the exercise of any portion of this Warrant, and the Holder shall
not have the right to exercise any portion of this Warrant, pursuant to the terms and conditions of this Warrant and any such
exercise shall be null and void and treated as if never made, to the extent that after giving effect to such exercise, the Holder
together with the other Attribution Parties collectively would beneficially own in excess of 9.99% (the “Maximum Percentage”)
of the shares of Common Stock outstanding immediately after giving effect to such exercise. For purposes of the foregoing sentence,
the aggregate number of shares of Common Stock beneficially owned by the Holder and the other Attribution Parties shall include
the number of shares of Common Stock held by the Holder and all other Attribution Parties plus the number of shares of Common
Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall
exclude shares of Common Stock which would be issuable upon (A) exercise of the remaining, unexercised portion of this Warrant
beneficially owned by the Holder or any of the other Attribution Parties and (B) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Company (including, without limitation, any convertible notes or convertible
preferred stock or warrants, including other SPA Warrants) beneficially owned by the Holder or any other Attribution Party subject
to a limitation on conversion or exercise analogous to the limitation contained in this Section 1(f)(i). For purposes of this
Section 1(f)(i), beneficial ownership shall be calculated in accordance with Section 13(d) of the 1934 Act. For purposes of determining
the number of outstanding shares of Common Stock the Holder may acquire upon the exercise of this Warrant without exceeding the
Maximum Percentage, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s
most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with
the SEC, as the case may be, (y) a more recent public announcement by the Company or (z) any other written notice by the Company
or the Transfer Agent, if any, setting forth the number of shares of Common Stock outstanding (the “Reported Outstanding
Share Number”). If the Company receives an Exercise Notice from the Holder at a time when the actual number of outstanding
shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall (i) notify the Holder in writing
of the number of shares of Common Stock then outstanding and, to the extent that such Exercise Notice would otherwise cause the
Holder’s beneficial ownership, as determined pursuant to this Section 1(f)(i), to exceed the Maximum Percentage, the Holder
must notify the Company of a reduced number of Warrant Shares to be purchased pursuant to such Exercise Notice (the number of
shares by which such purchase is reduced, the “Reduction Shares”) and (ii) as soon as reasonably practicable,
the Company shall return to the Holder any exercise price paid by the Holder for the Reduction Shares. For any reason at any time,
upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing or
by electronic mail to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including
this Warrant, by the Holder and any other Attribution Party since the date as of which the Reported Outstanding Share Number was
reported. In the event that the issuance of shares of Common Stock to the Holder upon exercise of this Warrant results in the
Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage
of the number of outstanding shares of Common Stock (as determined under Section 13(d) of the 1934 Act), the number of shares
so issued by which the Holder’s and the other Attribution Parties’ aggregate beneficial ownership exceeds the Maximum
Percentage (the “Excess Shares”) shall be deemed null and void and shall be cancelled ab initio, and the Holder
shall not have the power to vote or to transfer the Excess Shares. As soon as reasonably practicable after the issuance of the
Excess Shares has been deemed null and void, the Company shall return to the Holder the exercise price paid by the Holder for
the Excess Shares. For purposes of clarity, the shares of Common Stock issuable pursuant to the terms of this Warrant in excess
of the Maximum Percentage shall not be deemed to be beneficially owned by the Holder for any purpose including for purposes of
Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to exercise this Warrant pursuant to this paragraph shall
have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of exercisability.
The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms
of this Section 1(f)(i) to the extent necessary to correct this paragraph or any portion of this paragraph which may be defective
or inconsistent with the intended beneficial ownership limitation contained in this Section 1(f)(i) or to make changes or supplements
necessary or desirable to properly give effect to such limitation. The limitation contained in this paragraph may not be waived
and shall apply to a successor holder of this Warrant.
(g)
Reservation of Authorized Shares
(i)
Reservation. The Company shall initially reserve out of its authorized and unissued shares of Common Stock a number of
shares of Common Stock for the SPA Warrants equal to 100% of the maximum number of shares of Common Stock as shall be necessary
to satisfy the Company’s obligation to issue shares of Common Stock under the SPA Warrants (without regard to any limitations
on exercise) as of the Issuance Date. The Company shall at all times keep reserved for issuance under this Warrant a number of
shares of Common Stock at least equal to 100% of the maximum number of shares of Common Stock as shall be necessary to satisfy
the Company’s obligation to issue shares of Common Stock under the SPA Warrants then outstanding (without regard to any
limitations on exercise) (the “Required Reserve Amount”); provided that at no time shall the number of shares
of Common Stock reserved pursuant to this Section 1(g)(i) be reduced other than proportionally in connection with any exercise
or redemption of SPA Warrants. The Required Reserve Amount (including, without limitation, each increase in the number of shares
so reserved) shall be allocated pro rata among the holders of the SPA Warrants based on number of shares of Common Stock issuable
upon exercise of SPA Warrants held by each holder on the Closing Date (without regard to any limitations on exercise) or increase
in the number of reserved shares, as the case may be (the “Authorized Share Allocation”). In the event that
a holder shall sell or otherwise transfer any of such holder’s SPA Warrants, each transferee shall be allocated a pro rata
portion of such holder’s Authorized Share Allocation. Any shares of Common Stock reserved and allocated to any Person which
ceases to hold any SPA Warrants shall be allocated to the remaining holders of SPA Warrants, pro rata based on the number of shares
of Common Stock issuable upon exercise of the SPA Warrants then held by such holders (without regard to any limitations on exercise).
(ii)
Insufficient Authorized Shares. If, notwithstanding Section 1(g)(i), and not in limitation thereof, at any time while any
of the SPA Warrants remain outstanding, the Company does not have a sufficient number of authorized and unreserved shares of Common
Stock to satisfy its obligation to reserve the Required Reserve Amount (an “Authorized Share Failure”), then
the Company shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock to an
amount sufficient to allow the Company to reserve the Required Reserve Amount for all the SPA Warrants then outstanding. Without
limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share
Failure, but in no event later than ninety (90) days after the occurrence of such Authorized Share Failure, the Company shall
hold a meeting of its stockholders or, if permitted by applicable law, file an information statement for the approval of an increase
in the number of authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder
with a proxy statement and shall use its best efforts to solicit its stockholders’ approval of such increase in authorized
shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal. In
the event that the Company is prohibited from issuing shares of Common Stock upon an exercise of this Warrant due to the failure
by the Company to have sufficient shares of Common Stock available out of the authorized but unissued shares of Common Stock (such
unavailable number of shares of Common Stock, the “Authorization Failure Shares”), in lieu of delivering such
Authorization Failure Shares to the Holder, the Company shall pay cash in exchange for the cancellation of such portion of this
Warrant exercisable into such Authorized Failure Shares at a price equal to the sum of (i) the product of (x) such number of Authorization
Failure Shares and (y) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on
the date the Holder delivers the applicable Exercise Notice with respect to such Authorization Failure Shares to the Company and
ending on the date of such issuance and payment under this Section 1(g); and (ii) to the extent the Holder purchases (in an open
market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of Authorization Failure
Shares, any brokerage commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection therewith.
2.
ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price and number of Warrant Shares issuable upon
exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 2.
(a)
Stock Dividends and Splits. Without limiting any provision of Section 2(b) or Section 4, if the Company, at any time on
or after the date of the Securities Purchase Agreement, (i) pays a stock dividend on one or more classes of its then outstanding
shares of Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock,
(ii) subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its then outstanding
shares of Common Stock into a larger number of shares or (iii) combines (by combination, reverse stock split or otherwise) one
or more classes of its then outstanding shares of Common Stock into a smaller number of shares, then in each such case the Exercise
Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately
before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such
event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for
the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii)
or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination. If
any event requiring an adjustment under this paragraph occurs during the period that an Exercise Price is calculated hereunder,
then the calculation of such Exercise Price shall be adjusted appropriately to reflect such event.
(b)
Adjustment Upon Issuance of Shares of Common Stock. If and whenever on or after the date of the Securities Purchase Agreement,
the Company issues or sells, or in accordance with this Section 2 is deemed to have issued or sold, any shares of Common Stock
(including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding any
Excluded Securities issued or sold or deemed to have been issued or sold) for a consideration per share (the “New Issuance
Price”) less than a price equal to the lesser of (x) $0.50 (as adjusted for stock splits, stock dividends, recapitalizations
and similar events), and (y) the Exercise Price in effect immediately prior to such issuance or sale or deemed issuance or sale
(such lower price then in effect is referred to as the “Applicable Price”) (the foregoing a “Dilutive
Issuance”), then immediately after such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an
amount equal to the New Issuance Price. For all purposes of the foregoing (including, without limitation, determining the adjusted
Exercise Price and the New Issuance Price under this Section 2(b)), the following shall be applicable:
(i)
Issuance of Options. If the Company in any manner grants or sells any Options and the lowest price per share for which
one share of Common Stock is at any time issuable upon the exercise of any such Option or upon conversion, exercise or exchange
of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof is less than
the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the
Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 2(b)(i), the
“lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion,
exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms
thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable
by the Company with respect to any one share of Common Stock upon the granting or sale of such Option, upon exercise of such Option
and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant
to the terms thereof and (y) the lowest exercise price set forth in such Option for which one share of Common Stock is issuable
upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise
of any such Option or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable, directly or indirectly,
by the Company to the holder of such Option (or any other Person) upon the granting or sale of such Option, upon exercise of such
Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise
pursuant to the terms thereof plus the value of any other consideration received or receivable by, or benefit conferred on, the
holder of such Option (or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be
made upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options
or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities.
(ii)
Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest
price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof
or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities
for such price per share. For the purposes of this Section 2(b)(ii), the “lowest price per share for which one share of
Common Stock is issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof” shall
be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company
with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise
or exchange of such Convertible Security and otherwise pursuant to the terms thereof and (y) the lowest conversion price set forth
in such Convertible Security for which one share of Common Stock is issuable upon conversion, exercise or exchange thereof or
otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable, directly or indirectly, by the Company
to the holder of such Convertible Security (or any other Person) upon the issuance or sale of such Convertible Security plus the
value of any other consideration received or receivable by, or benefit conferred on, the holder of such Convertible Security (or
any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance
of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities or otherwise pursuant to the
terms thereof, and if any such issuance or sale of such Convertible Securities is made upon exercise of any Options for which
adjustment of this Warrant has been or is to be made pursuant to other provisions of this Section 2(b), except as contemplated
below, no further adjustment of the Exercise Price shall be made by reason of such issuance or sale.
(iii)
Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional
consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at
which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases
at any time, the Exercise Price in effect at the time of such increase or decrease shall be adjusted to the Exercise Price which
would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase
price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted,
issued or sold. For purposes of this Section 2(b)(iii), if the terms of any Option or Convertible Security that was outstanding
as of the date of issuance of this Warrant are increased or decreased in the manner described in the immediately preceding sentence,
then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange
thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section
2(b) shall be made if such adjustment would result in an increase of the Exercise Price then in effect.
(iv)
Calculation of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection
with the issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the
“Primary Security”, and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary
Securities”, and together with the Primary Security, each a “Unit”), together comprising one integrated
transaction, the aggregate consideration per share of Common Stock with respect to such Primary Security shall be deemed to be
the lower of (x) the purchase price of such Unit, (y) if such Primary Security is an Option and/or Convertible Security, the lowest
price per share for which one share of Common Stock is at any time issuable upon the exercise or conversion of the Primary Security
in accordance with Section 2(b)(i) and 2(b)(ii) above and (z) the VWAP of the shares of Common Stock as of the Trading Day immediately
following the public announcement of such Dilutive Issuance. If any shares of Common Stock, Options or Convertible Securities
are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the
gross amount of consideration received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities
are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair
value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount
of consideration received by the Company for such securities will be the arithmetic average of the VWAPs of such security for
each of the five (5) Trading Days immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible
Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving
entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business
of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities, as the case
may be. The fair value of any consideration other than cash or publicly traded securities will be determined jointly by the Company
and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring
valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5)
Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly
selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties absent
manifest error and the fees and expenses of such appraiser shall be borne by the Company.
(v)
Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A)
to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to
subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be
the date of the issuance or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase (as the
case may be).
(c)
Number of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to this Section 2(a), the number
of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that
after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same
as the aggregate Exercise Price in effect immediately prior to such adjustment (without regard to any limitations on exercise
contained herein).
(d)
Holder’s Right of Alternative Exercise Price Following Issuance of Certain Options or Convertible Securities. In
addition to and not in limitation of the other provisions of this Section 2, if the Company in any manner issues or sells or enters
into any agreement to issue or sell, any Common Stock, Options or Convertible Securities (any such securities, “Variable
Price Securities”) after the Subscription Date that are issuable pursuant to such agreement or convertible into or exchangeable
or exercisable for shares of Common Stock at a price which varies or may vary with the market price of the shares of Common Stock,
including by way of one or more reset(s) to a fixed price, but exclusive of such formulations reflecting customary anti-dilution
provisions (such as share splits, share combinations, share dividends and similar transactions) (each of the formulations for
such variable price being herein referred to as, the “Variable Price”), the Company shall provide written notice
thereof via facsimile and overnight courier to the Holder on the date of such agreement and the issuance of such Convertible Securities
or Options. From and after the date the Company enters into such agreement or issues any such Variable Price Securities, the Holder
shall have the right, but not the obligation, in its sole discretion to substitute the Variable Price for the Exercise Price upon
exercise of this Warrant by designating in the Exercise Notice delivered upon any exercise of this Warrant that solely for purposes
of such exercise the Holder is relying on the Variable Price rather than the Exercise Price then in effect. The Holder’s
election to rely on a Variable Price for a particular exercise of this Warrant shall not obligate the Holder to rely on a Variable
Price for any future exercises of this Warrant.
(e)
Other Events. In the event that the Company (or any Subsidiary (as defined in the Securities Purchase Agreement)) shall
take any action to which the provisions hereof are not strictly applicable, or, if applicable, would not operate to protect the
Holder from dilution or if any event occurs of the type contemplated by the provisions of this Section 2 but not expressly provided
for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other
rights with equity features), then the Company’s board of directors shall in good faith determine and implement an appropriate
adjustment in the Exercise Price and the number of Warrant Shares (if applicable) so as to protect the rights of the Holder, provided
that no such adjustment pursuant to this Section 2 will increase the Exercise Price or decrease the number of Warrant Shares as
otherwise determined pursuant to this Section 2, provided further that if the Holder does not accept such adjustments as appropriately
protecting its interests hereunder against such dilution, then the Company’s board of directors and the Holder shall agree,
in good faith, upon an independent investment bank of nationally recognized standing to make such appropriate adjustments, whose
determination shall be final and binding and whose fees and expenses shall be borne by the Company.
(f)
Calculations. All calculations under this Section 2 shall be made by rounding to the nearest cent or the nearest 1/100th
of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned
or held by or for the account of the Company, and the disposition of any such shares shall be considered an issuance or sale of
Common Stock.
(g)
Voluntary Adjustment By Company. The Company may at any time during the term of this Warrant, with the prior written consent
of the Holder, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board
of Directors of the Company.
3.
RIGHTS UPON DISTRIBUTION OF ASSETS. Except to the extent of any adjustments pursuant to Section 2 above, if the Company
shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares
of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other
securities, property, options, evidence of indebtedness or any other assets by way of a dividend, spin off, reclassification,
corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time
after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to receive such Distribution upon exercise
of this Warrant, pro rata, to the same extent that the Holder would have participated therein if the Holder had held the number
of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations or restrictions
on exercise of this Warrant, including without limitation, the Maximum Percentage) immediately before the date on which a record
is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock
are to be determined for the participation in such Distribution (provided, however, that to the extent that the
Holder’s right to participate in any such Distribution would result in the Holder and the other Attribution Parties exceeding
the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution to such extent (and shall not
be entitled to beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership)
to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time or
times, if ever, as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage,
at which time or times the Holder shall be granted such Distribution (and any Distributions declared or made on such initial Distribution
or on any subsequent Distribution held similarly in abeyance) to the same extent as if there had been no such limitation).
4.
PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.
(a) Purchase
Rights. In addition to any adjustments pursuant to Section 2 above, if at any time the Company grants, issues or sells
any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to
the record holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled
to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have
acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant
(without regard to any limitations or restrictions on exercise of this Warrant, including without limitation, the Maximum
Percentage) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for
the grant, issuance or sale of such Purchase Rights (provided, however, that to the extent that the
Holder’s right to participate in any such Purchase Right would result in the Holder and the other Attribution Parties
exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Purchase Right to such extent
(and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Purchase Right (and
beneficial ownership) to such extent) and such Purchase Right to such extent shall be held in abeyance for the benefit of the
Holder until such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution
Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such right (and any Purchase
Right granted, issued or sold on such initial Purchase Right or on any subsequent Purchase Right held similarly in abeyance)
to the same extent as if there had been no such limitation).
(b) Fundamental
Transactions. The Company shall not enter into or be party to a Fundamental Transaction unless the Successor Entity
assumes in writing all of the obligations of the Company under this Warrant and the other Transaction Documents (as
defined in the Securities Purchase Agreement) in accordance with the provisions of this Section 4(b) pursuant to written
agreements in form and substance satisfactory to the Holder and approved by the Holder prior to such Fundamental Transaction,
including agreements to deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a
written instrument substantially similar in form and substance to this Warrant, including, without limitation, which is
exercisable for a corresponding number of shares of capital stock equivalent to the shares of Common Stock acquirable and
receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such
Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital
stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and
the value of such shares of capital stock, such adjustments to the number of shares of capital stock and such exercise price
being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such
Fundamental Transaction). Upon the consummation of each Fundamental Transaction, the Successor Entity shall succeed to, and
be substituted for (so that from and after the date of the applicable Fundamental Transaction, the provisions of this Warrant
and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and
may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant
and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.
Upon consummation of each Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there
shall be issued upon exercise of this Warrant at any time after the consummation of the applicable Fundamental
Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or other property (except such items
still issuable under Sections 3 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise
of this Warrant prior to the applicable Fundamental Transaction, such shares of publicly traded common stock (or its
equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive upon
the happening of the applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable
Fundamental Transaction (without regard to any limitations on the exercise of this Warrant), as adjusted in accordance with
the provisions of this Warrant. Notwithstanding the foregoing, and without limiting Section 1(f) hereof, the Holder may
elect, at its sole option, by delivery of written notice to the Company to waive this Section 4(b) to permit the Fundamental
Transaction without the assumption of this Warrant. In addition to and not in substitution for any other rights hereunder,
prior to the consummation of each Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to
receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate
Event”), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to
receive upon an exercise of this Warrant at any time after the consummation of the applicable Fundamental Transaction but
prior to the Expiration Date, in lieu of the shares of the Common Stock (or other securities, cash, assets or other property
(except such items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable thereafter))
issuable upon the exercise of the Warrant prior to such Fundamental Transaction, such shares of stock, securities, cash,
assets or any other property whatsoever (including warrants or other purchase or subscription rights) which the Holder
would have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant been
exercised immediately prior to the applicable Fundamental Transaction (without regard to any limitations on the exercise of
this Warrant). Provision made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to
the Holder.
(c) Black
Scholes Value. Notwithstanding the foregoing and the provisions of Section 4(b) above.
(i)
at the option of the Company, the Company may, by written notice to the Holder, delivered not less than 10 Trading Days and
no more than 20 Trading Days prior to the date of consummation of a Change of Control, elect to redeem this Warrant by paying
to the Holder on the date of consummation of such Change of Control an amount in cash equal to the Black-Scholes Value;
provided, the Company may only exercise such redemption right to the extent the Company simultaneously exercises this
redemption right pursuant to each other SPA Warrant.
(ii)
at the request of the Holder delivered at any time commencing on the earliest to occur of (x) the public disclosure of any
Fundamental Transaction after which the Company ceases to be a Company with common equity registered under the Security
Exchange Act of 1934, as amended (a “Going Private Transaction”), (y) the consummation of any Going Private
Transaction and (z) the Holder first becoming aware of any Going Private Transaction through the date that is ninety (90)
days after the public disclosure of the consummation of such Going Private Transaction by the Company pursuant to a Current
Report on Form 8-K filed with the SEC, the Company or the Successor Entity (as the case may be) shall purchase this Warrant
from the Holder on the date of such request by paying to the Holder cash in an amount equal to the Black Scholes
Value.
(d) Application.
The provisions of this Section 4 shall apply similarly and equally to successive Fundamental Transactions and Corporate
Events and shall be applied as if this Warrant (and any such subsequent warrants) were fully exercisable and without regard
to any limitations on the exercise of this Warrant (provided that the Holder shall continue to be entitled to the benefit of
the Maximum Percentage, applied however with respect to shares of capital stock registered under the 1934 Act and
thereafter receivable upon exercise of this Warrant (or any such other warrant)).
5.
NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its certificate of
incorporation, bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution,
issuance or sale of securities, or any other voluntary action or avoid the observance or performance of any of the terms of this
Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be reasonably
required to protect the rights of the Holder. Without limiting the generality of the foregoing, the Company (a) shall not increase
the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect,
(b) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully
paid and non-assessable shares of Common Stock upon the exercise of this Warrant, and (c) shall, in accordance with Section 1(g)
above, so long as any of the SPA Warrants are outstanding, take all action necessary to reserve and keep available out of its
authorized and unissued shares of Common Stock, solely for the purpose of effecting the exercise of the SPA Warrants, 100% of
the maximum number of shares of Common Stock as shall from time to time be necessary to effect the exercise of the SPA Warrants
then outstanding (without regard to any limitations on exercise).
6.
WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, the Holder, solely in its capacity
as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the
Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in its capacity
as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent
to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance
or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the
Holder of the Warrant Shares which it is then entitled to receive upon the due exercise of this Warrant. In addition, nothing
contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise
of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors
of the Company. Notwithstanding this Section 6, except with respect to such notices available on EDGAR, the Company shall provide
the Holder with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously
with the giving thereof to the stockholders.
7.
REISSUANCE OF WARRANTS.
(a) Transfer
of Warrant. If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, whereupon the
Company will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)),
registered as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by
the Holder and, if less than the total number of Warrant Shares then underlying this Warrant is being transferred, a new
Warrant (in accordance with Section 7(d)) to the Holder representing the right to purchase the number of Warrant Shares not
being transferred.
(b) Lost,
Stolen or Mutilated Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Warrant (as to which a written certification and the indemnification
contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification
undertaking by the Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and
cancellation of this Warrant, the Company shall execute and deliver to the Holder a new Warrant (in accordance with Section
7(d)) representing the right to purchase the Warrant Shares then underlying this Warrant.
(c)
Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal
office of the Company, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate the right
to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase
such portion of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, no warrants
for fractional shares of Common Stock shall be given.
(d)
Issuance of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant,
such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant,
the right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to
Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder which, when added to the number of shares of Common
Stock underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares
then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same
as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.
8.
NOTICES. Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall
be given in accordance with Section 5.3 of the Securities Purchase Agreement. The Company shall provide the Holder with prompt
written notice of all actions taken pursuant to this Warrant, including in reasonable detail a description of such action and
the reason therefor. Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i)
immediately upon each adjustment of the Exercise Price and the number of Warrant Shares, setting forth in reasonable detail, and
certifying, the calculation of such adjustment(s), (ii) at least fifteen (15) days prior to the date on which the Company closes
its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect
to any grants, issuances or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or
other property to holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction,
dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction
with such notice being provided to the Holder, and (iii) at least ten (10) Trading Days prior to the consummation of any Fundamental
Transaction. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding
the Company or any of its Subsidiaries, the Company shall simultaneously file such notice with the SEC pursuant to a Current Report
on Form 8-K. It is expressly understood and agreed that the time of execution specified by the Holder in each Exercise Notice
shall be definitive and may not be disputed or challenged by the Company.
9.
AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of this Warrant (other than Section 1(f)) may
be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the Holder. No waiver shall be effective unless it is in writing and
signed by an authorized representative of the waiving party.
10.
SEVERABILITY. If any provision of this Warrant is prohibited by law or otherwise determined to be invalid or unenforceable
by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this Warrant so long as this Warrant as so modified continues
to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations
or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the
parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s)
with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable
provision(s).
11.
GOVERNING LAW. This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning
the construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State
of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York
or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.
The Company hereby irrevocably waives personal service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to the Company at the address set forth in Section 5.3 of the Securities Purchase Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. The Company hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for
the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that
the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the Holder from
bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations
to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court
ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
12.
CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not
be construed against any Person as the drafter hereof. The headings of this Warrant are for convenience of reference and shall
not form part of, or affect the interpretation of, this Warrant. Terms used in this Warrant but defined in the other Transaction
Documents shall have the meanings ascribed to such terms on the Closing Date (as defined in the Securities Purchase Agreement)
in such other Transaction Documents unless otherwise consented to in writing by the Holder.
13. DISPUTE
RESOLUTION.
(a)
Submission to Dispute Resolution.
(i)
In the case of a dispute relating to the Exercise Price, the Closing Sale Price, the Bid Price, Black Scholes Consideration Value,
Event of Default Black Scholes Value, Black Scholes Value or fair market value or the arithmetic calculation of the number of
Warrant Shares (as the case may be) (including, without limitation, a dispute relating to the determination of any of the foregoing),
the Company or the Holder (as the case may be) shall submit the dispute to the other party via facsimile (A) if by the Company,
within two (2) Business Days after the occurrence of the circumstances giving rise to such dispute or (B) if by the Holder, at
any time after the Holder learned of the circumstances giving rise to such dispute. If the Holder and the Company are unable to
promptly resolve such dispute relating to such Exercise Price, such Closing Sale Price, such Bid Price, such Black Scholes Consideration
Value, Event of Default Black Scholes Value, Black Scholes Value or such fair market value or such arithmetic calculation of the
number of Warrant Shares (as the case may be), at any time after the second (2nd) Business Day following such initial
notice by the Company or the Holder (as the case may be) of such dispute to the Company or the Holder (as the case may be), then
the Holder may, at its sole option, select an independent, reputable investment bank to resolve such dispute.
(ii)
The Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered
in accordance with the first sentence of this Section 13 and (B) written documentation supporting its position with respect to
such dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following
the date on which the Holder selected such investment bank (the “Dispute Submission Deadline”) (the
documents referred to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the “Required
Dispute Documentation”) (it being understood and agreed that if either the Holder or the Company fails to so deliver
all of the Required Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the
Required Dispute Documentation shall no longer be entitled to (and hereby waives its right to) deliver or submit any written documentation
or other support to such investment bank with respect to such dispute and such investment bank shall resolve such dispute based
solely on the Required Dispute Documentation that was delivered to such investment bank prior to the Dispute Submission Deadline).
Unless otherwise agreed to in writing by both the Company and the Holder or otherwise requested by such investment bank, neither
the Company nor the Holder shall be entitled to deliver or submit any written documentation or other support to such investment
bank in connection with such dispute (other than the Required Dispute Documentation).
(iii)
The Company and the Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company
and the Holder of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline.
The fees and expenses of such investment bank shall be borne solely by the Company, and such investment bank’s resolution
of such dispute shall be final and binding upon all parties absent manifest error.
(b)
Miscellaneous. The Company expressly acknowledges and agrees that (i) this Section 13 constitutes an agreement to arbitrate
between the Company and the Holder (and constitutes an arbitration agreement) under the rules then in effect under § 7501,
et seq. of the New York Civil Practice Law and Rules (“CPLR”) and that the Holder is authorized to apply for
an order to compel arbitration pursuant to CPLR § 7503(a) in order to compel compliance with this Section 13, (ii) a dispute
relating to the Exercise Price includes, without limitation, disputes as to (A) whether an issuance or sale or deemed issuance
or sale of Common Stock occurred under Section 2(b), (B) the consideration per share at which an issuance or deemed issuance of
Common Stock occurred, (C) whether any issuance or sale or deemed issuance or sale of Common Stock was an issuance or sale or
deemed issuance or sale of Excluded Securities, (D) whether an agreement, instrument, security or the like constitutes and Option
or Convertible Security and (E) whether a Dilutive Issuance occurred, (iii) the terms of this Warrant and each other applicable
Transaction Document shall serve as the basis for the selected investment bank’s resolution of the applicable dispute, such
investment bank shall be entitled (and is hereby expressly authorized) to make all findings, determinations and the like that
such investment bank determines are required to be made by such investment bank in connection with its resolution of such dispute
(including, without limitation, determining (A) whether an issuance or sale or deemed issuance or sale of Common Stock occurred
under Section 2(b), (B) the consideration per share at which an issuance or deemed issuance of Common Stock occurred, (C) whether
any issuance or sale or deemed issuance or sale of Common Stock was an issuance or sale or deemed issuance or sale of Excluded
Securities, (D) whether an agreement, instrument, security or the like constitutes and Option or Convertible Security and (E)
whether a Dilutive Issuance occurred) and in resolving such dispute such investment bank shall apply such findings, determinations
and the like to the terms of this Warrant and any other applicable Transaction Documents, (iv) the Holder (and only the Holder),
in its sole discretion, shall have the right to submit any dispute described in this Section 13 to any state or federal court
sitting in The City of New York, Borough of Manhattan in lieu of utilizing the procedures set forth in this Section 13 and (v)
nothing in this Section 13 shall limit the Holder from obtaining any injunctive relief or other equitable remedies (including,
without limitation, with respect to any matters described in this Section 13).
14. REMEDIES,
CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Warrant shall be cumulative
and in addition to all other remedies available under this Warrant and the other Transaction Documents, at law or in equity (including
a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue
actual and consequential damages for any failure by the Company to comply with the terms of this Warrant. The Company covenants
to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts
set forth or provided for herein with respect to payments, exercises and the like (and the computation thereof) shall be the amounts
to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company
(or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable
harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the
event of any such breach or threatened breach, the holder of this Warrant shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other
security being required. The Company shall provide all information and documentation to the Holder that is requested by the Holder
to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Warrant (including, without
limitation, compliance with Section 2 hereof). The issuance of shares and certificates for shares as contemplated hereby upon
the exercise of this Warrant shall be made without charge to the Holder or such shares for any issuance tax or other costs in
respect thereof, provided that the Company shall not be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a name other than the Holder or its agent on its behalf.
15.
PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS.
If (a) this Warrant is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any
legal proceeding or the holder otherwise takes action to collect amounts due under this Warrant or to enforce the provisions of
this Warrant or (b) there occurs any bankruptcy, reorganization, receivership of the company or other proceedings affecting company
creditors’ rights and involving a claim under this Warrant, then the Company shall pay the costs incurred by the Holder
for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding,
including, without limitation, attorneys’ fees and disbursements.
16.
TRANSFER. This Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company, except
as may otherwise be required by the Securities Purchase Agreement.
17. CERTAIN
DEFINITIONS. For purposes of this Warrant, the following terms shall have the following meanings:
(a)
“1933 Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
(b)
“1934 Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(c)
“Adjustment Right” means any right granted with respect to any securities issued in connection with, or with
respect to, any issuance or sale (or deemed issuance or sale in accordance with Section 2) of shares of Common Stock (other than
rights of the type described in Section 4 and 4 hereof) that could result in a decrease in the net consideration received by the
Company in connection with, or with respect to, such securities (including, without limitation, any cash settlement rights, cash
adjustment or other similar rights).
(d)
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled
by, or is under common control with, such Person, it being understood for purposes of this definition that “control”
of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the
election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by
contract or otherwise.
(e)
“Approved Stock Plan” means any employee benefit plan or employment agreement which has been approved by the
board of directors of the Company prior to or subsequent to the date hereof pursuant to which shares of Common Stock and standard
options to purchase Common Stock may be issued to any employee, officer or director for services provided to the Company in their
capacity as such.
(f)
“Attribution Parties” means, collectively, the following Persons and entities: (i) any investment vehicle,
including, any funds, feeder funds or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly
managed or advised by the Holder’s investment manager or any of its Affiliates or principals, (ii) any direct or indirect
Affiliates of the Holder or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together
with the Holder or any of the foregoing and (iv) any other Persons whose beneficial ownership of the Company’s Common Stock
would or could be aggregated with the Holder’s and the other Attribution Parties for purposes of Section 13(d) of the 1934
Act. For clarity, the purpose of the foregoing is to subject collectively the Holder and all other Attribution Parties to the
Maximum Percentage.
(g)
“Bid Price” means, for any security as of the particular time of determination, the bid price for such security
on the Principal Market as reported by Bloomberg as of such time of determination, or, if the Principal Market is not the principal
securities exchange or trading market for such security, the bid price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg as of such time of determination, or if the foregoing
does not apply, the bid price of such security in the over-the-counter market on the electronic bulletin board for such security
as reported by Bloomberg as of such time of determination, or, if no bid price is reported for such security by Bloomberg as of
such time of determination, the average of the bid prices of any market makers for such security as reported in the “pink
sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC) as of such time of determination. If the Bid Price cannot be
calculated for a security as of the particular time of determination on any of the foregoing bases, the Bid Price of such security
as of such time of determination shall be the fair market value as mutually determined by the Company and the Holder. If the Company
and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance
with the procedures in Section 13. All such determinations shall be appropriately adjusted for any stock dividend, stock split,
stock combination or other similar transaction during such period.
(h)
“Black Scholes Value” means the value of the unexercised portion of this Warrant remaining on the date of the
Holder’s request pursuant to Section 4(c), which value is calculated using the Black Scholes Option Pricing Model obtained
from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the greater of (1) the highest
Closing Sale Price of the Common Stock during the period beginning on the Trading Day immediately preceding the announcement of
the applicable Change of Control (or the consummation of the applicable Change of Control, if earlier) and ending on the Trading
Day of the Holder’s request or the Company’s election, as applicable, pursuant to Section 4(c) and (2) the sum of
the price per share being offered in cash in the applicable Change of Control (if any) plus the value of the non-cash consideration
being offered in the applicable Change of Control (if any), (ii) a strike price equal to the Exercise Price in effect on the date
of the Holder’s request or the Company’s election, as applicable, pursuant to Section 4(c), (iii) a risk-free interest
rate corresponding to the U.S. Treasury rate for a period equal to the greater of (1) the remaining term of this Warrant as of
the date of the Holder’s request or the Company’s election, as applicable, pursuant to Section 4(c) and (2) the remaining
term of this Warrant as of the date of consummation of the applicable Change of Control or as of the date of the Holder’s
request or the Company’s election, as applicable, pursuant to Section 4(c) if such request or election is prior to the date
of the consummation of the applicable Change of Control, (iv) a zero cost of borrow and (v) an expected volatility equal to the
greater of 100% and the 30 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365
day annualization factor) as of the Trading Day immediately following the earliest to occur of (A) the public disclosure of the
applicable Change of Control, (B) the consummation of the applicable Change of Control and (C) the date on which the Holder first
became aware of the applicable Change of Control.
(i)
“Bloomberg” means Bloomberg, L.P.
(j)
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City
of New York are authorized or required by law to remain closed.
(k)
“Change of Control” means the Company, directly or indirectly, including through subsidiaries, Affiliates or
otherwise, in one or more related transactions: (i) effects any merger or consolidation of the Company with or into another Person;
(ii) effects any sale of all or substantially all of its assets in one or a series of related transactions; (iii) any tender offer
or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted
to tender or exchange their shares for other securities, cash or property; or (iv) effects any reclassification of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property.
Notwithstanding
the foregoing, “Change of Control” shall not include: (i) any merger of the Company or any of its, direct or
indirect, wholly-owned Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization, reclassification
or any other transaction, or series of related transactions, of the shares of Common Stock in which holders of the Company’s
voting power immediately prior to such reorganization, recapitalization, reclassification or any other transaction, or series
of related transactions, continue after such reorganization, recapitalization, reclassification or any other transaction, or series
of related transactions, to hold publicly traded securities and, directly or indirectly, are, in all material respects, the holders
of the voting power of the surviving entity (or entities with the authority or voting power to elect the members of the board
of directors (or their equivalent if other than a corporation) of such entity or entities) after such reorganization, recapitalization,
reclassification, or any other transaction, or series of related transactions, or (iii) pursuant to a migratory merger effected
solely for the purpose of changing the jurisdiction of incorporation of the Company or any of its Subsidiaries.
(l)
“Closing Sale Price” means, for any security as of any date, the last closing trade price for such security
on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and
does not designate the closing trade price, then the last trade price of such security prior to 4:00:00 p.m., New York time, as
reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security,
the last trade price of such security on the principal securities exchange or trading market where such security is listed or
traded as reported by Bloomberg, or if the foregoing does not apply, the last trade price of such security in the over-the-counter
market on the electronic bulletin board for such security as reported by Bloomberg, or, if no last trade price is reported for
such security by Bloomberg, the average of the ask prices of any market makers for such security as reported in the “pink
sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If the Closing Sale Price cannot be calculated for a security
on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market
value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market
value of such security, then such dispute shall be resolved in accordance with the procedures in Section 13. All such determinations
shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such
period.
(m)
“Common Stock” means (i) the Company’s shares of common stock, $0.000001 par value per share, and (ii)
any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification
of such common stock.
(n)
“Convertible Securities” means any stock or other security (other than Options) that is at any time and under
any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the
holder thereof to acquire, any shares of Common Stock.
(o)
“Eligible Market” means The New York Stock Exchange, the NYSE MKT, the Nasdaq Global Select Market, the Nasdaq
Global Market or the Principal Market.
(p)
“Excluded Securities” means (i) shares of Common Stock or standard options to purchase Common Stock issued
to directors, officers or employees of the Company in their capacity as such pursuant to an Approved Stock Plan (as defined below),
provided that the exercise price of any such options is not lowered, none of such options are amended to increase the number of
shares issuable thereunder and none of the terms or conditions of any such options are otherwise materially changed in any manner
that adversely affects any of the Buyers; (ii) shares of Common Stock issued upon the conversion or exercise of Convertible Securities
(other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i)
above) issued prior to the date hereof, provided that the conversion price of any such Convertible Securities (other than standard
options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) is not lowered,
none of such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock
Plan that are covered by clause (i) above) are amended to increase the number of shares issuable thereunder and none of the terms
or conditions of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved
Stock Plan that are covered by clause (i) above) are otherwise materially changed in any manner that adversely affects any of
the Buyers; (iii) shares of Common Stock issued pursuant to the Securities Purchase Agreement (as in effect as of the Subscription
Date) and (iv) the shares of Common Stock issuable upon exercise of the SPA Warrants.
(q)
“Expiration Date” means the date that is the fifth (5th) anniversary of the Issuance Date or, if such date
falls on a day other than a Business Day or on which trading does not take place on the Principal Market (a “Holiday”),
the next date that is not a Holiday.
(r)
“Event Market Price” means, with respect to any Stock Combination Event Date, the quotient determined by dividing
(x) the sum of the VWAP of the Common Stock for each Trading Day during the five (5) consecutive Trading Day period ending and
including the Trading Day immediately preceding the sixteenth (16th) Trading Day after such Stock Combination Event Date, divided
by (y) five (5).
(s)
“Fundamental Transaction” means (A) that the Company shall, directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company
is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially
all of the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of
Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company
to be subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or
exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of
the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party
to, or Affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding;
or (z) such number of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject
Entity making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule
13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock or share purchase
agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme
of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire,
either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock
calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject
Entity making or party to, such stock purchase agreement or other business combination were not outstanding; or (z) such number
of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under
the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common
Stock, (B) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or
more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the
“beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition,
purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation,
business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification
or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued
and outstanding Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common
Stock not held by all such Subject Entities as of the date of this Warrant calculated as if any shares of Common Stock held by
all such Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued
and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow such Subject Entities to
effect a statutory short form merger or other transaction requiring other shareholders of the Company to surrender their shares
of Common Stock without approval of the shareholders of the Company or (C) directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other instrument or transaction
structured in a manner to circumvent, or that circumvents, the intent of this definition in which case this definition shall be
construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary
to correct this definition or any portion of this definition which may be defective or inconsistent with the intended treatment
of such instrument or transaction.
(t)
“Group” means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in
Rule 13d-5 thereunder.
(u)
“Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible
Securities.
(v)
“Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and
whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such
Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation
of the Fundamental Transaction.
(w)
“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity or a government or any department or agency thereof.
(x)
“Principal Market” means the OTCQB.
(y)
“Registration Rights Agreement” means that certain registration rights agreement, dated as of the Closing Date,
by and among the Company and the initial holders of the SPA Warrants relating to, among other things, the registration of the
resale of the Registrable Securities (as defined in the Registration Rights Agreement), under the 1933 Act and the rules and regulations
promulgated thereunder, and applicable state securities laws.
(z)
“SEC” means the United States Securities and Exchange Commission or the successor thereto.
(aa)
“Subject Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons
or Group.
(bb)
“Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting
from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such
Fundamental Transaction shall have been entered into.
(cc)
“Trading Day” means any day on which the Common Stock is traded on the Principal Market, or, if the Principal
Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market
on which the Common Stock is then traded, provided that “Trading Day” shall not include any day on which the Common
Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from
trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance
the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such
day is otherwise designated as a Trading Day in writing by the Holder.
(dd)
“VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security on
the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal
securities exchange or securities market on which such security is then traded) during the period beginning at 9:30:01 a.m., New
York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “HP” function (set to weighted
average) or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter
market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time, and ending
at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such
security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of
the market makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets
LLC). If VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on
such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are
unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures
in Section 13. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination
or other similar transaction during such period.
IN
WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date
set out above.
|
Barfresh Food
Group Inc. |
|
|
|
|
By: |
/s/
Riccardo Delle Coste |
|
Name: |
Riccardo Delle
Coste |
|
Title: |
Chief Executive
Officer |
EXHIBIT
A
EXERCISE
NOTICE
TO
BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
SERIES G WARRANT TO PURCHASE COMMON STOCK
Barfresh
Food Group Inc.
The
undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”)
of Barfresh Food Group Inc., a Delaware corporation (the “Company”), evidenced by Series G Warrant to Purchase
Common Stock No. _______ (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have
the respective meanings set forth in the Warrant.
1.
Form of Exercise Price. The Holder intends that payment of the Aggregate Exercise Price shall be made as:
____________
a “Cash Exercise” with respect to _________________ Warrant Shares; and/or
____________
a “Cashless Exercise” with respect to _______________ Warrant Shares.
In
the event that the Holder has elected a Cashless Exercise with respect to some or all of the Warrant Shares to be issued pursuant
hereto, the Holder hereby represents and warrants that (i) this Exercise Notice was executed by the Holder at __________ [a.m.][p.m.]
on the date set forth below and (ii) if applicable, the Bid Price as of such time of execution of this Exercise Notice was $________.
|
[ ] | If this Exercise Notice is
being delivered after the Alternate Exercise Eligibility Date, check here if Holder is electing to use the following Alternate
Exercise Price in this exercise:____________. |
2.
Payment of Exercise Price. In the event that the Holder has elected a Cash Exercise with respect to some or all of the
Warrant Shares to be issued pursuant hereto, the Holder shall pay the Aggregate Exercise Price in the sum of $___________________
to the Company in accordance with the terms of the Warrant.
3.
Holder’s Representation. Notwithstanding anything to the contrary contained herein, this Exercise Notice shall constitute
a representation by the Holder of the Warrant submitting this Exercise Notice that after giving effect to the exercise provided
for in this Exercise Notice, such Holder (together with its affiliates) will not have beneficial ownership (together with the
beneficial ownership of such Person’s affiliates) of a number of Common Shares which exceeds the Beneficial Ownership Limitation
(as defined in the Warrant) of the total outstanding Common Shares of the Corporation as determined pursuant to the provisions
of Section 1(f) of the Warrant.
4.
Delivery of Warrant Shares. The Company shall deliver to Holder, or its designee or agent as specified below, __________
Warrant Shares in accordance with the terms of the Warrant. Delivery shall be made to Holder, or for its benefit, as follows:
|
[ ] | Check
here if requesting delivery as a certificate to the following name and to the following
address: |
|
[ ] | Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows: |
|
DTC
Participant: |
|
|
|
|
|
DTC Number: |
|
|
|
|
|
Account Number: |
|
Date: _____________ __, |
|
|
|
|
|
Name of Registered
Holder |
|
By: |
|
|
Name: |
|
|
Title: |
|
|
|
|
|
Tax
ID: |
|
|
|
Facsimile: |
|
|
|
EXHIBIT
B
ACKNOWLEDGMENT
The
Company hereby acknowledges this Exercise Notice and hereby directs ______________ to issue the above indicated number of shares
of Common Stock in accordance with the Transfer Agent Instructions dated _________, 201_, from the Company and acknowledged and
agreed to by _______________.
|
Barfresh
Food Group Inc. |
|
|
|
By: |
|
|
Name: |
|
|
Title: |
|
SECURITIES
PURCHASE AGREEMENT
This
Securities Purchase Agreement (this “Agreement”) is between Barfresh Food Group Inc., a Delaware corporation
(the “Company”) and each purchaser identified on the signature pages hereto (each, including its successors
and assigns, a “Purchaser” and collectively the “Purchasers”) dated with respect to each
Purchaser as of the date set forth on each Purchaser’s signature page hereto.
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933,
as amended (the “Securities Act”), and Rule 506(b) promulgated thereunder, the Company desires to issue and sell to
each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company
as more fully described in this Agreement.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration
the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:
ARTICLE
I.
DEFINITIONS
1.1
Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following
terms have the meanings set forth in this Section 1.1:
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person as such terms are used in and construed under Rule 405 under the Securities Act. With respect to a Purchaser,
any investment fund or managed account that is managed on a discretionary basis by the same investment manager as such Purchaser
will be deemed to be an Affiliate of such Purchaser.
“Business
Day” means any day except Saturday, Sunday, any day that is a federal legal holiday in the United States or any day
on which banking institutions in the State of California are authorized or required by law or other governmental action to close.
“Closing”
or “Closing Date” means the Business Day(s) when Transaction Documents have been executed and delivered by
the applicable parties thereto, and all conditions precedent to: (i) the Purchasers’ obligations to pay the Subscription
Amount; and (ii) the Company’s obligations to deliver the Securities have been satisfied or waived.
“Commission”
means the Securities and Exchange Commission.
“Common
Stock” means the common stock of the Company, par value $0.000001 per share, and any other class of securities into
which such securities may hereafter be reclassified or changed into.
“Common
Stock Equivalents” means any securities of the Company which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is
at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Disclosure
Schedules” means the Disclosure Schedules of the attached hereto as Annex B and incorporated herein by reference.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Liens”
means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Per
Share Purchase Price” equals $0.50, subject to adjustment for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that occur after the issuance thereof.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time
to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.
“Securities”
means the Shares, the Warrants and the Warrant Shares.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Shares”
means the shares of Common Stock issued to each Purchaser pursuant to this Agreement.
“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall
not be deemed to include the location and/or reservation of borrowable shares of Common Stock).
“Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for Shares and Warrants purchased hereunder as
specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription
Amount,” in United States dollars and in immediately available funds.
“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1(a), and shall, where applicable, include any subsidiary
of the Company formed or acquired after the date hereof.
“Trading
Day” means a day on which the New York Stock Exchange is open for trading.
“Trading
Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: The New York Stock Exchange, the NYSE MKT, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq
Capital Market or the OTCQB.
“Transaction
Documents” means this Agreement, the Registration Rights Agreement, the Warrants and any other documents or agreements
executed in connection with the transactions contemplated hereunder.
“Transfer
Agent” means Action Stock Transfer, with a mailing address of 2469 E. Fort Union Blvd., Suite 214, Salt Lake City, UT
84121, and a facsimile number of (801) 274-1099, or any successor transfer agent of the Company.
“Warrants”
means, collectively, the series “F” Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance
with Section 2.2(a) hereof, which Warrants shall be exercisable immediately at a price of $0.60 per Warrant Share and have a term
of exercise equal to five (5) years from the Initial Exercise Date, in the form of Exhibit A attached hereto.
“Warrant
Shares” means the shares of Common Stock issuable upon exercise of the Warrants.
ARTICLE
II.
PURCHASE AND SALE
2.1
Closing.
(a)
On the Closing Date(s), upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution
and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly,
agree to purchase, in the aggregate, the Company’s Shares at the Per Share Purchase Price of $0.50. One-half (1/2) of a
five (5) year Warrant to purchase Common Stock at an exercise price of $0.60 per Warrant Share will be issued with each Share
that is subscribed.
(b)
The date and time of the Closing (the “Closing”) shall be 5:00 p.m., PST time on such date as is mutually agreed to
by the Company and each Purchaser (the “Closing Date”). The aggregate purchase price for the Stock and Warrants to
be purchased by each such Purchaser at the Closing (the “Purchase Price”) shall be the amount set forth opposite each
Purchaser’s name in column (3) of the Schedule of Purchasers attached hereto as Annex A; provided that the aggregate
purchase price of the Shares and Warrants sold hereunder must be at least $5 million (“Minimum Aggregate Purchase Price”)
and may not exceed $7 million (“Maximum Aggregate Purchase Price”). Officers, directors and employees of the Company
and its Affiliates may, but are not required to, participate in this offering, and their subscriptions shall be considered in
calculating the Minimum Aggregate Purchase Price and Maximum Aggregate Purchase Price.
(c)
Subscribed funds will be available for use by the Company immediately after the Closing. Each Purchaser shall deliver to the Company,
via wire transfer or a certified check, immediately available funds equal to its Subscription Amount, and the Company shall deliver
to each Purchaser its respective Shares and a Warrant as determined pursuant to Section 2.2(a), and the Company and each Purchaser
shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions
set forth in Sections 2.2 and 2.3, the Closing shall occur at the Company’s executive office or such other location as the
parties shall mutually agree or take place via facsimile or email at the facsimile number and email address provided herein. Notwithstanding
anything contained herein to the contrary, the Company may reject any subscription, in whole or in part, in its sole discretion.
2.2
Deliveries.
(a)
On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:
(i)
this Agreement and the Registration Rights Agreement duly executed by the Company;
(ii)
the opinion of Libertas Law Group, Inc., the Company’s counsel, dated as of the Closing Date, in the form acceptable to
such Purchaser;
(iii)
a certificate evidencing the formation and good standing of the Company issued by the Secretary of State of Delaware as of a date
within ten (10) days of the Closing Date;
(iv)
a certified copy of the Certificate of Incorporation as certified by the Delaware Secretary of State within ten (10) days of the
Closing Date;
(v)
a letter from the Company’s transfer agent certifying the number of shares of Common Stock outstanding on the Closing Date
immediately prior to the Closing;
(vi)
a certificate, duly executed by the Chief Executive Officer of the Company, dated as of the Closing Date, certifying that each
and every representation and warranty of the Company shall be true and correct as of the date when made and as of the Closing
Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which
shall be true and correct as of such specific date) and the Company shall have performed, satisfied and complied in all respects
with the covenants, agreements and conditions required to be performed, satisfied or complied with by the Company at or prior
to the Closing Date;
(vii)
a copy of the irrevocable instructions to the Transfer Agent, duly executed by the Company, instructing the Transfer Agent to
deliver, on an expedited basis, a certificate evidencing a number of Shares equal to such Purchaser’s Subscription Amount
divided by the Per Share Purchase Price, registered in the name of such Purchaser;
(viii)
a letter on the letterhead of the Company, duly executed by the Chief Executive Officer of the Company, setting forth the wire
transfer instructions of the Company; and
(ix)
a Warrant, duly executed by the Company, registered in the name of such Purchaser to purchase up to that number of shares of Common
Stock equal to one-half (1/2) of every Share issued to such Purchaser in accordance with this Agreement, with an exercise price
equal to $0.60, subject to adjustment therein.
(b)
On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:
(i)
this Agreement and the Registration Rights Agreement duly executed by such Purchaser; and
(ii)
such Purchaser’s Subscription Amount by wire transfer to the Company.
2.3
Closing Conditions.
(a)
The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:
(i)
the accuracy in all material respects on the Closing Date of the representations and warranties of the Purchasers contained herein;
(ii)
all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have
been performed; and
(iii)
the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.
(b)
The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions
being met:
(i)
each and every representation and warranty of the Company set forth herein shall be true and correct as of the date when made
and as of the Closing Date as though originally made at that time (except for representations and warranties that speak as of
a specific date, which shall be true and correct as of such specific date) and the Company shall have performed, satisfied and
complied in all respects with the covenants, agreements and conditions required to be performed, satisfied or complied with by
the Company at or prior to the Closing Date;
(ii)
on or prior to the Closing Date, the Company shall receive (or shall have received) at least $5 million (and no more than $7 million)
in aggregate purchase price for the Shares and Warrants to be purchased by the Purchasers hereunder.
(iii)
the Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the
sale of the Securities;
(iv)
the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;
(v)
there shall have been no Material Adverse Effect (defined in Section 3.1(b) below) with respect to the Company since the date
hereof; and
(vi)
from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s
principal Trading Market (except for any suspension of trading of limited duration agreed to by the Company, which suspension
shall be terminated prior to the Closing), and, at any time prior to the Closing Date, trading in securities generally as reported
by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose
trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the
United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or
other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial
market which, in each case, in the reasonable judgment of each Purchaser, makes it impracticable or inadvisable to purchase the
Securities at the Closing.
ARTICLE
III.
REPRESENTATIONS AND WARRANTIES
3.1
Representations and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules
shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained
in the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations and warranties
to each Purchaser:
(a)
Subsidiaries. All of the direct and indirect subsidiaries of the Company are set forth in the Company’s SEC Reports
(hereinafter defined in Section 3.1(h)). The Company owns, directly or indirectly, the capital stock or other equity interests
of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary
are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.
(b)
Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable),
with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles
of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified
to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature
of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified
or in good standing, as the case may be, could not have or reasonably be expected to result in (i) a material adverse effect on
the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations,
assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii)
a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations
under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”), and no Proceeding
has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power
and authority or qualification.
(c)
Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate
the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action
is required by the Company, its board of directors or its stockholders in connection therewith other than in connection with the
Required Approvals. Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when
delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms except (i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
(d)
No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company, the issuance and sale
of the Securities and the consummation by the Company of the other transactions contemplated hereby and thereby do not and will
not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation,
bylaws or other organizational or charter documents; or (ii) conflict with, or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets
of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary
debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset
of the Company or any Subsidiary is bound or affected; or (iii) subject to the Required Approvals, conflict with or result in
a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and
(iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.
(e)
Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of,
give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority
or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other
than: (i) filings required pursuant to Section 4.4 of this Agreement; and (ii) the filing of Form D with the Commission and such
filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).
(f)
Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the
Company other than restrictions on transfer provided for in the Transaction Documents. The Warrant Shares, when issued in accordance
with the terms of the Transaction Documents, will be validly issued, fully paid and nonassessable, free and clear of all Liens
imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. The Company has reserved
from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement and the
Warrants.
(g)
Capitalization. Except as set forth on Schedule 3.1(g), the Company has not issued any capital stock since its most recently
filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s
stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase
plans and pursuant to the conversion or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed
periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation, or
any similar right to participate in the transactions contemplated by the Transaction Documents. Except as set forth in the Company’s
SEC Reports and as a result of the purchase and sale of the Securities, there are no outstanding options, warrants, scrip rights
to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible
into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock,
or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue
additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Securities will not obligate the Company
to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of
any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All
of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive
rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the
board of directors of the Company or others is required for the issuance and sale of the Securities. There are no stockholders
agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company
is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.
(h)
SEC Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents
required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation
to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein,
being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension
of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective
dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as
applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The 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.
(i)
Material Changes; Undisclosed Events, Liabilities or Developments. Except as specifically disclosed in the Company’s
SEC Reports filed prior to the date hereof: (i) there has been no event, occurrence or development that has had or that could
reasonably be expected to result in a Material Adverse Effect; (ii) the Company has not incurred any liabilities (contingent or
otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed
in filings made with the Commission; (iii) the Company has not altered its method of accounting; (iv) the Company has not declared
or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements
to purchase or redeem any shares of its capital stock; and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option plans or pursuant to conversion of outstanding debt. The
Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance
of the Securities contemplated by this Agreement or as set forth on Schedule 3.1(i), no event, liability or development
has occurred or exists with respect to the Company or its Subsidiaries or their respective business, properties, operations or
financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation
is made or deemed made that has not been publicly disclosed at least one (1) Trading Day prior to the date that this representation
is made.
(j)
Litigation. Except as set forth in the SEC Reports, there is no action, suit, inquiry, notice of violation, Proceeding
or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any
of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) which: (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents or the Securities; or (ii) could, if there were an
unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary,
nor to the knowledge of the Company, any director or officer thereof, is or has been the subject of any Action involving a claim
of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been,
and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company
or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending
the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities
Act.
(k)
Labor Relations. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any
of the employees of the Company that could reasonably be expected to result in a Material Adverse Effect. None of the Company’s
or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company
or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the
Company and its Subsidiaries believe that their relationships with their employees are good. No executive officer, to the knowledge
of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure
or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant
in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance
with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(l)
Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred
that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary
under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation
of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any
of its properties is bound (whether or not such default or violation has been waived); (ii) is in violation of any order of any
court, arbitrator or governmental body; or (iii) is or has been in violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state and local laws applicable to its business and all such laws
that affect the environment, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.
(m)
Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the
appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described
in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material
Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of
Proceedings relating to the revocation or modification of any Material Permit.
(n)
Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned
by them and good and marketable title in all personal property owned by them that is material to the business of the Company and
the Subsidiaries, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries
and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties.
Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting
and enforceable leases with which the Company and the Subsidiaries are in compliance.
(o)
Patents and Trademarks. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual
property rights and similar rights necessary or material for use in connection with their respective businesses as described in
the SEC Reports and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual
Property Rights”). Neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of the
Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person. To the
knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another
Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to
protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(p) Insurance.
The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are
engaged. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business without a significant increase in cost.
(q)
Transactions With Affiliates and Employees. Except as set forth in the SEC Reports or as otherwise set forth on Schedule
3(q), none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company
is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee
or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest
or is an officer, director, trustee or partner, in each case in excess of the amount permitted under Item 404 of Regulation S-K
other than for: (i) payment of salary or consulting fees for services rendered; (ii) reimbursement for expenses incurred on behalf
of the Company; and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.
(r)
Private Placement. Assuming the accuracy of the Purchasers representations and warranties set forth in Section 3.2, no
registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as
contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading
Market.
(s)
Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities,
will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940,
as amended. The Company shall conduct its business in a manner so that it will not become subject to the Investment Company Act
of 1940, as amended.
(t)
Listing and Maintenance Requirements. The Company’s Common Stock is registered pursuant to Section 12(g) of the Exchange
Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating
terminating such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading
Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the
listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with all such listing and maintenance requirements.
(u)
Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or
their agents or counsel with any information that it believes constitutes or might constitute material, non-public information,
unless prior thereto such Purchaser shall have executed a written agreement regarding the confidentiality and use of such information.
The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in
securities of the Company. All disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company, its
business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and
does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the
Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees that
no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than
those specifically set forth in Section 3.2 hereof.
(v)
No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section
3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by the Company for purposes of: (i) the Securities Act which
would require the registration of any such securities under the Securities Act; or (ii) any applicable shareholder approval provisions
of any Trading Market on which any of the securities of the Company are listed or designated.
(w)
Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result
in a Material Adverse Effect, the Company and each Subsidiary has filed all necessary federal, state and foreign income and franchise
tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which
has been asserted or threatened against the Company or any Subsidiary.
(x)
No General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of
the Securities by any form of general solicitation or general advertising. The Company has offered the Securities for sale only
to the Purchasers and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.
(y)
Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the Company, any agent or other person acting on
behalf of the Company, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses related to foreign or domestic political activity; (ii) made any unlawful payment to foreign or domestic government
officials or employees or to any foreign or domestic political parties or campaigns from corporate funds; (iii) failed to disclose
fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is
in violation of law; or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.
(z)
Accountants. The Company’s accounting firm is Eide Bailly LLP. To the knowledge and belief of the Company, such accounting
firm: (i) is a registered public accounting firm as required by the Exchange Act; and (ii) shall express its opinion with respect
to the financial statements to be included in the Company’s Annual Report on Form 10-K for the year ending March 31, 2015.
(aa)
No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the
Company which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents,
and the Company is current with respect to any fees owed to its accountants.
(bb)
Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the
Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby
and any advice given by any Purchaser or any of their respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities.
The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement and the other
Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company
and its representatives.
(cc)
Acknowledgement Regarding Purchaser’s Trading Activity. Anything in this
Agreement or elsewhere herein to the contrary notwithstanding (except for Sections 3.2(f) hereof), it is understood and acknowledged
by the Company: (i) that none of the Purchasers have been asked by the Company to agree, nor has any Purchaser agreed, to desist
from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities
issued by the Company or to hold the Securities for any specified term; (ii) that past or future open market or other transactions
by any Purchaser, including Short Sales, and specifically including, without limitation, Short Sales or “derivative”
transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price
of the Company’s publicly-traded securities; (iii) that any Purchaser, and counter-parties in “derivative” transactions
to which any such Purchaser is a party, directly or indirectly, presently may have a “short” position in the Common
Stock, provided, however, any such short position shall not have been established by an such Purchaser, or its Affiliates, during
the Discussion Time ( as defined in Section 3.2(f)) and (iv) that each Purchaser shall not be deemed to have any affiliation with
or control over any arm’s length counter-party in any “derivative” transaction. The Company further understands
and acknowledges that (a) one or more Purchasers may engage in hedging activities at various times during the period that the
Securities are outstanding and (b) such hedging activities (if any) could reduce the value of the existing stockholders’
equity interests in the Company at and after the time that the hedging activities are being conducted. The Company acknowledges
that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.
(dd)
Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has: (i) taken, directly
or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of any of the Securities; (ii) sold, bid for, purchased, or, paid any compensation
for soliciting purchases of, any of the Securities; or (iii) paid or agreed to pay to any Person any compensation for soliciting
another to purchase any other securities of the Company.
(ee)
Certain Fees. Other than payments of certain fees and commissions pursuant to the Company’s agreement with Wunderlich
Securities, no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated
by the Transaction Documents.
(ff)
No Disqualification Events. With respect to Securities to be offered and sold hereunder in reliance on Rule 506(b) under
the Securities Act (“Regulation D Securities”), none of the Company, any of its predecessors, any affiliated
issuer, any director, executive officer, other officer of the Company participating in the offering contemplated hereby, any beneficial
owner of 20% or more of the Company’s outstanding voting equity securities nor any promoter (as that term is defined in
Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered
Person” and, together, “Issuer Covered Persons”) is subject to any of the “Bad Actor”
disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”),
except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine
whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable,
with its disclosure obligations under Rule 506(e), and has furnished to the Purchasers a copy of any disclosures provided thereunder.
(gg)
Other Covered Persons. The Company is not aware of any Person (other than Wunderlich Securities) that has been or will
be paid (directly or indirectly) remuneration for solicitation of Purchasers or potential purchasers in connection with the sale
of any Regulation D Securities.
3.2
Representations and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents
and warrants as of the date hereof and as of the Closing Date to the Company as follows:
(a)
Organization; Authority. Such Purchaser is an entity duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to consummate
the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of the Transaction Documents and performance by such Purchaser of the transactions contemplated by
the Transaction Documents have been duly authorized by all necessary corporate or similar action on the part of such Purchaser.
Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser
in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against
it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally; (ii)
as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies; and (iii)
insofar as indemnification and contribution provisions may be limited by applicable law.
(b)
Own Account. Such Purchaser understands that the Securities are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account
and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act
or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons
to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities
law. Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.
(c)
Purchaser Status. At the time such Purchaser was offered the Securities, it was, and at the date hereof it is, and on each
date on which it exercises any Warrants, it will be either: (i) an “accredited investor” as defined in Rule 501 under
the Securities Act; or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.
Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.
(d)
Experience of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication
and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment
in the Securities and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk
of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.
(e)
General Solicitation. Such Purchaser is not purchasing the Securities as a result of any advertisement, article, notice
or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television
or radio or presented at any seminar or any other general solicitation or general advertisement.
(f)
Short Sales and Confidentiality Prior To The Date Hereof. Other than consummating the transactions contemplated hereunder,
such Purchaser has not, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly
or indirectly executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing
from the time that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing
the Company setting forth the material terms of the transactions contemplated hereunder until the date hereof (“Discussion
Time”). Notwithstanding the foregoing, in the case of a Purchaser
that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s
assets and the portfolio managers have no knowledge of the investment decisions made by the portfolio managers managing other
portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of
assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.
Other than to other Persons party to this Agreement, such Purchaser has maintained the confidentiality of all disclosures made
to it in connection with this transaction (including the existence and terms of this transaction).
(g)
Non-Reliance on Statements of Agents. Purchaser represents and warrants that Purchaser has not relied on statements of
any officer, director, employee or agent of the Company not contained in this Agreement or the Company’s SEC Filings in
evaluating the merits of an investment in the Securities.
(h)
Certain Fees. Purchaser has not entered into any agreement or arrangement entitling any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person to brokerage or finder’s fees or commissions with respect
to the transactions contemplated by the Transaction Documents. The Company shall have no obligation with respect to any fees or
with respect to any claims made by or on behalf of any Person other than Wunderlich Securities for fees of a type contemplated
in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.
ARTICLE
IV.
OTHER AGREEMENTS OF THE PARTIES
4.1
Transfer Restrictions.
(a)
The Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of
Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser
or in connection with a pledge as contemplated in Section 4.1(b), except in a case of the transfer of Securities to the Purchaser’s
Limited Partners, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the
transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory
to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities
Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall
have the rights of a Purchaser under this Agreement.
(b)
The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the
following form:
THESE
SECURITIES HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF
WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED
IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
(c)
The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with
a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an
“accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions
of this Agreement and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Securities
to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion
of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall
be required of such pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the
Securities. Certificates evidencing the Shares and Warrant Shares shall not contain any legend (including the legend set forth
in Section 4.1(b)): (i) following any sale of such Shares or Warrant Shares pursuant to Rule 144; or (ii) if such Shares or Warrant
Shares are eligible for sale under Rule 144 (provided that a Purchaser provides the Company with an assurance letter, which shall
not include an opinion of Purchaser’s counsel, in the form reasonably satisfactory to Company’s legal counsel, that
such Shares or Warrant Shares are eligible for sale, assignment or transfer under Rule 144); or (iii) if such legend is not required
under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff
of the Commission). The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge
the restrictions on transfer set forth in this Section, except in accordance with applicable law. Certificates for Securities
subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by crediting the account of the
Purchaser’s prime broker with the Depository Trust Company System as directed by such Purchaser. The Company shall, subject
to applicable law, cause its counsel to issue a legal opinion with respect to any resale of Securities pursuant to Rule 144 or
a registration statement. Any fees (with respect to the Transfer Agent, counsel to the Company or otherwise) associated with the
issuance of such opinion shall be borne by the Company.
(d)
If the Company shall fail, for any reason or for no reason, to either (I) if the Transfer Agent is not participating in the DTC
Fast Automated Securities Transfer Program, to issue and deliver to a Purchaser (or its designee) a certificate representing the
Securities so delivered to the Company by such Purchaser that is registered on the Company’s share register or, if the Transfer
Agent is participating in the DTC Fast Automated Securities Transfer Program, to credit the balance account of such Purchaser
or such Purchaser’s designee with DTC for such number of Shares or Warrant Shares, as applicable, so delivered to the Company
or (II) if a Registration Statement covering the resale of such number of Shares or Warrant Shares, as applicable, so delivered
to the Company (the “Unavailable Shares”) is not available for the resale of such Unavailable Shares and the
Company fails to promptly, but in no event later than as required pursuant to the Registration Rights Agreement (x) so notify
such Purchaser and (y) deliver the Shares or Warrant Shares, as applicable, electronically by crediting such aggregate number
of Shares or Warrant Shares, as applicable, to such Purchaser’s or its designee’s balance account with DTC through
its Deposit/Withdrawal At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter referred
as a “Notice Failure” and together with the event described in clause (I) above, a “Delivery Failure”),
and if on or after such Trading Day such Purchaser purchases (in an open market transaction or otherwise) shares of Common Stock
to deliver in satisfaction of a sale by such Purchaser of shares of Common Stock issuable upon such exercise that such Purchaser
anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three (3) Trading Days
after such Purchaser’s request and in such Purchaser’s discretion, either (i) pay cash to such Purchaser in an amount
equal to such Purchaser’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any)
for the shares of Common Stock so purchased) (the “Buy-In Price”), at which point the Company’s obligation
to deliver such certificate or credit such Purchaser’s balance account shall terminate and such shares shall be cancelled,
or (ii) promptly honor its obligation to so deliver to such Purchaser a certificate or certificates or credit such Purchaser’s
DTC account representing such number of shares of Common Stock that would have been so delivered if the Company timely complied
with its obligations hereunder and pay cash to such Purchaser in an amount equal to the excess (if any) of the Buy-In Price over
the product of (A) such number of shares of Shares or Warrant Shares (as the case may be) that the Company was required to deliver
to such Purchaser by the Required Delivery Date, multiplied by (B) the lowest Closing Sale Price (as defined in the Warrants)
of the Common Stock on any Trading Day during the period commencing on the date of the delivery by such Purchaser to the Company
of the applicable Shares or Warrant Shares (as the case may be) and ending on the date of such delivery and payment under this
clause (ii). Except insofar as the payments provided for herein may be deemed to reflect the uncertainty of a Purchaser’s
damages upon a Delivery Failure and are intended to be a reasonable estimate of a Purchaser’s damages in such case, nothing
shall limit such Purchaser’s right to pursue any other remedies available to it hereunder, at law or in equity, including,
without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely
deliver certificates representing shares of Common Stock (or to electronically deliver such shares of Common Stock) as required
pursuant to the terms hereof.
4.2
Furnishing of Information. Until the earliest of the time that: (i) no Purchaser owns Securities; or (ii) the Securities
may be sold without restriction, the Company covenants to file in a timely manner (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the
Exchange Act. As long as any Purchaser owns Securities, if the Company is not required to file reports pursuant to the Exchange
Act, it will prepare and furnish to the Purchasers and make publicly available in accordance with Rule 144 such information as
is required for the Purchasers to sell the Securities under Rule 144. The Company further covenants that it will take such further
action as any holder of Securities may reasonably request, to the extent required from time to time to enable such Person to sell
such Securities without registration under the Securities Act within the requirements of the exemption provided by Rule 144.
4.3
Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in
a manner that would require the registration under the Securities Act of the sale of the Securities to the Purchasers or that
would be integrated with the offer or sale of the Securities to the Purchasers for purposes of the rules and regulations of any
Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder
approval is obtained before the closing of such subsequent transaction.
4.4
Securities Laws Disclosure; Publicity. On or before 9:30 a.m., New York time, on the first (1st) Business Day
after the date of this Agreement, the Company shall issue a press release and Current Report on Form 8-K disclosing the material
terms of the transactions contemplated hereby (the “8-K Filing”). From and after the filing of the 8-K Filing, the
Company shall have disclosed all material, non-public information (if any) provided to any of the Purchasers by the Company or
any of its Subsidiaries or any of their respective officers, directors, employees or agents in connection with the transactions
contemplated by the Transaction Documents. Subject to the foregoing, neither the Company, its Subsidiaries nor any Purchaser shall
issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however,
the Company shall be entitled, without the prior approval of any Purchaser, to make the Press Release and any press release or
other public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously
therewith and (ii) as is required by applicable law and Trading Market regulations (provided that in the case of clause (i) each
Purchaser shall be consulted by the Company in connection with any such press release or other public disclosure prior to its
release). Without the prior written consent of the applicable Purchaser (which may be granted or withheld in such Purchaser’s
sole discretion), the Company shall not (and shall cause each of its Subsidiaries and affiliates to not) disclose the name of
such Purchaser in any filing, announcement, release or otherwise. Notwithstanding anything contained in this Agreement to the
contrary and without implication that the contrary would otherwise be true, except with respect to the material terms and conditions
of the transactions contemplated by the Transaction Documents, the Company expressly acknowledges and agrees that no Purchaser
has had, and no Purchaser shall have (unless expressly agreed to by a particular Purchaser after the date hereof in a written
definitive and binding agreement executed by the Company and such particular Purchaser (it being understood and agreed that no
Purchaser may bind any other Purchaser with respect thereto)), any duty of confidentiality with respect to, or a duty not to trade
on the basis of, any material, non-public information regarding the Company or any of its Subsidiaries.
4.5
Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the
Transaction Documents disclosed in the 8-K Filing or publicly disclosed on or prior to the Closing Date, the Company covenants
and agrees that neither it nor any other Person acting on its behalf will provide any Purchaser or its agents or counsel with
any information that the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall
have executed a written agreement regarding the confidentiality and use of such information. The Company understands and confirms
that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company. To the
extent that the Company delivers any material, non-public information to a Purchaser without such Purchaser’s consent, the
Company hereby covenants and agrees that such Purchaser shall not have any duty of confidentiality with respect to, or a duty
not to trade on the basis of, such material, non-public information.
4.6
Use of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder for working capital purposes
and shall not use such proceeds for: (a) the satisfaction of any portion of the Company’s debt (other than payment of trade
payables in the ordinary course of the Company’s business and prior practices); (b) the redemption of any Common Stock or
Common Stock Equivalents; or (c) the settlement of any outstanding litigation.
4.7
Indemnification. Subject to the provisions of this Section 4.7, the Company will indemnify and hold each Purchaser and
its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser
(within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless
from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to: (a) any breach of any of the representations, warranties, covenants or
agreements made by the Company in this Agreement or in the other Transaction Documents; or (b) any action instituted against a
Purchaser in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate
of such Purchaser, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based
upon a breach of such Purchaser’s representations, warranties or covenants under the Transaction Documents or any agreements
or understandings such Purchaser may have with any such stockholder or any violations by the Purchaser of state or federal securities
laws or any conduct by such Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action
shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser
Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel
of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense
of such Purchaser Party except to the extent that: (i) the employment thereof has been specifically authorized by the Company
in writing; (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel; or (iii)
in such action there is, in the reasonable opinion of such separate counsel, a material conflict on any material issue between
the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable
fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this
Agreement: (i) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall
not be unreasonably withheld or delayed; or (ii) to the extent, but only to the extent that a loss, claim, damage or liability
is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made
by such Purchaser Party in this Agreement or in the other Transaction Documents.
4.8
Indemnification of Company. Subject to the provisions of this Section 4.7, each Purchaser (other than institutional investors)
severally and not jointly with the other Purchasers, will indemnify and hold the Company and its directors, officers, shareholders,
members, partners, employees and agents harmless from any and all losses, liabilities, obligations, claims, contingencies, damages,
costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that the Company may suffer or incur as a result of or relating to any breach of any of the representations,
warranties, covenants or agreements made by the Purchaser in this Agreement. If any action shall be brought against the Company
in respect of which indemnity may be sought pursuant to this Agreement, the Company shall promptly notify such Purchaser in writing,
and the Purchaser shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to
the Company. The Company 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 Company except to the extent that: (i) the employment
thereof has been specifically authorized by the Purchaser in writing; (ii) the Purchaser has failed after a reasonable period
of time to assume such defense and to employ counsel; or (iii) in such action there is, in the reasonable opinion of such separate
counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser, in
which case the Purchaser shall be responsible for the reasonable fees and expenses of no more than one such separate counsel.
Such Purchaser will not be liable to the Company under this Agreement: (i) for any settlement by the Company effected without
the Purchaser’s prior written consent, which shall not be unreasonably withheld or delayed; (ii) to the extent, but only
to the extent that a loss, claim, damage or liability is attributable to any of the Company’s breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement; or (iii) in an amount in excess of such Purchaser’s
gain upon such Purchaser’s sale of the Common Stock and/or Warrant Shares acquired pursuant to this Agreement.
4.9
Reservation of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve
and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling
the Company to issue Shares pursuant to this Agreement and Warrant Shares pursuant to any exercise of the Warrants.
4.10
Listing of Common Stock. The Company hereby agrees to use best efforts to maintain the listing or quotation of the Common
Stock on a Trading Market. The Company will take all action reasonably necessary to continue the listing or quotation and trading
of its Common Stock on a Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations
under the bylaws or rules of the Trading Market.
4.11
Short Sales and Confidentiality After The Date Hereof. Each Purchaser severally and not jointly with the other Purchasers,
covenants that neither it nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any Short
Sales during the period commencing at the Discussion Time and ending at the time that the transactions contemplated by this Agreement
are first publicly announced as described in Section 4.4. Each Purchaser, severally and
not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly
disclosed by the Company as described in Section 4.4, such Purchaser will maintain the confidentiality of the existence and terms
of this transaction and the information included in the Disclosure Schedules. Notwithstanding
the foregoing, no Purchaser makes any representation, warranty or covenant hereby that it will not engage in Short Sales in the
securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced as
described in Section 4.4. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment
vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers
have no knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s
assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that
made the investment decision to purchase the Securities covered by this Agreement.
4.12
Delivery of Securities After Closing. The Company shall deliver, or cause to be delivered, the respective Securities purchased
by each Purchaser to such Purchaser within three (3) Trading Days of the Closing Date.
4.13
Form D; Blue Sky Filings. The Company agrees to file in a timely manner a Form D with respect to the Securities as required
under Regulation D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as
the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale
to the Purchasers at the Closing under applicable securities or “Blue Sky” laws of the states of the United States,
and shall provide evidence of such actions promptly upon request of any Purchaser.
4.14
Notice of Disqualification Events. The Company will notify the Purchasers in writing, prior to the Closing Date of (i)
any Disqualification Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become
a Disqualification Event relating to any Issuer Covered Person.
ARTICLE
V.
MISCELLANEOUS
5.1
Fees and Expenses. Except as provided below, each party shall pay the fees and expenses of its advisers, counsel, accountants
and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall reimburse Kelley Drye & Warren LLP for all reasonable legal
fees and expenses of Kelley Drye & Warren LLP incurred in connection with the structuring, documentation, negotiation and
closing of the transactions contemplated by the Transaction Documents and regulatory filings in connection therewith) (the “Transaction
Expenses”) which at the option of Kelley Drye & Warren LLP, may be withheld by the lead Purchaser from its Purchase
Price at the Closing in an aggregate amount not to exceed $15,000. Other than for Persons engaged by any Purchaser, the Company
shall further be responsible for the payment of any placement agent’s fees, financial advisory fees, transfer agent fees,
the fees and expenses of DTC (as defined below) fees or broker’s commissions relating to or arising out of the transactions
contemplated hereby (including, without limitation, any fees payable to any placement agent of the Company in connection with
the transactions contemplated by this Agreement), Transfer Agent fees, stamp taxes and other taxes and duties levied in connection
with the delivery of any Securities to the Purchasers. The Company shall pay, and hold each Purchaser harmless against, any liability,
loss or expense (including, without limitation, reasonable attorneys’ fees and out-of-pocket expenses) arising in connection
with any claim relating to any such payment.
5.2
Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding
of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written,
with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
5.3
Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall
be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication
is delivered via facsimile or email at the facsimile number set forth on the signature pages attached hereto or the email address
set forth on the signature pages attached hereto prior to 5:30 p.m. (PST) on a Business Day; (b) the next Business Day after the
date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature
pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (PST) on any Business Day; (c) the 2nd
Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service; or (d) upon actual
receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as
set forth on the signature pages attached hereto.
5.4
Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in
the case of an amendment, by the Company and the Purchasers of more than fifty percent (50%) of the Shares still held by the Purchasers
or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future
or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay
or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.
5.5
Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed
to limit or affect any of the provisions hereof.
5.6
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors
and permitted assigns.
5.7
Assignment. Each Purchaser acknowledges that it may not assign any of its rights to or interest in or under this Agreement
without the prior written consent of the Company, and any attempted assignment without such consent shall be void and without
force or effect.
5.8
No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and each of their respective
successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person,
except as otherwise set forth in Section 4.8.
5.9
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents
shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard
to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively
in the state and federal courts sitting in The City of New York, Borough of Manhattan. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan for the adjudication
of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including
with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such
suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered
or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.
5.10
Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Shares
and Warrant Shares.
5.11
Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered
one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other
party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered
by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid
and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as
if such facsimile or “.pdf” signature page were an original thereof.
5.12
Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction
to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention
of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any
of such that may be hereafter declared invalid, illegal, void or unenforceable.
5.13
Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation),
or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory
to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances
shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement
Securities.
5.14
Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction
Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way
for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained
herein or in any other Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute
the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by
the Transaction Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including without
limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary
for any other Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented
by its own separate legal counsel in their review and negotiation of the Transaction Documents. The Company’s counsel does
not represent any of the Purchasers. The Company has elected to provide all Purchasers with the same terms and Transaction Documents
for the convenience of the Company and not because it was required or requested to do so by the Purchasers.
5.15
Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to
revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments
hereto.
IN WITNESS
WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
BARFRESH
FOOD GROUP inc.
|
|
Address
for Notice: |
|
|
|
|
|
|
BARFRESH
FOOD GROUP inc. |
|
|
|
90
Madison Street |
|
|
|
Suite
701 |
|
|
|
Denver,
CO 80206 |
By: |
/s/
Riccardo Delle Coste |
|
Facsimile:
(303) 297-1903 |
Name: |
Riccardo
Delle Coste |
|
Attention:
Riccardo Delle Coste, |
Title: |
Chief
Executive Officer |
|
Chief
Executive Officer |
|
|
|
Email:
riccardo@smoothieinc.com |
[PURCHASER
SIGNATURE PAGE TO BARFRESH FOOD GROUP INC. SECURITIES PURCHASE AGREEMENT]
IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
Name
of Purchaser: |
|
|
|
Signature
of Authorized Signatory of Purchaser: |
|
|
|
Name
of Authorized Signatory: |
|
|
|
Title
of Authorized Signatory: |
|
|
|
Date:
|
|
|
|
Email
Address of Purchaser: |
|
|
|
Telephone
Number of Purchaser: |
|
|
|
Fax
Number of Purchaser: |
|
Address
for Notice of Purchaser:
|
Address
for Delivery of Securities for Purchaser (if not same as address for notice): |
Subscription
Amount: $
Shares:
Warrant
Shares:
EIN
Number:
ANNEX
B
DISCLOSURE
SCHEDULES
REGISTRATION
RIGHTS AGREEMENT
This
REGISTRATION RIGHTS AGREEMENT (this “Agreement”), by and among Barfresh Food Group Inc., a Delaware
corporation with offices located at 90 Madison Street, Suite 701, Denver, CO 80206 (the “Company”), and the
undersigned buyers (each, a “Buyer,” and collectively, the “Buyers”) is entered into concurrently
with the Securities Purchase Agreement by and among the parties hereto (the “Securities Purchase Agreement”),
dated with respect to each Purchaser as of the date set forth on each Purchaser’s signature page to the Securities Purchase
Agreement.
RECITALS
A.
In connection with the Securities Purchase Agreement, the Company has agreed, upon the terms and subject to the conditions of
the Securities Purchase Agreement, to issue and sell to each Buyer (i) the Shares (as defined in the Securities Purchase Agreement)
and (ii) the Warrants (as defined in the Securities Purchase Agreement) which will be exercisable to purchase Warrant Shares (as
defined in the Securities Purchase Agreement) in accordance with the terms of the Warrants.
B.
To induce the Buyers to consummate the transactions contemplated by the Securities Purchase Agreement, the Company has agreed
to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder,
or any similar successor statute (collectively, the “1933 Act”), and applicable state securities laws.
AGREEMENT
NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company and each of the Buyers hereby agree as follows:
1.
Definitions.
Capitalized
terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Securities Purchase Agreement.
As used in this Agreement, the following terms shall have the following meanings:
(a)
“Applicable Date” means the earlier of (x) the first date on which the resale by the Buyers of at least 50%
of the Registrable Securities is covered by a Registration Statement (as defined in the Registration Rights Agreement) filed hereunder
(and each prospectus contained therein is available for use on such date) or (y) the first date on which all of the Registrable
Securities are eligible to be resold by the Buyers pursuant to Rule 144 (or, if a Current Public Information Failure (as defined
below) has occurred and is continuing, such later date after which the Company has cured such Current Public Information Failure).
(b)
“Closing Date” shall have the meaning set forth in the Securities Purchase Agreement.
(c)
“Effective Date” means the date that the applicable Registration Statement has been declared effective by the
SEC.
(d)
“Effectiveness Deadline” means (i) with respect to the initial Registration Statement required to be filed
pursuant to Section 2(a), the earlier of (A) either the 90th calendar day after the Closing Date, in the event the
SEC has notified the Company that it will no be reviewing the Registration Statement, or the 120th calendar day after
the Closing Date, in the event the SEC is conducting either a full or limited review of the Registration Statement, and (B) the
2nd Business Day after the date the Company is notified (orally or in writing, whichever is earlier) by the SEC that such Registration
Statement will not be reviewed or will not be subject to further review and (ii) with respect to any additional Registration Statements
that may be required to be filed by the Company pursuant to this Agreement, the earlier of (A) either the 90th calendar
day following the date on which the Company was required to file such additional Registration Statement, in the event the SEC
has notified the Company that it will not be reviewing such additional Registration Statement, or the 120th calendar
day following the date on which the Company was required to file such additional Registration Statement, , in the event the SEC
is conducting either a full or limited review of this additional Registration Statement, and (B) the 2nd Business Day
after the date the Company is notified (orally or in writing, whichever is earlier) by the SEC that such Registration Statement
will not be reviewed or will not be subject to further review.
(e)
“Filing Deadline” means (i) with respect to the initial Registration Statement required to be filed pursuant
to Section 2(a), the 30th calendar day after the Closing Date and (ii) with respect to any additional Registration
Statements that may be required to be filed by the Company pursuant to this Agreement, the date on which the Company was required
to file such additional Registration Statement pursuant to the terms of this Agreement.
(f)
“Investor” means a Buyer or any transferee or assignee of any Registrable Securities or Warrants, as applicable,
to whom a Buyer assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in
accordance with Section 9 and any transferee or assignee thereof to whom a transferee or assignee of any Registrable Securities
or Warrants, as applicable, assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement
in accordance with Section 9.
(g)
“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization or a government or any department or agency thereof.
(h)
“register,” “registered,” and “registration” refer to a registration
effected by preparing and filing one or more Registration Statements in compliance with the 1933 Act and pursuant to Rule 415
and the declaration of effectiveness of such Registration Statement(s) by the SEC.
(i)
“Registrable Securities” means (i) the Shares, (ii) the Warrant Shares and (iii) any capital stock of the Company
issued or issuable with respect to the Shares, the Warrant Shares or the Warrants, including, without limitation, (1) as a result
of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise and (2) shares of capital stock of
the Company into which the shares of Common Stock (as defined in the Warrants) are converted or exchanged and shares of capital
stock of a Successor Entity (as defined in the Warrants) into which the shares of Common Stock are converted or exchanged, in
each case, without regard to any limitations on exercise of the Warrants.
(j)
“Registration Statement” means a registration statement or registration statements of the Company filed under
the 1933 Act covering Registrable Securities.
(k)
“Required Holders” means, as of any given time, the holders of a majority of the Registrable Securities as
of such time (excluding any Registrable Securities held by the Company or any of its Subsidiaries as of such time).
(l)
“Required Registration Amount” means the sum of (i) the number of Shares issued pursuant to the Securities
Purchase Agreement and (ii) the maximum number of Warrant Shares issued and issuable pursuant to the Warrants immediately preceding
the applicable date of determination (without taking into account any limitations on the exercise of the Warrants set forth therein),
all subject to adjustment as provided in Section 2(c) and/or Section 2(f).
(m)
“Rule 144” means Rule 144 promulgated by the SEC under the 1933 Act, as such rule may be amended from time
to time, or any other similar or successor rule or regulation of the SEC that may at any time permit the Investors to sell securities
of the Company to the public without registration.
(n)
“Rule 415” means Rule 415 promulgated by the SEC under the 1933 Act, as such rule may be amended from time
to time, or any other similar or successor rule or regulation of the SEC providing for offering securities on a continuous or
delayed basis.
(o)
“SEC” means the United States Securities and Exchange Commission or any successor thereto.
2.
Registration.
(a)
Mandatory Registration. The Company shall prepare and, as soon as practicable, but in no event later than the Filing Deadline,
file with the SEC an initial Registration Statement on Form S-1- covering the resale of all of the Registrable Securities, provided
that such initial Registration Statement shall register for resale at least the number of shares of Common Stock equal to the
Required Registration Amount as of the date such Registration Statement is initially filed with the SEC. Such initial Registration
Statement, and each other Registration Statement required to be filed pursuant to the terms of this Agreement, shall contain (except
if otherwise directed by the Required Holders) the “Selling Stockholders” and “Plan of Distribution”
sections in substantially the form attached hereto as Exhibit B. The Company shall use its reasonable best efforts to have
such Registration Statement, declared effective by the SEC as soon as practicable, but in no event later than the applicable Effectiveness
Deadline for such Registration Statement.
(b)
Legal Counsel. Subject to Section 5 hereof, Kelley Drye & Warren LLP, counsel solely to the lead investor (“Legal
Counsel”), shall have the right to review any registration, solely on behalf of the lead investor, pursuant to this
Section 2.
(c)
Sufficient Number of Shares Registered. In the event the number of shares available under any Registration Statement is
insufficient to cover all of the Registrable Securities required to be covered by such Registration Statement or an Investor’s
allocated portion of the Registrable Securities pursuant to Section 2(g), the Company shall amend such Registration Statement
(if permissible), or file with the SEC a new Registration Statement (on the short form available therefor, if applicable), or
both, so as to cover at least the Required Registration Amount as of the Trading Day immediately preceding the date of the filing
of such amendment or new Registration Statement, in each case, as soon as practicable. The Company shall use its reasonable best
efforts to cause such amendment to such Registration Statement and/or such new Registration Statement (as the case may be) to
become effective as soon as practicable following the filing thereof with the SEC.
(d)
Effect of Failure to File and Obtain and Maintain Effectiveness of a Registration Statement. If (i) the initial Registration
Statement covering the resale of all of the Registrable Securities required to be covered thereby (after giving effect to any
reduction pursuant to Section 2(f)) and required to be filed by the Company pursuant to this Agreement is (A) not filed with the
SEC on or before the Filing Deadline for such Registration Statement (a “Filing Failure”) or (B) the initial
Registration Statement is not declared effective by the SEC on or before the Effectiveness Deadline for such Registration Statement
(an “Effectiveness Failure”) (it being understood that if on the Business Day immediately following the Effective
Date for such Registration Statement the Company shall not have filed a “final” prospectus for such Registration Statement
with the SEC under Rule 424(b) in accordance with Section 3(b) (whether or not such a prospectus is technically required by such
rule), the Company shall be deemed to not have satisfied this clause (i)(B) and such event shall be deemed to be an Effectiveness
Failure), (ii) other than during an Allowable Grace Period (as defined below), on any day after the Effective Date of a Registration
Statement sales of all of the Registrable Securities required to be included on such Registration Statement (disregarding any
reduction pursuant to Section 2(f)) cannot be made pursuant to such Registration Statement (including, without limitation, because
of a failure to keep such Registration Statement effective, a failure to disclose such information as is necessary for sales to
be made pursuant to such Registration Statement, a suspension or delisting of (or a failure to timely list) the shares of Common
Stock on an Eligible Market (as defined in the Warrants), or by reason of a stop order) or the prospectus contained therein is
not available for use for any reason (a “Maintenance Failure”), or (iii) if a Registration Statement is not
effective for any reason or the prospectus contained therein is not available for use for any reason, and either (x) the Company
fails for any reason to satisfy the requirements of Rule 144(c)(1), including, without limitation, the failure to satisfy the
current public information requirement under Rule 144(c) or (y) the Company has ever been an issuer described in Rule 144(i)(1)(i)
or becomes such an issuer in the future, and the Company shall fail to satisfy any condition set forth in Rule 144(i)(2) (a “Current
Public Information Failure”) as a result of which any of the Investors are unable to sell Registrable Securities without
restriction under Rule 144 (including, without limitation, volume restrictions), then, as partial relief for the damages to any
holder by reason of any such delay in, or reduction of, its ability to sell the underlying shares of Common Stock (which remedy
shall not be exclusive of any other remedies available at law or in equity), the Company shall pay to each holder of Registrable
Securities relating to such Registration Statement an amount in cash equal to one percent (1%) of the product of (x) the number
of Registrable Securities of such Investor required hereunder to be included in such Registration Statement and (y) the Closing
Sale Price (as defined in the Warrants) as of Trading Day immediately prior to the date a Registration Delay Payment (as defined
below) is due hereunder (1) on the date of such Effectiveness Failure, Maintenance Failure or Current Public Information Failure,
as applicable, and (2) on every thirty (30) day anniversary of (I) a Filing Failure until such Filing Failure is cured; (II) an
Effectiveness Failure until such Effectiveness Failure is cured; (III) a Maintenance Failure until such Maintenance Failure is
cured; and (IV) a Current Public Information Failure until the earlier of (i) the date such Current Public Information Failure
is cured and (ii) such time that such public information is no longer required pursuant to Rule 144 (in each case, pro rated for
periods totaling less than thirty (30) days). The payments to which a holder of Registrable Securities shall be entitled pursuant
to this Section 2(d) are referred to herein as “Registration Delay Payments”, it being understood that no Registration
Delay Payments shall be payable to an Investor with respect to a Filing Failure, an Effectiveness Failure, a Maintenance Failure
or a Current Public Information Failure to the extent (x) such Registration Delay Payments relate to such Registrable Securities
such Investor elects not to include in such Registration Statement or (y) such Investor fails to timely perform its obligations
hereunder. Following the initial Registration Delay Payment for any particular event or failure (which shall be paid on the date
of such event or failure, as set forth above), without limiting the foregoing, if an event or failure giving rise to the Registration
Delay Payments is cured prior to any thirty (30) day anniversary of such event or failure, then such Registration Delay Payment
shall be made on the third (3rd) Business Day after such cure. In the event the Company fails to make Registration
Delay Payments in a timely manner in accordance with the foregoing, such Registration Delay Payments shall bear interest at the
rate of one percent (1%) per month (prorated for partial months) until paid in full. Notwithstanding the foregoing, no Registration
Delay Payments shall be owed to an Investor (other than with respect to a Maintenance Failure resulting from a suspension or delisting
of (or a failure to timely list) the shares of Common Stock on the Principal Market) with respect to any period during which all
of such Investor’s Registrable Securities may be sold by such Investor without restriction under Rule 144 (including, without
limitation, volume restrictions) and without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2),
if applicable) or, with respect to any Investor, to the extent the Company has previously paid to such Investor an aggregate of
Registration Delay Payments in excess of six percent (6%) of such Investor’s Purchase Price (as defined in the Securities
Purchase Agreement”). Notwithstanding anything to the contrary contained in this Agreement, the terms “Filing Failure”
and “Effectiveness Failure” as used herein only apply to the initial Registration Statement and do not apply to any
subsequent Registration Statement required to be filed under this Agreement.
(e)
[Intentionally omitted].
(f)
Offering. Notwithstanding anything to the contrary contained in this Agreement, in the event the staff of the SEC (the
“Staff”) or the SEC seeks to characterize any offering pursuant to a Registration Statement filed pursuant
to this Agreement as constituting an offering of securities by, or on behalf of, the Company, or in any other manner, such that
the Staff or the SEC do not permit such Registration Statement to become effective and used for resales in a manner that does
not constitute such an offering and that permits the continuous resale at the market by the Investors participating therein (or
as otherwise may be acceptable to each Investor) without being named therein as an “underwriter,” then the Company
shall reduce the number of Registrable Securities to be included in such Registration Statement by all Investors until such time
as the Staff and the SEC shall so permit such Registration Statement to become effective as aforesaid. In making such reduction,
the Company shall reduce the number of shares to be included by all Investors on a pro rata basis (based upon the number of Registrable
Securities otherwise required to be included for each Investor) unless the inclusion of shares by a particular Investor or a particular
set of Investors are resulting in the Staff or the SEC’s “by or on behalf of the Company” offering position,
in which event the shares held by such Investor or set of Investors shall be the only shares subject to reduction (and if by a
set of Investors on a pro rata basis by such Investors or on such other basis as would result in the exclusion of the least number
of shares by all such Investors); provided, that, with respect to such pro rata portion allocated to any Investor, such Investor
may elect the allocation of such pro rata portion among the Registrable Securities of such Investor. In addition, in the event
that the Staff or the SEC requires any Investor seeking to sell securities under a Registration Statement filed pursuant to this
Agreement to be specifically identified as an “underwriter” in order to permit such Registration Statement to become
effective, and such Investor does not consent to being so named as an underwriter in such Registration Statement, then, in each
such case, the Company shall reduce the total number of Registrable Securities to be registered on behalf of such Investor, until
such time as the Staff or the SEC does not require such identification or until such Investor accepts such identification and
the manner thereof. Any reduction pursuant to this paragraph will reduce all Registrable Securities registered on such Registration
Statement, pro rata.
(g)
Allocation of Registrable Securities. The initial number of Registrable Securities included in any Registration Statement
and any increase in the number of Registrable Securities included therein shall be allocated pro rata among the Investors based
on the number of Registrable Securities held by each Investor at the time such Registration Statement covering such initial number
of Registrable Securities or increase thereof is declared effective by the SEC. In the event that an Investor sells or otherwise
transfers any of such Investor’s Registrable Securities, each transferee or assignee (as the case may be) that becomes an
Investor shall be allocated a pro rata portion of the then-remaining number of Registrable Securities included in such Registration
Statement for such transferor or assignee (as the case may be). Any shares of Common Stock included in a Registration Statement
and which remain allocated to any Person which ceases to hold any Registrable Securities covered by such Registration Statement
shall be allocated to the remaining Investors, pro rata based on the number of Registrable Securities then held by such Investors
which are covered by such Registration Statement.
(h)
No Inclusion of Other Securities. Except as set forth on Schedule 2(h) (“Other Registrable Securities”), the
Company shall in no event include any securities other than Registrable Securities on the initial filing of the Registration Statement
filed in accordance herewith without the prior written consent of the Required Holders. Until six (6) months from the Applicable
Date, the Company shall not file a Registration Statement (other than a Registration Statement on Form S-4 or S-8) unless it contains
all of the Registrable Shares not included in the initial Registration Statement as a result of Section 2(f).
3.
Related Obligations.
The
Company shall use its reasonable best efforts to effect the registration of the Registrable Securities in accordance with the
intended method of disposition thereof, and, pursuant thereto, the Company shall have the following obligations:
(a)
The Company shall promptly prepare and file with the SEC a Registration Statement with respect to all the Registrable Securities
(but in no event later than the applicable Filing Deadline) and use its reasonable best efforts to cause such Registration Statement
to become effective as soon as practicable after such filing (but in no event later than the Effectiveness Deadline). Subject
to Allowable Grace Periods, the Company shall keep each Registration Statement effective (and the prospectus contained therein
available for use) pursuant to Rule 415 for resales by the Investors on a delayed or continuous basis at then-prevailing market
prices (and not fixed prices) at all times until the earlier of (i) the date as of which all of the Investors may sell all of
the Registrable Securities required to be covered by such Registration Statement (disregarding any reduction pursuant to Section
2(f)) without restriction pursuant to Rule 144 (including, without limitation, volume restrictions) and without the need for current
public information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or (ii) the date on which the Investors shall
have sold all of the Registrable Securities covered by such Registration Statement (the “Registration Period”).
Notwithstanding anything to the contrary contained in this Agreement, the Company shall ensure that, when filed and at all times
while effective, each Registration Statement (including, without limitation, all amendments and supplements thereto) and the prospectus
(including, without limitation, all amendments and supplements thereto) used in connection with such Registration Statement (1)
shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary
to make the statements therein (in the case of prospectuses, in the light of the circumstances in which they were made) not misleading
and (2) will disclose (whether directly or through incorporation by reference to other SEC filings to the extent permitted) all
material information regarding the Company and its securities.
(b)
Subject to Section 3(r) of this Agreement, the Company shall prepare and file with the SEC such amendments (including, without
limitation, post-effective amendments) and supplements to each Registration Statement and the prospectus used in connection with
each such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may
be necessary to keep each such Registration Statement effective at all times during the Registration Period for such Registration
Statement, and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable
Securities of the Company required to be covered by such Registration Statement until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth
in such Registration Statement; provided, however, by 8:30 a.m. (New York time) on the Business Day immediately following each
Effective Date, the Company shall file with the SEC in accordance with Rule 424(b) under the 1933 Act the final prospectus to
be used in connection with sales pursuant to the applicable Registration Statement (whether or not such a prospectus is technically
required by such rule). In the case of amendments and supplements to any Registration Statement which are required to be filed
pursuant to this Agreement (including, without limitation, pursuant to this Section 3(a)) by reason of the Company filing a report
on Form 10-Q or Form 10-K or any analogous report under the Securities Exchange Act of 1934, as amended (the “1934 Act”),
the Company shall, if permitted under the applicable rules and regulations of the SEC, have incorporated such report by reference
into such Registration Statement, if applicable, or shall file such amendments or supplements with the SEC no later than the fifth
calendar day after the calendar day on which the 1934 Act report is filed which created the requirement for the Company to amend
or supplement such Registration Statement.
(c)
The Company shall (A) permit Legal Counsel and legal counsel for each other Investor to review and comment upon (i) each Registration
Statement at least five (5) Business Days prior to its filing with the SEC and (ii) all amendments and supplements to each Registration
Statement (including, without limitation, the prospectus contained therein) (except for Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K, and any similar or successor reports) within a reasonable number of days prior
to their filing with the SEC, and (B) not file any Registration Statement or amendment or supplement thereto in a form to which
Legal Counsel or any legal counsel for any other Investor reasonably objects in writing, and limited solely with respect to a
disclosure regarding such counsel’s client. The Company shall promptly furnish to Legal Counsel and legal counsel for each
other Investor, upon written request, without charge, (i) copies of any correspondence from the SEC or the Staff to the Company
or its representatives relating to each Registration Statement, provided that such correspondence shall not contain any material,
non-public information regarding the Company or any of its Subsidiaries (as defined in the Securities Purchase Agreement), (ii)
except to the extent available on EDGAR, after the same is prepared and filed with the SEC, one (1) copy of each Registration
Statement and any amendment(s) and supplement(s) thereto, including, without limitation, financial statements and schedules, all
documents incorporated therein by reference, if requested by an Investor, and all exhibits and (iii) except to the extent available
on EDGAR, upon the effectiveness of each Registration Statement, one (1) copy of the prospectus included in such Registration
Statement and all amendments and supplements thereto The Company shall reasonably cooperate with Legal Counsel and legal counsel
for each other Investor in performing the Company’s obligations pursuant to this Section 2(h).
(d)
The Company shall promptly furnish to each Investor whose Registrable Securities are included in any Registration Statement, without
charge, upon written request by an Investor, (i) after the same is prepared and filed with the SEC, at least one (1) copy of each
Registration Statement and any amendment(s) and supplement(s) thereto, including, without limitation, financial statements and
schedules, all documents incorporated therein by reference, if requested by an Investor, all exhibits and each preliminary prospectus,
(ii) upon the effectiveness of each Registration Statement, one copy of the prospectus included in such Registration Statement
and all amendments and supplements thereto (or such other number of copies as such Investor may reasonably request from time to
time) and (iii) such other documents, including, without limitation, copies of any preliminary or final prospectus, as such Investor
may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by such Investor.
(e)
The Company shall use its reasonable best efforts to (i) register and qualify, unless an exemption from registration and qualification
applies, the resale by Investors of the Registrable Securities covered by a Registration Statement under such other securities
or “blue sky” laws of all applicable jurisdictions in the United States, (ii) prepare and file in those jurisdictions,
such amendments (including, without limitation, post-effective amendments) and supplements to such registrations and qualifications
as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may
be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business
in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(e), (y) subject itself to general
taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall
promptly notify Legal Counsel, legal counsel for each other Investor and each Investor who holds Registrable Securities of the
receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable
Securities for sale under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt
of actual notice of the initiation or threatening of any proceeding for such purpose.
(f)
The Company shall notify Legal Counsel, legal counsel for each other Investor and each Investor in writing of the happening of
any event, as promptly as practicable after becoming aware of such event, as a result of which the prospectus included in a Registration
Statement, as then in effect, may include an untrue statement of a material fact or omission to state 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 (provided that in no event shall such notice contain any material, non-public information regarding the Company
or any of its Subsidiaries), and, subject to Section 3(r), promptly prepare a supplement or amendment to such Registration Statement
and such prospectus contained therein to correct such untrue statement or omission and deliver ten (10) copies of such supplement
or amendment to Legal Counsel, legal counsel for each other Investor and each Investor (or such other number of copies as Legal
Counsel, legal counsel for each other Investor or such Investor may reasonably request). The Company shall also promptly notify
Legal Counsel, legal counsel for each other Investor and each Investor in writing (i) when a prospectus or any prospectus supplement
or post-effective amendment has been filed, when a Registration Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to Legal Counsel, legal counsel for each other Investor and each Investor
by facsimile or e-mail on the same day of such effectiveness and by overnight mail), and when the Company receives written notice
from the SEC that a Registration Statement or any post-effective amendment will be reviewed by the SEC, (ii) of any request by
the SEC for amendments or supplements to a Registration Statement or related prospectus or related information, (iii) of the Company’s
reasonable determination that a post-effective amendment to a Registration Statement would be appropriate; and (iv) of the receipt
of any request by the SEC or any other federal or state governmental authority for any additional information relating to the
Registration Statement or any amendment or supplement thereto or any related prospectus. The Company shall respond as promptly
as practicable to any comments received from the SEC with respect to each Registration Statement or any amendment thereto (it
being understood and agreed that the Company’s response to initial SEC comments shall be delivered to the SEC no later than
twenty-one (21) Business Days after the receipt thereof and that the Company’s response to any subsequent SEC comments shall
be delivered to the SEC no later than fifteen (15) Business Days after the Company’s receipt thereof).
(g)
The Company shall (i) use its reasonable best efforts to prevent the issuance of any stop order or other suspension of effectiveness
of each Registration Statement or the use of any prospectus contained therein, or the suspension of the qualification, or the
loss of an exemption from qualification, of any of the Registrable Securities for sale in any jurisdiction and, if such an order
or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and (ii) notify
Legal Counsel, legal counsel for each other Investor and each Investor who holds Registrable Securities of the issuance of such
order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.
(h)
If any Investor may be required under applicable securities law to be described in any Registration Statement as an underwriter
and such Investor consents to so being named an underwriter, at the request of any Investor, the Company shall furnish to such
Investor, on the date of the effectiveness of such Registration Statement and thereafter from time to time on such dates as an
Investor may reasonably request (i) a letter, dated such date, from the Company’s independent certified public accountants
in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public
offering, addressed to the Investors, and (ii) an opinion, dated as of such date, of counsel representing the Company for purposes
of such Registration Statement, in form, scope and substance as is customarily given in an underwritten public offering, addressed
to the Investors.
(i)
If any Investor may be required under applicable securities law to be described in any Registration Statement as an underwriter
and such Investor consents to so being named an underwriter, upon the written request of such Investor, the Company shall make
available for inspection by (i) such Investor, (ii) legal counsel for such Investor and (iii) one (1) firm of accountants or other
agents retained by such Investor (collectively, the “Inspectors”), all pertinent financial and other records,
and pertinent corporate documents and properties of the Company (collectively, the “Records”), as shall be
reasonably deemed necessary by each Inspector, and cause the Company’s officers, directors and employees to supply all information
which any Inspector may reasonably request; provided, however, each Inspector shall agree in writing to hold in strict confidence
and not to make any disclosure (except to such Investor) or use of any Record or other information which the Company’s board
of directors determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (1)
the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement or is
otherwise required under the 1933 Act, (2) the release of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or (3) the information in such Records has been made generally
available to the public other than by disclosure in violation of this Agreement or any other Transaction Document (as defined
in the Securities Purchase Agreement). Such Investor agrees that it shall, upon learning that disclosure of such Records is sought
in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and
allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for,
the Records deemed confidential. Nothing herein (or in any other confidentiality agreement between the Company and such Investor,
if any) shall be deemed to limit any Investor’s ability to sell Registrable Securities in a manner which is otherwise consistent
with applicable laws and regulations.
(j)
The Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company
unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of
such information is necessary to avoid or correct a misstatement or omission in any Registration Statement or is otherwise required
to be disclosed in such Registration Statement pursuant to the 1933 Act, (iii) the release of such information is ordered pursuant
to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information
has been made generally available to the public other than by disclosure in violation of this Agreement or any other Transaction
Document. The Company agrees that it shall, upon learning that disclosure of such information concerning an Investor is sought
in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to such Investor
and allow such Investor, at such Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.
(k)
Without limiting any obligation of the Company under the Securities Purchase Agreement, if requested by an Investor, the Company
shall use its reasonable best efforts either to (i) cause all of the Registrable Securities covered by each Registration Statement
to be listed on each securities exchange on which securities of the same class or series issued by the Company are then listed,
if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange, (ii) secure designation
and quotation of all of the Registrable Securities covered by each Registration Statement on a Trading Market (as defined in the
Securities Purchase Agreement).
(l)
The Company shall cooperate with the Investors who hold Registrable Securities being offered and, to the extent applicable, facilitate
the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities
to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts (as the
case may be) as the Investors may reasonably request from time to time and registered in such names as the Investors may request.
(m)
If requested by an Investor, the Company shall as soon as practicable after receipt of notice from such Investor and subject to
Section 3(r) hereof, (i) incorporate in a prospectus supplement or post-effective amendment such information as an Investor reasonably
requests to be included therein relating to the sale and distribution of Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor
and any other terms of the offering of the Registrable Securities to be sold in such offering; (ii) make all required filings
of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus
supplement or post-effective amendment; and (iii) supplement or make amendments to any Registration Statement or prospectus contained
therein if reasonably requested by an Investor holding any Registrable Securities.
(n)
The Company shall use its reasonable best efforts to cause the Registrable Securities covered by a Registration Statement to be
registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition
of such Registrable Securities.
(o)
If requested by an Investor, the Company shall make generally available to its security holders as soon as practical, but not
later than ninety (90) days after the close of the period covered thereby, an earnings statement (in form complying with, and
in the manner provided by, the provisions of Rule 158 under the 1933 Act) covering a twelve-month period beginning not later than
the first day of the Company’s fiscal quarter next following the applicable Effective Date of each Registration Statement.
(p)
The Company shall otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC in
connection with any registration hereunder.
(q)
Within one (1) Business Day after a Registration Statement which covers Registrable Securities is declared effective by the SEC,
the Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable
Securities (with copies to the Investors whose Registrable Securities are included in such Registration Statement) confirmation
that such Registration Statement has been declared effective by the SEC in the form attached hereto as Exhibit A.
(r)
Notwithstanding anything to the contrary herein (but subject to the last sentence of this Section 3(r), at any time after the
Effective Date of a particular Registration Statement, the Company may delay the disclosure of material, non-public information
concerning the Company or any of its Subsidiaries the disclosure of which at the time is not, in the good faith opinion of the
board of directors of the Company, in the best interest of the Company and, in the opinion of counsel to the Company, otherwise
required (a “Grace Period”), provided that the Company shall promptly notify the Investors in writing of the
(i) existence of material, non-public information giving rise to a Grace Period (provided that in each such notice the Company
shall not disclose the content of such material, non-public information to any of the Investors) and the date on which such Grace
Period will begin and (ii) date on which such Grace Period ends, provided further that (I) no Grace Period shall exceed ten (10)
consecutive days and during any three hundred sixty five (365) day period all such Grace Periods shall not exceed an aggregate
of thirty (30) days, (II) the first day of any Grace Period must be at least five (5) Trading Days after the last day of any prior
Grace Period and (III) no Grace Period may exist during the sixty (60) Trading Day period immediately following the Effective
Date of such Registration Statement (provided that such sixty (60) Trading Day period shall be extended by the number of Trading
Days during such period and any extension thereof contemplated by this proviso during which such Registration Statement is not
effective or the prospectus contained therein is not available for use) (each, an “Allowable Grace Period”).
For purposes of determining the length of a Grace Period above, such Grace Period shall begin on and include the date the Investors
receive the notice referred to in clause (i) above and shall end on and include the later of the date the Investors receive the
notice referred to in clause (ii) above and the date referred to in such notice. The provisions of Section 3(g) hereof shall not
be applicable during the period of any Allowable Grace Period. Upon expiration of each Grace Period, the Company shall again be
bound by the first sentence of Section 3(f) with respect to the information giving rise thereto unless such material, non-public
information is no longer applicable. Notwithstanding anything to the contrary contained in this Section 3(r), the Company shall
cause its transfer agent to deliver unlegended shares of Common Stock to a transferee of an Investor in accordance with the terms
of the Securities Purchase Agreement in connection with any sale of Registrable Securities with respect to which such Investor
has entered into a contract for sale, and delivered a copy of the prospectus included as part of the particular Registration Statement
to the extent applicable, prior to such Investor’s receipt of the notice of a Grace Period and for which the Investor has
not yet settled.
(s)
Neither the Company nor any Subsidiary or affiliate thereof shall identify any Investor as an underwriter in any public disclosure
or filing with the SEC, the Principal Market or any Trading Market and any Buyer being deemed an underwriter by the SEC shall
not relieve the Company of any obligations it has under this Agreement or any other Transaction Document; provided, however, that
the foregoing shall not prohibit the Company from including the disclosure found in the “Plan of Distribution” section
attached hereto as Exhibit B in the Registration Statement.
4.
Obligations of the Investors.
(a)
At least five (5) Business Days prior to the first anticipated filing date of each Registration Statement, the Company shall notify
each Investor in writing of the information the Company requires from each such Investor with respect to such Registration Statement.
It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with
respect to the Registrable Securities of a particular Investor that such Investor shall furnish to the Company such information
regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held
by it, as shall be reasonably required to effect and maintain the effectiveness of the registration of such Registrable Securities
and shall execute such documents in connection with such registration as the Company may reasonably request.
(b)
Each Investor, by such Investor’s acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of each Registration Statement hereunder, unless such Investor
has notified the Company in writing of such Investor’s election to exclude all of such Investor’s Registrable Securities
from such Registration Statement.
(c)
Each Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in
Section 3(g) or the first sentence of 3(f), such Investor will immediately discontinue disposition of Registrable Securities pursuant
to any Registration Statement(s) covering such Registrable Securities until such Investor’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(g) or the first sentence of Section 3(f) or receipt of notice that
no supplement or amendment is required.
(d)
Each Investor covenants and agrees that it will comply with the prospectus delivery requirements of the 1933 Act as applicable
to it in connection with sales of Registrable Securities pursuant to a Registration Statement.
5.
Expenses of Registration.
All
reasonable expenses, other than underwriting discounts and commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees,
printers and accounting fees, FINRA filing fees (if any) and fees and disbursements of counsel for the Company shall be paid by
the Company.
6.
Indemnification.
(a)
To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend each Investor and
each of its directors, officers, shareholders, members, partners, employees, agents, advisors, representatives (and any other
Persons with a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other
title) and each Person, if any, who controls such Investor within the meaning of the 1933 Act or the 1934 Act and each of the
directors, officers, shareholders, members, partners, employees, agents, advisors, representatives (and any other Persons with
a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title) of such
controlling Persons (each, an “Indemnified Person”), against any losses, obligations, claims, damages, liabilities,
contingencies, judgments, fines, penalties, charges, costs (including, without limitation, court costs, reasonable attorneys’
fees and costs of defense and investigation), amounts paid in settlement or expenses, joint or several, (collectively, “Claims”)
incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken
from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether
pending or threatened, whether or not an Indemnified Person is or may be a party thereto (“Indemnified Damages”),
to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a
Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the
offering under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered
(“Blue Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained
in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the
SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in
light of the circumstances under which the statements therein were made, not misleading or (iii) any violation or alleged violation
by the Company of the 1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule
or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement (the
matters in the foregoing clauses (i) through (iii) being, collectively, “Violations”). Subject to Section 6(c),
the Company shall reimburse the Indemnified Persons, promptly as such expenses are incurred and are due and payable, for any legal
fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to
a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by such Indemnified Person for such Indemnified Person expressly for use in connection
with the preparation of such Registration Statement or any such amendment thereof or supplement thereto and (ii) shall not be
available to a particular Investor to the extent such Claim is based on a failure of such Investor to deliver or to cause to be
delivered the prospectus made available by the Company (to the extent applicable), including, without limitation, a corrected
prospectus, if such prospectus or corrected prospectus was timely made available by the Company pursuant to Section 3(d) and then
only if, and to the extent that, following the receipt of the corrected prospectus no grounds for such Claim would have existed;
and (iii) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld or delayed. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of any
of the Registrable Securities by any of the Investors pursuant to Section 9.
(b)
In connection with any Registration Statement in which an Investor is participating, such Investor agrees to severally and not
jointly indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company,
each of its directors, each of its officers who signs the Registration Statement and each Person, if any, who controls the Company
within the meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Party”), against any Claim or Indemnified
Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified
Damages arise out of or are based upon any Violation, in each case, to the extent, and only to the extent, that such Violation
occurs in reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use
in connection with such Registration Statement; and, subject to Section 6(c) and the below provisos in this Section 6(b), such
Investor will reimburse an Indemnified Party any legal or other expenses reasonably incurred by such Indemnified Party in connection
with investigating or defending any such Claim; provided, however, the indemnity agreement contained in this Section 6(b) and
the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of such Investor, which consent shall not be unreasonably withheld
or delayed, provided further that such Investor shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified
Damages as does not exceed the net proceeds to such Investor as a result of the applicable sale of Registrable Securities pursuant
to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or
on behalf of such Indemnified Party and shall survive the transfer of any of the Registrable Securities by any of the Investors
pursuant to Section 9.
(c)
Promptly after receipt by an Indemnified Person or Indemnified Party (as the case may be) under this Section 6 of notice of the
commencement of any action or proceeding (including, without limitation, any governmental action or proceeding) involving a Claim,
such Indemnified Person or Indemnified Party (as the case may be) shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with
any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to
the indemnifying party and the Indemnified Person or the Indemnified Party (as the case may be); provided, however, an Indemnified
Person or Indemnified Party (as the case may be) shall have the right to retain its own counsel with the fees and expenses of
such counsel to be paid by the indemnifying party if: (i) the indemnifying party has agreed in writing to pay such fees and expenses;
(ii) the indemnifying party shall have failed promptly to assume the defense of such Claim and to employ counsel reasonably satisfactory
to such Indemnified Person or Indemnified Party (as the case may be) in any such Claim; or (iii) the named parties to any such
Claim (including, without limitation, any impleaded parties) include both such Indemnified Person or Indemnified Party (as the
case may be) and the indemnifying party, and such Indemnified Person or such Indemnified Party (as the case may be) shall have
been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified
Person or such Indemnified Party and the indemnifying party (in which case, if such Indemnified Person or such Indemnified Party
(as the case may be) notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the
indemnifying party, then the indemnifying party shall not have the right to assume the defense thereof and such counsel shall
be at the expense of the Indemnifying Party, provided further that in the case of clause (iii) above the indemnifying party shall
not be responsible for the reasonable fees and expenses of more than one (1) separate legal counsel for such Indemnified Person
or Indemnified Party (as the case may be). The Indemnified Party or Indemnified Person (as the case may be) shall reasonably cooperate
with the indemnifying party in connection with any negotiation or defense of any such action or Claim by the indemnifying party
and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person
(as the case may be) which relates to such action or Claim. The indemnifying party shall keep the Indemnified Party or Indemnified
Person (as the case may be) reasonably apprised at all times as to the status of the defense or any settlement negotiations with
respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without
its prior written consent; provided, however, the indemnifying party shall not unreasonably withhold, delay or condition its consent.
No indemnifying party shall, without the prior written consent of the Indemnified Party or Indemnified Person (as the case may
be), consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person (as the case may be) of a
release from all liability in respect to such Claim or litigation, and such settlement shall not include any admission as to fault
on the part of the Indemnified Party. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated
to all rights of the Indemnified Party or Indemnified Person (as the case may be) with respect to all third parties, firms or
corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying
party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability
to the Indemnified Person or Indemnified Party (as the case may be) under this Section 6, except to the extent that the indemnifying
party is materially and adversely prejudiced in its ability to defend such action.
(d)
The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified Damages are incurred.
(e)
The indemnity and contribution agreements contained herein shall be in addition to (i) any cause of action or similar right of
the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.
7.
Contribution.
To
the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make
the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent
permitted by law; provided, however: (i) no contribution shall be made under circumstances where the maker would not have been
liable for indemnification under the fault standards set forth in Section 6 of this Agreement, (ii) no Person involved in the
sale of Registrable Securities which Person is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) in connection with such sale shall be entitled to contribution from any Person involved in such sale of Registrable
Securities who was not guilty of fraudulent misrepresentation; and (iii) contribution by any seller of Registrable Securities
shall be limited in amount to the amount of net proceeds received by such seller from the applicable sale of such Registrable
Securities pursuant to such Registration Statement. Notwithstanding the provisions of this Section 7, no Investor shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Investor
from the applicable sale of the Registrable Securities subject to the Claim exceeds the amount of any damages that such Investor
has otherwise been required to pay, or would otherwise be required to pay under Section 6(b), by reason of such untrue or alleged
untrue statement or omission or alleged omission.
8.
Reports Under the 1934 Act.
With
a view to making available to the Investors the benefits of Rule 144, the Company agrees to:
(a)
make and keep public information available, as those terms are understood and defined in Rule 144;
(b)
file with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act
so long as the Company remains subject to such requirements (it being understood and agreed that nothing herein shall limit any
obligations of the Company under the Securities Purchase Agreement) and the filing of such reports and other documents is required
for the applicable provisions of Rule 144; and
(c)
furnish to each Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a written statement
by the Company, if true, that it has complied with the reporting, submission and posting requirements of Rule 144 and the 1934
Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by
the Company with the SEC if such reports are not publicly available via EDGAR, and (iii) such other information as may be reasonably
requested to permit the Investors to sell such securities pursuant to Rule 144 without registration.
9.
Assignment of Registration Rights.
All or any portion of the rights under this Agreement shall be automatically assignable
by each Investor to any transferee or assignee (as the case may be) of all or any portion of such Investor’s Registrable
Securities or Warrants if: (i) such Investor agrees in writing with such transferee or assignee (as the case may be) to assign
all or any portion of such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such
transfer or assignment (as the case may be); (ii) the Company is, within a reasonable time after such transfer or assignment (as
the case may be), furnished with written notice of (a) the name and address of such transferee or assignee (as the case may be),
and (b) the securities with respect to which such registration rights are being transferred or assigned (as the case may be);
(iii) immediately following such transfer or assignment (as the case may be) the further disposition of such securities by such
transferee or assignee (as the case may be) is restricted under the 1933 Act or applicable state securities laws if so required;
(iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence such transferee
or assignee (as the case may be) agrees in writing with the Company to be bound by all of the provisions contained herein; (v)
such transfer or assignment (as the case may be) shall have been made in accordance with the applicable requirements of the Securities
Purchase Agreement and the Warrants (as the case may be); and (vi) such transfer or assignment (as the case may be) shall have
been conducted in accordance with all applicable federal and state securities laws.
10.
Amendment of Registration Rights.
Provisions
of this Agreement may be amended only with the written consent of the Company and the Required Holders. Any amendment effected
in accordance with this Section 10 shall be binding upon each Investor and the Company, provided that no such amendment shall
be effective to the extent that it (1) applies to less than all of the holders of Registrable Securities or (2) imposes any obligation
or liability on any Investor without such Investor’s prior written consent (which may be granted or withheld in such Investor’s
sole discretion). No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving
party. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision
of this Agreement unless the same consideration (other than the reimbursement of legal fees) also is offered to all of the parties
to this Agreement.
11.
Miscellaneous.
(a)
Solely for purposes of this Agreement, a Person is deemed to be a holder of Registrable Securities whenever such Person owns,
or is deemed to own, of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections
from two or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from such record owner of such Registrable Securities.
(b)
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must
be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when
sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending
party); (iii) with respect to Section 3(c), by electronic mail (provided confirmation of transmission is electronically generated
and kept on file by the sending party); or (iv) one (1) Business Day after deposit with a nationally recognized overnight delivery
service with next day delivery specified, in each case, properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:
|
If to the Company: |
|
|
|
|
Barfresh Food Group Inc. |
|
|
90 Madison Street, Suite 701 |
|
|
Denver, CO 80206 |
|
|
Telephone: |
(303) 329-3008 |
|
|
Facsimile: |
(303) 578-5368 |
|
|
Attention: |
Chief Executive
Officer |
|
|
|
|
|
With a copy (for informational purposes only) to: |
|
|
|
|
Libertas Law Group, Inc. |
|
|
225 Santa Monica Blvd, Suite 1100 |
|
|
Santa Monica, CA 90401 |
|
|
Telephone: |
(310) 359-8742 |
|
|
Facsimile: |
(310) 356-1922 |
|
|
Attention: |
Mark Abdou, Esq. |
|
|
Email: |
mark@libertaslaw.com |
|
|
|
|
|
If to the Transfer Agent: |
|
|
|
|
Action Stock Transfer |
|
|
2469 E. Fort Union Blvd, Suite 214 |
|
|
Salt Lake City, UT 84121 |
|
|
Telephone: |
(801) 274-1088 |
|
|
Facsimile: |
(801) 274-1099 |
|
|
Attention: |
Justeene Blankenship |
|
If to Legal Counsel: |
|
|
|
|
Kelley Drye & Warren LLP |
|
|
101 Park Avenue |
|
|
New York, NY 10178 |
|
|
Telephone: |
(212) 808-7540 |
|
|
Facsimile: |
(212) 808-7897 |
|
|
Attention: |
Michael A. Adelstein,
Esq. |
|
|
E-mail: |
madelstein@kelleydrye.com |
If
to a Buyer, to its address and facsimile number set forth on the Schedule of Buyers attached to the Securities Purchase Agreement,
with copies to such Buyer’s representatives as set forth on the Schedule of Buyers, or to such other address and/or facsimile
number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other
party five (5) days prior to the effectiveness of such change, provided that Kelley Drye & Warren LLP shall only be provided
notices sent to the lead investor. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver
or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine or electronic mail
transmission containing the time, date, recipient facsimile number or electronic mail address and an image of the first page of
such transmission or (C) provided by a courier or overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or
(iii) above, respectively.
(c)
Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such
right or remedy, shall not operate as a waiver thereof. The Company and each Investor acknowledge and agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that each party hereto shall be entitled to an injunction or injunctions
to prevent or cure breaches of the provisions of this Agreement by any other party hereto and to enforce specifically the terms
and provisions hereof (without the necessity of showing economic loss and without any bond or other security being required),
this being in addition to any other remedy to which any party may be entitled by law or equity.
(d)
All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than
the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting
in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party
hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding
by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE
TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING
OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(e)
If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity
or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations
of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will
endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s),
the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
(f)
This Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced
herein and therein constitute the entire agreement among the parties hereto and thereto solely with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to
herein and therein. This Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and
the instruments referenced herein and therein supersede all prior agreements and understandings among the parties hereto solely
with respect to the subject matter hereof and thereof; provided, however, nothing contained in this Agreement or any other Transaction
Document shall (or shall be deemed to) (i) have any effect on any agreements any Investor has entered into with the Company or
any of its Subsidiaries prior to the date hereof with respect to any prior investment made by such Investor in the Company, (ii)
waive, alter, modify or amend in any respect any obligations of the Company or any of its Subsidiaries or any rights of or benefits
to any Investor or any other Person in any agreement entered into prior to the date hereof between or among the Company and/or
any of its Subsidiaries and any Investor and all such agreements shall continue in full force and effect or (iii) limit any obligations
of the Company under any of the other Transaction Documents.
(g)
Subject to compliance with Section 9 (if applicable), this Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto. This Agreement is not for the benefit of, nor may any provision hereof be
enforced by, any Person, other than the parties hereto, their respective permitted successors and assigns and the Persons referred
to in Sections 6 and 7 hereof.
(h)
The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter,
singular and plural forms thereof. The terms “including,” “includes,” “include” and words
of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,”
“hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision
in which they are found.
(i)
This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that
any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of
an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.
(j)
Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents as any other party may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
(k)
The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and
no rules of strict construction will be applied against any party. Notwithstanding anything to the contrary set forth in Section
10, terms used in this Agreement but defined in the other Transaction Documents shall have the meanings ascribed to such terms
on the Closing Date in such other Transaction Documents unless otherwise consented to in writing by each Investor.
(l)
All consents and other determinations required to be made by the Investors pursuant to this Agreement shall be made, unless otherwise
specified in this Agreement, by the Required Holders, determined as if all of the outstanding Warrants then held by Investors
have been exercised for Registrable Securities without regard to any limitations on exercise of the Warrants.
(m)
This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other Person.
(n)
The obligations of each Investor under this Agreement and the other Transaction Documents are several and not joint with the obligations
of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor
under this Agreement or any other Transaction Document. Nothing contained herein or in any other Transaction Document, and no
action taken by any Investor pursuant hereto or thereto, shall be deemed to constitute the Investors as, and the Company acknowledges
that the Investors do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity,
or create a presumption that the Investors are in any way acting in concert or as a group or entity with respect to such obligations
or the transactions contemplated by the Transaction Documents or any matters, and the Company acknowledges that the Investors
are not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or
the transactions contemplated by this Agreement or any of the other the Transaction Documents. Each Investor shall be entitled
to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out
of any other Transaction Documents, and it shall not be necessary for any other Investor to be joined as an additional party in
any proceeding for such purpose. The use of a single agreement with respect to the obligations of the Company contained herein
was solely in the control of the Company, not the action or decision of any Investor, and was done solely for the convenience
of the Company and not because it was required or requested to do so by any Investor. It is expressly understood and agreed that
each provision contained in this Agreement and in each other Transaction Document is between the Company and an Investor, solely,
and not between the Company and the Investors collectively and not between and among Investors.
IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Registration Rights Agreement
to be duly executed as of the date first written above.
|
COMPANY: |
|
|
|
|
BARFRESH FOOD GROUP INC. |
|
|
|
|
By: |
/s/ Riccardo
Delle Coste |
|
Name: |
Riccardo Delle
Coste |
|
Title: |
Chief Executive
Officer |
[PURCHASER
SIGNATURE PAGE TO BARFRESH FOOD GROUP INC. REGISTRATION RIGHTS AGREEMENT]
IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Registration Rights Agreement
to be duly executed as of the date first written above.
|
BUYERS: |
|
|
|
Wolverine
Flagship Fund Trading Limited |
|
|
|
By: |
|
|
Name: |
|
|
Title: |
|
IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Registration Rights Agreement
to be duly executed as of the date first written above.
EXHIBIT
A
FORM
OF NOTICE OF EFFECTIVENESS
OF
REGISTRATION STATEMENT
_____________________
_____________________
Attention: _____________
Re:
Barfresh Food Group Inc.
Ladies and
Gentlemen:
[We
are] [I am] counsel to Barfresh Food Group Inc., a Delaware corporation (the “Company”), and have
represented the Company in connection with that certain Securities Purchase Agreement (the “Securities Purchase
Agreement”) entered into by and among the Company and the buyers named therein (collectively, the
“Holders”) pursuant to which the Company issued to the Holders certain shares (the
“Shares”) of common stock, $0.000001 par value, of the Company (the “Common Stock”),
and warrants exercisable for shares of Common Stock (the “Warrants”). Pursuant to the Securities Purchase
Agreement, the Company also has entered into a Registration Rights Agreement with the Holders (the “Registration
Rights Agreement”) pursuant to which the Company agreed, among other things, to register the Registrable Securities
(as defined in the Registration Rights Agreement), including the Shares and the shares of Common Stock issuable upon exercise
of the Warrants, under the Securities Act of 1933, as amended (the “1933 Act”). In connection with the
Company’s obligations under the Registration Rights Agreement, on ____________ ___, 20__, the Company filed a
Registration Statement on Form [S-1][S-3] (File No. 333-_____________) (the “Registration Statement”) with
the Securities and Exchange Commission (the “SEC”) relating to the Registrable Securities which names each
of the Holders as a selling stockholder thereunder.
In
connection with the foregoing, [we][I] advise you that a member of the SEC’s staff has advised [us][me] by telephone that
the SEC has entered an order declaring the Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS]
on [ENTER DATE OF EFFECTIVENESS] and [we][I] have no knowledge, after telephonic inquiry of a member of the SEC’s staff,
that any stop order suspending its effectiveness has been issued or that any proceedings for that purpose are pending before,
or threatened by, the SEC and the Registrable Securities are available for resale under the 1933 Act pursuant to the Registration
Statement.
The
Shares and Shares of Common stock underlying the Warrants are subject to the effective Registration Statement and can be reissued
free of restrictive legend upon notice of a sale by each Holder and confirmation by each Holder that it has complied with the
prospectus delivery requirements, provided that the Company has not advised the transfer agent orally or in writing
that the opinion has been withdrawn.
|
Very truly yours, |
|
[ISSUER’S COUNSEL] |
|
|
|
By: |
|
EXHIBIT
B
SELLING
STOCKHOLDERS
The
shares of common stock being offered by the selling stockholders are those previously issued to the selling stockholders and those
issuable to the selling stockholders upon exercise of the warrants. For additional information regarding the issuance of common
stock and the warrants, see “Private Placement of Shares and Warrants” above. We are registering the shares of common
stock in order to permit the selling stockholders to offer the shares for resale from time to time. Except for the ownership of
the common stock and the warrants issued pursuant to the Securities Purchase Agreement, the selling stockholders have not had
any material relationship with us within the past three years.
The
table below lists the selling stockholders and other information regarding the beneficial ownership (as determined under Section
13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder) of the shares of common stock
held by each of the selling stockholders. The second column lists the number of shares of common stock beneficially owned by the
selling stockholders, based on their respective ownership of shares of common stock and warrants, as of ________, 2015, assuming
exercise of the warrants held by each such selling stockholder on that date but taking account of any limitations on exercise
set forth therein.
The
third column lists the shares of common stock being offered by this prospectus by the selling stockholders and does not take in
account any limitations on exercise of the warrants set forth therein.
In
accordance with the terms of a registration rights agreement with the holders of the common stock and the warrants, this prospectus
generally covers the resale of the sum of (i) the number of shares of common stock issued in connection with the Securities Purchase
Agreement and (ii) the maximum number of shares of common stock issuable upon exercise of the warrants, in each case, determined
as if the outstanding warrants were exercised in full (without regard to any limitations on exercise contained therein) as of
the trading day immediately preceding the date this registration statement was initially filed with the SEC. Because the exercise
price of the warrants may be adjusted, the number of shares that will actually be issued may be more or less than the number of
shares being offered by this prospectus. The fourth column assumes the sale of all of the shares offered by the selling stockholders
pursuant to this prospectus.
Under
the terms of the warrants, a selling stockholder may not exercise the warrants to the extent (but only to the extent) such selling
stockholder or any of its affiliates would beneficially own a number of shares of our common stock which would exceed 4.99%. The
number of shares in the second column reflects these limitations. The selling stockholders may sell all, some or none of their
shares in this offering. See “Plan of Distribution.”
Name
of Selling Stockholder |
|
Number
of Shares
of Common Stock
Owned Prior to
Offering |
|
Maximum
Number of
Shares of Common
Stock to be Sold
Pursuant to this
Prospectus |
|
Number
of Shares
of Common Stock
of Owned After
Offering |
|
|
|
|
|
|
|
Wolverine
Flagship Fund Trading Limited (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
[OTHER BUYERS] |
|
|
|
|
|
|
(1)
[___________]
PLAN
OF DISTRIBUTION
We
are registering the shares of common stock previously issued and the shares of common stock issuable upon exercise of the warrants
to permit the resale of these shares of common stock by the holders of the common stock and warrants from time to time after the
date of this prospectus. We will not receive any of the proceeds from the sale by the selling stockholders of the shares of common
stock. We will bear all fees and expenses incident to our obligation to register the shares of common stock.
The
selling stockholders may sell all or a portion of the shares of common stock held by them and offered hereby from time to time
directly or through one or more underwriters, broker-dealers or agents. If the shares of common stock are sold through underwriters
or broker-dealers, the selling stockholders will be responsible for underwriting discounts or commissions or agent’s commissions.
The shares of common stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of
the sale, at varying prices determined at the time of sale or at negotiated prices. These sales may be effected in transactions,
which may involve crosses or block transactions, pursuant to one or more of the following methods:
|
● |
on
any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale; |
|
|
|
|
● |
in the over-the-counter
market; |
|
|
|
|
● |
in transactions
otherwise than on these exchanges or systems or in the over-the-counter market; |
|
|
|
|
● |
through the writing
or settlement of options, whether such options are listed on an options exchange or otherwise; |
|
|
|
|
● |
ordinary brokerage
transactions and transactions in which the broker-dealer solicits purchasers; |
|
|
|
|
● |
block trades in
which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal
to facilitate the transaction; |
|
|
|
|
● |
purchases by a
broker-dealer as principal and resale by the broker-dealer for its account; |
|
|
|
|
● |
an exchange distribution
in accordance with the rules of the applicable exchange; |
|
|
|
|
● |
privately negotiated
transactions; |
|
|
|
|
● |
short sales made
after the date the Registration Statement is declared effective by the SEC; |
|
|
|
|
● |
broker-dealers
may agree with a selling security holder to sell a specified number of such shares at a stipulated price per share; |
|
|
|
|
● |
a combination
of any such methods of sale; and |
|
|
|
|
● |
any other method
permitted pursuant to applicable law. |
The
selling stockholders may also sell shares of common stock under Rule 144 promulgated under the Securities Act of 1933, as amended,
if available, rather than under this prospectus. In addition, the selling stockholders may transfer the shares of common stock
by other means not described in this prospectus. If the selling stockholders effect such transactions by selling shares of common
stock to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions
in the form of discounts, concessions or commissions from the selling stockholders or commissions from purchasers of the shares
of common stock for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions
as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved).
In connection with sales of the shares of common stock or otherwise, the selling stockholders may enter into hedging transactions
with broker-dealers, which may in turn engage in short sales of the shares of common stock in the course of hedging in positions
they assume. The selling stockholders may also sell shares of common stock short and deliver shares of common stock covered by
this prospectus to close out short positions and to return borrowed shares in connection with such short sales. The selling stockholders
may also loan or pledge shares of common stock to broker-dealers that in turn may sell such shares.
The
selling stockholders may pledge or grant a security interest in some or all of the warrants or shares of common stock owned by
them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell
the shares of common stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3)
or other applicable provision of the Securities Act amending, if necessary, the list of selling stockholders to include the pledgee,
transferee or other successors in interest as selling stockholders under this prospectus. The selling stockholders also may transfer
and donate the shares of common stock in other circumstances in which case the transferees, donees, pledgees or other successors
in interest will be the selling beneficial owners for purposes of this prospectus.
To
the extent required by the Securities Act and the rules and regulations thereunder, the selling stockholders and any broker-dealer
participating in the distribution of the shares of common stock may be deemed to be “underwriters” within the meaning
of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed
to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the shares of common
stock is made, a prospectus supplement, if required, will be distributed, which will set forth the aggregate amount of shares
of common stock being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any
discounts, commissions and other terms constituting compensation from the selling stockholders and any discounts, commissions
or concessions allowed or re-allowed or paid to broker-dealers.
Under
the securities laws of some states, the shares of common stock may be sold in such states only through registered or licensed
brokers or dealers. In addition, in some states the shares of common stock may not be sold unless such shares have been registered
or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.
There
can be no assurance that any selling stockholder will sell any or all of the shares of common stock registered pursuant to the
registration statement, of which this prospectus forms a part.
The
selling stockholders and any other person participating in such distribution will be subject to applicable provisions of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder, including, without limitation, to the extent applicable,
Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares of common stock by the
selling stockholders and any other participating person. To the extent applicable, Regulation M may also restrict the ability
of any person engaged in the distribution of the shares of common stock to engage in market-making activities with respect to
the shares of common stock. All of the foregoing may affect the marketability of the shares of common stock and the ability of
any person or entity to engage in market-making activities with respect to the shares of common stock.
We
will pay all expenses of the registration of the shares of common stock pursuant to the registration rights agreement, estimated
to be $[_____] in total, including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance
with state securities or “blue sky” laws; provided, however, a selling stockholder will pay all underwriting discounts
and selling commissions, if any. We will indemnify the selling stockholders against liabilities, including some liabilities under
the Securities Act in accordance with the registration rights agreements or the selling stockholders will be entitled to contribution.
We may be indemnified by the selling stockholders against civil liabilities, including liabilities under the Securities Act that
may arise from any written information furnished to us by the selling stockholder specifically for use in this prospectus, in
accordance with the related registration rights agreements or we may be entitled to contribution.
Once
sold under the registration statement, of which this prospectus forms a part, the shares of common stock will be freely tradable
in the hands of persons other than our affiliates.
Barfresh
Completes $5.275 Million Equity Financing To Accelerate Growth
Company
Expands Institutional Fund Ownership of Common Stock with Raise
Denver,
CO - March 16, 2015 – Barfresh Food Group, Inc. (“Barfresh”) (OTCQB: BRFH), a manufacturer of frozen, ready-to-blend
beverages, today announced that it has closed a $5.275 million private placement of common stock and warrants to new institutional
and accredited investors.
Under
the terms of the funding transaction, Barfresh sold 10,550,000 common shares for $0.50 per share, along with warrants to purchase
up to an aggregate of 5,275,000 shares of common stock at an exercise price of $0.60 per share. The warrants will expire in five
years and could represent an additional $3.165 million if exercised in cash.
This
financing will provide Barfresh with additional working capital to rapidly scale new contracts and expand its operations to meet
demand for its unique line of Smoo® blended beverages. Barfresh’s proprietary Smoo® system
uses controlled, pre-packaged portions to deliver freshly made, all natural, frozen beverages that are quick, cost-efficient and
do not require significant equipment or space to produce. Unlike traditional methods, the all-in-one Smoo® packs
have everything needed to produce a flavorful, fresh smoothie, frappe or shake, including ice. The Smoo® system
results in virtually no waste and allows for simple, low-cost inventory management.
“We
have recently entered into new distribution partnerships, expanded existing partnerships, enhanced our product line and made key
hires on our management team,” said Riccardo Delle Coste, CEO of Barfresh. “This funding will allow us to accelerate
our growth strategy and satisfy the growing demand for our products by expanding our footprint and enter into additional distribution
partnerships, both in the U.S. and abroad.”
Wunderlich
acted as an advisor and placement agent on the raise. Libertas Law Group of Los Angeles, California acted as legal counsel to
Barfresh.
About
Barfresh Food Group
Barfresh
Food Group, Inc. (OTCQB: BRFH) is a developer, manufacturer and distributer of ready-to-blend beverages, including smoothies,
shakes and frappes, primarily for restaurant chains in the quick serve restaurant, fast casual and casual dining sectors. The
company’s proprietary, U.S. patent-pending system uses portion-controlled pre-packaged beverage ingredients that deliver
freshly made smoothies that are quick, cost efficient and without waste. For more information, please visit www.barfresh.com/us.
Forward
Looking Statements
Except
for historical information herein, matters set forth in this press release are forward-looking within the meaning of the “safe
harbor” provisions of the Private Securities Litigation Reform Act of 1995, including statements about the Company’s
commercial progress and future financial performance. These forward-looking statements are identified by the use of words such
as “grow”, “expand”, “anticipate”, “intend”, “estimate”, “believe”,
“expect”, “plan”, “should”, “hypothetical”, “potential”, “forecast”
and “project”, among others. All statements, other than statements of historical fact, included in the press release
that address activities, events or developments that the Company believes or anticipates will or may occur in the future are forward-looking
statements. These statements are based on certain assumptions made based on experience, expected future developments and other
factors the Company believes are appropriate under the circumstances. Such statements are subject to a number of assumptions,
risks and uncertainties, many of which are beyond the control of the Company and may not materialize. Investors are cautioned
that any such statements are not guarantees of future performance. The contents of this release should be considered in conjunction
with the warnings, risk factors and cautionary statements contained in the Company’s recent filings with the Securities
and Exchange Commission, including its Annual Report on Form 10K and Quarterly Report on Form 10Q. Furthermore, the Company does
not intend, and is not obligated, to update publicly any forward-looking statements, except as required by law.
Contact
Liolios
Group Inc.
Scott Liolios
or Cody Slach
Tel 1-949-574-3860
BRFH@liolios.com