Washington, D.C. 20549
☐ Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☐ Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
Stockholder Proposals
Stockholders who, in accordance
with Rule 14a-8 under the Exchange Act, wish to present proposals for inclusion in our proxy statement in connection with our next
annual meeting must submit their proposals so that they are received by the Company’s Chief Executive Officer at our principal
executive offices, 400 South Australian Avenue, Suite 800, West Palm Beach, Florida 33401, no later than August 7, 2017. As the
rules of the Securities and Exchange Commission make clear, simply submitting a proposal does not guarantee that it will be included.
For any proposal that is
not submitted for inclusion in our next proxy statement (as described in the preceding paragraph) but is instead sought to be presented
directly at our next annual meeting (including director nominations or other proposals), the proposal must be submitted to the
Company’s Chief Executive Officer at our principal executive offices, 400 South Australian Avenue, Suite 800, West Palm Beach,
Florida 33401, no later than October 20, 2017, as required by Rule 14a-4(c)(1) of the Exchange Act. Even if a stockholder makes
a timely notification, the proxies may still exercise discretionary voting authority under circumstances consistent with the SEC’s
proxy rules.
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Rennova Health, Inc.
|
|
|
|
By Order of the Board of Directors
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|
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Date: April 25, 2017
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By:
/s/ Seamus Lagan
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Seamus Lagan
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Director, Chief Executive Officer
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and President
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EXHIBIT A
FORM
OF SENIOR SECURED Original issue discount CONVERTIBLE DEBENTURE
DUE MARCH 21, 2019
[NEITHER THIS SECURITY
NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION
OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.]
1
Original Issue Date: _________ __, 2017
[(exchanged
for other securities of the Company originally issued on _________________)]
Original Conversion Price (subject to adjustment
herein):
$1.66
$_______________
SENIOR
SECURED Original issue discount CONVERTIBLE DEBENTURE
DUE
_________
THIS SENIOR SECURED
ORIGINAL ISSUE DISCOUNT CONVERTIBLE DEBENTURE is one of a series of duly authorized and validly issued Senior Secured Original
Issue Discount Convertible Debentures of Rennova Health, Inc., a Delaware corporation, (the “
Company
”), having
its principal place of business at 400 S. Australian Avenue, West Palm Beach, Florida 33401, designated as its Senior Secured Original
Issue Discount Convertible Debenture due __________ (this debenture, the “
Debenture
” and, collectively with
the other debentures of such series issued pursuant to the [Purchase Agreement][Exchange Agreement] (the “
Debentures
”).
FOR VALUE RECEIVED,
the Company promises to pay to ________________________ or its registered assigns (the “
Holder
”), or shall have
paid pursuant to the terms hereunder, the principal sum of $_______________ on ______, 2019 (the “
Maturity Date
”)
or such earlier date as this Debenture is required or permitted to be repaid as provided hereunder. This Debenture is subject to
the following additional provisions:
Section 1
.
Definitions
.
For the purposes hereof, in addition to the terms defined elsewhere in this Debenture, (a) capitalized terms not otherwise defined
herein shall have the meanings set forth in the [Purchase Agreement][Exchange Agreement] and (b) the following terms shall have
the following meanings:
“
Alternate
Consideration
” shall have the meaning set forth in Section 5(e).
“
Bankruptcy
Event
” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule
1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment
of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or
any Significant Subsidiary thereof, (b) there is commenced against the Company or any Significant Subsidiary thereof any such case
or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Significant Subsidiary thereof is
adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the
Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part
of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Significant
Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Significant Subsidiary thereof
calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts, (g) the Company
or any Significant Subsidiary thereof admits in writing that it is generally unable to pay its debts as they become due or (h)
the Company or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of
or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.
“
Base
Conversion Price
” shall have the meaning set forth in Section 5(b).
“
Beneficial
Ownership Limitation
” shall have the meaning set forth in Section 4(d).
“
Business
Day
” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to
close.
“
Buy-In
”
shall have the meaning set forth in Section 4(c)(v).
_______________________________
1
Remove for Series H Preferred exchange debenture.
“
Change
of Control Transaction
” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof
by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of
effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of
in excess of 45% of the voting securities of the Company (other than by means of conversion or exercise of the Debentures and the
Securities issued together with the Debentures), (b) the Company merges into or consolidates with any other Person, or any Person
merges into or consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company immediately
prior to such transaction own less than 60% of the aggregate voting power of the Company or the successor entity of such transaction,
(c) the Company sells or transfers all or substantially all of its assets to another Person and the stockholders of the Company
immediately prior to such transaction own less than 60% of the aggregate voting power of the acquiring entity immediately after
the transaction, (d) a replacement at one time or within a three year period of more than one-half of the members of the Board
of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on the Original
Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board
of Directors was approved by a majority of the members of the Board of Directors who are members on the date hereof), or (e) the
execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events
set forth in clauses (a) through (d) above.
“
Conversion
”
shall have the meaning ascribed to such term in Section 4.
“
Conversion
Date
” shall have the meaning set forth in Section 4(a).
“
Conversion
Price
” shall have the meaning set forth in Section 4(b).
“
Conversion
Schedule
” means the Conversion Schedule in the form of
Schedule 1
attached hereto.
“
Conversion
Shares
” means, collectively, the shares of Common Stock issuable upon conversion of this Debenture in accordance with
the terms hereof.
“
Debenture
Register
” means the records of the Company regarding registration and transfers of this Debenture.
“
Dilutive
Issuance
” shall have the meaning set forth in Section 5(b).
“
Dilutive
Issuance Notice
” shall have the meaning set forth in Section 5(b).
“
Effectiveness
Period
” shall have the meaning set forth in the Registration Rights Agreement.
“
Equity
Conditions
” means, during the period in question, (a) the Company shall have duly honored all conversions and amortizations
scheduled to occur or occurring by virtue of one or more Notices of Conversion of the Holder, if any, (b) the Company shall have
paid all liquidated damages and other amounts owing to the Holder in respect of this Debenture, (c) one of the following applies
to this Debenture: (i) there is an effective Registration Statement pursuant to which the Holder is permitted to utilize the prospectus
thereunder to resell all of the shares of Common Stock issuable pursuant to the Transaction Documents (and the Company believes,
in good faith, that such effectiveness will continue uninterrupted for the foreseeable future), (ii) all of the Conversion Shares
issuable pursuant to the Transaction Documents (and shares issuable in lieu of cash payments of interest) may be resold pursuant
to Rule 144 without volume or manner-of-sale restrictions or current public information requirements as determined by the counsel
to the Company as set forth in a written opinion letter to such effect, addressed and acceptable to the Transfer Agent and the
Holder or (iii) the Conversion Shares take on the registered characteristics of the Preferred Stock and are free trading and issued
without a Securities Act legend; (d) the Common Stock is trading on a Trading Market and all of the shares issuable pursuant to
the Transaction Documents are listed or quoted for trading on such Trading Market (and the Company believes, in good faith, that
trading of the Common Stock on a Trading Market will continue uninterrupted for the foreseeable future), (e) there is a sufficient
number of authorized but unissued and otherwise unreserved shares of Common Stock for the issuance of all of the shares then issuable
pursuant to the Transaction Documents, (f) there is no existing Event of Default and no existing event which, with the passage
of time or the giving of notice, would constitute an Event of Default, (g) the issuance of the shares in question would not violate
the limitations set forth in Section 4(d) and Section 4(e) herein, (h) there has been no public announcement of a pending or proposed
Fundamental Transaction or Change of Control Transaction that has not been consummated, (i) the applicable Holder is not in possession
of any information provided by the Company, any of its Subsidiaries, or any of their officers, directors, employees, agents or
Affiliates, that constitutes, or may constitute, material non-public information and (j) for each Trading Day in a period of 20
consecutive Trading Days prior to the applicable date in question, the daily dollar trading volume for the Common Stock on the
principal Trading Market exceeds $250,000 per Trading Day and (k) the Alternate Conversion Price is not less than $0.39, not subject
to adjustment for reverse and forward stock splits and the like.
“
Event
of Default
” shall have the meaning set forth in Section 8(a).
“
Exchange
Agreement
” shall mean that Securities Exchange Agreement pursuant to which certain of the Debentures are issued upon
exchange of outstanding securities of the Company, entered into on the date of the Purchase Agreement.
“
Fundamental
Transaction
” shall have the meaning set forth in Section 5(e).
“
Issuable
Maximum
” shall have the meaning set forth in Section 4(e).
“
Mandatory
Default Amount
” means the sum of (a) the greater of (i) the outstanding principal amount of this Debenture, divided by
the fixed Conversion Price on the date the Mandatory Default Amount is either (A) demanded (if demand or notice is required to
create an Event of Default) or otherwise due or (B) paid in full, whichever has a lower Conversion Price, multiplied by the VWAP
on the date the Mandatory Default Amount is either (x) demanded or otherwise due or (y) paid in full, whichever has a higher VWAP,
or (ii) 130% of the outstanding principal amount of this Debenture, plus 100% of accrued and unpaid interest hereon, and (b) all
other amounts, costs, expenses and liquidated damages due in respect of this Debenture.
“
Monthly
Amortization
” means the amortization of this Debenture pursuant to Section 6(b) hereof.
“
Monthly
Amortization Amount
” means, as to a Monthly Amortization, the lesser of $______
2
and the then outstanding
principal amount of this Debenture, plus liquidated damages and any other amounts then owing to the Holder in respect of this Debenture.
“
Monthly
Amortization Date
” means the 1
st
of each month, commencing immediately upon [the earlier of (a) the
first such date immediately following the Effective Date and (b) ___________, 2017
3
]
4
[March __,
2017]
5
, and terminating upon the full amortization of this Debenture.
“
Monthly
Amortization Notice
” shall have the meaning set forth in Section 6(b) hereof.
“
New
York Courts
” shall have the meaning set forth in Section 9(d).
“
Notice
of Conversion
” shall have the meaning set forth in Section 4(a).
“
Original
Issue Date
” means the date of the first issuance of the Debentures, regardless of any transfers of any Debenture and
regardless of the number of instruments which may be issued to evidence such Debentures.
“
Permitted
Indebtedness
” means (a) the indebtedness evidenced by the Debentures, (b) the Indebtedness existing on the Original Issue
Date and set forth on
Schedule 3.1(aa)
attached to the Purchase Agreement, (c) lease obligations and purchase money indebtedness
of up to $3,000,000, in the aggregate, incurred in connection with the acquisition of capital assets and lease obligations with
respect to newly acquired or leased assets and (d) indebtedness that (i) is expressly subordinate to the Debentures pursuant to
a written subordination agreement with the Purchasers that is acceptable to each Purchaser in its sole and absolute discretion
and (ii) matures at a date later than the 91
st
day following the Maturity Date.
“
Permitted
Lien
” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental
charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good
faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Company)
have been established in accordance with GAAP, (b) Liens imposed by law which were incurred in the ordinary course of the Company’s
business, such as carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other
similar Liens arising in the ordinary course of the Company’s business, and which (x) do not individually or in the aggregate
materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business
of the Company and its consolidated Subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject to such Lien,
(c) Liens incurred in connection with Permitted Indebtedness under clauses (a), (b) and (d)/(e) thereunder, and (d) Liens incurred
in connection with Permitted Indebtedness under clause (c) thereunder, provided that such Liens are not secured by assets of the
Company or its Subsidiaries other than the assets so acquired or leased, (e) Liens in connection with equipment leases in effect
on the Original Issue Date and (f) Liens in favor of the Florida Department of Revenue in effect on the Original Issue Date.
_______________________________
2
5% of the principal amount
3
90
th
day following the First Closing Date
4
Purchase Agreement Debenture
5
Series H Debenture
“
Purchase
Agreement
” means the Securities Purchase Agreement, dated as of March __, 2017 among the Company and the original Holders,
as amended, modified or supplemented from time to time in accordance with its terms.
[“
Registration
Rights Agreement
” means the Registration Rights Agreement, dated as of the date of the Purchase Agreement, among the
Company and the original Holders, in the form of
Exhibit B
attached to the Purchase Agreement.
“
Registration
Statement
” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and
covering the resale of Underlying Shares by each Holder as provided for in the Registration Rights Agreement.]
6
“
Securities
Act
” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“
Share
Delivery Date
” shall have the meaning set forth in Section 4(c)(ii).
“
Successor
Entity
” shall have the meaning set forth in Section 5(e).
“
Trading
Day
” means a day on which the principal Trading Market is open for trading.
“
Trading
Market
” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New
York Stock Exchange, OTCQB or OTCQX (or any successors to any of the foregoing).
“
VWAP
”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market,
the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable,
(c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then
reported in the “Pink Sheets” published by OTC Markets, Inc. (or a similar organization or agency succeeding to its
functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases,
the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers
of a majority in interest of the Debentures then outstanding and reasonably acceptable to the Company, the fees and expenses of
which shall be paid by the Company.
Section 2
.
OID; Prepayment
.
a)
Original Issue Discount
. This Debenture is issued as an original issue discount debenture and there are no regularly scheduled
interest payments on this Debenture, except as set forth in Section 8(b).
b)
Prepayment
. Except as otherwise set forth in this Debenture, the Company may not prepay any portion of the principal amount
of this Debenture without the prior written consent of the Holder.
Section 3.
Registration of Transfers
and Exchanges.
a)
Different Denominations
. This Debenture is exchangeable for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holder surrendering the same. No service charge will be payable for such registration
of transfer or exchange.
b)
Investment Representations
. This Debenture has been issued subject to certain investment representations of the original
Holder set forth in the [Purchase Agreement][Exchange Agreement] and may be transferred or exchanged only in compliance with the
[Purchase Agreement][Exchange Agreement] and applicable federal and state securities laws and regulations.
c)
Reliance on Debenture Register
. Prior to due presentment for transfer to the Company of this Debenture, the Company and
any agent of the Company may treat the Person in whose name this Debenture is duly registered on the Debenture Register as the
owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture
is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.
_______________________________
6
Remove these and all references to registration rights in Series H exchange Preferred.
Section 4.
Conversion
.
a)
Voluntary Conversion
. At any time after the Original Issue Date until this Debenture is no longer outstanding, this Debenture
shall be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from time to
time (subject to the conversion limitations set forth in Section 4(d) and Section 4(e) hereof). The Holder shall effect conversions
by delivering to the Company a Notice of Conversion, the form of which is attached hereto as
Annex A
(each, a “
Notice
of Conversion
”), specifying therein the principal amount of this Debenture to be converted and the date on which such
conversion shall be effected (such date, the “
Conversion Date
”). If no Conversion Date is specified in a Notice
of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. No ink-original
Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice
of Conversion form be required. To effect conversions hereunder, the Holder shall not be required to physically surrender this
Debenture to the Company unless the entire principal amount of this Debenture has been so converted in which case the Holder shall
surrender this Debenture as promptly as is reasonably practicable after such conversion without delaying the Company’s obligation
to deliver the shares on the Share Delivery Date. Conversions hereunder shall have the effect of lowering the outstanding principal
amount of this Debenture in an amount equal to the applicable conversion. The Holder and the Company shall maintain records showing
the principal amount(s) converted and the date of such conversion(s). The Company may deliver an objection to any Notice of Conversion
within one (1) Business Day of delivery of such Notice of Conversion. In the event of any dispute or discrepancy, the records of
the Holder shall be controlling and determinative in the absence of manifest error.
The Holder, and any assignee by acceptance
of this Debenture, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion
of this Debenture, the unpaid and unconverted principal amount of this Debenture may be less than the amount stated on the face
hereof.
b)
Conversion Price
. The conversion price shall initially be equal to
$1.66,
subject to adjustment herein (the “
Conversion
Price
”). For purposes of clarification, whether or not the Company provides a notice of adjustment of the Conversion
Price pursuant to Section 5(g), each Holder shall receive a number of Conversion Shares and retain the principal amount based upon
the Conversion Price as it may be adjusted pursuant to Section 5, regardless of whether a Holder accurately refers to such price
or principal amount of this Debenture converted in any Notice of Conversion.
c)
Mechanics of Conversion
.
i.
Conversion Shares Issuable Upon Conversion of Principal Amount
. The number of Conversion Shares issuable upon a conversion
hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Debenture to be
converted by (y) the Conversion Price.
ii.
Delivery of Conversion Shares Upon Conversion
. Not later than the earlier of (i) three (3) Trading Days and (ii) the number
of Trading Days comprising the Standard Settlement Period (as defined below) after each Conversion Date (the “
Share Delivery
Date
”), the Company shall deliver, or cause to be delivered, to the Holder (A) the Conversion Shares which, on or after
the earlier of (i) the six month anniversary of the Original Issue Date or (ii) the Effective Date, shall be free of restrictive
legends and trading restrictions (other than those which may then be required by the Purchase Agreement or the Exchange Agreement,
as applicable) representing the number of Conversion Shares being acquired upon the conversion of this Debenture. On or after the
earlier of (i) the six month anniversary of the Original Issue Date or (ii) the Effective Date, the Company shall deliver any Conversion
Shares required to be delivered by the Company under this Section 4(c) electronically through the Depository Trust Company or another
established clearing corporation performing similar functions. As used herein, “
Standard Settlement Period
”
means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with
respect to the Common Stock as in effect on the date of delivery of the Notice of Conversion.
iii.
Failure to Deliver Conversion Shares
. If, in the case of any Notice of Conversion, such Conversion Shares are not delivered
to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice
to the Company at any time on or before its receipt of such Conversion Shares, to rescind such Conversion, in which event the Company
shall promptly return to the Holder any original Debenture delivered to the Company and the Holder shall promptly return to the
Company the Conversion Shares issued to such Holder pursuant to the rescinded Notice of Conversion.
iv.
Obligation Absolute; Partial Liquidated Damages
. The Company’s obligations to issue and deliver the Conversion Shares
upon conversion of this Debenture in accordance with the terms hereof are absolute and unconditional, irrespective of any action
or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination,
or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged
violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of such Conversion Shares;
provided
,
however
,
that such delivery shall not operate as a waiver by the Company of any such action the Company may have against the Holder. In
the event the Holder of this Debenture shall elect to convert any or all of the outstanding principal amount hereof, the Company
may not refuse conversion based on any claim that the Holder or anyone associated or affiliated with the Holder has been engaged
in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining
and or enjoining conversion of all or part of this Debenture shall have been sought and obtained, and the Company posts a surety
bond for the benefit of the Holder in the amount of 150% of the outstanding principal amount of this Debenture, which is subject
to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and
the proceeds of which shall be payable to the Holder to the extent it obtains judgment. In the absence of such injunction, the
Company shall issue Conversion Shares or, if applicable, cash, upon a properly noticed conversion. If the Company fails for any
reason to deliver to the Holder such Conversion Shares pursuant to Section 4(c)(ii) by the Share Delivery Date, the Company shall
pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of principal amount being converted, $10
per Trading Day (increasing to $20 per Trading Day on the fifth (5
th
) Trading Day after such liquidated damages begin
to accrue) for each Trading Day after such Share Delivery Date until such Conversion Shares are delivered or Holder rescinds such
conversion. Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant
to Section 8 hereof for the Company’s failure to deliver Conversion Shares within the period specified herein and the Holder
shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree
of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to
enforce damages pursuant to any other Section hereof or under applicable law.
v.
Compensation for Buy-In on Failure to Timely Deliver Conversion Shares Upon Conversion
. In addition to any other rights
available to the Holder, if the Company fails for any reason to deliver to the Holder such Conversion Shares by the Share Delivery
Date pursuant to Section 4(c)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase
(in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock
to deliver in satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon the conversion
relating to such Share Delivery Date (a “
Buy-In
”), then the Company shall (A) pay in cash to the Holder (in
addition to any other remedies available to or elected by the Holder) the amount, if any, by which (x) the Holder’s total
purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate
number of shares of Common Stock that the Holder was entitled to receive from the conversion at issue multiplied by (2) the actual
sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and
(B) at the option of the Holder, either reissue (if surrendered) this Debenture in a principal amount equal to the principal amount
of the attempted conversion (in which case such conversion shall be deemed rescinded) or deliver to the Holder the number of shares
of Common Stock that would have been issued if the Company had timely complied with its delivery requirements under Section 4(c)(ii).
For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an
attempted conversion of this Debenture with respect to which the actual sale price of the Conversion Shares (including any brokerage
commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence,
the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts
payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein
shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver
Conversion Shares upon conversion of this Debenture as required pursuant to the terms hereof.
vi.
Reservation of Shares Issuable Upon Conversion
. The Company covenants that it will at all times reserve and keep available
out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Debenture, each
as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder
(and the other holders of the Debentures), not less than such aggregate number of shares of the Common Stock as shall (subject
to the terms and conditions set forth in the [Purchase Agreement][Exchange Agreement]) be issuable (taking into account the adjustments
and restrictions of Section 5) upon the conversion of the then outstanding principal amount of this Debenture. The Company covenants
that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and
nonassessable and, if the Registration Statement is then effective under the Securities Act, shall be registered for public resale
in accordance with such Registration Statement (subject to such Holder’s compliance with its obligations under the Registration
Rights Agreement).
vii.
Fractional Shares
. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this
Debenture. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Company
shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Conversion Price or round up to the next whole share.
viii.
Transfer Taxes and Expenses
. The issuance of Conversion Shares on conversion of this Debenture shall be made without charge
to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such
Conversion Shares, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of any such Conversion Shares upon conversion in a name other than that of the Holder of
this Debenture so converted and the Company shall not be required to issue or deliver such Conversion Shares unless or until the
Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established
to the satisfaction of the Company that such tax has been paid. The Company shall pay all Transfer Agent fees required for same-day
processing of any Notice of Conversion and all fees to the Depository Trust Company (or another established clearing corporation
performing similar functions) required for same-day electronic delivery of the Conversion Shares.
d)
Holder’s Conversion Limitations
. The Company shall not effect any conversion of this Debenture, and a Holder shall
not have the right to convert any portion of this Debenture, to the extent that after giving effect to the conversion set forth
on the applicable Notice of Conversion, the Holder (together with the Holder’s Affiliates, and any other Persons acting as
a group together with the Holder or any of the Holder’s Affiliates (such Persons, “
Attribution Parties
”))
would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall
include the number of shares of Common Stock issuable upon conversion of this Debenture with respect to which such determination
is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining,
unconverted principal amount of this Debenture beneficially owned by the Holder or any of its Affiliates or Attribution Parties
and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a limitation
on conversion or exercise analogous to the limitation contained herein (including, without limitation, any other Debentures or
the Warrants) beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the
preceding sentence, for purposes of this Section 4(d), beneficial ownership shall be calculated in accordance with Section 13(d)
of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section
4(d) applies, the determination of whether this Debenture is convertible (in relation to other securities owned by the Holder together
with any Affiliates and Attribution Parties) and of which principal amount of this Debenture is convertible shall be in the sole
discretion of the Holder, and the submission of a Notice of Conversion shall be deemed to be the Holder’s determination of
whether this Debenture may be converted (in relation to other securities owned by the Holder together with any Affiliates or Attribution
Parties) and which principal amount of this Debenture is convertible, in each case subject to the Beneficial Ownership Limitation.
To ensure compliance with this restriction, the Holder will be deemed to represent to the Company each time it delivers a Notice
of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and the Company shall
have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status
as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. For purposes of this Section 4(d), in determining the number of outstanding shares of Common Stock, the Holder may
rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Company’s
most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by
the Company, or (iii) a more recent written notice by the Company or the Company’s transfer agent setting forth the number
of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading
Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities
of the Company, including this Debenture, by the Holder or its Affiliates since the date as of which such number of outstanding
shares of Common Stock was reported. The “
Beneficial Ownership Limitation
” shall be 4.99% of the number of shares
of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion
of this Debenture held by the Holder. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership
Limitation provisions of this Section 4(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the
number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon
conversion of this Debenture held by the Holder and the Beneficial Ownership Limitation provisions of this Section 4(d) shall continue
to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61
st
day after such notice
is delivered to the Company. The Beneficial Ownership Limitation provisions of this paragraph shall be construed and implemented
in a manner otherwise than in strict conformity with the terms of this Section 4(d) to correct this paragraph (or any portion hereof)
which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or
supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall
apply to a successor holder of this Debenture.
e)
Issuance Limitations
. Notwithstanding anything herein to the contrary, if the Company has not obtained Shareholder Approval,
then the Company may not issue, upon conversion of this Debenture, a number of shares of Common Stock which, when aggregated with
any shares of Common Stock issued on or after the Original Issue Date and prior to such Conversion Date (i) in connection with
the conversion of any Debentures issued pursuant to the [Purchase Agreement][Exchange Agreement], (ii) in connection with the exercise
of any Warrants issued pursuant to the [Purchase Agreement][Exchange Agreement], (iii) in connection with any warrants issued to
any registered broker-dealer as a fee in connection with the issuance of the Securities pursuant to the Purchase Agreement and
(iv) in connection with the conversion of any original issue discount convertible debentures and exercise of warrants issued pursuant
to the [Purchase Agreement/Exchange Agreement] (such securities, collectively, the “
Issuance Capped Securities
”
and the holders of Issuance Capped Securities, the “
Capped Holders
”) would exceed 1,027,396
7
shares
of Common Stock (subject to adjustment for forward and reverse stock splits, recapitalizations and the like) (such number of shares,
the “
Issuable Maximum
”). Each Capped Holder shall be entitled to a portion of the Issuable Maximum equal to
the quotient obtained by dividing (x) the Holder’s original Subscription Amount plus the exchange amounts exchanged pursuant
to the Exchange Agreement, if any, by (y) the aggregate original Subscription Amount (or exchange amounts if pursuant to the Exchange
Agreement) of all Capped Holders. In addition, a Capped Holder may allocate its pro-rata portion of the Issuable Maximum among
Issuance Capped Securities held by it in its sole discretion. Such portion shall be adjusted upward ratably in the event a Capped
Holder no longer holds any Issuance Caped Securities and the amount of Issuance Capped Securities issued to such Capped Holder
was less than such Capped Holder’s pro-rata share of the Issuable Maximum. For avoidance of doubt, unless and until any required
Shareholder Approval is obtained and effective, warrants issued to any registered broker-dealer as a fee in connection with the
Securities issued pursuant to the Purchase Agreement as described in clause (iii) above shall provide that such warrants shall
not be allocated any portion of the Issuable Maximum and shall be unexercisable unless and until such Shareholder Approval is obtained
and effective.
_______________________________
7
19.99% of the number of shares of Common Stock
outstanding on the Trading Day immediately preceding the date of the Purchase Agreement.
Section 5
.
Certain
Adjustments
.
a)
Stock Dividends and Stock Splits
. If the Company, at any time while this Debenture is outstanding: (i) pays a stock dividend
or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock
Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion
of, or payment of interest on, the Debentures), (ii) subdivides outstanding shares of Common Stock into a larger number of shares,
(iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares or
(iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then
the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding
any treasury shares of the Company) outstanding immediately before such event, and of which the denominator shall be the number
of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon conversion of this Debenture
shall be proportionally adjusted such that the aggregate Conversion Price of this Debenture shall remain unchanged. Any adjustment
made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision,
combination or re-classification.
b)
Subsequent Equity Sales
. If, at any time while this Debenture is outstanding, the Company or any Subsidiary, as applicable,
sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces
any sale, grant or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents entitling any Person
to acquire shares of Common Stock at an effective price per share that is lower than the then Conversion Price (such lower price,
the “
Base Conversion Price
” and such issuances, collectively, a “
Dilutive Issuance
”) (if
the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price
adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights
per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price
per share that is lower than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion
Price on such date of the Dilutive Issuance), then the Conversion Price shall be reduced to equal the Base Conversion Price, provided
that the Base Conversion Price shall not be less than $0.39 (not subject to reverse stock splits and the like). Such adjustment
shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment will
be made under this Section 5(b) in respect of an Exempt Issuance. If the Company enters into a Variable Rate Transaction, despite
the prohibition set forth in the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents
at the lowest possible conversion price at which such securities may be converted or exercised. The Company shall notify the Holder
in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this
Section 5(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and
other pricing terms (such notice, the “
Dilutive Issuance Notice
”). For purposes of clarification, whether or
not the Company provides a Dilutive Issuance Notice pursuant to this Section 5(b), upon the occurrence of any Dilutive Issuance,
the Holder is entitled to receive a number of Conversion Shares based upon the Base Conversion Price on or after the date of such
Dilutive Issuance, regardless of whether the Holder accurately refers to the Base Conversion Price in the Notice of Conversion.
c)
Subsequent Rights Offerings
. In addition to any adjustments pursuant to Section 5(a) above, if at any time the Company grants,
issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the
record holders of any class of shares of Common Stock (the “
Purchase Rights
”), then the Holder will be entitled
to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired
if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Debenture (without regard
to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the
date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date
as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder
exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such
extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase
Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in
the Holder exceeding the Beneficial Ownership Limitation).
d)
Pro Rata Distributions
. During such time as this Debenture is outstanding, if the Company shall declare or make any dividend
or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of
capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by
way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a
“
Distribution
”), at any time after the issuance of this Debenture, then, in each such case, the Holder shall
be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder
had held the number of shares of Common Stock acquirable upon complete conversion of this Debenture (without regard to any limitations
on conversion hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a
record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common
Stock are to be determined for the participation in such Distribution (
provided
,
however
, to the extent that the
Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation,
then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any
shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance
for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial
Ownership Limitation).
e)
Fundamental Transaction
. If, at any time while this Debenture is outstanding, (i) the Company, directly or indirectly, in
one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the
outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more
related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more
than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other
Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase
agreement or other business combination) (each a “
Fundamental Transaction
”), then, upon any subsequent conversion
of this Debenture, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such
conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 4(d)
and Section 4(e) on the conversion of this Debenture), the number of shares of Common Stock of the successor or acquiring corporation
or of the Company, if it is the surviving corporation, and any additional consideration (the “
Alternate Consideration
”)
receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Debenture
is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 4(d) and Section
4(e) on the conversion of this Debenture). For purposes of any such conversion, the determination of the Conversion Price shall
be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect
of one (1) share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the
Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.
If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Debenture
following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the
Company is not the survivor (the “
Successor Entity
”) to assume in writing all of the obligations of the Company
under this Debenture and the other Transaction Documents (as defined in the [Purchase Agreement][Exchange Agreement]) in accordance
with the provisions of this Section 5(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder
and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder
of this Debenture, deliver to the Holder in exchange for this Debenture a security of the Successor Entity evidenced by a written
instrument substantially similar in form and substance to this Debenture which is convertible for a corresponding number of shares
of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable
upon conversion of this Debenture (without regard to any limitations on the conversion of this Debenture) prior to such Fundamental
Transaction, and with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking
into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares
of capital stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic
value of this Debenture immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory
in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed
to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Debenture 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 Debenture and the other
Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.
f)
Calculations
. All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be. For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as
of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued
and outstanding.
g)
Notice to the Holder
.
i.
Adjustment to Conversion Price
. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, the
Company shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth
a brief statement of the facts requiring such adjustment.
ii.
Notice to Allow Conversion by Holder
. If (A) the Company shall declare a dividend (or any other distribution in whatever
form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be
required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party,
any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office
or agency maintained for the purpose of conversion of this Debenture, and shall cause to be delivered to the Holder at its last
address as it shall appear upon the Debenture Register, at least twenty (20) calendar days prior to the applicable record or effective
date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record
to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date
as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common
Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share
exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the
validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes,
or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously
file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to convert this
Debenture during the 20-day period commencing on the date of such notice through the effective date of the event triggering such
notice except as may otherwise be expressly set forth herein.
Section 6
.
Amortization
.
a)
[RESERVED]
b)
Monthly Amortization; Alternate Conversion Price
. On each Monthly Amortization Date, the Company shall amortize the
Monthly Amortization Amount (the “
Monthly Amortization
”) in Conversion Shares;
provided
,
however
,
as to any Monthly Amortization and upon written irrevocable notice delivered at least 10 Trading Days’ prior to such Monthly
Amortization Date (the “
Cash Amortization Notice
”), the Company may elect a cash amortization payment if the
Equity Conditions are then met (or waived by the Holder). The Company shall issue a press release or file a notice of such election
on a Form 8-K Current Report each time it elects to amortize a portion of this Debenture for cash within one Business Day of such
election. In the absence of a timely Cash Amortization Notice, the Company shall be deemed to have elected to provide for amortization
in the form of Conversion Shares at an alternate conversion price as to such Monthly Amortization Amount (“
Alternate Conversion
Price
”) equal to the lesser of (i) the then Conversion Price and (ii) 85% of the lesser of (A) the VWAP on the day immediately
prior to the date the applicable Notice of Conversion is tendered by the Holder and (B) the VWAP on the day the applicable Notice
of Conversion is tendered by the Holder;
provided
,
however
, in no event shall the Alternate Conversion Price be less
than $____
8
(not subject to reverse
stock splits and the like). Following the Monthly Amortization Date, the Holder shall have the right to convert, from time to time
in the Holder’s sole discretion, the Monthly Amortization Amount at the Alternate Conversion Price as determined from time
to time as and when converted. Additionally, the Holder shall have the right, by one or more notices delivered to the Company from
time to time within the Monthly Amortization Period, to cause the Company to amortize in Conversion Shares up to four times the
principal amount represented by such Monthly Amortization Amount at the Alternate Conversion Price (to the extent a Monthly Amortization
Amount is increased by the Holder, such additional amounts shall be amortized in Conversion Shares only). Any principal amount
so accelerated but not converted shall be restored to the issued and outstanding principal amount of this Debenture upon the request
of the Holder. In the event of a cash payment of the Monthly Amortization Amount, the Holder may convert, pursuant to Section 4(a),
any principal amount of this Debenture subject to a Monthly Amortization at any time prior to the date that the Monthly Amortization
Amount, plus accrued but unpaid liquidated damages and any other amounts then owing to the Holder are due and paid in full at the
then applicable Conversion Price. Unless otherwise indicated by the Holder in the applicable Notice of Conversion, any principal
amount of this Debenture converted during the applicable Monthly Conversion Period until the date the Monthly Amortization Amount
is paid in full shall be first applied to any principal amount subject to the Monthly Amortization Amount payable in cash. Any
principal amount of this Debenture converted during the applicable Monthly Conversion Period in excess of the Monthly Amortization
Amount shall be applied against the last principal amount of this Debenture scheduled to be amortized hereunder, in reverse time
order from the Maturity Date. The Company covenants and agrees that it will honor all Notices of Conversion tendered up until such
amounts are paid in full. The Company’s determination to pay a Monthly Amortization in cash or provide for an Alternative
Conversion Price shall be applied ratably to all of the holders of the then outstanding Debentures based on their (or their predecessor’s)
initial purchases of Debentures pursuant to the [Purchase Agreement][Exchange Agreement]. If the Company does not give timely notice
that it intends to pay any given Monthly Amortization Amount in cash it shall be presumed that payment will be made in Conversion
Shares (subject to the Equity Conditions being met, or waived by the Holder).
_______________________________
8
20% of the closing bid price on the date of the Purchase Agreement.
c)
Amortization Procedure
. The payment of cash pursuant to a Monthly Amortization elected to be paid in cash shall be
payable on the Monthly Amortization Date. If any portion of the payment pursuant to an Monthly Amortization shall not be paid by
the Company by the applicable due date, interest shall accrue thereon at an interest rate equal to the lesser of 18% per annum
or the maximum rate permitted by applicable law until such amount is paid in full. Notwithstanding anything herein contained to
the contrary, if any portion of the Monthly Amortization Amount remains unpaid after such date, the Holder may elect, by written
notice to the Company given at any time thereafter, to invalidate such Monthly Amortization,
ab initio
. Notwithstanding
anything to the contrary in this Section 6, the Company’s determination to amortize in cash or its elections under Section
6(b) shall be applied ratably among the Holders of Debentures. The Holder may elect to convert the outstanding principal amount
of the Debenture pursuant to Section 4 prior to actual payment in cash for any amortization under this Section 6 by the delivery
of a Notice of Conversion to the Company.
Section 7
.
Negative
Covenants
. So long as at least $1,000,000 aggregate principal amount of Debentures is then outstanding, unless the holders
of at least 67% in principal amount of the then outstanding Debentures shall have otherwise given prior written consent, the Company
shall not, and shall not permit any of the Subsidiaries to, directly or indirectly:
a)
other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed
money of any kind, including, but not limited to, a guarantee, on or with respect to any of its property or assets now owned or
hereafter acquired or any interest therein or any income or profits therefrom;
b)
other than Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any
of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;
c)
amend its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially
and adversely affects any rights of the Holder;
d)
repay, repurchase or offer to repay, repurchase or otherwise acquire more than a
de minimis
number of shares of its Common
Stock or Common Stock Equivalents other than as to (i) Debentures, the Conversion Shares or Warrant Shares as permitted or required
under the Transaction Documents and (ii) repurchases of Common Stock or Common Stock Equivalents of departing officers and directors
of the Company, provided that such repurchases shall not exceed an aggregate of $100,000 for all officers and directors during
the term of this Debenture;
e)
repay, repurchase or offer to repay, repurchase or otherwise acquire any Indebtedness, other than the Debentures if on a pro-rata
basis and other than regularly scheduled principal and interest payments as such terms are in effect as of the Original Issue Date,
provided that such payments shall not be permitted if, at such time, or after giving effect to such payment, any Event of Default
exists or occur as a result thereof;
f)
pay cash dividends or distributions on any equity securities of the Company;
g)
enter into any transaction with any Affiliate of the Company which would be required to be disclosed in any public filing with
the Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested
directors of the Company (even if less than a quorum otherwise required for board approval); or
h)
enter into any agreement with respect to any of the foregoing.
Section 8
.
Events of Default
.
a)
“
Event of Default
” means, wherever used herein, any of the following events (whatever the reason for such event
and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or
order of any court, or any order, rule or regulation of any administrative or governmental body):
i.
any default in the payment of (A) the principal amount of any Debenture or (B) liquidated damages and other amounts owing
to a Holder on any Debenture, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date
or by acceleration or otherwise) which default, solely in the case of a default under clause (B) above, is not cured within 3 Trading
Days;
ii.
the Company shall fail to observe or perform any other covenant or agreement contained in the Debentures (other than a breach
by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in
clause (xi) below) or in any Transaction Document, which failure is not cured, if possible to cure, within the earlier to occur
of (A) 5 Trading Days after notice of such failure sent by the Holder or by any other Holder to the Company and (B) 10 Trading
Days after the Company has become or should have become aware of such failure;
iii.
a default or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument)
shall occur under (A) any of the Transaction Documents (and not covered by clause (i) or (ii) above) or (B) any other material
agreement, lease, document or instrument to which the Company or any Subsidiary is obligated for more than $200,000 (and not covered
by clause (vi) below) that is not cured within 45 calendar days. For the purposes of clarification any existing defaults on the
Tegal Notes and the TCA Notes (collectively, the “
Outstanding Defaults
”) that are cured within 15 calendar days
of the Original Issue Date shall not be deemed an Event of Default, (provided that in the event that the Outstanding Defaults are
not cured within 15 calendar days of the Original Issue Date, the Outstanding Defaults shall be deemed an Event of Default for
the purposes of this section); [IF THESE ARE BEING PAID OFF SHOULD THIS COME OUT?]
iv.
any representation or warranty made in this Debenture, any other Transaction Documents, any written statement pursuant hereto
or thereto or any other report, financial statement or certificate made or delivered to the Holder or any other Holder shall be
untrue or incorrect in any material respect as of the date when made or deemed made;
v.
the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to
a Bankruptcy Event;
vi.
the Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility,
indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured
or evidenced, any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves
an obligation greater than $150,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such
indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;
vii.
the Common Stock shall not be eligible for listing or quotation for trading on a Trading Market and shall not be eligible
to resume listing or quotation for trading thereon within five Trading Days;
viii.
the Company shall be a party to any Change of Control Transaction or Fundamental Transaction or shall agree to sell or dispose
of all or in excess of 33% of its assets in one transaction or a series of related transactions (whether or not such sale would
constitute a Change of Control Transaction);
ix.
the Initial Registration Statement (as defined in the Registration Rights Agreement) shall not have been declared effective
by the Commission on or prior to the 120
th
calendar day after the Closing Date or the Company does not meet the current
public information requirements under Rule 144 in respect of the Registrable Securities (as defined under the Registration Rights
Agreement);
x.
if, during the Effectiveness Period (as defined in the Registration Rights Agreement), either (a) the effectiveness of the
Registration Statement lapses for any reason or (b) the Holder shall not be permitted to resell Registrable Securities (as defined
in the Registration Rights Agreement) under the Registration Statement for a period of more than 30 consecutive Trading Days or
45 non-consecutive Trading Days during any 12 month period;
provided
,
however
, that if the Company is negotiating
a merger, consolidation, acquisition or sale of all or substantially all of its assets or a similar transaction and, in the written
opinion of counsel to the Company, the Registration Statement would be required to be amended to include information concerning
such pending transaction(s) or the parties thereto which information is not available or may not be publicly disclosed at the time,
the Company shall be permitted an additional 10 consecutive Trading Days during any 12 month period pursuant to this Section 8(a)(x);]
[9]
xi.
the Company shall fail for any reason to deliver Conversion Shares to a Holder prior to the seventh Trading Day after a
Conversion Date pursuant to Section 4(c) or the Company shall provide at any time notice to the Holder, including by way of public
announcement, of the Company’s intention to not honor requests for conversions of any Debentures in accordance with the terms
hereof;
_______________________________
9
Remove for Series H Debentures.
xii.
any Person shall breach any agreement delivered to the initial Holders pursuant to Section 2.2 of the Purchase Agreement;
xiii.
the electronic transfer by the Company of shares of Common Stock through the Depository Trust Company or another established
clearing corporation is no longer available or is subject to a “chill”;
xiv.
any monetary judgment, writ or similar final process shall be entered or filed against the Company, any subsidiary or any
of their respective property or other assets for more than $50,000, and such judgment, writ or similar final process shall remain
unvacated, unbonded or unstayed for a period of 45 calendar days; or
xv.
a false or inaccurate certification (including a false or inaccurate deemed certification) by the Company that the Equity
Conditions are satisfied or that there has been no Equity Conditions Failure or as to whether any Event of Default has occurred.
xvi.
The Holders shall not have been granted a first priority lien on all real estate owned by the Company or its Subsidiaries
within 60 days of the Closing Date.
b)
Remedies Upon Event of Default
. If any Event of Default occurs, the outstanding principal amount of this Debenture, liquidated
damages and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election,
immediately due and payable in cash at the Mandatory Default Amount. Commencing 5 days after the occurrence of any Event of Default
that results in the eventual acceleration of this Debenture, the interest rate on this Debenture shall accrue at an interest rate
equal to the lesser of 18% per annum or the maximum rate permitted under applicable law. Upon the payment in full of the Mandatory
Default Amount, the Holder shall promptly surrender this Debenture to or as directed by the Company. In connection with such acceleration
described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice
of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies
hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Holder
at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Debenture until such time, if any,
as the Holder receives full payment pursuant to this Section 8(b). No such rescission or annulment shall affect any subsequent
Event of Default or impair any right consequent thereon.
Section 9
.
Miscellaneous
.
a)
Notices
. Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without
limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, by email attachment, or sent
by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above, or such other facsimile
number, email address, or address as the Company may specify for such purposes by notice to the Holder delivered in accordance
with this Section 9(a). Any and all notices or other communications or deliveries to be provided by the Company hereunder
shall be in writing and delivered personally, by facsimile, by email attachment, or sent by a nationally recognized overnight courier
service addressed to each Holder at the facsimile number, email address or address of the Holder appearing on the books of the
Company, or if no such facsimile number or email attachment or address appears on the books of the Company, at the principal place
of business of such Holder, as set forth in the Purchase Agreement or Exchange Agreement, as applicable. Any notice or other
communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number or email attachment to the email address set forth on
the signature pages attached hereto prior to 5:30 p.m. (New York City time) on any Trading Day, (ii) the next Trading Day after
the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment
to the email address set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m.
(New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required to be given.
b)
Absolute Obligation
. Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable,
on this Debenture at the time, place, and rate, and in the coin or currency, herein prescribed. This Debenture is a direct debt
obligation of the Company. This Debenture ranks
pari passu
with all other Debentures now or hereafter issued under the terms
set forth herein.
c)
Lost or Mutilated Debenture
. If this Debenture shall be mutilated, lost, stolen or destroyed, the Company shall execute
and deliver, in exchange and substitution for and upon cancellation of a mutilated Debenture, or in lieu of or in substitution
for a lost, stolen or destroyed Debenture, a new Debenture for the principal amount of this Debenture so mutilated, lost, stolen
or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Debenture, and of the ownership hereof,
reasonably satisfactory to the Company.
d)
Governing Law
. All questions concerning the construction, validity, enforcement and interpretation of this Debenture 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 conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement
and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its
respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts
sitting in the City of New York, Borough of Manhattan (the “
New York Courts
”). Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the New York Courts 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 such New York Courts, or such New York Courts are improper or 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 Debenture 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 applicable law. Each party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Debenture
or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any provisions of this
Debenture, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees
and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
e)
Waiver
. Any waiver by the Company or the Holder of a breach of any provision of this Debenture shall not operate as or be
construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture. The failure
of the Company or the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term
of this Debenture on any other occasion. Any waiver by the Company or the Holder must be in writing.
f)
Severability
. If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall
remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to
all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates
the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum
rate of interest permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that it shall
not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of this Debenture
as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance
of this Debenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any
such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein
granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.
g)
Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief
. The remedies provided in this Debenture
shall be cumulative and in addition to all other remedies available under this Debenture and any of 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 Holder’s right to pursue actual and consequential damages for any failure by the Company to comply with the terms of
this Debenture. 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, conversion 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 shall be entitled, in addition
to all other available remedies, to an injunction restraining any such breach or any such threatened 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 Debenture.
h)
Next Business Day
. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day.
i)
Headings
. The headings contained herein are for convenience only, do not constitute a part of this Debenture and shall not
be deemed to limit or affect any of the provisions hereof.
j)
Secured Obligation
. The obligations of the Company under this Debenture are secured by all assets of the Company and each
Subsidiary pursuant to the Security Agreement, dated as of March___, 2017 between the Company, the Subsidiaries of the Company
and the Secured Parties (as defined therein).
Section 10
.
Disclosure
.
Upon receipt or delivery by the Company of any notice in accordance with the terms of this Debenture, unless the Company has in
good faith determined that the matters relating to such notice do not constitute material, nonpublic information relating to the
Company or its Subsidiaries, the Company shall within two (2) Business Days after such receipt or delivery publicly disclose such
material, nonpublic information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice
contains material, non-public information relating to the Company or its Subsidiaries, the Company so shall indicate to the Holder
contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed to presume
that all matters relating to such notice do not constitute material, nonpublic information relating to the Company or its Subsidiaries.
*********************
(Signature Pages Follow)
IN WITNESS WHEREOF,
the Company has caused this Debenture to be duly executed by a duly authorized officer as of the date first above indicated.
|
RENNOVA HEALTH, INC.
|
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By:__________________________________________
Name: Seamus Lagan
Title: Chief Executive Officer
Facsimile No. for delivery of Notices:
slagan@rennovahealth.com
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ANNEX
A
NOTICE OF CONVERSION
The undersigned hereby
elects to convert principal under the Senior Secured Original Issue Discount Convertible Debenture due _____, 2019 of Rennova Health,
Inc., a Delaware corporation (the “
Company
”), into shares of common stock (the “
Common Stock
”),
of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in
the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is
delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will
be charged to the holder for any conversion, except for such transfer taxes, if any.
By the delivery of
this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common Stock does not
exceed the amounts specified under Section 4 of this Debenture, as determined in accordance with Section 13(d) of the Exchange
Act.
The undersigned agrees
to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the
aforesaid shares of Common Stock.
Conversion calculations:
Date to Effect Conversion:
Principal Amount of Debenture
to be Converted:
Applicable Conversion Price:
Number of shares of Common Stock
to be issued:
Signature:
Name:
Address for Delivery
of Common Stock Certificates:
Or
DWAC Instructions:
Broker No:
Account No:
Schedule 1
CONVERSION SCHEDULE
The Senior Secured Original Issue Discount
Convertible Debentures due on ________ in the aggregate principal amount of $____________ are issued by Rennova Health, Inc., a
Delaware corporation. This Conversion Schedule reflects conversions made under Section 4 of the above referenced Debenture.
Dated:
Date of Conversion (or for first entry, Original Issue Date)
|
Amount of Conversion
|
Aggregate Principal Amount Remaining Subsequent to Conversion (or original
Principal Amount)
|
Company Attest
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EXHIBIT B
FORM
OF
SERIES [A/B/C] COMMON STOCK PURCHASE WARRANT
[NEITHER THIS SECURITY
NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE
OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.]
1
SERIES [A/B/C] COMMON STOCK PURCHASE
WARRANT
rENNOVA
HEALTH, INC.
Warrant Shares: _______ Initial Exercise Date: March
__, 2017
THIS SERIES [A/B/C] COMMON
STOCK PURCHASE WARRANT (the “
Warrant
”) certifies that, for value received, _____________ or its assigns (the
“
Holder
”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter
set forth, at any time on or after the date hereof (the “
Initial Exercise Date
”) and on or prior to the close
of business on the _____
2
year anniversary
of the Initial Exercise Date (the “
Termination Date
”) but not thereafter, to subscribe for and purchase from
Rennova Health, Inc., a Delaware corporation (the “
Company
”), up to ______ shares (as subject to adjustment
hereunder, the “
Warrant Shares
”) of Common Stock [;
provided
,
however
, the exercisability of this
Series C Warrant shall vest ratably from time to time in proportion to the Holder’s (or its permitted assigns) exercise of
the Series B Common Stock Purchase Warrant as compared with all Series B Common Stock Purchase Warrants issued to Holder at the
Closing (“
Vesting Schedule
”). Notwithstanding anything herein to the contrary, if the Holder exercises all of
its Series B Common Stock Purchase Warrants issued at Closing, all Series C Common Stock Purchase Warrants hereunder may be exercised
by the Holder, if the Holder exercises half of the Series B Common Stock Purchase Warrant issued at Closing, only half of the Series
C Common Stock Purchase Warrants hereunder may be exercised by the Holder until such time that the Holder exercises additional
Series B Common Stock Purchase Warrants.]
3
. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section
2(b).
1
Remove legend for Series H Exchange Warrants
2
Series A and C – 5 years; Series B – 18 months
3
Series
C only
Section 1
.
Definitions
.
Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain [Securities Purchase
Agreement (the “
Purchase Agreement
”)][Securities Exchange Agreement (the “
Exchange Agreement
”)],
dated as of March ___, 2017, among the Company and the purchasers signatory thereto.
Section 2
.
Exercise
.
a)
Exercise of Warrant
. [Subject to the Vesting Schedule,]
4
Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after
the Initial Exercise Date and on or before the Termination Date by delivery to the Company or the Transfer Agent (or such other
office or agency that the Company may designate by notice in writing to the registered Holder at the address of the Holder appearing
on the books of the Company), as applicable, of a duly executed facsimile copy or PDF copy submitted by electronic (or e-mail attachment)
of the Notice of Exercise in the form annexed hereto (“
Notice of Exercise
”). Within the earlier of (i) three
(3) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein)
following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in
the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise
procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise
shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form
be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant
to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised
in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of
the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of
a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of
Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the
Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall
deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice.
The Holder and any assignee,
by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase
of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may
be less than the amount stated on the face hereof.
b)
Exercise Price
. The exercise price per share of the Common Stock under this Warrant shall be [
_____
]
5
,
subject to adjustment hereunder (the “
Exercise Price
”).
4
Series C only
5
Series A and C
- $1.95; Series B - $1.66
c)
Cashless Exercise
. If [at any time after the six-month anniversary of the Closing Date,]
6
there is no effective Registration Statement registering, or no current prospectus available for, the resale of the Warrant Shares
by the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise”
in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)]
by (A), where:
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(A)
|
as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable
Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that
is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of
“regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws)
on such Trading Day, (ii) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of
the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed and delivered
during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter pursuant to Section
2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading
Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular
trading hours” on such Trading Day;
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(B) = the
Exercise Price of this Warrant, as adjusted hereunder; and
(X) =
the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant
if such exercise were by means of a cash exercise rather than a cashless exercise.
If
Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9)
of the Securities Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period
of the Warrant Shares being issued may be tacked on to the holding period of this Warrant. The Company agrees not to
take any position contrary to this Section 2(c).
[If
Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9)
of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The
Company agrees not to take any position contrary to this Section 2(c).]
7
“
Bid
Price
” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common
Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on
a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading
Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as
applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock
are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding
to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all
other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith
by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees
and expenses of which shall be paid by the Company.
6
Remove for Series H exchange Warrants, reduce period for debenture exchange warrants.
7
Use this on Series
H exchange warrants instead of language above.
“
VWAP
”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market,
the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable,
(c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then
reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding
to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all
other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith
by the Purchasers of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees
and expenses of which shall be paid by the Company.
Notwithstanding
anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant
to this Section 2(c).
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d)
|
Mechanics of Exercise
.
|
i.
Delivery of Warrant Shares Upon Exercise
. Warrant Shares purchased hereunder shall be transmitted by the Transfer
Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository
Trust Company through its Deposit or Withdrawal at Custodian system (“
DWAC
”) if the Company is then a participant
in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or
resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale
limitations pursuant to Rule 144 (assuming cashless exercise), and otherwise by physical delivery of a certificate, registered
in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the
Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that
is the earlier of (A) the earlier of (i) three (3) Trading Days after the delivery to the Company of the Notice of Exercise and
(ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (B) the number of Trading Days comprising
the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “
Warrant Share
Delivery Date
”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have
become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date
of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless
exercise) is received within the earlier of (i) three Trading Days and (ii) the number of Trading Days comprising the Standard
Settlement Period following delivery of the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the
Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash,
as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the
Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth
Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such
Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant
in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “
Standard Settlement
Period
” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading
Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.
ii.
Delivery of New Warrants Upon Exercise
. If this Warrant shall have been exercised in part, the Company shall, at
the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver
to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant,
which new Warrant shall in all other respects be identical with this Warrant.
iii.
Rescission Rights
. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares
pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv.
Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise
. In addition to any other rights
available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance
with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after
such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage
firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which
the Holder anticipated receiving upon such exercise (a “
Buy-In
”), then the Company shall (A) pay in cash to
the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for
the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the
Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order
giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the
Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed
rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied
with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase
price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price
giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be
required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder
in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s
right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon
exercise of the Warrant as required pursuant to the terms hereof.
v.
No Fractional Shares or Scrip
. No fractional shares or scrip representing fractional shares shall be issued upon
the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such
exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal
to such fraction multiplied by the Exercise Price or round up to the next whole share.
vi.
Charges, Taxes and Expenses
. Issuance of Warrant Shares shall be made without charge to the Holder for any issue
or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses
shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may
be directed by the Holder;
provided
,
however
, that in the event that Warrant Shares are to be issued in a name other
than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto
duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any
Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar
functions) required for same-day electronic delivery of the Warrant Shares.
vii.
Closing of Books
. The Company will not close its stockholder books or records in any manner which prevents the timely
exercise of this Warrant, pursuant to the terms hereof.
e)
Holder’s
Exercise Limitations
. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise
any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after
exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other
Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “
Attribution
Parties
”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes
of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution
Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination
is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining,
nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii)
exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation,
any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein
beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence,
for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act
and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing
to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible
for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e)
applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together
with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion
of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this
Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties)
and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company
shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group
status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder
may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual
report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent
written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon
the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder
the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder
or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported.
The “
Beneficial Ownership Limitation
” shall be 4.99% of the number of shares of the Common Stock outstanding
immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon
notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that
the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions
of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the
61
st
day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented
in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof)
which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or
supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall
apply to a successor holder of this Warrant.
f)
Issuance Restrictions
. Notwithstanding anything herein to the contrary, if the Company has not obtained Shareholder
Approval, then the Company may not issue upon exercise of this Warrant a number of shares of Common Stock, which, when aggregated
with any shares of Common Stock issued (i) pursuant to the conversion of any Debentures, (ii) upon exercise of this or any other
Warrant issued pursuant to the [Purchase Agreement][Exchange Agreement], and (iii) [in connection with the conversion or exercise
of any original issue discount convertible debentures and Common Stock purchase warrants issued pursuant to the [Purchase Agreement][Exchange
Agreement]] (such securities, collectively, the “
Issuance Capped Securities
” and the holders of Issuance Capped
Securities, the “
Capped Holders
”) would exceed 1,027,396
8
,
subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions
of the Common Stock that occur after the date of the [Purchase Agreement][Exchange Agreement] (such number of shares, the “
Issuable
Maximum
”). Each Capped Holder shall be entitled to a portion of the Issuable Maximum equal to the quotient obtained by
dividing (x) the Holder’s original Subscription Amount plus the exchange amounts exchanged pursuant to the Exchange Agreement,
if any, by (y) the aggregate original Subscription Amount (or exchange amounts if pursuant to the Exchange Agreement) of all Capped
Holders. In addition, a Capped Holder may allocate its pro-rata portion of the Issuable Maximum among Issuance Capped Securities
held by it in its sole discretion. Such portion shall be adjusted upward ratably in the event a Capped Holder no longer holds any
Issuance Caped Securities and the amount of Issuance Capped Securities issued to such Capped Holder was less than such Capped Holder’s
pro-rata share of the Issuable Maximum. For avoidance of doubt, unless and until any required Shareholder Approval is obtained
and effective, warrants issued to any registered broker-dealer as a fee in connection with the Securities issued pursuant to the
Purchase Agreement as described in clause (iii) above shall provide that such warrants shall not be allocated any portion of the
Issuable Maximum and shall be unexercisable unless and until such Shareholder Approval is obtained and effective.
Section 3
.
Certain
Adjustments
.
a)
Stock Dividends and Splits
. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend
or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company
upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines
(including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by
reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price
shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares,
if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding
immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted
such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a)
shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend
or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
8
19.99%
of the number of shares of Common Stock outstanding on the Trading Day immediately preceding the date of the Purchase Agreement
b)
Subsequent
Equity Sales
. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is
outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or
issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock
Equivalents, at an effective price per share less than the Exercise Price then in effect (such lower price, the
“
Base Share Price
” and such issuances collectively, a “
Dilutive Issuance
”) (it being
understood and agreed that if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether
by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise,
or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive
shares of Common Stock at an effective price per share that is less than the Exercise Price, such issuance shall be deemed to
have occurred for less than the Exercise Price on such date of the Dilutive Issuance at such effective price), then
simultaneously with the consummation of each Dilutive Issuance the Exercise Price shall be reduced and only reduced to equal
the Base Share Price, and the number of Warrant Shares issuable hereunder shall be increased such that the aggregate Exercise
Price payable hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the aggregate
Exercise Price prior to such adjustment, provided that the Base Share Price shall not be less than $0.39, not subject to
adjustment for reverse stock splits and the like. Such adjustment shall be made whenever such Common Stock or Common Stock
Equivalents are issued. Notwithstanding the foregoing, no adjustments shall be made, paid or issued under this Section 3(b)
in respect of an Exempt Issuance. The Company shall notify the Holder, in writing, no later than the Trading Day following
the issuance or deemed issuance of any Common Stock or Common Stock Equivalents subject to this Section 3(b), indicating
therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms
(such notice, the “
Dilutive Issuance Notice
”). For purposes of clarification, whether or not the Company
provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, the Holder
is entitled to receive upon exercise a number of Warrant Shares based upon the Base Share Price regardless of whether the
Holder accurately refers to the Base Share Price in the Notice of Exercise. If the Company enters into a Variable Rate
Transaction, despite the prohibition thereon in the [Purchase Agreement][Exchange Agreement], the Company shall be deemed to
have issued Common Stock or Common Stock Equivalents at the lowest possible conversion or exercise price at which such
securities may be converted or exercised.
c)
Subsequent Rights Offerings
. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company
grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata
to the record holders of any class of shares of Common Stock (the “
Purchase Rights
”), then the Holder will be
entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have
acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without
regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before
the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase
Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in
the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase
Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent)
and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto
would not result in the Holder exceeding the Beneficial Ownership Limitation).
d)
Pro Rata Distributions
. During such time as this Warrant is outstanding, if the Company shall declare or make any
dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of
return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or
options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction)
(a “
Distribution
”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall
be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder
had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations
on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record
is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock
are to be determined for the participation in such Distribution (
provided
,
however
, to the extent that the Holder's
right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the
Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of
Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for
the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial
Ownership Limitation).
e)
Fundamental Transaction
. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly,
in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the
outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more
related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other
Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held
by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to,
such stock or share purchase agreement or other business combination) (each a “
Fundamental Transaction
”), then,
upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have
been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder
(without regard to any limitation in Section 2(e) or Section 2(f) on the exercise of this Warrant), the number of shares of Common
Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration
(the “
Alternate Consideration
”) receivable as a result of such Fundamental Transaction by a holder of the number
of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard
to any limitation in Section 2(e) or Section 2(f) on the exercise of this Warrant). For purposes of any such exercise, the determination
of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate
Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion
the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components
of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon
any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of
a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable
at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction, purchase this Warrant
from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value of the remaining unexercised portion
of this Warrant on the date of the consummation of such Fundamental Transaction. “
Black Scholes Value
” means
the value of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg,
L.P. (“
Bloomberg
”) determined as of the day of consummation of the applicable Fundamental Transaction for pricing
purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between
the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility
equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of the Trading Day immediately
following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation
shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being
offered in such Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement
of the applicable Fundamental Transaction and the Termination Date. The payment of the Black Scholes Value will be made by wire
transfer of immediately available funds within five Business Days of the Holder’s election (or, if later, on the effective
date of the Fundamental Transaction). The Company shall cause any successor entity in a Fundamental Transaction in which the Company
is not the survivor (the “
Successor Entity
”) to assume in writing all of the obligations of the Company under
this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements
in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such
Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of
the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable
for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares
of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this
Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares
of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction
and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose
of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which
is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions
of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor
Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this
Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.
f)
Calculations
. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a
share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding
as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g)
Notice to Holder
.
i.
Adjustment to Exercise Price
. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3,
the Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment
and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii.
Notice to Allow Exercise by Holder
. If (A) the Company shall declare a dividend (or any other distribution in whatever
form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required
in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale
or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile
or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company,
at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date
on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record
is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the
Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such
notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified
in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information
regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant
to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the
date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
Section 4
.
Transfer
of Warrant
.
a)
Transferability
. Subject to compliance with any applicable securities laws and the conditions set forth in Section
4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement and the applicable provisions of the Exchange Agreement,
this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in
part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment
of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient
to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company
shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination
or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary,
the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant
in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date the Holder
delivers an assignment form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith,
may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
b)
New Warrants
. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid
office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved
in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or
Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated
the Initial Exercise Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant
thereto.
c)
Warrant Register
. The Company shall register this Warrant, upon records to be maintained by the Company for that
purpose (the “
Warrant Register
”), in the name of the record Holder hereof from time to time. The Company may
deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
d)
[Transfer Restrictions
. If, at the time of the surrender of this Warrant in connection with any transfer of this
Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under
the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale
restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing
such transfer, that the Holder or transferee of this Warrant, as the case may be, comply with the provisions of Section 5.7 of
the Purchase Agreement and applicable provisions of the Exchange Agreement.
e)
Representation by the Holder
. The Holder, by the acceptance hereof, represents and warrants that it is acquiring
this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and
not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act
or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.]
9
9
Remove for Series H Warrants.
Section 5
.
Miscellaneous
.
a)
No Rights as Stockholder Until Exercise
. This Warrant does not entitle the Holder to any voting rights, dividends
or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly
set forth in Section 3.
b)
Loss, Theft, Destruction or Mutilation of Warrant
. The Company covenants that upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to
the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in
the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock
certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.
c)
Saturdays, Sundays, Holidays, etc
. If the last or appointed day for the taking of any action or the expiration of
any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised
on the next succeeding Business Day.
d)
Authorized Shares
.
The Company covenants
that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient
number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.
The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged
with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company
will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without
violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be
listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance
herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by
the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such
issue).
Except and
to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions
as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting
the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable
therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant
and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory
body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before taking
any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction thereof.
e)
Jurisdiction
. All questions concerning the construction, validity, enforcement and interpretation of this Warrant
shall be determined in accordance with the provisions of the [Purchase Agreement][Exchange Agreement].
f)
Restrictions
. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not
registered and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities
laws.
g)
Nonwaiver and Expenses
. No course of dealing or any delay or failure to exercise any right hereunder on the part
of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding
the fact that all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with
any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts
as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including
those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing
any of its rights, powers or remedies hereunder.
h)
Notices
. Any notice, request or other document required or permitted to be given or delivered to the Holder by the
Company shall be delivered in accordance with the notice provisions of the [Purchase Agreement][Exchange Agreement].
i)
Limitation of Liability
. No provision hereof, in the absence of any affirmative action by the Holder to exercise
this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to
any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability
is asserted by the Company or by creditors of the Company.
j)
Remedies
. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees
to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
k)
Successors and Assigns
. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced
hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors
and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time
of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
l)
Amendment
. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the
Company and the Holder.
m)
Severability
. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Warrant.
n)
Headings
. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose,
be deemed a part of this Warrant.
********************
(Signature Page Follows)
IN WITNESS WHEREOF, the
Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
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RENNOVA HEALTH, INC.
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By:__________________________________________
Name: Seamus Lagan
Title: Chief Executive Officer
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NOTICE OF EXERCISE
To: rennova
health, inc.
(1)
The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant
(only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer
taxes, if any.
(2)
Payment shall take the form of (check applicable box):
[_] in lawful
money of the United States; or
[_] if permitted
the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c),
to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure
set forth in subsection 2(c).
(3)
Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The Warrant Shares shall be delivered to
the following DWAC Account Number:
_______________________________
_______________________________
_______________________________
(4)
Accredited Investor
.
The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933,
as amended.
[SIGNATURE
OF HOLDER]
Name of Investing Entity: ________________________________________________________________________
Signature of Authorized Signatory of
Investing Entity
: _________________________________________________
Name of Authorized Signatory: ___________________________________________________________________
Title of Authorized Signatory: ____________________________________________________________________
Date: ________________________________________________________________________________________
EXHIBIT B
ASSIGNMENT
FORM
(To assign the foregoing Warrant, execute
this form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant
and all rights evidenced thereby are hereby assigned to
Name:
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(Please Print)
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Address:
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(Please Print)
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Phone Number:
Email Address:
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______________________________________
______________________________________
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Dated: _______________ __, ______
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Holder’s Signature:
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Holder’s Address:
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PROXY
RENNOVA HEALTH, INC.
Special Meeting of the Stockholders,
May 19, 2017
This Proxy is solicited on behalf of the
Board of Directors
The undersigned stockholder of
Rennova Health, Inc. (the “Company”) hereby appoints Seamus Lagan and Marc Gelberg, or either of them, as
Proxies, each with the power to appoint a substitute, and hereby authorizes them to vote all such shares of the Company as to
which the undersigned is entitled to vote at the Special Meeting of the Stockholders of the Company and at all adjournments
or postponements thereof, to be held at the offices of Shutts & Bowen LLP, located at 525 Okeechobee Boulevard, Suite
1100, West Palm Beach, Florida 33401, in accordance with the following instructions.
THE SHARES REPRESENTED HEREBY WILL
BE VOTED AS SPECIFIED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR (I) THE ISSUANCE OF SHARES OF THE
COMPANY’S COMMON STOCK UNDERLYING SENIOR SECURED ORIGINAL ISSUE DISCOUNT CONVERTIBLE DEBENTURES AND THREE SERIES OF
WARRANTS ISSUED BY THE COMPANY PURSUANT TO THE TERMS OF THAT CERTAIN SECURITIES PURCHASE AGREEMENT, DATED AS OF MARCH 15,
2017, AND THOSE CERTAIN EXCHANGE AGREEMENTS, DATED AS OF MARCH 15, 2017, BETWEEN THE COMPANY AND THE INVESTORS NAMED THEREIN,
IN AN AMOUNT IN EXCESS OF 19.99% OF THE COMPANY’S COMMON STOCK OUTSTANDING BEFORE THE ISSUANCE OF SUCH SENIOR
SECURED ORIGINAL ISSUE DISCOUNT CONVERTIBLE DEBENTURES AND WARRANTS, AND (II) AUTHORIZATION TO ADJOURN THE SPECIAL MEETING,
IF NECESSARY, IF A QUORUM IS PRESENT, TO SOLICIT ADDITIONAL PROXIES IF THERE ARE NOT SUFFICIENT VOTES IN FAVOR OF THE
ISSUANCE PROPOSAL.
NOTE: IN THEIR DISCRETION, THE PROXIES ARE
AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
(DETACH BELOW AND RETURN USING THE ENVELOPE
PROVIDED)
RENNOVA HEALTH, INC.
SPECIAL MEETING OF STOCKHOLDERS
MAY 19, 2017
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1.
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APPROVE THE ISSUANCE OF SHARES OF THE COMPANY’S COMMON STOCK UNDERLYING SENIOR
SECURED ORIGINAL ISSUE DISCOUNT CONVERTIBLE DEBENTURES AND THREE SERIES OF WARRANTS ISSUED BY THE COMPANY PURSUANT TO THE
TERMS OF THAT CERTAIN SECURITIES PURCHASE AGREEMENT, DATED AS OF MARCH 15, 2017, AND THOSE CERTAIN EXCHANGE AGREEMENTS,
DATED AS OF MARCH 15, 2017, BETWEEN THE COMPANY AND THE
INVESTORS NAMED THEREIN, IN AN AMOUNT IN EXCESS OF 19.99% OF THE
COMPANY’S COMMON STOCK OUTSTANDING BEFORE THE ISSUANCE OF SUCH SENIOR SECURED ORIGINAL ISSUE DISCOUNT CONVERTIBLE
DEBENTURES AND WARRANTS.
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☐
FOR
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☐
AGAINST
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☐
ABSTAIN
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2.
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AUTHORIZE AN ADJOURNMENT OF THE SPECIAL MEETING, IF NECESSARY, IF A QUORUM IS PRESENT, TO SOLICIT
ADDITIONAL PROXIES IF THERE ARE NOT SUFFICIENT VOTES IN FAVOR OF THE ISSUANCE PROPOSAL.
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☐
FOR
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☐
AGAINST
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☐
ABSTAIN
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Check the appropriate box and indicate changes
below:
☐
Address
Change?
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☐
Name Change?
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SIGNATURE(S)
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_______________________
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________________________
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(Please sign exactly as your name appears on
your proxy card. When shares are held by joint tenants, both should sign. When signing as an attorney, executor, administrator,
trustee or partner, please give full title as such. If a corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by authorized person.)