Parallax Health Sciences 8K Entry into a Material Definitive Agreement | SEC 7 May 19

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is dated as of May 6, 2019,

between Parallax Health Sciences, Inc., a Nevada corporation (the “Company”), and each

purchaser identified on the signature pages hereto (each, including its successors and assigns, a

“Purchaser” and collectively, the “Purchasers”).

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant

to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506

promulgated thereunder, the Company desires to issue and sell to each Purchaser, and each

Purchaser, severally and not jointly, desires to purchase from the Company, securities of the

Company as more fully described in this Agreement.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this

Agreement, and for other good and valuable consideration, the receipt and adequacy of which are

hereby acknowledged, the Company and each Purchaser agree as follows:

ARTICLE I.

DEFINITIONS

1.1

Definitions. In addition to the terms defined elsewhere in this Agreement, for all

purposes of this Agreement, the following terms have the meanings set forth in this Section 1.1:

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

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

“Affiliate” means any Person that, directly or indirectly through one or more

intermediaries, controls or is controlled by or is under common control with a Person, as

such terms are used in and construed under Rule 405 under the Securities Act.

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

“Business Day” means any day except any Saturday, any Sunday, any day which

is a federal legal holiday in the United States or any day on which banking institutions in

the State of New York are authorized or required by law or other governmental action to

close.

“Closing Dates” means the First Closing Date and the Second Closing Date.

“Closings” means the First Closing and the Second Closing of the purchase and

sale of the Securities pursuant to Section 2.1.

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

“Common Stock” means the common stock of the Company, par value $0.001 per

share, and any other class of securities into which such securities may hereafter be

reclassified or changed.

“Common Stock Equivalents” means any securities of the Company or the

Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock,

including, without limitation, any debt, preferred stock, right, option, warrant or other

instrument that is at any time convertible into or exercisable or exchangeable for, or

otherwise entitles the holder thereof to receive, Common Stock.

“Company Counsel” means ____________, with offices located at

_____________.

“DisclosureSchedules”means the Disclosure Schedules ofthe Company delivered

concurrently herewith.

“Disclosure Time” means, (i) if this Agreement is signed on a day that is not a

TradingDayorafter9:00a.m.(NewYorkCitytime)andbefore midnight(NewYorkCity

time) on any Trading Day, 9:01 a.m. (New York City time) on the Trading Day

immediatelyfollowingthedatehereof,[unlessotherwiseinstructedastoanearliertimeby

the Placement Agent, and (ii) if this Agreement is signed between midnight (New York

Citytime)and9:00a.m.(NewYorkCitytime)onanyTradingDay,nolaterthan9:01a.m.

(New York City time) on the date hereof[, unless otherwise instructed as to an earlier time

by the Placement Agent.

“Effective Date” means the earliest of the date that (a) the initial Registration

StatementhasbeendeclaredeffectivebytheCommission,(b)alloftheSharesandWarrant

Shares have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without

the requirement for the Company to be in compliance with the current public information

required under Rule 144 and without volume or manner-of-sale restrictions, (c) following

the one year anniversary of the last Closing Date provided that a holder of Shares or

Warrant Shares is not an Affiliate of the Company, or (d) all of the Shares and Warrant

SharesmaybesoldpursuanttoanexemptionfromregistrationunderSection4(a)(1)ofthe

Securities Act without volume or manner-of-sale restrictions and Company Counsel has

delivered to such holders a standing written unqualified opinion that resales may then be

made by such holders of the Shares and Warrant Shares pursuant to such exemption which

opinion shall be in form and substance reasonably acceptable to such holders.

“EGS” means Ellenoff Grossman & Schole LLP, with offices located at 1345

Avenue of the Americas, New York, New York 10105-0302.

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

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the

rules and regulations promulgated thereunder.

“Exempt Issuance” means the issuance of (a) shares of Common Stock or options

to employees, officers or directors of the Company pursuant to any stock or option plan

duly adopted for such purpose, by a majority of the non-employee members of the Board

of Directors or a majority of the members of a committee of non-employee directors

established for such purpose for services rendered to the Company, (b) securities upon the

exercise or exchange of or conversion of any Securities issued hereunder and/or other

securities exercisable or exchangeable for or convertible into shares of Common Stock

issued and outstanding on the date of this Agreement, provided that such securities have

not been amended since the date of this Agreement to increase the number of such

securities or to decrease the exercise price, exchange price or conversion price of such

securities(otherthaninconnectionwithstocksplitsorcombinations)ortoextendtheterm

ofsuchsecurities,and(c)securitiesissuedpursuanttoacquisitionsorstrategictransactions

approved by a majority of the disinterested directors of the Company, provided that such

securities are issued as “restricted securities” (as defined in Rule 144) and carry no

registration rights that require or permit the filing of any registration statement in

connection therewith during the prohibition period in Section 4.12(a) herein, and provided

that any such issuance shall only be to a Person (or to the equityholders ofa Person) which

is, itself or through its subsidiaries, an operating company or an owner of an asset in a

business synergistic with the business of the Company and shall provide to the Company

additionalbenefitsinadditiontotheinvestmentoffunds,butshallnotincludeatransaction

in which the Company is issuing securities primarily for the purpose of raising capital or

to an entity whose primary business is investing in securities.

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

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

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

“First Closing” shall have the meaning ascribed to such term in Section 2.1.

“First Closing Date” means the Trading Day on which all of the Transaction

Documents have been executed and delivered by the applicable parties thereto, and all

conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount for

the First Closing and (ii) the Company’s obligations to deliver the Securities for the First

Closing, in each case, have been satisfied or waived.

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

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

“Intellectual Property Rights” shall have the meaning ascribed to such term in

Section 3.1(p).

“Legend Removal Date” shall have the meaning ascribed to such term in Section

4.1(c).

“Liens” means a lien, charge pledge, security interest, encumbrance, right of first

refusal, preemptive right or other restriction.

“Lock-Up Agreement”means the Lock-Up Agreement, dated as of thedate hereof,

by and among the Company and the directors, officers, and 10% stockholders of the

Company, in the form of Exhibit D attached hereto.

“Material Adverse Effect” shall have the meaning assigned to such term in Section

3.1(b).

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

“Participation Maximum” shall have the meaning ascribed to such term in Section

4.11(a).

“Per Unit Purchase Price” equals $0.125 per unit, subject to adjustment for reverse

andforwardstocksplits,stockdividends,stockcombinationsandothersimilartransactions

of the Common Stock that occur after the date of this Agreement.

“Person” means an individual or corporation, partnership, trust, incorporated or

unincorporated association, joint venture, limited liability company, joint stock company,

government (or an agency or subdivision thereof) or other entity of any kind.

“Pharmaceutical Product” shall have the meaning ascribed to such term in Section

3.1(jj).

“Proceeding” means an action, claim, suit, investigation or proceeding (including,

without limitation, an informal investigation or partial proceeding, such as a deposition),

whether commenced or threatened.

“Public Information Failure” shall have the meaning ascribed to such term in

Section 4.2(b).

“Public Information Failure Payments” shall have the meaning ascribed to such

term in Section 4.2(b).

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

“Registration Rights Agreement” means the Registration Rights Agreement, dated

onoraboutthedatehereof,amongtheCompanyandthePurchasers,intheformofExhibit

A attached hereto.

“Registration Statement” means a registration statement meeting the requirements

set forth in the Registration Rights Agreement and coveringtheresalebythePurchasersof

the Shares and the Warrant Shares.

“Required Approvals” shall have the meaning ascribed to such term in Section

3.1(e).

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the

Securities Act, as such Rule may be amended or interpreted from time to time, or any

similar rule or regulation hereafter adopted by the Commission having substantially the

same purpose and effect as such Rule.

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the

Securities Act, as such Rule may be amended or interpreted from time to time, or any

similar rule or regulation hereafter adopted by the Commission having substantially the

same purpose and effect as such Rule.

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

“Second Closing” shall have the meaning ascribed to such term in Section 2.1.

“Second Closing Date” means the Trading Day on which all of the Transaction

Documents have been executed and delivered by the applicable parties thereto, and all

conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount for

the Second Closing and (ii) the Company’s obligations to deliver the Securities for the

Second Closing, in each case, have been satisfied or waived.

“Securities” means the Shares, the Warrants and the Warrant Shares.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and

regulations promulgated thereunder.

“Shares” means the shares of Common Stock issued or issuable to each Purchaser

pursuant to this Agreement.

“Subscription Amount” means, as to each Purchaser, the aggregate amount to be

paid for units of Shares and Warrants purchased hereunder as specified below such

Purchaser’s name on the signature page of this Agreement and next to the heading

“Subscription Amount,” in United States dollars and in immediately available funds. The

Subscription Amounts at the First Closing and the Second Closing shall be the same.

“Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a)

and shall, where applicable, also include any direct or indirect subsidiary of the Company

formed or acquired after the date hereof.

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

trading.

“Trading Market” means any of the following markets or exchanges on which the

CommonStockislistedorquotedfortradingonthedateinquestion:theNYSEAmerican,

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).

“Transaction Documents” means this Agreement, the Warrants, the Registration

Rights Agreement, the Lock-Up Agreement, all exhibits and schedules thereto and hereto

and any other documents or agreements executed in connection with the transactions

contemplated hereunder.

“Transfer Agent” means Action Stock Transfer Corp., the current transfer agent of

the Company, and any successor transfer agent of the Company.

“Variable Rate Transaction” shall have the meaning ascribed to such term in

Section 4.12(b).

“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,

thedailyvolumeweightedaveragepriceoftheCommonStockforsuchdate(orthenearest

precedingdate)ontheTradingMarketonwhichtheCommonStockisthenlistedorquoted

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.

“Warrants”means, collectively,theCommon Stock purchase warrants deliveredto

the Purchasers at the Closing in accordance with Section 2.2(a) hereof, which Warrants

shall be exercisable immediately and have a term of exercise equal to two (2) years, in the

form of Exhibit C attached hereto.

“WarrantShares”meansthesharesofCommonStockissuableuponexerciseofthe

Warrants.

ARTICLE II.

PURCHASE AND SALE

2.1

Closings. Upon the terms and subject to the conditions set forth herein,

substantially concurrent with the execution and delivery of this Agreement by the parties hereto,

the Company agrees to sell, and the Purchasers, severally and not jointly,agree to purchase in two

Closings, up to an aggregate of $1,000,000 of units with each unit consisting of 1.5 Shares and

Warrants to purchase 1.5 Warrant Shares. Each Purchaser shall deliver to the Company, via wire

transfer or a certified check, immediately available funds equal to such Purchaser’s Subscription

Amount as set forth on the signature page hereto executed by such Purchaser, and the Company

shalldelivertoeachPurchaseritsrespectiveunitsofSharesandaWarrant,asdeterminedpursuant

to Section 2.2(a), and the Company and each Purchaser shall deliver the other items set forth in

Section 2.2 deliverable at the Closing. The Closings shall take place in two stages as set forth

below (respectively, the “First Closing” and the “Second Closing”). Upon satisfaction of the

covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of

EGS or such other location as the parties shall mutually agree.

(a)

FirstClosing. TheFirstClosingshallbeforupto$500,000oftheaggregate

Subscription Amount subscribed for by all Purchasers hereunder and shall occur on, or as

soon as reasonably practicable following, the date hereof.

(b)

Second Closing. The Second Closing shall be for up to $500,000 of the

aggregate SubscriptionAmount subscribed for by all Purchasershereunderandshalloccur

within 5 Business Days following the Effective Date, subject to the terms hereunder.

2.2

Deliveries.

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

delivered to each Purchaser the following:

(i)

as to the First Closing, this Agreement duly executed by the

Company;

(ii)

as to the First Closing, a legal opinion of Company Counsel,

substantially in the form of Exhibit B attached hereto;

(iii) a copy of the irrevocable instructions to the Transfer Agent

instructing the Transfer Agent to deliver, on an expedited basis, a certificate

evidencinganumberofSharesequalto(A)suchPurchaser’sSubscriptionAmount

for the respective Closing divided (B) by the quotient obtained by dividing the Per

Unit Purchase Price by 1.5, registered in the name of such Purchaser;

(iv)

a Warrant registered in the name of such Purchaser to purchase up

toanumberofsharesofCommonStockequalto100%ofsuchPurchaser’sShares,

with an exercise price equal to $0.25, subject to adjustment therein;

(v)

the Company shall have provided each Purchaser with the

Company’s wire instructions, on Company letterhead and executed by the Chief

Executive Officer or Chief Financial Officer;

(vi)

as to the First Closing, the Lock-Up Agreements; and

(vii) as to the First Closing, the Registration Rights Agreement duly

executed by the Company.

(b) On or prior to each Closing Date, each Purchaser shall deliver or cause to be

delivered to the Company, as applicable, the following:

(i)

As to the First Closing, this Agreement duly executed by such

Purchaser;

(ii)

such Purchaser’s Subscription Amount as to the applicable Closing

by wire transfer to the account specified in writing by the Company;

(iii) such Purchaser’s leak-out agreement in form and substance

reasonably acceptable to the Purchaser and the Company1; and

(iv)

as to the First Closing, the Registration Rights Agreement duly

executed by such Purchaser.

2.3

Closing Conditions.

(a)

The obligations of the Company hereunder in connection with the Closing

are subject to the following conditions being met:

(i)

theaccuracyinallmaterialrespects(or,totheextentrepresentations

orwarrantiesarequalifiedbymaterialityorMaterialAdverseEffect,inallrespects)

on the applicable Closing Date of the representations and warranties of the

Purchasers contained herein (unless as of a specific date therein in which case they

shall be accurate as of such date);

(ii)

all obligations, covenants and agreements of each Purchaser

required to be performed at or prior to the applicable Closing Date shall have been

performed; and

(iii) thedeliverybyeachPurchaseroftheitemssetforthinSection2.2(b)

of this Agreement.

(b)

The respective obligations of the Purchasers hereunder in connection with

the Closing are subject to the following conditions being met:

(i)

theaccuracyinallmaterialrespects(or,totheextentrepresentations

orwarrantiesarequalifiedbymaterialityorMaterialAdverseEffect,inallrespects)

when made and on the applicable Closing Date of the representations and

warranties of the Company contained herein (unless as of a specific date therein in

which case they shall be accurate as of such date);

(ii)

all obligations, covenants and agreements of the Company required

to be performed at or prior to the applicable Closing Date shall have been

performed;

(iii) the delivery by the Company of the items set forth in Section 2.2(a)

of this Agreement;

(iv)

there shall have been no Material Adverse Effect with respect to the

Company since the date hereof;

(v)

astotheSecondClosing,theRegistrationStatementshallhavebeen

declared effective as to all of the Shares and Warrant Shares issued and issuable at

If market price is less than exercise price purchaser will not sell greater than $15,000 and 15% of dollar

weighted average trading volume from prior 5 trading days.

the First Closing and Second Closing (ignoring for such purposes an conversion or

exerciselimitationsthereunder)bytheCommissiononorbefore______________,

2019; and

(vi)

from the date hereof to the applicable Closing Date, trading in the

Common Stock shall not have been suspended by the Commission or the

Company’s principal Trading Market, and, at any time prior to the applicable

Closing Date, trading in securities generally as reported by Bloomberg L.P. shall

not have been suspended or limited, or minimum prices shall not have been

established on securities whose trades are reported by such service, or on any

Trading Market, nor shall a banking moratorium have been declared either by the

United States or New York State authorities nor shall there have occurred any

material outbreak or escalation of hostilities or other national or international

calamity of such magnitude in its effect on, or any material adverse change in, any

financialmarketwhich,ineachcase,inthereasonablejudgmentofsuchPurchaser,

makes it impracticable or inadvisable to purchase the Securities at the Closing.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1

Representations and Warranties of the Company. Except as set forth in the

Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof and shall qualify

any representation or otherwise made herein to the extent of the disclosure contained in the

corresponding section of the Disclosure Schedules, the Company hereby makes the following

representations and warranties to each Purchaser:

(a)

Subsidiaries. All of the direct and indirect subsidiaries of the Company are

set forth on Schedule 3.1(a). The Company owns, directly or indirectly, all of the capital

stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the

issued and outstanding shares of capital stock of each Subsidiary are validly issued andare

fully paid, non-assessable and free of preemptive and similar rights to subscribe for or

purchase securities. If the Company has no subsidiaries, all other references to the

Subsidiaries or any of them in the Transaction Documents shall be disregarded.

(b)

OrganizationandQualification. TheCompanyandeachoftheSubsidiaries

isanentitydulyincorporatedorotherwiseorganized,validlyexistingandingoodstanding

under the laws of the jurisdiction of its incorporation or organization, with the requisite

power and authority to own and use its properties and assets and to carry on its business as

currently conducted. Neither the Company nor any Subsidiary is in violation nor default

of any of the provisions of its respective certificate or articles of incorporation, bylaws or

other organizational or charter documents. Each of the Company and the Subsidiaries is

duly qualified to conduct business and is in good standing asa foreign corporation or other

entity in each jurisdictionin which the nature ofthe businessconducted or property owned

by it makes such qualification necessary, except where the failure to be so qualified or in

good standing, as the case may be, could not have or reasonably be expected to result in:

(i) a material adverse effect on the legality, validity or enforceability of any Transaction

Document, (ii) a material adverse effect on the results of operations, assets, business,

prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken

as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any

material respect on a timely basis its obligations under any Transaction Document (any of

(i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any

such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such

power and authority or qualification.

(c)

Authorization; Enforcement. The Company has the requisite corporate

power and authority to enter into and to consummate the transactions contemplated by this

Agreement and each of the other Transaction Documents and otherwise to carry out its

obligations hereunder and thereunder. The execution and delivery of this Agreement and

each of the other Transaction Documents by the Company and the consummation by it of

the transactions contemplated hereby and thereby have been duly authorized by all

necessary action on the part of the Company and no further action is required by the

Company, the Board of Directors or the Company’s stockholders in connection herewith

or therewith other than in connection with the Required Approvals. This Agreement and

each other Transaction Document to which it is a party has been (or upon delivery will

have been) duly executed by the Company and, when delivered in accordance with the

terms hereof and thereof, will constitute the valid and binding obligation of the Company

enforceable against the Company in accordance with its terms, except (i) as limited by

general equitable principles and applicable bankruptcy, insolvency, reorganization,

moratoriumandotherlawsofgeneralapplicationaffectingenforcementofcreditors’rights

generally, (ii) as limited by laws relating to the availability of specific performance,

injunctive relief or other equitable remedies and (iii) insofar as indemnification and

contribution provisions may be limited by applicable law.

(d)

NoConflicts. The execution, deliveryandperformancebytheCompany of

this Agreement and the other Transaction Documents to which it is a party, the issuance

and sale of the Securities and the consummation by it of the transactions contemplated

hereby and thereby do not and will not (i) conflict with or violate any provision of the

Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other

organizationalorcharterdocuments,or(ii)conflictwith,orconstituteadefault(oranevent

that with notice or lapse of time or both would become a default) under, result in the

creationofanyLienuponanyofthepropertiesorassetsoftheCompanyoranySubsidiary,

orgivetoothersanyrightsoftermination,amendment,anti-dilutionorsimilaradjustments,

acceleration or cancellation (with or without notice, lapse of time or both) of, any

agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary

debt or otherwise) or other understanding to which the Company or any Subsidiary is a

party or by which any property or asset of the Company or any Subsidiary is bound or

affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of

any law, rule, regulation, order, judgment, injunction, decree or other restriction of any

courtorgovernmentalauthoritytowhichtheCompanyoraSubsidiaryissubject(including

federal and state securities laws and regulations), or by which any property or asset of the

CompanyoraSubsidiaryisboundoraffected;exceptinthecaseofeachofclauses(ii)and

(iii), such as could not have or reasonably be expected to result in a Material Adverse

Effect.

(e)

Filings, Consents and Approvals. The Company is not required to obtain

any consent, waiver, authorization or order of, give any notice to, or make any filing or

registration with, any court or other federal, state, local or other governmental authority or

other Person in connection with the execution, delivery and performance by the Company

of the Transaction Documents, other than: (i) the filings required pursuant to Section 4.4

of this Agreement, (ii) the filing with the Commission pursuant to the Registration Rights

Agreement, (iii) the notice and/or application(s) to each applicable Trading Market for the

issuance and sale of the Securities and the listing of the Shares and Warrant Shares for

trading thereon in the time and manner required thereby and (iv) the filing of Form D with

the Commission and such filings as are required to be made under applicable state

securities laws (collectively, the “Required Approvals”).

(f)

Issuance of the Securities. The Securities are duly authorized and, when

issued and paid for in accordance with the applicable Transaction Documents, will be duly

and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the

Company other than restrictions on transfer provided for in the Transaction Documents.

The Warrant Shares, when issued in accordance with the terms of the Transaction

Documents, will be validly issued, fully paid andnonassessable, free and clear of all Liens

imposedbytheCompanyotherthanrestrictionsontransferprovidedforintheTransaction

Documents. The Company has reserved from its duly authorized capital stock the

maximum number of shares of Common Stock issuable pursuant to this Agreement and

the Warrants.

(g)

Capitalization. The capitalization of the Company as of the date hereof is

as set forth on Schedule 3.1(g), which Schedule 3.1(g) shall also include the number of

shares of Common Stock owned beneficially, and of record, by Affiliates of the Company

asofthedatehereof. TheCompanyhasnotissuedanycapitalstocksinceitsmostrecently

filed periodic report under the Exchange Act, other than pursuant to the exercise of

employee stock options under the Company’s stock option plans, the issuance of shares of

Common Stock to employees pursuant to the Company’s employee stock purchase plans

and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding

asofthedateofthemostrecentlyfiledperiodicreportundertheExchangeAct. NoPerson

has any right of first refusal, preemptive right, right of participation, or any similar right to

participate in the transactions contemplated by the Transaction Documents. Except as a

result of thepurchaseand sale of theSecurities,there are no outstanding options, warrants,

scrip rights to subscribe to, calls or commitments of any character whatsoever relating to,

or securities, rights or obligations convertible into or exercisable or exchangeable for, or

giving any Person any right to subscribe for or acquire, any shares of Common Stock or

the capital stock of any Subsidiary, or contracts, commitments, understandings or

arrangements by which the Company or any Subsidiary is or may become bound to issue

additional shares of Common Stock or Common Stock Equivalents or capital stock of any

Subsidiary. The issuance and sale of the Securities will not obligate the Company or any

Subsidiary to issue shares of Common Stock or other securities to any Person (other than

the Purchasers). There are no outstanding securities or instruments of the Company or any

Subsidiarywithanyprovisionthatadjuststheexercise,conversion,exchangeorresetprice

of such security or instrument upon an issuance of securities by the Company or any

Subsidiary. There are no outstanding securities or instruments of the Company or any

Subsidiary that contain any redemption or similar provisions, and there are no contracts,

commitments, understandings or arrangements by which the Company or any Subsidiary

is or may become bound to redeem a security of the Company or such Subsidiary. The

Company does not have any stock appreciation rights or “phantom stock” plans or

agreements or any similar plan or agreement. All of the outstanding shares of capital stock

of the Company are duly authorized, validly issued, fully paid and nonassessable, have

been issued in compliance with all federal and state securities laws, and none of such

outstanding shares was issued in violation of any preemptive rights or similar rights to

subscribe for or purchase securities. No further approval or authorization of any

stockholder, the Board of Directors or others is required for the issuance and sale of the

Securities. There are no stockholders agreements, voting agreements or other similar

agreements with respect to the Company’s capital stock to which the Company is a party

or, to the knowledge of the Company, between or among any of the Company’s

stockholders.

(h)

SEC Reports; Financial Statements. The Company has filed all reports,

schedules, forms, statements and other documents required to be filed by the Company

undertheSecuritiesActandtheExchangeAct,includingpursuanttoSection13(a)or15(d)

thereof,forthetwoyearsprecedingthedatehereof(orsuchshorterperiodastheCompany

was required by law or regulation to file such material) (the foregoing materials, including

the exhibits thereto and documents incorporated by reference therein, being collectively

referredtohereinasthe“SECReports”)onatimelybasisorhasreceivedavalidextension

of such time of filing and has filed any such SEC Reports prior to the expiration of any

such extension. As of their respective dates, the SEC Reports complied in all material

respects with the requirements of the Securities Act and the Exchange Act, as applicable,

andnoneoftheSECReports,whenfiled,containedanyuntruestatement ofa material fact

oromittedtostateamaterialfactrequiredtobestatedthereinornecessaryinordertomake

the statements therein, in the light of the circumstances under which they were made, not

misleading. The Company has never been an issuer subject to Rule 144(i) under the

Securities Act. The financial statements of the Company included in the SEC Reports

comply in all material respects with applicable accounting requirements and the rules and

regulations of the Commission with respect thereto as in effect at the time of filing. Such

financial statements have been prepared in accordance with United States generally

accepted accounting principles applied on a consistent basis during the periods involved

(“GAAP”), except as may be otherwise specified in such financial statements or the notes

thereto and except that unaudited financial statements may not contain all footnotes

required by GAAP, and fairly present in all material respects the financial position of the

Company and its consolidated Subsidiaries as of and for the dates thereof and the results

of operations and cash flows for the periods then ended, subject, in the case of unaudited

statements, to normal, immaterial, year-end audit adjustments.

(i)

Material Changes; Undisclosed Events, Liabilities or Developments. Since

the date of the latest audited financial statements included within the SEC Reports, except

as set forth on Schedule 3.1(i), (i) there has been no event, occurrence or development that

has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the

Company has not incurred any liabilities (contingent or otherwise) other than (A) trade

payables and accrued expenses incurred in the ordinary course of business consistent with

past practice and (B) liabilities not required to be reflected in the Company’s financial

statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the

Company has not altered its method of accounting, (iv) the Company has not declared or

madeanydividendordistributionofcashorotherpropertytoitsstockholdersorpurchased,

redeemed or made any agreements to purchase or redeem any shares of its capital stock

and (v) the Company has not issued any equity securities to any officer, director or

Affiliate, except pursuant toexistingCompany stock option plans. The Company does not

havependingbeforetheCommissionanyrequestforconfidentialtreatmentofinformation.

Except for the issuance of the Securities contemplated by thisAgreement or as set forth on

Schedule 3.1(i), no event, liability, fact, circumstance, occurrence or development has

occurred or exists or is reasonably expected to occur or exist with respect to the Company

or its Subsidiaries or their respective businesses, prospects, properties, operations, assets

or financial condition that would be required to be disclosed by the Company under

applicable securities laws at the time this representation is made or deemed made that has

not been publicly disclosed at least 1 Trading Day prior to the date that this representation

is made.

(j)

Litigation. Except as set forth in Item 3 of the Company’s Annual Report

on Form 10-K or as set forth on Schedule 3.1(j) attached hereto, there is no action, suit,

inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of

the Company, threatened against or affecting the Company, any Subsidiary or any of their

respective properties before or by any court, arbitrator, governmental or administrative

agency or regulatory authority (federal, state, county, local or foreign) (collectively, an

“Action”) which (i) adversely affects or challenges the legality, validity or enforceability

of any of the Transaction Documents or the Securities or (ii) could, if there were an

unfavorabledecision,haveorreasonablybeexpectedtoresultinaMaterialAdverseEffect.

Neither the Company nor any Subsidiary, nor any director orofficer thereof, is or has been

thesubjectofanyActioninvolvingaclaimofviolationoforliability underfederal orstate

securities laws or a claim of breach of fiduciary duty. There has not been, and to the

knowledge of the Company, there is not pending or contemplated,any investigation by the

Commission involving the Company or any current or former director or officer of the

Company. The Commission has not issued any stop order or other order suspending the

effectiveness of any registration statement filed by the Company or any Subsidiary under

the Exchange Act or the Securities Act.

(k)

Labor Relations. No labor dispute exists or, to the knowledge of the

Company, is imminent with respect to any of the employees of the Company, which could

reasonably be expected to result in a Material Adverse Effect. None of the Company’s or

its Subsidiaries’ employees is a member of a union that relates to such employee’s

relationship with the Company or such Subsidiary, and neither the Company nor any of its

Subsidiaries is a party to a collective bargaining agreement, and the Company and its

Subsidiaries believe that their relationships with their employees are good. To the

knowledge of the Company, no executive officer of the Company or any Subsidiary is, or

is now expected to be, in violation of any material term of any employment contract,

confidentiality, disclosure or proprietary information agreement or non-competition

agreement, or any other contract or agreement or any restrictive covenant in favor of any

third party, and the continued employment of each such executive officer does not subject

the Company or any of its Subsidiaries to any liability with respect to any of the foregoing

matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state,

local and foreign laws and regulations relating to employment and employment practices,

terms and conditions of employment and wages and hours, except where the failure to be

in compliance could not, individually or in the aggregate, reasonably be expected to have

a Material Adverse Effect.

(l)

Compliance. Neither the Company nor any Subsidiary: (i) is in default

under or in violation of (and no event has occurred that has not been waived that, with

noticeorlapseoftimeorboth,wouldresultinadefaultbythe Company or any Subsidiary

under),norhastheCompanyoranySubsidiaryreceivednoticeofaclaimthatitisindefault

under or that it is in violation of, any indenture, loan or credit agreement or any other

agreement or instrument to which it is a party or by which it or any of its properties is

bound (whether or not such default or violation has been waived), (ii) is in violation of any

judgment, decree, or order of any court, arbitrator or other governmental authority or (iii)

is or has been in violation of any statute, rule, ordinance orregulation of any governmental

authority, including without limitation all foreign, federal, state and local laws relating to

taxes, environmental protection,occupational health and safety, product quality and safety

and employment and labor matters, except in each case as could not have or reasonably be

expected to result in a Material Adverse Effect.

(m)

Environmental Laws.

The Company and its Subsidiaries (i) are in

compliance with all federal, state, local and foreign laws relating to pollution or protection

of human health or the environment (including ambient air, surface water, groundwater,

landsurfaceorsubsurfacestrata),includinglawsrelatingtoemissions,discharges,releases

or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous

substances or wastes (collectively, “Hazardous Materials”) into the environment, or

otherwise relating to the manufacture, processing, distribution, use, treatment, storage,

disposal,transportorhandlingofHazardousMaterials,aswellasallauthorizations,codes,

decrees, demands, or demand letters, injunctions, judgments, licenses, notices or notice

letters, orders, permits, plans or regulations, issued, entered, promulgated or approved

thereunder (“Environmental Laws”); (ii) have received all permits licenses or other

approvals required of them under applicable Environmental Laws to conduct their

respective businesses; and (iii) are in compliance with all terms and conditions of any such

permit, license or approval where in each clause (i), (ii) and (iii), the failure to so comply

could be reasonably expected to have, individually or in the aggregate, a Material Adverse

Effect.

(n)

Regulatory Permits. The Company and the Subsidiaries possess all

certificates, authorizations and permits issued by the appropriate federal, state, local or

foreignregulatoryauthoritiesnecessarytoconducttheirrespectivebusinessesasdescribed

in the SEC Reports, except where the failure to possess such permits could not reasonably

be expected to result in a Material Adverse Effect (“Material Permits”), and neither the

Company nor any Subsidiary has received any notice of proceedings relating to the

revocation or modification of any Material Permit.

(o)

Title to Assets. The Company and the Subsidiaries have good and

marketable title in fee simple to all real property owned by them and good and marketable

titleinallpersonalpropertyownedbythemthatismaterialtothebusinessoftheCompany

and the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as do not

materially affect the value of such property and do not materially interfere with the use

made and proposed to be made of such property by the Company and the Subsidiaries and

(ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves

have been made therefor in accordance with GAAP and the payment of which is neither

delinquentnorsubjecttopenalties. Anyrealpropertyandfacilitiesheldunderleasebythe

Company and the Subsidiaries are held by them under valid, subsisting and enforceable

leases with which the Company and the Subsidiaries are in compliance.

(p)

Intellectual Property. The Company and the Subsidiaries have, or have

rights to use, all patents, patent applications, trademarks, trademark applications, service

marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual

property rights and similar rights necessary or required for use in connection with their

respective businesses as described in the SEC Reports and which the failure to so have

could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”).

None of, and neither the Company nor any Subsidiary has received a notice (written or

otherwise) that any of, the Intellectual Property Rights has expired, terminated or been

abandoned, or is expected to expire or terminate or be abandoned, within two (2) years

from the date of this Agreement. Neither the Company nor any Subsidiary has received,

since the date of the latest audited financial statements included within the SEC Reports, a

written notice of a claim or otherwise has any knowledge that the Intellectual Property

Rights violate or infringe upon the rights of any Person, except as could not have or

reasonably be expected to not have a Material Adverse Effect. To the knowledge of the

Company, all such Intellectual Property Rights are enforceable and there is no existing

infringement by another Person of any of the Intellectual Property Rights. The Company

and its Subsidiaries have taken reasonable security measures to protect the secrecy,

confidentiality and value of all of their intellectual properties, except where failure to do

so could not, individually or in the aggregate, reasonably be expected to have a Material

Adverse Effect.

(q)

Insurance. The Company and the Subsidiaries are insured by insurers of

recognizedfinancialresponsibilityagainstsuchlossesandrisksandinsuchamountsasare

prudent and customary in the businesses in which the Company and the Subsidiaries are

engaged, including, but not limited to, directors and officers insurance coverage at least

equaltotheaggregateSubscriptionAmount. NeithertheCompanynoranySubsidiaryhas

anyreasontobelievethatitwillnotbeabletorenewitsexistinginsurancecoverageasand

when such coverage expires or to obtain similar coverage from similar insurers as may be

necessary to continue its business without a significant increase in cost.

(r)

Transactions with Affiliates and Employees. Except as set forth on

Schedule 3.1(r), none of the officers or directors of the Company or any Subsidiary and, to

the knowledge of the Company, none of the employees of the Company or any Subsidiary

is presently a party to any transaction with the Company or any Subsidiary (other than for

services as employees, officers and directors), including any contract, agreement or other

arrangement providing for the furnishing of services to or by, providing for rental of real

or personal property to or from, providing for the borrowing of money from or lending of

moneytoorotherwiserequiringpaymentstoorfromanyofficer,directororsuchemployee

or,totheknowledgeoftheCompany,anyentityinwhichanyofficer, director, oranysuch

employee has a substantial interest or is an officer, director, trustee, stockholder, member

or partner, in each case in excess of $120,000 other than for (i) payment of salary or

consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf

oftheCompanyand(iii)otheremployeebenefits,includingstockoptionagreementsunder

any stock option plan of the Company.

(s)

Sarbanes-Oxley; Internal Accounting Controls. The Company and the

Subsidiaries are in compliance with any and all applicable requirements of the Sarbanes-

Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules

andregulationspromulgatedbytheCommissionthereunderthatareeffectiveasofthedate

hereof and as of the applicable Closing Date. The Company and the Subsidiaries maintain

a system of internal accounting controls sufficient to provide reasonable assurance that: (i)

transactions are executed in accordance with management’s general or specific

authorizations,(ii)transactionsarerecordedasnecessarytopermitpreparationoffinancial

statements in conformity with GAAP and to maintain asset accountability, (iii) access to

assetsispermittedonlyinaccordancewithmanagement’sgeneralorspecificauthorization,

and (iv) the recorded accountability for assets is compared with the existing assets at

reasonable intervals and appropriate action is taken with respect to any differences. The

Company and the Subsidiaries have established disclosure controls and procedures (as

defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the

Subsidiaries and designed such disclosure controls and procedur es to ensure that

informationrequiredtobedisclosedbytheCompanyinthereportsitfilesorsubmitsunder

theExchangeActisrecorded,processed,summarizedandreported,withinthetimeperiods

specified in the Commission’s rules and forms. The Company’s certifying officers have

evaluated the effectiveness of the disclosure controls and procedures of the Company and

the Subsidiaries as of the end of the period covered by the most recently filed periodic

reportundertheExchangeAct(suchdate,the“EvaluationDate”). TheCompanypresented

in its most recently filed periodic report under the Exchange Act the conclusions of the

certifying officers about the effectiveness of the disclosure controls and procedures based

on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been

no changes in the internal control over financial reporting (as such term is defined in the

Exchange Act) of the Company and its Subsidiaries that have materially affected, or is

reasonably likely to materially affect, the internal control over financial reporting of the

Company and its Subsidiaries.

(t)

Certain Fees. No brokerage or finder’s fees or commissions are or will be

payable by the Company or any Subsidiary to any broker, financial advisor or consultant,

finder, placement agent, investment banker, bank or other Person with respect to the

transactions contemplated by the Transaction Documents. The Purchasers shall have no

obligation with respect to any fees or with respect to any claims made by or on behalf of

other Persons for fees of a type contemplated in this Section that may be due in connection

with the transactions contemplated by the Transaction Documents.

(u)

Private Placement. Assuming the accuracy of the Purchasers’

representations and warranties set forth in Section 3.2, no registration under the Securities

Act is required for the offer and sale of the Securities by the Company to the Purchasers as

contemplated hereby. The issuance and sale of the Securities hereunder does not

contravene the rules and regulations of the Trading Market.

(v)

Investment Company. The Company is not, and is not an Affiliate of, and

immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an

“investment company” within the meaning of the Investment Company Act of 1940, as

amended. The Company shall conduct its business in a manner so that it will not become

an “investment company” subject to registration under the Investment Company Act of

1940, as amended.

(w)

Registration Rights. Other than each of the Purchasers, no Person has any

right to cause the Company or any Subsidiary to effect the registration under the Securities

Act of any securities of the Company or any Subsidiary that have not been satisfied either

through the filing of a resale registration statement or Rule 144 eligibility.

(x)

Listing and Maintenance Requirements. The Common Stock is registered

pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no

actiondesignedto,or whichtoits knowledge is likelyto have the effect of, terminatingthe

registration of the Common Stock under the Exchange Act nor has the Company received

any notification that the Commission is contemplating terminating such registration. The

Company has not, in the 12 months preceding the date hereof, received notice from any

Trading Market on which the Common Stock is or has been listed or quoted to the effect

thattheCompanyisnotincompliancewiththelistingormaintenancerequirementsofsuch

Trading Market. The Company is, and has no reason to believe that it will not in the

foreseeable future continue to be, in compliance with all such listing and maintenance

requirements. The Common Stock is currently eligible for electronic transfer through the

Depository Trust Company or another established clearing corporation and the Company

is current in payment of the fees to the Depository Trust Company (or such other

established clearing corporation) in connection with such electronic transfer.

(y)

ApplicationofTakeoverProtections. ExceptassetforthonSchedule3.1(y)

attached hereto, the Company and the Board of Directors have taken all necessary action,

if any, in order to render inapplicable any control share acquisition, business combination,

poison pill (including any distribution under a rights agreement) or other similar

anti-takeoverprovisionundertheCompany’scertificateofincorporation(orsimilarcharter

documents) or the laws of its state of incorporation that is or could become applicable to

the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or

exercising their rights under the Transaction Documents, including without limitation as a

result of the Company’s issuance of the Securities and the Purchasers’ ownership of the

Securities.

(z)

Disclosure. Except with respect to the material terms and conditions of the

transactions contemplated by the Transaction Documents, the Company confirms that

neither it nor any other Person acting on its behalf has provided any of the Purchasers or

their agents or counsel with any information that it believes constitutes or might constitute

material, non-public information.

The Company understands and confirms that the

Purchasers will rely on the foregoing representation in effecting transactions in securities

of the Company. All of the disclosure furnished by or on behalf of the Company to the

PurchasersregardingtheCompanyanditsSubsidiaries,theirrespectivebusinessesandthe

transactions contemplated hereby, including the Disclosure Schedules to this Agreement,

is true and correct and does not contain any untrue statement of a material fact or omit to

state any material fact necessary in order to make the statements made therein, in the light

of the circumstances under which they were made, not misleading. The press releases

disseminated by the Company during the twelve months preceding the date of this

Agreement taken as a whole do not contain any untrue statement of a material fact or omit

to state a material fact required to be stated therein or necessary in order to make the

statementstherein,inthelightofthecircumstancesunderwhichtheyweremadeandwhen

made, not misleading. The Company acknowledges and agrees that no Purchaser makes

orhasmadeanyrepresentationsorwarrantieswithrespecttothetransactionscontemplated

hereby other than those specifically set forth in Section 3.2 hereof.

(aa) No Integrated Offering. Assuming the accuracy of the Purchasers’

representations and warranties set forth in Section 3.2, neither the Company, nor any of its

Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any

offers or sales of any security or solicited any offers to buy any security, under

circumstances that would cause this offering of the Securities to be integrated with prior

offerings by the Company for purposes of (i) the Securities Act which would require the

registration of any such securities under the Securities Act, or (ii) any applicable

shareholder approval provisions of any Trading Market on which any of the securities of

the Company are listed or designated.

(bb) Solvency. Based on the consolidated financial condition of the Company

asoftheapplicableClosingDateandtherepaymentofcertaindebtassetforthonSchedule

3.1(bb) out of the proceeds of this offering at Closing, after giving effect to the receipt by

the Company of the proceeds from the sale of the Securities hereunder, (i) the fair saleable

value of the Company’s assets exceeds the amount that will be required to be paid on or in

respect of the Company’s existing debts and other liabilities (including known contingent

liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small

capitaltocarryonitsbusinessasnowconductedandasproposedtobeconductedincluding

its capital needs taking into account the particular capital requirements of the business

conducted by the Company, consolidated and projected capital requirements and capital

availability thereof, and (iii) the current cash flow of the Company, together with the

proceeds the Company would receive, were it to liquidate all of its assets, after taking into

account all anticipated uses of the cash, would be sufficient to pay all amounts on or in

respectofitsliabilitieswhensuchamountsarerequiredtobepaid. TheCompanydoesnot

intendtoincurdebtsbeyonditsabilitytopaysuchdebtsastheymature(takingintoaccount

the timing and amounts of cash to be payable on or in respect of its debt). The Company

has no knowledge of any facts or circumstances which lead it to believe that it will file for

reorganization or liquidation under the bankruptcy or reorganization laws of any

jurisdiction within one year from the applicable Closing Date. Schedule 3.1(bb) sets forth

as of the date hereof all outstanding secured and unsecured Indebtedness of the Company

or any Subsidiary, or for which the Company or any Subsidiary has commitments. For the

purposes of this Agreement, “Indebtedness” means (x) any liabilities for borrowed money

or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the

ordinary course of business), (y) all guaranties, endorsements and other contingent

obligations in respect of indebtedness of others, whether or not the same are or should be

reflected in the Company’s consolidated balance sheet (or the notes thereto), except

guaranties by endorsement of negotiable instruments for deposit or collection or similar

transactions in the ordinary course of business; and (z) the present value of any lease

payments in excess of $50,000 due under leases required to be capitalized in accordance

with GAAP. Neither the Company nor any Subsidiary is in default with respect to any

Indebtedness.

(cc) Tax Status. Except for matters that would not, individually or in the

aggregate, have or reasonably be expected to result in a Material Adverse Effect, the

Company and its Subsidiaries each (i) has made or filed all United States federal, state and

local income and all foreign income and franchise tax returns, reports and declarations

required by any jurisdiction to which it is subject, (ii) has paid all taxes and other

governmental assessments and charges that are material in amount, shown or determined

to be due on such returns, reports and declarations and (iii) has set aside on its books

provision reasonably adequate for the payment of all material taxes for periods subsequent

to the periods to which such returns, reports or declarations apply. There are no unpaid

taxes in any material amount claimed to be due by the taxing authority of any jurisdiction,

and the officers of the Company or of any Subsidiary know of nobasis for any such claim.

(dd) No General Solicitation. Neither the Company nor any Person acting on

behalf of the Company has offered or sold any of the Securities by any form of general

solicitation or general advertising. The Company has offered the Securities for sale only

to the Purchasers and certain other “accredited investors” within the meaning of Rule 501

under the Securities Act.

(ee) ForeignCorruptPractices. NeithertheCompanynoranySubsidiary,norto

the knowledge of the Company or any Subsidiary, any agent or other person acting on

behalf of the Company or any Subsidiary, has (i) directly or indirectly, used any funds for

unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign

or domestic political activity, (ii) made any unlawful payment to foreign or domestic

government officials or employees or to any foreign or domestic political parties or

campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the

Company or any Subsidiary (or made by any person acting on its behalf of which the

Company is aware) which is in violation of law or (iv) violatedin any material respect any

provision of FCPA.

(ff)

Accountants. The Company’s accounting firm is set forth on Schedule

3.1(ff) of the Disclosure Schedules. To the knowledge and belief of the Company, such

accounting firm (i) is a registered public accounting firm as required by the Exchange Act

and (ii) shall express its opinion with respect to the financial statements to be included in

the Company’s Annual Report for the fiscal year ending December 31, 2019.

(gg) No Disagreements with Accountants and Lawyers. There are no

disagreements of any kind presently existing, or reasonably anticipated by the Company to

arise, between the Company and the accountants and lawyers formerly or presently

employed by the Company and the Company is current with respect to any fees owed to

its accountants and lawyers which could affect the Company’s ability to performany of its

obligations under any of the Transaction Documents.

(hh)

Acknowledgment Regarding Purchasers’ Purchase of Securities. The

Company acknowledges and agrees that each of the Purchasers is acting solely in the

capacity of an arm’s length purchaser with respect to the Transaction Documents and the

transactions contemplated thereby. The Company further acknowledges that no Purchaser

is acting as a financial advisor or fiduciary of the Company (or in any similar capacity)

with respect to the Transaction Documents and the transactions contemplated thereby and

any advice given by any Purchaser or any of their respective representatives or agents in

connection with the Transaction Documents and the transactions contemplated thereby is

merely incidental to the Purchasers’ purchase of the Securities. The Company further

represents to each Purchaser that the Company’s decision to enter into this Agreement and

the other Transaction Documents has been based solely on the independent evaluation of

the transactions contemplated hereby by the Company and its representatives.

(ii)

Acknowledgment Regarding Purchaser’s Trading Activity. Anything in

this Agreement or elsewhere herein to the contrary notwithstanding (except for Sections

3.2[(g) and 4.14 hereof), it is understood and acknowledged by the Company that: (i) none

of the Purchasers has been asked by the Company to agree, nor has any Purchaser agreed,

to desist from purchasing or selling, securities of the Company, or “derivative” securities

based on securities issued by the Company or to hold the Securities for any specified term,

(ii) past or future open market or other transactions by any Purchaser before or after the

closing of this or future private placement transactions, may negatively impact the market

price of the Company’s publicly-traded securities, and (iii) each Purchaser shall not be

deemed to have any affiliation with or control over any arm’s length counter-party in any

“derivative”transaction. TheCompanyfurtherunderstandsandacknowledgesthat(y)one

ormorePurchasersmayengageinhedgingactivitiesatvarioustimesduringtheperiodthat

the Securities are outstanding, including, without limitation, during the periods that the

value of the Warrant Shares deliverable with respect to Securities are being determined,

and (z) such hedging activities (if any) could reduce the value of the existing stockholders'

equity interests in the Company at and after the time that the hedging activities are being

conducted. The Company acknowledges that such aforementioned hedging activities do

not constitute a breach of any of the Transaction Documents.

(jj)

Regulation M Compliance. The Company has not, and to its knowledge no

one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause

or to result in the stabilization or manipulation of the price of any security of the Company

to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid

any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed

to pay to any Person any compensation for soliciting another to purchase any other

securities of the Company, other than, in the case of clauses (ii) and (iii), compensation

paidtotheCompany’splacementagentinconnectionwiththeplacementoftheSecurities.

(kk) FDA. As to each product subject to the jurisdiction of the U.S. Food and

Drug Administration (“FDA”) under the Federal Food, Drug and Cosmetic Act, as

amended, and the regulations thereunder (“FDCA”) that is manufactured, packaged,

labeled,tested,distributed,sold,and/ormarketedbytheCompanyoranyofitsSubsidiaries

(each such product, a “Pharmaceutical Product”), such Pharmaceutical Product is being

manufactured,packaged,labeled,tested,distributed,soldand/ormarketedbytheCompany

in compliance with all applicable requirements under FDCA and similar laws, rules and

regulations relating to registration, investigational use, premarket clearance, licensure, or

application approval, good manufacturing practices, good laboratory practices, good

clinical practices, product listing, quotas, labeling, advertising, record keeping and filing

ofreports,exceptwherethefailuretobeincompliancewouldnothaveaMaterialAdverse

Effect. Thereisnopending,completedor,totheCompany'sknowledge,threatened,action

(including any lawsuit, arbitration, or legal or administrative or regulatory proceeding,

charge, complaint, or investigation) against the Company or any of its Subsidiaries, and

none of the Company or any of its Subsidiaries has received any notice, warning letter or

other communication from the FDA or any other governmental entity, which (i) contests

the premarket clearance, licensure, registration, or approval of, the uses of, the distribution

of, the manufacturing or packaging of, the testing of, the sale of, or the labeling and

promotion of any Pharmaceutical Product, (ii) withdraws its approval of, requests the

recall, suspension, or seizure of, or withdraws or orders the withdrawal of advertising or

salespromotionalmaterialsrelatingto,anyPharmaceuticalProduct,(iii)imposesaclinical

hold on any clinical investigation by the Company or any of its Subsidiaries, (iv) enjoins

production at any facility of the Company or any of its Subsidiaries, (v) enters or proposes

to enter into a consent decree of permanent injunction with the Company or any of its

Subsidiaries, or(vi) otherwiseallegesanyviolationofanylaws,rulesorregulationsbythe

Company or any of its Subsidiaries, and which, either individually or in the aggregate,

would have a Material Adverse Effect. The properties, business and operations of the

Company have been and are being conducted in all material respects in accordance with all

applicable laws, rules and regulations of the FDA. The Company has not been informed by

the FDAthat the FDA will prohibit the marketing, sale, licenseor use in the United States of

any product proposed to be developed, produced or marketed by the Company nor has the

FDA expressed any concern as to approving or clearing for marketing any product being

developedor proposedtobedevelopedbythe Company.

(ll)

Stock Option Plans. Each stock option granted by the Company under the

Company’s stock option plan was granted (i) in accordance with the terms of the

Company’sstockoptionplanand(ii)withanexercisepriceatleastequaltothefairmarket

value of the Common Stock on the date such stock option would be considered granted

under GAAP and applicable law. No stock option granted under the Company’s stock

option plan has been backdated. The Company has not knowingly granted, and there is no

and has been no Company policy or practice to knowingly grant, stock options prior to, or

otherwise knowingly coordinate the grant of stock options with, the release or other public

announcement of material information regarding the Company or its Subsidiaries or their

financial results or prospects.

(mm) OfficeofForeignAssetsControl. NeithertheCompanynoranySubsidiary

nor, to the Company's knowledge, any director, officer, agent, employee or affiliate of the

Company or any Subsidiary is currently subject to any U.S. sanctions administered by the

Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).

(nn) U.S. Real Property Holding Corporation. The Company is not and has

never been a U.S. real property holding corporation within the meaning of Section 897 of

the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon

Purchaser’s request.

(oo) Bank Holding Company Act. Neither the Company nor any of its

SubsidiariesorAffiliatesissubjecttotheBankHoldingCompanyActof1956,asamended

(the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System

(the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates

ownsorcontrols,directlyorindirectly,fivepercent(5%)ormoreoftheoutstandingshares

ofanyclassofvotingsecuritiesortwenty-fivepercent or moreofthetotalequityofabank

oranyentitythatissubjecttotheBHCAandtoregulationbytheFederalReserve. Neither

theCompanynoranyofitsSubsidiariesorAffiliatesexercisesacontrollinginfluenceover

the management or policies of a bank or any entity that is subject to the BHCA and to

regulation by the Federal Reserve.

(pp) Money Laundering. The operations of the Company and its Subsidiaries

are and have been conducted at all times in compliance with applicable financial record-

keeping and reporting requirements of the Currency and Foreign Transactions Reporting

Act of 1970, as amended, applicable money laundering statutes and applicable rules and

regulations thereunder (collectively, the “Money Laundering Laws”), and no Action or

Proceeding by or before any court or governmental agency, authority or body or any

arbitrator involving theCompany or any Subsidiary with respectto theMoney Laundering

Laws is pending or, to the knowledge of the Company or any Subsidiary, threatened.

(qq) NoDisqualificationEvents. WithrespecttotheSecuritiestobeofferedand

soldhereunderinrelianceonRule506undertheSecuritiesAct,noneoftheCompany,any

ofits predecessors,any affiliatedissuer, anydirector, executiveofficer,otherofficerofthe

Company participating in the offering hereunder, any beneficial owner of 20% or more of

the Company’s outstanding voting equity securities, calculated on the basis of voting

power, nor any promoter (as that term is defined in Rule 405 under the Securities Act)

connected with the Company in any capacity at the time of sale (each, an “Issuer Covered

Person” and, together, “Issuer Covered Persons”) is subject to any of the "Bad Actor"

disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a

“Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2)

or (d)(3). The Company has exercised reasonable care to determine whether any Issuer

Covered Person is subject to a Disqualification Event. The Company has complied, to the

extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to

the Purchasers a copy of any disclosures provided thereunder.

(rr)

Other Covered Persons. The Company is not aware of any person (other

than any Issuer Covered Person) that has been or will be paid (directly or indirectly)

remuneration for solicitation of purchasers in connection with the sale of any Securities.

(ss)

Notice of Disqualification Events. The Company will notify the Purchasers

in writing, prior to the applicable Closing Date of (i) any DisqualificationEvent relating to

any Issuer Covered Person and (ii) any event that would, with the passage of time, become

a Disqualification Event relating to any Issuer Covered Person.

3.2

Representations and Warranties of the Purchasers. Each Purchaser, for itself and

fornootherPurchaser,herebyrepresentsandwarrantsasofthedatehereofandasoftheapplicable

Closing Date to the Company as follows (unless as of a specific date therein, in which case they

shall be accurate as of such date):

(a)

Organization;Authority. SuchPurchaseriseitheranindividualoranentity

duly incorporated or formed, validly existing and in good standing under the laws of the

jurisdiction of its incorporation or formation with full right, corporate, partnership, limited

liability company or similar power and authority to enter into and to consummate the

transactions contemplated by the Transaction Documents and otherwise to carry out its

obligations hereunder and thereunder. The execution and delivery of the Transaction

Documents and performance by such Purchaser of the transactions contemplated by the

Transaction Documents have been duly authorized by all necessary corporate, partnership,

limited liability company or similar action, as applicable, on the part of such Purchaser.

Each Transaction Document to which it is a party has been duly executed by such

Purchaser,andwhendeliveredbysuchPurchaserinaccordancewiththetermshereof,will

constitute the valid and legally binding obligation of such Purchaser, enforceable against

it in accordance with its terms, except (i) as limited by general equitable principles and

applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general

application affecting enforcement of creditors’ rights generally, (ii) as limited by laws

relating to the availability of specific performance, injunctive relief or other equitable

remedies and (iii) insofar as indemnification and contribution provisions may be limited

by applicable law.

(b)

Own Account. Such Purchaser understands that the Securities are

“restricted securities” and have not been registered under the Securities Act or any

applicable state securities law and is acquiring the Securities as principal for its own

account and not with a view to or for distributing or reselling such Securities or any part

thereof in violation of the Securities Act or any applicable state securities law, has no

present intention of distributing any of such Securities in violation of the Securities Act or

any applicable state securities law and has no direct or indirect arrangement or

understandings with any other persons to distribute or regarding the distribution of such

Securities in violation of the Securities Act or any applicable state securities law (this

representation and warranty not limiting such Purchaser’s right to sell the Securities

pursuant to the Registration Statement or otherwise in compliance with applicable federal

and state securities laws). Such Purchaser is acquiring the Securities hereunder in the

ordinary course of its business.

(c)

Purchaser Status. At the time such Purchaser was offered the Securities, it

was, and as of the date hereof it is, and on each date on which it exercises any Warrants, it

willbeeither:(i)an“accreditedinvestor”asdefinedinRule501(a)(1),(a)(2),(a)(3),(a)(7)

or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule

144A(a) under the Securities Act.

(d)

Experience of Such Purchaser. Such Purchaser, either alone or together

withitsrepresentatives,hassuchknowledge,sophisticationandexperienceinbusinessand

financial matters so as to be capable of evaluating the merits and risks of the prospective

investment in the Securities, and has so evaluated the merits and risks of such investment.

Such Purchaser is able to bear the economic risk of an investment in the Securities and, at

the present time, is able to afford a complete loss of such investment.

(e)

GeneralSolicitation. SuchPurchaserisnot,tosuchPurchaser’sknowledge,

purchasing the Securities as a result of any advertisement, article, notice or other

communication regarding the Securities published in any newspaper, magazine or similar

mediaorbroadcastovertelevisionorradioorpresentedatanyseminaror,totheknowledge

of such Purchaser, any other general solicitation or general advertisement.

(f)

Access to Information. Such Purchaser acknowledges that it has had the

opportunity to review the Transaction Documents (including all exhibits and schedules

thereto) and the SEC Reports and has been afforded (i) the opportunity to ask such

questions as it has deemed necessary of, and to receive answers from, representatives of

the Company concerning the terms and conditions of the offering of the Securities and the

meritsandrisksofinvestingintheSecurities;(ii)accesstoinformationabouttheCompany

and its financial condition, results of operations, business, properties, management and

prospectssufficienttoenableittoevaluateitsinvestment;and(iii)theopportunitytoobtain

such additional information that the Company possesses or can acquire without

unreasonable effort or expense that is necessary to make an informed investment decision

with respect to the investment. Such Purchaser acknowledges and agrees that neither the

Placement Agent nor any Affiliate of the Placement Agent has provided such Purchaser

with any information or advice with respect to the Securities nor is such information or

advice necessary or desired. Neither the Placement Agent nor any Affiliate has made or

makes any representation as to the Company or the quality of the Securities and the

PlacementAgentandanyAffiliatemayhaveacquirednon-publicinformationwithrespect

to the Company which such Purchaser agrees need not be provided to it. In connection

with the issuance of the Securities to such Purchaser, neither the Placement Agent nor any

of its Affiliates has acted as a financial advisor or fiduciary to such Purchaser.

(g)

Certain Transactions and Confidentiality. Other than consummating the

transactionscontemplated hereunder,such Purchaser has not,norhasanyPersonactingon

behalf of or pursuant to any understanding with such Purchaser, directly or indirectly

executed any purchases or sales of the securities of the Company during the period

commencing as of the time that such Purchaser first received a term sheet (written or oral)

fromtheCompanyoranyotherPersonrepresentingtheCompanysettingforththematerial

terms of the transactions contemplated hereunder and ending immediately prior to the

executionhereof. Notwithstandingtheforegoing,inthecaseofaPurchaserthatisamulti-

managed investment vehicle whereby separate portfolio managers manage separate

portions of such Purchaser’s assets and the portfolio managers have no direct knowledge

of the investment decisions made by the portfolio managers managing other portions of

such Purchaser’s assets, the representation set forth above shall only apply with respect to

the portion of assets managed by the portfolio manager that made the investment decision

to purchase the Securities covered by this Agreement. Other than to otherPersons party to

this Agreement or to such Purchaser’s representatives, including, without limitation, its

officers,directors,partners,legalandotheradvisors,employees,agentsandAffiliates,such

Purchaser has maintained the confidentiality of all disclosures made to it in connection

with this transaction (including the existence and terms of this transaction).

The Company acknowledges and agrees that the representations contained in this Section

3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s

representations and warranties contained in this Agreement or any representations and warranties

containedinanyotherTransactionDocumentoranyotherdocumentorinstrumentexecutedand/or

deliveredinconnectionwiththisAgreementortheconsummationofthetransactionscontemplated

hereby.

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

4.1

Transfer Restrictions.

(a)

TheSecuritiesmayonlybedisposedofincompliancewithstateandfederal

securities laws. In connection with any transfer of Securities other than pursuant to an

effective registration statement or Rule 144, to the Company or to an Affiliate of a

Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company

mayrequirethetransferorthereoftoprovidetotheCompanyanopinionofcounselselected

by the transferor and reasonably acceptable to the Company, the form and substance of

which opinion shall be reasonably satisfactory to the Company, to the effect that such

transferdoesnotrequireregistrationofsuchtransferredSecuritiesundertheSecuritiesAct.

As a condition of transfer, any such transferee shall agree in writing to be bound by the

terms of this Agreement and the Registration Rights Agreement and shall have the rights

and obligations of a Purchaser under this Agreement and the Registration Rights

Agreement.

(b)

ThePurchasersagreetotheimprinting,solongasisrequiredbythisSection

4.1, of a legend on any of the Securities in the following form:

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND

EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE

IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE

SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND,

ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN

EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR

PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION

NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES

ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE

MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN

WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS

DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN

SECURED BY SUCH SECURITIES.

The Company acknowledges and agrees that a Purchaser may from time to time

pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a

security interest in some or all of the Securities to a financial institution that is an

“accredited investor” as defined in Rule 501(a) under the Securities Act and, if required

under the terms of such arrangement, such Purchaser may transfer pledged or secured

Securitiestothepledgeesorsecuredparties. Suchapledgeortransferwouldnotbesubject

to approval of the Company and no legal opinion of legal counsel of the pledgee, secured

party or pledgor shall be required in connection therewith. Further, no notice shall be

requiredofsuchpledge. AttheappropriatePurchaser’sexpense,theCompanywillexecute

anddeliversuchreasonabledocumentationasa pledgeeorsecured party ofSecuritiesmay

reasonably request in connection with a pledge or transfer of the Securities, including, if

theSecuritiesaresubjecttoregistrationpursuanttotheRegistrationRightsAgreement,the

preparation and filing of any required prospectus supplement under Rule 424(b)(3) under

the Securities Act or other applicable provision of the Securities Act to appropriately

amend the list of Selling Stockholders (as defined in the Registration Rights Agreement)

thereunder.

(c)

CertificatesevidencingtheSharesandWarrantSharesshallnotcontainany

legend (including the legend set forth in Section 4.1(b) hereof), (i) while a registration

statement (including the Registration Statement) covering the resale of such security is

effective under the Securities Act,(ii) following any sale ofsuch Shares or Warrant Shares

pursuant to Rule 144 (assuming cashless exercise of the Warrants), (iii) if such Shares or

Warrant Shares are eligible for sale under Rule 144 (assuming cashless exercise of the

Warrants), without the requirement for the Company to be in compliance with the current

public information required under Rule 144 as to such Shares and Warrant Shares and

without volume or manner-of-sale restrictions], or (iv) if such legend is not required under

applicable requirements of the Securities Act (including judicial interpretations and

pronouncements issued by the staff of the Commission). The Company shall cause its

counsel to issue a legal opinion to the Transfer Agent or the Purchaser promptly after the

Effective Date if required by the Transfer Agent to effect the removal of the legend

hereunder, or if requested by a Purchaser, respectively. If all or any portion of a Warrant

is exercised at a time when there is an effective registration statement to cover the resale

of the Warrant Shares, or if such Shares or Warrant Shares may be sold under Rule 144

and the Company is then in compliance with the current public information required under

Rule 144 (assuming cashless exercise of the Warrants), or if the Shares or Warrant Shares

may be sold under Rule 144 without the requirement for the Company to be in compliance

with the current public information required under Rule 144 as to such Shares or Warrant

Shares or if such legend is not otherwise required under applicable requirements of the

Securities Act (including judicial interpretations and pronouncements issued by the staff

of the Commission) then such Warrant Shares shall be issued free of all legends. The

Company agrees that following the Effective Date or at such time as such legend is no

longer required under this Section 4.1(c), it will, no later than the earlier of (i) two (2)

Trading Days and (ii) the number of Trading Days comprising the Standard Settlement

Period (as defined below) following the delivery by a Purchaser to the Company or the

Transfer Agent of a certificate representing Shares or Warrant Shares, as the case may be,

issued with a restrictive legend (such date, the “Legend Removal Date”), deliver or cause

to be delivered to such Purchaser a certificate representing such shares that is free from all

restrictive and other legends. The Company may not make any notation on its records or

give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in

this Section 4. Certificates for Securities subject to legend removal hereunder shall be

transmitted by the Transfer Agent to the Purchaser by crediting the account of the

Purchaser’s prime broker with the Depository Trust Company System as directed by such

Purchaser. As used herein, “Standard Settlement Period” means the standard settlement

period,expressedinanumberofTradingDays,ontheCompany’sprimaryTradingMarket

with respect to the Common Stock as in effect on the date of delivery of a certificate

representingSharesorWarrantsShares,asthecasemaybe,issuedwitharestrictivelegend.

(d)

InadditiontosuchPurchaser’sotheravailableremedies,theCompanyshall

pay to a Purchaser, in cash, (i) as partial liquidated damages and not as a penalty, for each

$1,000 of Shares or Warrant Shares (based on the VWAP of the Common Stock on the

date such Securities are submitted to the Transfer Agent) delivered for removal of the

restrictivelegendandsubjecttoSection4.1(c),$10perTradingDay(increasingto$20per

Trading Day five (5) Trading Days after such damages have begun to accrue) for each

Trading Day after the Legend Removal Date until such certificate is delivered without a

legend and (ii) if the Company fails to (a) issue and deliver (or cause to be delivered) to a

Purchaser by the Legend Removal Date a certificate representing the Securities so

delivered to the Company by such Purchaser that is free from all restrictive and other

legends and (b) if after the Legend Removal Date such Purchaser purchases (in an open

market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a

sale by such Purchaser of all or any portion of the number of shares of Common Stock, or

a sale of a number of shares of Common Stock equal to all or any portion of the number of

shares of Common Stock that such Purchaser anticipated receiving from the Company

without any restrictive legend, then, an amount equal to the excess of such Purchaser’s

total purchase price (including brokerage commissions and other out-of-pocket expenses,

if any) for the shares of Common Stock so purchased (including brokerage commissions

andotherout-of-pocketexpenses,ifany)(the“Buy-InPrice”)overtheproductof(A)such

number of Shares or Warrant Shares that the Company was required to deliver to such

Purchaser by the Legend Removal Date multiplied by (B) the lowest closing sale price of

the Common Stock on any Trading Day during the period commencing on the date of the

delivery by such Purchaser to the Company of the applicable Shares or Warrant Shares (as

the case may be) and ending on the date of such delivery and payment under this clause

(ii).

(e)

Each Purchaser, severally and not jointly with the other Purchasers, agrees

with the Company that such Purchaser will sell any Securities pursuant to either the

registration requirements of the Securities Act, including any applicable prospectus

delivery requirements, or an exemption therefrom, and that if Securities are sold pursuant

to a Registration Statement, they will be sold in compliance with the plan of distribution

set forth therein, and acknowledges that the removal of the restrictive legend from

certificates representing Securities as set forth in this Section 4.1 is predicated upon the

Company’s reliance upon this understanding.

4.2

Furnishing of Information; Public Information.

(a)

If the Common Stock is not registered under Section 12(b) or 12(g) of the

Exchange Act on the date hereof, the Company agrees to cause the Common Stock to be

registered under Section 12(g) of the Exchange Act on or before the 60^th calendar day

followingthedatehereof.Untiltheearliestofthetimethat(i)noPurchaserownsSecurities

or (ii) the Warrants have expired, the Company covenants to maintain the registration of

the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or

obtain extensions in respect thereof and file within the applicable grace period) all reports

required to be filed by the Company after the date hereof pursuant to the Exchange Act

eveniftheCompanyisnotthensubjecttothereportingrequirementsoftheExchangeAct.

(b)

At any time during the period commencing from the six (6) month

anniversaryofthedatehereofandendingatsuchtimethatalloftheSecuritiesmaybesold

without the requirement for the Company to be in compliance with Rule 144(c)(1) and

otherwise without restriction or limitation pursuant to Rule 144, if the Company (i) shall

fail for any reason to satisfy the current public information requirement under Rule 144(c)

or (ii) has ever been an issuer described in Rule 144(i)(1)(i) or becomes an issuer in the

future, and the Company shall fail to satisfy any condition set forth in Rule 144(i)(2) (a

“Public Information Failure”) then, in addition to such Purchaser’s other available

remedies, the Company shall pay toa Purchaser,in cash, aspartialliquidated damages and

not as a penalty, by reason of any such delay in or reduction of its ability to sell the

Securities, an amount in cash equal to two percent (2.0%) of the aggregate Subscription

Amount of such Purchaser’s Securities on the day of a Public Information Failure and on

everythirtieth(30^th)day(proratedforperiodstotalinglessthanthirtydays)thereafteruntil

the earlier of (a) the date such Public Information Failure is cured and (b) such time that

such public information is no longer required for the Purchasers to transfer the Shares and

Warrant Shares pursuantto Rule 144. The payments to whicha Purchasershall be entitled

pursuant to this Section 4.2(b) are referred to herein as “Public Information Failure

Payments.” Public Information Failure Payments shall be paid on the earlier of (i) the last

day of the calendar month during which such Public Information Failure Payments are

incurred and (ii) the third (3^rd) Business Day after the event or failure giving rise to the

Public Information Failure Payments is cured. In the event the Company fails to make

Public Information Failure Payments in a timely manner, such Public Information Failure

Payments shall bear interest at the rate of 1.5% per month (prorated for partial months)

untilpaidinfull.NothinghereinshalllimitsuchPurchaser’srighttopursueactualdamages

for the Public Information Failure, and such Purchaser shall have the right to pursue all

remediesavailabletoitatlaworinequityincluding,withoutlimitation,adecreeofspecific

performance and/or injunctive relief.

4.3

Integration. The Company shall not sell, offer for sale or solicit offers to buy or

otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that

would be integrated with the offer or sale of the Securities in a manner that would require the

registration under the Securities Act of the sale of the Securities or that would be integrated with

the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market

suchthatitwouldrequireshareholderapprovalpriortotheclosingofsuchothertransactionunless

shareholder approval is obtained before the closing of such subsequent transaction.

4.4

Securities Laws Disclosure; Publicity. The Company shall (a) by the Disclosure

Time, issue a press release disclosing the material terms of the transactions contemplated hereby,

and (b) file a Current Report on Form 8-K, including the Transaction Documents as exhibits

thereto, with the Commission within the time required by the Exchange Act. From and after the

issuanceofsuchpressrelease,theCompanyrepresentstothePurchasersthatitshallhavepublicly

disclosed all material, non-public information delivered to any of the Purchasers by the Company

or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in

connection with the transactions contemplated by the Transaction Documents. In addition,

effective upon the issuance of such press release, the Company acknowledges and agrees that any

andallconfidentialityorsimilarobligationsunderanyagreement,whetherwrittenororal,between

the Company, any of its Subsidiaries or any of their respective officers, directors, agents,

employees or Affiliates on the one hand, and anyof the Purchasers or anyoftheir Affiliates on the

other hand, shall terminate. The Company and each Purchaser shall consult with each other in

issuing any other press releases with respect to the transactions contemplated hereby, and neither

the Company nor any Purchaser shall issue any such press release nor otherwise make any such

public statement without the prior consent of the Company, with respect to any press release of

any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of

the Company, which consent shall not unreasonably be withheld or delayed, except if such

disclosure is required by law, in which case the disclosing party shall promptly provide the other

partywithpriornoticeofsuchpublicstatementorcommunication. Notwithstandingtheforegoing,

the Company shall not publicly disclose the name of any Purchaser, or include the name of any

Purchaser in any filing with the Commission or any regulatory agency orTrading Market, without

the prior written consent of such Purchaser, except (a) as required by federal securities law in

connection with (i) any registration statement contemplated by the Registration Rights Agreement

and (ii) the filing of final Transaction Documents with the Commission and (b) to the extent such

disclosure is required by law or Trading Market regulations, in which case the Company shall

provide the Purchasers with prior notice of such disclosure permitted under this clause (b).

4.5

Shareholder Rights Plan. No claim will be made or enforced by the Company or,

with the consent of the Company, any other Person, that any Purchaser is an “Acquiring Person”

under any control share acquisition, business combination, poison pill (including any distribution

under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter

adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any

such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or

under any other agreement between the Company and the Purchasers.

4.6

Non-Public Information. Except with respect to the material terms and conditions

ofthetransactionscontemplatedbytheTransactionDocuments,whichshallbedisclosedpursuant

to Section 4.4, the Company covenants and agrees that neither it, nor any other Person acting on

itsbehalfwillprovideanyPurchaseror its agentsor counselwith anyinformation thatconstitutes,

or the Company reasonably believes constitutes, material non-public information, unless prior

thereto such Purchaser shall have consented to the receipt of such information and agreed with the

Company to keep such information confidential. The Company understands and confirms that

each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of

the Company. To the extent that the Company delivers any material, non-public information to a

Purchaser without such Purchaser’s consent, the Company hereby covenants and agrees that such

Purchaser shall not have any duty of confidentiality to the Company, any of its Subsidiaries, or

any of their respective officers, directors, agents, employees or Affiliates, or a duty to the

Company, any of its Subsidiaries or any of their respective officers, directors, agents, employees

or Affiliates not to trade on the basis of, such material, non-public information, provided that the

Purchaser shall remain subject to applicable law. To the extent that any notice provided pursuant

to any Transaction Document constitutes, or contains, material, non-public information regarding

the Company or any Subsidiaries, the Company shall simultaneously file such notice with the

Commission pursuant to a Current Report on Form 8-K. The Company understands and confirms

thateachPurchasershallberelyingontheforegoingcovenantineffectingtransactionsinsecurities

of the Company.

4.7

Use of Proceeds. The Company shall use $__________ of the net proceeds from

the sale of the Securities hereunder for working capital purposes and the balance shall be used for

the satisfaction of the Company’s debt as set forth on Schedule 4.7.

4.8

Indemnification of Purchasers. Subject to the provisions of this Section 4.8, the

Company will indemnify and hold each Purchaser and its directors, officers, shareholders,

members, partners, employees and agents (and any other Persons with a functionally equivalent

role of a Person holding such titles notwithstanding a lack of such title or any other title), each

Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and

Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members,

partners or employees (and any other Persons with a functionally equivalent role of a Person

holdingsuchtitlesnotwithstandingalackofsuchtitleoranyothertitle)ofsuchcontrollingpersons

(each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims,

contingencies,damages,costsandexpenses,includingalljudgments,amountspaidinsettlements,

court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party

may suffer or incur as a result of or relating to (a) any breach of any of the representations,

warranties, covenants or agreements made by the Company in this Agreement or in the other

Transaction Documents or (b) any action instituted against the Purchaser Parties in any capacity,

or any of them or their respective Affiliates, by any stockholder of the Company who is not an

Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the

Transaction Documents (unless such action is solely based upon a material breach of such

Purchaser Party’s representations, warranties or covenants under the Transaction Documents or

any agreements or understandings such Purchaser Party may have with any such stockholder or

any violations by such Purchaser Party of state or federal securities laws or any conduct by such

Purchaser Party which is finally judicially determined to constitute fraud, gross negligence or

willfulmisconduct). IfanyactionshallbebroughtagainstanyPurchaserPartyinrespectofwhich

indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify

the Company in writing, and the Company shall have the right to assume the defense thereof with

counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party

shall have the right to employ separate counsel in any such action and participate in the defense

thereof, but the fees and expenses of such counsel*々怄뀄䀄〄倄耀〄䀅瀀Mthe expense of such Purchaser Party

except to the extent that (i) the employment thereof has been specifically authorized by the

Company in writing, (ii) the Company has failed after a reasonable period of time to assume such

defense andto employ counsel or (iii) in such action there is, in the reasonable opinion of counsel,

a material conflict on any material issue between the position of the Company and the position of

such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and

expenses of no more than one such separate counsel. The Company will not be liable to any

Purchaser Party underthis Agreement (y) for anysettlement bya Purchaser Party effected without

the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z)

to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any

Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made

by such Purchaser Party in this Agreement or in the other Transaction Documents. The

indemnification required by this Section 4.8 shall be made by periodic payments of the amount

thereof during the course of the investigation or defense, as and when bills are received or are

incurred. The indemnity agreements contained herein shall be inaddition to any causeof action or

similarrightofanyPurchaserPartyagainsttheCompanyorothersandanyliabilitiestheCompany

may be subject to pursuant to law.

4.9

Reservation of Common Stock. As of the date hereof, the Company has reserved

and the Company shall continue to reserve and keep available at all times, free of preemptive

rights, 300% of the number of shares of Common Stock for the purpose of enabling the Company

to issue Shares pursuant to this Agreement and Warrant Shares pursuant to any exercise of the

Warrants.

4.10 Listing of Common Stock. The Company hereby agrees to use best efforts to

maintain the listing or quotation of the Common Stock on the Trading Market on which it is

currently listed, and concurrently with the Closing, the Company shall apply to list or quote all of

the Shares and Warrant Shares on such Trading Market and promptly secure the listing of all of

the Shares and Warrant Shares on such Trading Market. The Company further agrees, if the

Company applies to have the Common Stock traded on any other Trading Market, it will then

include in such application all of the Shares and Warrant Shares, and will take such other action

as is necessary to cause all of the Shares and Warrant Shares to be listed or quoted on such other

Trading Market as promptly as possible. The Company will then take all action reasonably

necessary to continue the listing and trading of its Common Stock on a Trading Market and will

complyinallrespectswiththeCompany’sreporting,filingandotherobligationsunderthebylaws

or rules of the Trading Market. The Company agrees to maintain the eligibility of the Common

StockforelectronictransferthroughtheDepositoryTrustCompanyoranotherestablishedclearing

corporation, including, without limitation, by timely payment of fees to the Depository Trust

Company or such other established clearing corporation in connection with such electronic

transfer.

4.11 Participation in Future Financing.

(a)

From the date hereof until the date that is the 12-month anniversary of the

Effective Date, upon any issuance by the Company or any of its Subsidiaries of Common

StockorCommonStockEquivalentsforcashconsideration,Indebtednessoracombination

of units thereof (a “Subsequent Financing”), each Purchaser shall have the right to

participateinuptoanamountoftheSubsequentFinancingequalto20%oftheSubsequent

Financing (the “Participation Maximum”) on the same terms, conditions and price

provided for in the Subsequent Financing.

(b)

At least five (5) Trading Days prior to the closing of the Subsequent

Financing, the Company shall deliver to each Purchaser a written notice of its intention to

effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask such Purchaser

if it wants to review the details of such financing (such additional notice, a “Subsequent

Financing Notice”). Upon the request of a Purchaser, and only upon a request by such

Purchaser, for a Subsequent Financing Notice, the Company shall promptly, but no later

thanone(1)TradingDayaftersuchrequest,deliveraSubsequentFinancingNoticetosuch

Purchaser. The Subsequent Financing Notice shall describe in reasonable detail the

proposed terms of such Subsequent Financing, the amount of proceeds intended to be

raised thereunder and the Person or Persons through or with whom such Subsequent

Financing is proposed to be effected and shall include a term sheet or similar document

relating thereto as an attachment.

(c)

Any Purchaser desiring to participate in such Subsequent Financing must

provide written notice to the Company by not later than 5:30 p.m. (New York City time)

on the fifth (5^th) Trading Day after all of the Purchasers have received the Pre-Notice that

such Purchaser is willing to participate in the Subsequent Financing, the amount of such

Purchaser’s participation, and representing and warranting that such Purchaser has such

funds ready, willing, and available for investment on the terms set forth in the Subsequent

Financing Notice. If the Company receives no such notice from a Purchaser as of such

fifth (5^th) Trading Day, such Purchaser shall be deemed to have notified the Company that

it does not elect to participate.

(d)

If by 5:30 p.m. (New York City time) on the fifth (5^th) TradingDay after all

of the Purchasers have received the Pre-Notice, notifications by the Purchasers of their

willingness to participate in the Subsequent Financing (or to cause their designees to

participate) is, in the aggregate, less than the total amount of the Subsequent Financing,

then the Company may effect the remaining portion of such Subsequent Financing on the

terms and with the Persons set forth in the Subsequent Financing Notice.

(e)

If by 5:30 p.m. (New York City time) on the fifth (5^th) TradingDay after all

of the Purchasers have received the Pre-Notice, the Company receives responses to a

SubsequentFinancingNoticefromPurchasersseekingtopurchasemorethantheaggregate

amountoftheParticipationMaximum,eachsuchPurchasershallhavetherighttopurchase

its Pro Rata Portion (as defined below) of the Participation Maximum. “Pro Rata Portion”

means the ratio of (x) the Subscription Amount of Securities purchased on each Closing

Date by a Purchaser participating under this Section 4.11 and (y) the sum of the aggregate

Subscription Amounts of Securities purchased on such Closing Dates by all Purchasers

participating under this Section 4.11.

(f)

The Company must provide the Purchasers with a second Subsequent

Financing Notice, and the Purchasers will again have the right of participation set forth

above in this Section 4.11, if the Subsequent Financing subject to the initial Subsequent

Financing Notice is not consummated for any reason on the terms set forth in such

Subsequent Financing Notice within thirty (30) Trading Days after the date of the initial

Subsequent Financing Notice.

(g)

The Company and each Purchaser agree that if any Purchaser elects to

participate in the Subsequent Financing, the transaction documents related to the

Subsequent Financing shall not include any term or provision that, directly or indirectly,

will, or is intended to, exclude one or more of the Purchasers from participating in a

Subsequent Financing, including, but not limited to, provisions whereby such Purchaser

shallberequiredtoagreetoanyrestrictionsontradingastoanyoftheSecuritiespurchased

hereunder or be required to consent to any amendment to or termination of, or grant any

waiver, release or the like under or in connection with, this Agreement, without the prior

written consent of such Purchaser.

(h)

Notwithstanding anything to the contrary in this Section 4.11 and unless

otherwiseagreedtobysuchPurchaser,theCompanyshalleitherconfirminwritingtosuch

Purchaser that the transaction with respect to the Subsequent Financing has been

abandoned or shall publicly disclose its intention to issue the securities in the Subsequent

Financing, in either case in such a manner such that such Purchaser will not be in

possession of any material, non-public information, by the tenth (10^th) Business Day

following delivery of the Subsequent Financing Notice. If by such tenth (10^th) Business

Day,nopublicdisclosureregardingatransactionwithrespecttotheSubsequentFinancing

has been made, and no notice regarding the abandonment of such transaction has been

received by such Purchaser, such transaction shall be deemed to have been abandoned and

such Purchaser shall not be deemed to be in possession of any material, non-public

information with respect to the Company or any of its Subsidiaries.

(i)

Notwithstanding the foregoing, this Section 4.11 shall not apply in respect

of an Exempt Issuance and, as to the contemplated Maxim Offering, the Participation

Maximum shall be $1,000,000 rather than 20% of the aggregate offering amount.

4.12 Subsequent Equity Sales.

(a)

From the date hereof until 180 days after the Effective Date, neither the

CompanynoranySubsidiaryshallissue,enterintoanyagreementtoissueorannouncethe

issuance or proposed issuance of any shares of Common Stock or Common Stock

Equivalents.

(b)

From the date hereof until such time as no Purchaser holds any of the

Warrants, the Company shall be prohibited from effecting or entering intoan agreement to

effect any issuance by the Company or any of its Subsidiaries of Common Stock or

Common Stock Equivalents (or a combination of units thereof) involving a Variable Rate

Transaction or are registered or include registration rights. “Variable Rate Transaction”

means a transaction in which the Company (i) issues or sells any debt or equity securities

that are convertible into, exchangeable or exercisable for, or include the right to receive,

additional shares of Common Stock either (A) at a conversion price, exercise price or

exchange rate or other price that is based upon, and/or varies with, the trading prices of or

quotations for the shares of Common Stock at any time after the initial issuance of such

debtorequitysecuritiesor(B)withaconversion,exerciseorexchangepricethatissubject

to being reset at some future date after the initial issuance of such debt or equity security

orupontheoccurrenceofspecifiedorcontingenteventsdirectlyorindirectlyrelatedtothe

business of the Company or the market for the Common Stock or (ii) enters into, or effects

a transaction under, any agreement, including, but not limited to, an equity line of credit,

whereby the Company may issue securities at a future determined price. Any Purchaser

shall be entitled to obtain injunctive relief against the Company to preclude any such

issuance, which remedy shall be in addition to any right to collect damages.

(c)

Notwithstanding the foregoing, Section 4.12(a) shall not applyin respect of

(i) an Exempt Issuance, (ii) an issuance of Common Stock or Common Stock Equivalents

for a fixed price of at least $0.50 per share, subject to adjustment for reverse and forward

stock splits and the like or (iii) and underwritten fully marketed public offering of the

Company’s securities at a fixed price that raises gross proceeds of at least $10 million or

(iv)acontemplatedofferingofsecuritiesoftheCompanyatafixedpriceofupto$6million

with customary registration rights through Maxim Group LLC as sole placement agent

(“Maxim Offering”); provided, however, such placement must close and release funds

from escrow upon receipt of $1,000,000 into escrow or interest from investors.

Notwithstanding anything herein to the contrary, in no event shall any of the

aforementioned exceptions allow for a Variable Rate Transaction.

4.13 Equal Treatment of Purchasers. No consideration (including any modification of

any Transaction Document) shall beoffered or paid to any Person to amend or consentto a waiver

or modification of any provision of the Transaction Documents unless the same consideration is

also offered to all of the parties to the Transaction Documents. For clarification purposes, this

provision constitutes a separate right granted to each Purchaser by the Company and negotiated

separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class

andshallnotinanywaybeconstruedasthePurchasersactinginconcertorasagroupwithrespect

to the purchase, disposition or voting of Securities or otherwise.

4.14 Certain Transactions and Confidentiality. Each Purchaser, severally and not jointly

with the other Purchasers, covenants that neither it, nor any Affiliate acting on its behalf or

pursuant toany understanding with it will execute any purchases or sales of any of the Company’s

securities during the period commencing with the execution of this Agreement and ending at such

time that the transactions contemplated by this Agreement are first publicly announced pursuant

to the initial press release as described in Section 4.4. Each Purchaser, severally and not jointly

with the other Purchasers, covenants that until such time as the transactions contemplated by this

AgreementarepubliclydisclosedbytheCompanypursuanttotheinitialpressreleaseasdescribed

in Section 4.4, such Purchaser will maintain the confidentiality of the existence and terms of this

transaction and the information included in the Disclosure Schedules. Notwithstanding the

foregoingandnotwithstandinganythingcontainedinthisAgreementtothecontrary,theCompany

expressly acknowledges and agrees that (i) no Purchaser makes any representation, warranty or

covenant hereby that it will not engage in effecting transactions in any securities of the Company

after the time that the transactions contemplated by this Agreement are first publicly announced

pursuant to the initial press release as described in Section 4.4, (ii) no Purchaser shall be restricted

or prohibited from effecting any transactions in any securities of the Company in accordance with

applicable securities laws from and after the time that the transactions contemplated by this

AgreementarefirstpubliclyannouncedpursuanttotheinitialpressreleaseasdescribedinSection

4.4and(iii)noPurchasershallhaveanydutyofconfidentialityordutynottotradeinthesecurities

of the Company to the Company or its Subsidiaries after the issuance of the initial press release as

described in Section 4.4. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-

managed investment vehicle whereby separate portfolio managers manage separate portions of

such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment

decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the

covenant set forth above shall only apply with respect to the portion of assets managed by the

portfolio manager that made the investment decision to purchase the Securities covered by this

Agreement.

4.15 Form D; Blue Sky Filings. The Company agrees to timely file a Form D with

respect to the Securities as required under Regulation D and to provide a copy thereof, promptly

upon request of any Purchaser. The Company shall take such action as the Company shall

reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities

for, sale to the Purchasers at the Closing under applicable securities or “Blue Sky” laws of the

states of the United States, and shall provide evidence of such actions promptly upon request of

any Purchaser.

4.16 Capital Changes. Until the one-year anniversary of the Effective Date, the

Company shall not undertake a reverse or forward stock split or reclassification of the Common

Stock without the prior written consent of the Purchasers holding a majority in interest of the

Shares.

4.17 Acknowledgment of Dilution. The Company acknowledges that the issuance of

the Securities may result in dilution of the outstanding shares of Common Stock, which dilution

may be substantial under certain market conditions. The Company further acknowledges that its

obligations under the Transaction Documents, including, withoutlimitation, its obligation to issue

the Shares and Warrant Shares pursuant to the Transaction Documents, are unconditional and

absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the

effect of any such dilution or any claim the Company may have against any Purchaser and

regardless of the dilutive effect that such issuance may have on the ownership of the other

stockholders of the Company.

4.18 Most Favored Nation Provision. From the date hereof until the date when such

Purchaser no longer holds any of the Shares, if the Company effects a Subsequent Financing, each

Purchaser may elect, in its sole discretion, to exchange all or some of the Shares (but not the

Warrants)thenheldbysuchPurchaserforanysecuritiesorunitsissuedinaSubsequentFinancing

on a $1.00 for $1.00 basis based on the Subscription Amount paid for such Shares, along with any

accrued but unpaid interest, liquidated damages and other amounts owing thereon, and the

effective price at which such securities were sold in such Subsequent Financing. Any Purchaser

shall be entitled to obtain injunctive relief against the Company to enforce the provisions

hereunder, which remedy shall be in addition to any right to collect damages.

ARTICLE V.

MISCELLANEOUS

5.1

Termination. This Agreement may be terminated by any Purchaser, as to such

Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations

betweentheCompanyandtheotherPurchasers,bywrittennoticetotheotherparties,iftheClosing

has not been consummated on or before the fifth (5^th) Trading Day following the date hereof;

provided, however, thatno such termination will affect the right of any party to sue for any breach

by any other party (or parties).

5.2

Fees and Expenses. At the Closing, the Company has agreed to reimburse Ionic

Ventures LLC (“Ionic”) for its legal fees and expenses, otherwise pursuant to the term sheet

entered into between Ionic and the Company prior to the date hereof. Accordingly, in lieu of the

foregoing payments, the aggregate amount that Ionic is to pay for the Securities at the Closing

shall be reduced by such reimbursement amount in lieu thereof. Except as expressly set forth in

the Transaction Documents to the contrary, each party shall pay the fees and expenses of its

advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such

party incident to the negotiation, preparation, execution, delivery and performance of this

Agreement. The Company shall pay all Transfer Agent fees (including, without limitation, any

fees required for same-day processing of any instruction letter delivered by the Company and any

exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in

connection with the delivery of any Securities to the Purchasers.

5.3

Entire Agreement. The Transaction Documents, together with the exhibits and

schedules thereto, contain the entire understanding of the parties with respect to the subject matter

hereof and thereof and supersede all prior agreements and understandings, oral or written, with

respect to such matters, which the parties acknowledge have been merged into such documents,

exhibits and schedules.

5.4

Notices. Any and all notices or other communications or deliveries required or

permitted to be provided hereunder shall be in writing and shall be deemed given and effective on

the earliest of: (a) the date of transmission, if such notice or communication is delivered via

facsimile at the facsimile number or email attachment at the email address as set forth on the

signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day,

(b) the next Trading Day after the date of transmission, if such notice or communication is

deliveredviafacsimileatthefacsimilenumberoremailattachmentattheemailaddressassetforth

on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m.

(New York City time) on any Trading Day, (c) the second (2^nd) Trading Day following the date of

mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt

by the party to whom such notice is required to be given. The address for such notices and

communications shall be as set forth on the signature pages attached hereto. To the extent that any

notice provided pursuant to any Transaction Document constitutes, or contains material, non-

public information regarding the Company or any of the Subsidiaries, the Company shall

simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.

5.5

Amendments;Waivers. NoprovisionofthisAgreement may bewaived,modified,

supplemented or amended except in a written instrument signed, in the case of an amendment, by

the Company and Purchasers which purchased at least 67% in interest of the Shares based on the

initial Subscription Amounts hereunder or, in the case of a waiver, by the party against whom

enforcementofanysuchwaivedprovisionissought,providedthatifanyamendment,modification

or waiver disproportionately and adversely impacts a Purchaser (or group of Purchasers), the

consent of such disproportionately impacted Purchaser (or group of Purchasers) shall also be

required. No waiver of any default with respect to any provision, condition or requirement of this

Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent

default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or

omission of any party to exercise any right hereunder in any manner impair the exercise of any

such right. Any proposed amendment or waiver that disproportionately, materially and adversely

affectstherightsandobligationsofanyPurchaserrelativetothecomparablerightsandobligations

oftheotherPurchasersshallrequirethepriorwrittenconsentofsuchadverselyaffectedPurchaser.

AnyamendmenteffectedinaccordancewiththisSection5.5shallbebindinguponeachPurchaser

and holder of Securities and the Company.

5.6

Headings. The headings herein are for convenience only, do not constitute a part

of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

5.7

Successors and Assigns. This Agreement shall be binding upon and inure to the

benefit of the parties and their successors and permitted assigns. The Company may not assign

this Agreement or any rights or obligations hereunder without the prior written consent of each

Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this

Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided

that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the

provisions of the Transaction Documents that apply to the “Purchasers.”

5.8

No Third-Party Beneficiaries. [The Placement Agent shall be the third party

beneficiary of the representations and warranties of the Company in Section 3.1 and the

representations and warranties of the Purchasers in Section 3.2. This Agreement is intended for

thebenefitofthepartiesheretoandtheirrespectivesuccessorsandpermittedassignsandisnotfor

thebenefitof,nor mayanyprovisionhereofbeenforcedby,any other Person, exceptas otherwise

set forth in Section 4.8 [and this Section 5.8.

5.9

Governing Law. All questions concerning the construction, validity, enforcement

and interpretation of the Transaction Documents shall be governed by and construed and enforced

in accordance with the internal laws of the State of New York, without regard to the principles of

conflicts of law thereof. Each party agrees that all legal Proceedings concerning the

interpretations, enforcement and defense of the transactions contemplated by this Agreement and

any other Transaction Documents (whether brought against a party hereto or its respective

affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be

commenced exclusivelyin the stateand federal courts sittingin the City ofNewYork. Eachparty

hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in

the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in

connection herewith or with any transaction contemplated hereby or discussed herein (including

with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably

waives, and agrees not to assert in any Action or Proceeding, any claim that it is not personally

subject to the jurisdiction of any such court, that such Action or Proceeding is improper or is an

inconvenient venue for such Proceeding. Each party hereby irrevocably waives personal service

of process and consents to process being served in any such Action or Proceeding by mailing a

copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to

suchpartyattheaddressineffectfornoticestoitunderthisAgreementandagreesthatsuchservice

shallconstitutegoodandsufficientserviceofprocessandnoticethereof. Nothingcontainedherein

shall be deemed to limit in any way any right to serve process in any other manner permitted by

law. If any party shall commence an Action or Proceeding to enforce any provisions of the

TransactionDocuments,then,inadditiontotheobligationsoftheCompanyunderSection4.8,the

prevailing party in such Action or Proceeding shall be reimbursed by the non-prevailing party for

its reasonable attorneys’ fees and other costs and expenses incurred with the investigation,

preparation and prosecution of such Action or Proceeding.

5.10 Survival. The representations and warranties contained herein shall survive the

Closing and the delivery of the Securities.

5.11 Execution. This Agreement may be executed in two or more counterparts, all of

which when taken together shall be considered one and the same agreement and shall become

effective when counterparts have been signed by each party and delivered to each other party, it

beingunderstoodthatthepartiesneednotsignthesamecounterpart. Intheeventthatanysignature

is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such

signature shall create a valid and binding obligation of the party executing (or on whose behalf

such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature

page were an original thereof.

5.12 Severability. If any term, provision, covenant or restriction of this Agreement is

heldbyacourtofcompetentjurisdictiontobeinvalid,illegal,voidorunenforceable,theremainder

of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and

effectandshallinnowaybeaffected,impairedorinvalidated,andthepartiesheretoshallusetheir

commercially reasonable efforts to find and employ an alternative means to achieve the same or

substantially the same result as that contemplated by such term, provision, covenant or restriction.

It is hereby stipulated and declared to be the intention of theparties that they would have executed

theremainingterms,provisions,covenantsandrestrictionswithoutincludinganyofsuchthatmay

be hereafter declared invalid, illegal, void or unenforceable.

5.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary

contained in (and without limiting any similar provisions of) any of the other Transaction

Documents, whenever any Purchaser exercises a right, election, demand or option under a

TransactionDocumentandtheCompanydoesnottimelyperformitsrelatedobligationswithinthe

periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from

timetotimeuponwrittennoticetotheCompany,anyrelevantnotice,demandorelectioninwhole

or in part without prejudice to its future actions and rights; provided, however, that, in the case of

a rescission of an exercise of a Warrant, the applicable Purchaser shall be required to return any

sharesofCommonStocksubjecttoanysuchrescindedexercisenoticeconcurrentlywiththereturn

to such Purchaser of the aggregate exercise price paid to the Company for such shares and the

restoration of such Purchaser’s right to acquire such shares pursuant to such Purchaser’s Warrant

(including, issuance of a replacement warrant certificate evidencing such restored right).

5.14 Replacement of Securities. If any certificate or instrument evidencing any

Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in

exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu

of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence

reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new

certificate or instrument under such circumstances shall also pay any reasonable third-party costs

(including customary indemnity) associated with the issuance of such replacement Securities.

5.15 Remedies. In addition to being entitled to exercise all rights provided herein or

granted by law, including recovery of damages, each of the Purchasers and the Company will be

entitled to specific performance under the Transaction Documents. The parties agree that

monetary damages may not be adequate compensation for any loss incurred by reason of any

breach of obligations contained in the Transaction Documents and hereby agree to waive and not

to assert in any Action for specific performance of any such obligation the defense that a remedy

at law would be adequate.

5.16 Payment Set Aside. To the extent that the Company makes a payment or payments

to any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its

rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise

oranypartthereofaresubsequentlyinvalidated,declaredtobefraudulentorpreferential,setaside,

recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the

Company,atrustee,receiveroranyotherPersonunderanylaw(including,withoutlimitation,any

bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent

of any such restoration the obligation or part thereof originally intended to be satisfied shall be

revived and continued in full force and effect as if such payment had not been made or such

enforcement or setoff had not occurred.

5.17 IndependentNatureofPurchasers’ObligationsandRights. Theobligationsofeach

Purchaser under any Transaction Document are several and not joint with the obligations of any

other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-

performance of the obligations of any other Purchaser under any Transaction Document. Nothing

contained herein or in any other Transaction Document, and no action taken by any Purchaser

pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an

association, a joint venture or any other kind of entity, or create a presumption that the Purchasers

are in any way acting in concert or as a group with respect to such obligations or the transactions

contemplated by the Transaction Documents. Each Purchaser shall be entitled to independently

protectandenforceitsrightsincluding,withoutlimitation,therightsarising out ofthisAgreement

or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser

to be joined as an additional party in any Proceeding for such purpose. Each Purchaser has been

represented by its own separate legal counsel in its review and negotiation of the Transaction

Documents. For reasons of administrative convenience only, each Purchaser and its respective

counsel have chosen to communicate with the Company through EGS. EGS does not represent

any of the Purchasers and only represents Ionic. The Company has elected to provide all

Purchasers with the same terms and Transaction Documents for the convenience of the Company

and not because it was required or requested to do so by any of the Purchasers. It is expressly

understood and agreed that each provision contained in this Agreement and in each other

Transaction Document is between the Company and a Purchaser, solely, and not between the

Company and the Purchasers collectively and not between and among the Purchasers.

5.18 Liquidated Damages. The Company’s obligations to pay any partial liquidated

damages or other amounts owing under the Transaction Documents is a continuing obligation of

theCompanyandshallnotterminateuntilallunpaidpartialliquidateddamagesandotheramounts

have been paid notwithstanding the fact that the instrument or security pursuant to which such

partial liquidated damages or other amounts are due and payable shall have been canceled.

5.19 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of

any action or the expiration of any right required or granted herein shall not be a Business Day,

then such action may be taken or such right may be exercised on the next succeeding Business

Day.

5.20 Construction. The parties agree that each of them and/or their respective counsel

have reviewed and had an opportunity to revise the Transaction Documents and, therefore, the

normalruleofconstructiontotheeffectthatanyambiguitiesaretoberesolvedagainstthedrafting

partyshallnotbeemployedintheinterpretationoftheTransactionDocumentsoranyamendments

thereto. In addition, each and every reference to share prices and shares of Common Stock in any

Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock

dividends,stockcombinationsandothersimilartransactionsoftheCommonStockthatoccurafter

the date of this Agreement.

5.21 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING

IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY,

THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST

EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY,

UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER

TRIAL BY JURY.

(Signature Pages Follow)

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase

Agreement to be duly executed by their respective authorized signatories as of the date first

indicated above.

PARALLAX HEALTH SCIENCES, INC.

Address for Notice:

By: /s/ Paul R. Arena

Email: paul@parallaxcare.com

Name: Paul R. Arena

Fax: (888) 899-3966

Title: Chief Executive Officer

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

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

[PURCHASER SIGNATURE PAGES TO PRLX SECURITIES PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase

Agreement to be duly executed by their respective authorized signatories as of the date first

indicated above.

Name of Purchaser: ________________________________________________________

Signature of Authorized Signatory of Purchaser: __________________________________

Name of Authorized Signatory: ____________________________________________________

Title of Authorized Signatory: _____________________________________________________

Email Address of Authorized Signatory: ______________________________________________

Facsimile Number of Authorized Signatory: _____________________________________________

Address for Notice to Purchaser:

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