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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(D)
OF
THE SECURITIES EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported): June 27, 2025
Biofrontera
Inc.
(Exact
name of registrant as specified in its charter)
Delaware
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
120 Presidential Way Suite 330
Woburn Massachusetts
(Address of principal executive offices)
(Zip Code)
Registrant's
telephone number, including area code:
Not
Applicable
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities
registered pursuant to Section 12(b) of the Exchange Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, par value $0.001 per share
BFRI
The Nasdaq Stock Market LLC
Preferred Stock Purchase Rights
The Nasdaq Stock Market LLC
Warrants to purchase common stock
BFRIW
The Nasdaq Stock Market LLC
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (the “Exchange Act”) (§240.12b-2 of this chapter).
Emerging
growth company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
Strategic
Transaction with Biofrontera AG
On
June 30, 2025, Biofrontera Inc. (the “ Company ”) signed an agreement (the “ Agreement ”) with its
former parent company Biofrontera AG and its subsidiaries pursuant to which the Company acquired all rights in the United States (the
“ U.S. Rights ”) to Ameluz ® and RhodoLED ® (the “ Strategic Transaction ”).
Pursuant to the Agreement, the Company will now pay a royalty of 12% in years where Ameluz ® revenue in the United States
is less than $65.0 million and a royalty of 15% when Ameluz ® revenue in the United States.exceeds $65.0 million. The
royalty will replace the transfer pricing model under the Company's Second Amended and Restated License and Supply Agreement effective
as of February 13, 2024 by and among the Company, Biofrontera AG and Biofrontera AG's subsidiaries.
In
exchange for the U.S. Rights, in addition to the aforementioned royalty and an agreement to transfer all costs associated with
the U.S. business, Biofrontera AG will receive 3,109 shares of Series D Convertible Preferred Stock, par value $0.001 per share (the
“ Series D Preferred Stock ”), which represents a 10% post-money equity stake in the Company.
Pursuant
to the Certificate of Designation of Preferences, Rights and Limitations of the Series D Convertible Preferred Stock, which is filed
as Exhibit 3.1 to this Current Report on Form 8-K (the “ Series D Certificate of Designation ”), each share of Series
D Preferred Stock is, subject to certain limitations specified in the Series D Certification of Designation, immediately convertible
at the option of the holders thereof into shares of the Company's common stock, par value $0.001 per share (the “ Common
Stock ”) and has voting rights on an as-converted basis. However, holders of the Series D Preferred Stock may not exercise their
voting or conversion rights until the Company's stockholders provide the Stockholder Approval (as defined below) to approve the
issuance of the shares of Series D Preferred Stock and all Common Stock issuable upon conversion of such shares to the extent required
under the Nasdaq listing rules.
The
Series D Preferred Stock will not be registered under the Securities Act, and until so registered the securities may not be offered or
sold absent registration or availability of an applicable exemption from registration. There is no established public trading market
for the Series D Preferred Stock and the Company does not intend to list such securities on any national securities exchange or nationally
recognized trading system.
The
foregoing description of the Agreement between the Company and Biofrontera AG does not purport to be complete and is subject to, and
qualified in its entirety by reference to the text of the Agreement, a copy of which will be filed with the Company's Quarterly
Report on Form 10-Q for the period ending June 30, 2025.
Private
Placement of Series C Preferred Stock
On
June 27, 2025, as a condition precedent for the Strategic Transaction, the Company entered into a securities purchase agreement (the
“ Purchase Agreement ”) with certain accredited investors (the “ Investors ”), pursuant to which the
Company agreed to issue and sell, in a private placement (the “ Series C Preferred Offering ”), up to 11,000 shares
(the “ Series C Preferred Shares ”) of Series C Convertible Preferred Stock, par value $0.001 per share (the “ Series
C Preferred Stock ”) at a price of $1,000 per Series C Preferred Share for an aggregate offering price of $11.0 million. The
Series C Preferred Offering will consist of two tranches. The first tranche is expected to close on July 1, 2025 (the “ Initial
Closing ”), subject to the satisfaction of customary closing conditions. The gross proceeds from the Initial Closing are expected
to be $8.5 million, before deducting estimated offering expenses payable by the Company. The second tranche is expected to close after
the Company enters into definitive documentation to consummate the Strategic Transaction, which is expected to occur on or before September
30, 2025 (the “ Subsequent Closing ”). The gross proceeds from the Subsequent Closing are expected to be $2.5 million,
before deducting estimated offering expenses payable by the Company. The Company intends to use the net proceeds from the Series C Preferring
Offering to fund the acquisition and transfer costs associated with the Strategic Transaction and other general corporate purposes.
Pursuant
to the Certificate of Designation of Preferences, Rights and Limitations of the Series C Convertible Preferred Stock, which is filed
as Exhibit 3.2 to this Current Report on Form 8-K (the “ Series C Certificate of Designation ”), each share of Series
C Preferred Stock is, subject to the Cap prior to the Stockholder Approval (each as defined below) and certain other limitations specified
in the Series C Certification of Designation, immediately convertible at the option of the holders thereof into shares of the Common
Stock. Prior to the time when the Company's stockholders approve the issuance of all of the Series C Preferred Shares and the Series
D Preferred Shares and all Common Stock issuable upon conversion of such shares to the extent required under the Nasdaq listing rules
(collectively, the “ Stockholder Approval ”), the aggregate total number of shares of the Common Stock that may be issued
to all holders upon conversion of the Series C Preferred Stock shall not exceed the number of shares equal to 19.99% of the outstanding
Common Stock as of June 27, 2025 (the “ Cap ”).
Pursuant
to the Purchase Agreement, within 15 days of the date of the Initial Closing or such other period of time as may be agreed between the
Company and the Series C Preferred Investors (the “ Initial Filing Date ”), the Company shall file a registration statement
providing for the resale by the Investors of the Common Stock issuable upon conversion of the Series C Preferred Shares sold in the Initial
Closing and to use commercially reasonable efforts to have the registration statement declared effective within 60 days following the
Initial Filing Date (or, in the event that the staff of the Securities and Exchange Commission reviews and has written comments to such
registration statement, within the later of (a) 75 days following the Initial Filing Date and (b) 15 days following the last comment
received from the Staff of the Securities and Exchange Commission). In addition, as soon as practicable following the date of the Subsequent
Closing (the “ Subsequent Filing Date ”) (and in any event no later than three days thereafter), the Company shall file
a registration statement providing for the resale by the Investors of the Common Stock issuable upon conversion of the Series C Preferred
Shares sold in the Subsequent Closing and to use commercially reasonable efforts to have the registration statement declared effective
within 60 days following the Subsequent Filing Date (or, in the event that the staff of the Securities and Exchange Commission reviews
and has written comments to such registration statement, within the later of (a) 75 days following the Subsequent Filing Date and (b)
15 days following the last comment received from the Staff of the Securities and Exchange Commission). The Company further agreed to
take all steps necessary to keep such registration statements effective at all times until all Registrable Shares (as defined in the
Purchase Agreement) have been resold, or there remains no Registrable Shares. The Purchase Agreement also restricts the Company's
ability to file registration statements under the Securities Act of 1933, as amended (the “ Securities Act ”) prior
to the registration of all Registrable Shares for purposes other than to register the Common Stock issuable upon conversion of the Series
C Preferred Shares, subject to certain exceptions.
The
Purchase Agreement contains certain representations and warranties, covenants and indemnities customary for similar transactions. The
representations, warranties and covenants contained in the Purchase Agreement were made solely for the benefit of the parties to the
Purchase Agreement and may be subject to limitations agreed upon by the contracting parties.
The
securities issued in the Series C Preferred Offering have not been registered under the Securities Act, and until so registered the securities
may not be offered or sold absent registration or availability of an applicable exemption from registration. There is no established
public trading market for the Series C Preferred Stock and the Company does not intend to list such securities on any national securities
exchange or nationally recognized trading system.
The
form of the Purchase Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K. The foregoing summaries of the terms of the
Series C Certificate of Designation, the Series D Certificate of Designation, the Series C Preferred Stock and the Series D Preferred
Stock and the terms of the Purchase Agreement are subject to, and qualified in their entirety by, the full text of such documents, where
applicable, which are incorporated herein by reference.
No
statement in this report or the attached exhibits is an offer to sell or a solicitation of an offer to purchase the Company's securities,
and no offer, solicitation or sale will be made in any jurisdiction in which such offer, solicitation or sale is unlawful.
Item
3.02 Unregistered Sales of Equity Securities.
The
information contained above in Item 1.01 is hereby incorporated by reference into this Item 3.02. The Series C Preferred Stock and Series
D Preferred Stock are being issued and, upon conversion, the Common Stock issuable upon conversion of the Series C Preferred Stock and
Series D Preferred Stock will be issued without registration under the Securities Act, in reliance on the exemptions provided by Section
4(a)(2) of the Securities Act as a transaction not involving a public offering and/or Rule 506 promulgated under the Securities Act as
sales to accredited investors, and in reliance on similar exemptions under applicable state laws.
Item
3.03 Material Modification to Rights of Security Holders
The
information in response to Item 5.03 below is incorporated by reference in response to this Item 3.03.
Item
5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
The
information contained above in Item 1.01 is hereby incorporated by reference into this Item 5.03.
Series
C Preferred Stock
Pursuant
to the terms of the Purchase Agreement, on June 30, 2025, the Company filed the Series C Certificate of Designation with the Delaware
Secretary of State designating 11,000 shares of its authorized and unissued preferred stock as Series C Convertible Preferred Stock (the
“ Series C Preferred Stock ”), each with a stated value of $1,000 per share (the “ Original Share Price ”).
The Series C Certificate of Designation sets forth the rights, preferences and limitations of the shares of Series C Preferred Stock.
Terms not otherwise defined in this item shall have the meanings given in the Series C Certificate of Designation.
The
following is a summary of the terms of the Series C Preferred Stock:
Voting
Rights Subject to certain limitations described in the Series C Certificate of Designation, the Series C Preferred Stock is
voting stock. Holders of the Series C Preferred Stock are entitled to vote together with the Common Stock on an as-if-converted-to-Common-Stock
basis. Holders of Common Stock are entitled to one vote for each share of Common Stock held on all matters submitted to a vote of stockholders.
Accordingly, holders of Series C Preferred Stock will be entitled to one vote for each whole share of Common Stock into which their Series
C Preferred Stock is then-convertible on all matters submitted to a vote of stockholders, subject to certain limitations described in
the Series C Certificate of Designation, including as described below.
Unless
and until the Company has obtained the Stockholder Approval, the number of shares of Common Stock that shall be deemed issued upon conversion
of the Series C Preferred Stock (solely for purposes of calculating the number of aggregate votes that the holders of Series C Preferred
Stock are entitled to on an as-converted basis) shall not exceed the Cap. Notwithstanding the foregoing, the holders of the Series C
Preferred Stock are not entitled to vote together with the Common Stock on an as-if-converted-to-Common-Stock-basis with regard to the
Stockholder Approval.
Conversion Pursuant to the Series C Certificate of Designation, each share of Series C Preferred Stock is, subject to the Cap prior to the Stockholder
Approval and certain other limitations specified in the Series C Certification of Designation, immediately convertible at the option
of the holders thereof into the number of shares of the Company's Common Stock equal to the Original Share Price divided by 0.6249,
rounded down to the nearest whole share.
Liquidation .
Prior to the Stockholder Approval, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company,
including a change of control transaction, or Deemed Liquidation Event (any such event, a “ Liquidation ”) the holders
of shares of Series C Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Company available for distribution
to its stockholders, and in the event of a Deemed Liquidation Event, the holders of shares of Series C Preferred Stock then outstanding
shall be entitled to be paid out of the consideration payable to stockholders in such Deemed Liquidation Event or the other proceeds
available for distribution to stockholders, before any payment shall be made to the holders of any other shares of capital stock of the
Company by reason of their ownership thereof, an amount per share equal to the greater of (i) three times the Original Series C Per Share
Price, together with any dividends accrued but unpaid thereon (the “ Series C Liquidation Preference ”) or (ii) such
amount per share as would have been payable had all shares of Series C Preferred Stock been converted into Common Stock (without regard
to any limitations on conversion set forth in the Series C Certificate of Designation or otherwise) immediately prior to such Liquidation
(the amount payable pursuant to this sentence is hereinafter referred to as the “ Series C Liquidation Amount ”). If
upon any such Liquidation, the assets of the Company available for distribution to its stockholders shall be insufficient to pay the
holders of shares of Series C Preferred Stock the full Series C Liquidation Preference, the holders of shares of Series C Preferred Stock
shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would
otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares
were paid in full. After the payment in full of all Series C Liquidation Amount and all other amounts due to holders of shares of any
class of stock that is pari passu with the Series C Preferred Stock, the remaining assets of the Company available for distribution
to its stockholders or, in the case of a Deemed Liquidation Event, the consideration not payable to the holders of shares of Series C
Preferred Stock pursuant to the Series C Certificate of Designation shall be distributed among the holders of shares of Common Stock
and shares of any class of stock that is junior to the Series C Preferred Stock, pro rata based on the number of shares held by each
such holder (or in accordance with the provisions set forth in the applicable Certificate of Designation of Preferences, Rights and Limitations
for any class of stock that is junior to the Series D Preferred Stock).
Following
the Stockholder Approval, upon any Liquidation, the assets of the Company available for distribution to its stockholders shall be distributed
among the holders of the shares of Series C Preferred Stock, Series D Preferred Stock, any other classes of capital stock with liquidation
rights and Common Stock, pro rata based on the number of shares of Common Stock held by each such holder, treating for this purpose all
shares of Series C Preferred Stock as if they had been converted to Common Stock pursuant to the terms of the Series C Certificate of
Designation immediately prior to such Liquidation, without regard to any limitations on conversion set forth in the Series C Certificate
of Designation or otherwise.
The
foregoing summary of the terms of the Series C Preferred Stock is qualified in its entirety by reference to the text of the Series C
Certificate of Designation, which is filed hereto as Exhibit 3.1 and is incorporated herein by reference.
Series
D Preferred Stock
On
June 30, 2025, the Company filed the Series D Certificate of Designation with the Delaware Secretary of State designating 3,019 shares
of its authorized and unissued preferred stock as Series D Preferred Stock (the “ Series D Preferred Stock ”), each
with a stated value of $1,000 per share (the “ Conversion Value ”). The Series D Certificate of Designation sets forth
the rights, preferences and limitations of the shares of Series D Preferred Stock. Terms not otherwise defined in this item shall have
the meanings given in the Series D Certificate of Designation.
The
following is a summary of the terms of the Series D Preferred Stock:
Voting
Rights Subject to certain limitations described in the Series D Certificate of Designation, the Series D Preferred Stock is
voting stock. Holders of the Series D Preferred Stock are entitled to vote together with the Common Stock on an as-if-converted-to-Common-Stock
basis. Holders of Common Stock are entitled to one vote for each share of Common Stock held on all matters submitted to a vote of stockholders.
Accordingly, holders of Series D Preferred Stock will be entitled to one vote for each whole share of Common Stock into which their Series
D Preferred Stock is then-convertible on all matters submitted to a vote of stockholders, subject to certain limitations described in
the Series D Certificate of Designation. Notwithstanding the foregoing, holders of the Series D Preferred Stock are not entitled to vote
together with the Common Stock prior to the Stockholder Approval.
Conversion Pursuant to the Series D Certificate of Designation, each share of Series D Preferred Stock is, subject to certain limitations specified
in the Series D Certification of Designation, immediately convertible at the option of the holders thereof into the number of shares
of the Company's Common Stock equal to the Conversion Value divided by 0.6249, rounded down to the nearest whole share. Notwithstanding
the foregoing, holders of the Series D Preferred Stock are not entitled to convert their shares of Series D Preferred Stock into Common
Stock prior to the Stockholder Approval.
Liquidation .
Prior to the Stockholder Approval, in the event of any Liquidation the holders of shares of Series D Preferred Stock then outstanding
shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders, and in the event of a Deemed
Liquidation Event, the holders of shares of Series D Preferred Stock then outstanding shall be entitled to be paid out of the consideration
payable to stockholders in such Deemed Liquidation Event or the other proceeds available for distribution to stockholders, before any
payment shall be made to the holders of any other shares of capital stock of the Company by reason of their ownership thereof, an amount
per share equal to the greater of (i) three times the Conversion Value, together with any dividends accrued but unpaid thereon (the “ Series
D Liquidation Preference ”) or (ii) such amount per share as would have been payable had all shares of Series D Preferred Stock
been converted into Common Stock (without regard to any limitations on conversion set forth in the Series D Certificate of Designation
or otherwise) immediately prior to such Liquidation (the amount payable pursuant to this sentence is hereinafter referred to as the “ Series
D Liquidation Amount ”). If upon any such Liquidation, the assets of the Company available for distribution to its stockholders
shall be insufficient to pay the holders of shares of Series D Preferred Stock the full Series D Liquidation Preference, the holders
of shares of Series D Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion
to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts
payable on or with respect to such shares were paid in full. After the payment in full of all Series D Liquidation Amount and all other
amounts due to holders of shares of any class of stock that is pari passu with the Series D Preferred Stock, the remaining assets
of the Company available for distribution to its stockholders or, in the case of a Deemed Liquidation Event, the consideration not payable
to the holders of shares of Series D Preferred Stock pursuant to the Series D Certificate of Designation shall be distributed among the
holders of shares of Common Stock and shares of any class of stock that is junior to the Series D Preferred Stock, pro rata based on
the number of shares held by each such holder (or in accordance with the provisions set forth in the applicable Certificate of Designation
of Preferences, Rights and Limitations for any class of stock that is junior to the Series D Preferred Stock).
Following
the Stockholder Approval, upon any Liquidation, the assets of the Company available for distribution to its stockholders shall be distributed
among the holders of the shares of Series D Preferred Stock, Series C Preferred Stock, any other classes of capital stock with liquidation
rights and Common Stock, pro rata based on the number of shares of Common Stock held by each such holder, treating for this purpose all
shares of Series D Preferred Stock as if they had been converted to Common Stock pursuant to the terms of the Series D Certificate of
Designation immediately prior to such Liquidation, without regard to any limitations on conversion set forth in the Series D Certificate
of Designation or otherwise.
The
foregoing summary of the terms of the Series D Preferred Stock is qualified in its entirety by reference to the text of the Series D
Certificate of Designation, which is filed hereto as Exhibit 3.2 and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
Certificate of Designation of Preferences, Rights and Limitations of the Series D Convertible Preferred Stock
Certificate of Designation of Preferences, Rights and Limitations of the Series C Convertible Preferred Stock
Form of Securities Purchase Agreement, dated June 27, 2025, by and among Biofrontera Inc. and the purchasers named therein
Cover Page Interactive Data File (the cover page XBRL tags are embedded within the inline XBRL document)
Certain schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company undertakes to furnish supplement copies of any of the omitted schedules upon request by the SEC.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
July 1, 2025
Biofrontera Inc.
(Date)
(Registrant)
By:
/s/ E. Fred Leffler III
E. Fred Leffler III
Chief Financial Officer
Exhibit
3.1
Execution
Version
BIOFRONTERA
INC.
Certificate
of Designation of Preferences, Rights and Limitations
of
Series
D Convertible Preferred Stock
Pursuant
To Section 151 of the Delaware General Corporation Law
BIOFRONTERA
INC. , a Delaware corporation (the “ Corporation ”), in accordance with the provisions of Section 103 of the
Delaware General Corporation Law (the “ DGCL ”) does hereby certify that, in accordance with Sections 141(c)
and 151 of the DGCL, the following resolution was duly adopted by a committee of the Board of Directors of the Corporation acting upon
authority delegated by the Board of Directors, which resolution remains in full force and effect on the date hereof:
RESOLVED ,
pursuant to authority expressly set forth in the Certificate of Incorporation of the Corporation (the “ Certificate of Incorporation ”),
the issuance of a series of Preferred Stock designated as the Series D Convertible Preferred Stock, par value $0.001 per share, of the
Corporation is hereby authorized and the designation, number of shares, powers, preferences, rights, qualifications, limitations and
restrictions thereof (in addition to any provisions set forth in the Certificate of Incorporation that are applicable to the Preferred
Stock of all classes and series) are hereby fixed, and the Certificate of Designation of Preferences, Rights and Limitations of Series
D Convertible Preferred Stock is hereby approved as follows:
SERIES
D CONVERTIBLE PREFERRED STOCK
Section
1 Definitions . For the purposes hereof, the following terms shall have
the following meanings:
“ Affiliate ”
means any person or entity that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under
common control with a person or entity, as such terms are used in and construed under Rule 144 under the Securities Act of 1933. With
respect to a Holder, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as
such Holder will be deemed to be an Affiliate of such Holder.
“ Business
Day ” means any day except Saturday, Sunday, any day which shall be 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.
“ Commission ”
means the U.S. Securities and Exchange Commission.
“ Common
Stock ” means the Corporation's common stock, par value $0.001 per share, and stock of any other class of securities
into which such securities may hereafter be reclassified into.
“ Conversion
Date ” means the date on which the Series D Preferred Stock is converted pursuant to Section 6.
“ Conversion
Price ” means, for the Series D Preferred Stock, $0.6249 per share of Common Stock, subject to appropriate adjustment in
the event of any stock dividend, stock split, combination or other similar recapitalization.
“ Conversion
Shares ” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Series D Preferred Stock
in accordance with the terms hereof.
“ Conversion
Value ” means $1,000 per share.
“ Deemed
Liquidation Event ” means (a) a merger or consolidation in which (i) the Corporation is a constituent party or (ii) a subsidiary
of the Corporation is a constituent party and the Corporation issues shares of its capital stock pursuant to such merger or consolidation,
except any such merger or consolidation involving the Corporation or a subsidiary in which the shares of capital stock of the Corporation
outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares of
capital stock that represent, immediately following such merger or consolidation, at least a majority, by voting power, of the capital
stock of (1) the surviving or resulting corporation; or (2) if the surviving or resulting corporation is a wholly owned subsidiary of
another corporation immediately following such merger or consolidation, the parent corporation of such surviving or resulting corporation;
or (b) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions,
by the Corporation or any subsidiary of the Corporation of all or substantially all the assets of the Corporation and its subsidiaries
taken as a whole, or the sale or disposition (whether by merger, consolidation or otherwise) of one or more subsidiaries of the Corporation
if substantially all of the assets of the Corporation and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries,
except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Corporation.
“ DGCL ”
shall mean the Delaware General Corporation Law.
“ Exchange
Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“ Holder ”
means any holder of Series D Preferred Stock.
“ Issuance
Date ” means June 30, 2025.
“ Liquidation ”
has the meaning set forth in Section 5(a).
“ Liquidation
Preference ” has the meaning set forth in Section 5(a).
“ Maximum
Percentage ” has the meaning set forth in Section 6(d).
“ Person ”
means any individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“ Proposal ”
has the meaning set forth in Section 8.
“ Requisite
Holders ” means Holders of a majority of the then outstanding shares of Series D Preferred Stock, voting together as a single
class.
“ Series
D Liquidation Amount ” has the meaning set forth in Section 5(a).
“ Series
C Preferred Stock ” means the Series C Convertible Preferred Stock, par value $0.001 per share, of the Corporation, expected
to be created contemporaneously with the Series D Preferred Stock.
“ Series
D Preferred Stock ” has the meaning set forth in Section 2(a).
“ Stockholder
Approval ” means the date that the Corporation's stockholders first approve the Proposal.
“ Trading
Day ” means a day on which the Common Stock is traded for any period on a principal securities exchange or if the Common
Stock is not traded on a principal securities exchange, on a day that the Common Stock is traded on another securities market on which
the Common Stock is then being traded.
Section
2 Designation, Amount and Par Value; Assignment; Ranking
(a)
The distinctive serial designations of the series of Preferred Stock designated by this Certificate of Designation shall be designated
as the Corporation's Series D Convertible Preferred Stock (the “ Series D Preferred Stock ”). Each share
of Series D Preferred Stock shall be identical in all respects to every other share of Series D Preferred Stock. The number of shares
of Series D Preferred Stock so designated shall be 3,019. The Series D Preferred Stock shall have a par value of $0.001 per share.
(b)
The Corporation shall register shares of the Series D Preferred Stock, upon records to be maintained by the Corporation's transfer
agent for that purpose (the “ Series D Preferred Stock Register ”), in the name of the Holders thereof from time
to time. The Corporation and its transfer agent may deem and treat the registered Holder of shares of Series D Preferred Stock as the
absolute owner thereof for the purpose of any conversion thereof and for all other purposes. Shares of Series D Preferred Stock may be
issued solely in book-entry form. The Corporation or its transfer agent shall register the transfer of any shares of Series D Preferred
Stock in the Series D Preferred Stock Register, upon surrender of the shares of Series D Preferred Stock evidencing such shares to be
transferred, to the Corporation's transfer agent. Upon any such registration or transfer, a new or book-entry notation evidencing
the shares of Series D Preferred Stock so transferred shall be issued to the transferee and a new book-entry notation evidencing the
remaining portion of the shares not so transferred, if any, shall be issued to the transferring Holder, in each case, within two Business
Days. The provisions of this Certificate of Designation are intended to be for the benefit of all Holders from time to time and shall
be enforceable by any such Holder.
Series D Certificate of Designation
Page
(c)
Prior to the Stockholder Approval, the Series D Preferred Stock will be pari passu with the Series C Preferred Stock and senior
to the Common Stock and all other series or classes of stock and equity securities of the Corporation with respect to dividend rights
and rights on the distribution of assets on any voluntary or involuntary Liquidation, dissolution or winding up of the affairs of the
Corporation.
(d)
The Corporation shall not issue or authorize any class of stock with voting rights, liquidation rights or distribution rights senior
to the Series D Preferred Stock without the consent of the Holders of the Series D Preferred Stock.
Section
3 Dividends
(a)
At all times following the Issuance Date, while shares of Series D Preferred Stock are issued and outstanding, holders of Series D Preferred
Stock shall be entitled to receive, and the Corporation shall pay, dividends on shares of Series D Preferred Stock equal (on an as-if-converted-to-Common-Stock
basis as set forth in Section 6(a) and without regard to any limitations on conversion set forth herein or otherwise) to and in the same
form as dividends actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock.
If such dividends are not declared and paid in cash prior to the Stockholder Approval, the dividend amounts will be added to the aggregate
Liquidation Preference then outstanding of the Series D Preferred Stock (such dividends will accumulate and will be included in the payments
made upon redemption or Liquidation).
(b)
The Corporation shall not declare or pay any dividends on any class of stock (other than Common Stock) that is not also declared and
paid to the Series D Preferred Stock in a manner that treats the Series D Preferred Stock equally with the other classes of stock receiving
such dividend without the consent of the Holders of the Series D Preferred Stock.
Section
4 Voting Rights
Subject
to the last sentence of this Section 4 and Section 6(d), the Series D Preferred Stock is voting stock. Holders of the Series D Preferred
Stock are entitled to vote together with the Common Stock on an as-if-converted-to-Common-Stock basis as determined by dividing the aggregate
Conversion Value of all shares of Series D Preferred Stock held by each Holder, together with any dividends declared but unpaid thereon
with respect to such shares of Series D Preferred Stock, by the Conversion Price; provided that the voting power of each Holder (including
all shares of Common Stock held by such Holder) does not exceed the Maximum Percentage. Holders of Common Stock are entitled to one vote
for each share of Common Stock held on all matters submitted to a vote of stockholders. Accordingly, holders of Series D Preferred Stock
will be entitled to one vote for each whole share of Common Stock into which their Series D Preferred Stock is then-convertible, subject
to the Maximum Percentage, on all matters submitted to a vote of stockholders. Notwithstanding the foregoing, the Holders of Series D
Preferred Stock are not entitled to vote on any matters submitted to a vote of stockholders until the Stockholder Approval.
Section
5 Liquidation
(a)
Prior to the Stockholder Approval, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation,
including a change of control transaction, or Deemed Liquidation Event (any such event, a “ Liquidation ”) the holders
of shares of Series D Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders, and in the event of a Deemed Liquidation Event, the holders of shares of Series D Preferred Stock then
outstanding shall be entitled to be paid out of the consideration payable to stockholders in such Deemed Liquidation Event or the other
proceeds available for distribution to stockholders, before any payment shall be made to the holders of any other shares of capital stock
of the Corporation by reason of their ownership thereof, an amount per share equal to the greater of (i) three times (3X) the Conversion
Value, together with any dividends declared but unpaid thereon (the “ Liquidation Preference ”) or (ii) such amount
per share as would have been payable had all shares of Series D Preferred Stock been converted into Common Stock (without regard to any
limitations on conversion set forth herein or otherwise) pursuant to Section 6 immediately prior to such Liquidation (the amount payable
pursuant to this sentence is hereinafter referred to as the “ Series D Liquidation Amount ”). If upon any such Liquidation,
the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series
D Preferred Stock the full Liquidation Preference, the holders of shares of Series D Preferred Stock shall share ratably in any distribution
of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares
held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full. After the payment in
full of all Series D Liquidation Amount and all other amounts due to holders of shares of any class of stock that is pari passu with the Series D Preferred Stock, the remaining assets of the Corporation available for distribution to its stockholders or, in the
case of a Deemed Liquidation Event, the consideration not payable to the holders of shares of Series D Preferred Stock pursuant to the
paragraph above or to holders of any shares of any class of stock that is pari passu with the Series D Preferred Stock, shall
be distributed among the holders of shares of Common Stock and shares of any class of stock that is junior to the Series D Preferred
Stock, pro rata based on the number of shares held by each such holder (or in accordance with the provisions set forth in the applicable
Certificate of Designation of Preferences, Rights and Limitations for any class of stock that is junior to the Series D Preferred Stock).
Series D Certificate of Designation
Page
(b)
Following the Stockholder Approval, upon any Liquidation, the assets of the Corporation available for distribution to its stockholders
shall be distributed among the holders of the shares of Series D Preferred Stock, Series C Preferred Stock, any other classes of capital
stock with liquidation rights and Common Stock, pro rata based on the number of shares of Common Stock held by each such holder, treating
for this purpose all shares of Series D Preferred Stock as if they had been converted to Common Stock pursuant to the terms of this Certificate
of Designation immediately prior to such Liquidation, without regard to any limitations on conversion set forth herein or otherwise.
Section
6 Conversion
(a) Conversions at Option of Holder . Subject to the limitations set forth in Section 6(d), at the option of the Holder thereof, each
share of Series D Preferred Stock shall be convertible into the number of shares of Common Stock equal to the Conversion Value divided
by the Conversion Price, rounded down to the nearest whole share. For the avoidance of doubt, when a Holder converts more than one share
of Series D Preferred Stock at the same time pursuant to this Section 6, the number of shares issued for the block of shares taken together
as a whole will be rounded down to the nearest share.
(b) Mechanics of Conversion
(i) Notice of Conversion . Holders shall effect conversions by providing the Corporation and its transfer agent with the form of conversion
notice attached hereto as Annex A (“ Notice of Conversion ”), duly completed and executed. The Notice of Conversion
must specify the number of shares of Series D Preferred Stock to be converted, the number of shares of Series D Preferred Stock owned
prior to the conversion at issue, and the number of shares of Common Stock to be issued in respect of the conversion at issue. Provided
the Corporation's transfer agent is participating in the Depository Trust Company (“ DTC ”) Fast Automated
Securities Transfer program, the Notice of Conversion may specify, at the Holder's election, whether the applicable Conversion
Shares shall be credited to the DTC participant account nominated by the Holder through DTC's Deposit Withdrawal Agent Commission
system (a “ DWAC Delivery ”). The date on which such a conversion shall be deemed effective (an “ Optional
Conversion Date ”, or, a “ Conversion Date ”), shall be defined as the Trading Day that the Notice
of Conversion, completed and executed, is sent by facsimile or other electronic transmission to, and received during regular business
hours by, the Corporation and its transfer agent. The calculations set forth in the Notice of Conversion shall control in the absence
of manifest or mathematical error.
(ii) Delivery of Electronic Issuance Upon Conversion . On or before the earlier of (i) the first (1 st ) Trading Day and (ii)
the number of Trading Days comprising the Standard Settlement Period (as defined below), in each case, following the date on which the
Holder has delivered a Conversion Notice to the Corporation (the “ Share Delivery Date ”), the Corporation's
transfer agent shall (a) in the case of a DWAC Delivery (if so requested by the Holder), electronically transfer such Conversion Shares
by crediting the DTC participant account nominated by the Holder through DTC's DWAC system or (b) if the shares of Series D Preferred
stock being converted have been issued in global form eligible for book-entry settlement with DTC, the Conversion Shares shall be delivered
to the Holder through book-entry transfer through the facilities of DTC. If in the case of a DWAC Delivery, such shares are not electronically
delivered to or as directed by, the applicable Holder by the Share Delivery Date, the applicable Holder shall be entitled to elect to
rescind such Conversion Notice by written notice to the Corporation and its transfer agent at any time on or before its electronic receipt
of such shares, as applicable, in which event the Corporation's transfer agent shall promptly direct the return of any shares of
Common Stock delivered to the Holder through the DWAC system, representing the shares of Series D Preferred Stock unsuccessfully tendered
for conversion to the Corporation. As used herein, “Standard Settlement Period” means the standard settlement period, expressed
in a number of Trading Days on the Corporation's primary Trading Market with respect to the Common Stock as in effective on the
date of delivery of the Notice of Conversion.
Series D Certificate of Designation
Page
(iii) Obligation Absolute . Subject to Holder's right to rescind a Conversion Notice pursuant to Section 6(b)(ii) above, the Corporation's
obligation to issue and deliver the Conversion Shares upon conversion of Series D Preferred Stock in accordance with the terms hereof
are absolute and unconditional, irrespective of any action or inaction by a Holder to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by such Holder or any other Person of any obligation to the Corporation
or any violation or alleged violation of law by such Holder or any other Person, and irrespective of any other circumstance which might
otherwise limit such obligation of the Corporation to such Holder in connection with the issuance of such Conversion Shares. Nothing
herein shall limit a Holder's right to pursue actual damages for the Corporation's failure to deliver Conversion Shares within
the period specified herein and such Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or injunctive relief; provided that Holder shall not receive duplicate
damages for the Corporation's failure to deliver Conversion Shares within the period specified herein. The exercise of any such
rights shall not prohibit a Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.
(iv) Compensation for Buy-In on Failure to Timely Deliver Shares Upon Conversion . If the Corporation fails to effect a DWAC Delivery,
as applicable, by the Share Delivery Date pursuant to Section 6(b)(ii) (other than a failure caused by incorrect or incomplete information
provided by Holder to the Corporation), and if after such Share Delivery Date such Holder is required to or otherwise purchases (in an
open market transaction or otherwise), shares of Common Stock to deliver in satisfaction of a sale by such Holder of the Conversion Shares
which such Holder was entitled to receive upon the conversion relating to such Share Delivery Date (a “ Buy-In ”),
then the Corporation shall (A) pay in cash to such Holder (in addition to any other remedies available to or elected by such Holder)
the amount by which (x) such Holder's total purchase price (including any brokerage commissions) for the shares of Common Stock
so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that such Holder was entitled to receive from
the conversion at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed
(including any brokerage commissions) and (B) at the option of such Holder, either reissue (if surrendered) the shares of Series D Preferred
Stock, equal to the number of shares of Series D Preferred Stock, submitted for conversion or deliver to such Holder the number of shares
of Common Stock that would have been issued if the Corporation had timely complied with its delivery requirements under Section 6(b)(ii).
For example, if a Holder purchases shares of Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to
an attempted conversion of shares of Series D Preferred Stock with respect to which the actual sale price (including any brokerage commissions)
giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Corporation
shall be required to pay such Holder $1,000. The Holder shall provide the Corporation written notice, within three Trading Days after
the occurrence of a Buy-In, indicating the amounts payable to such Holder in respect of such Buy-In together with applicable confirmations
and other evidence reasonably requested by the Corporation. Nothing herein shall limit a Holder's right to pursue any other remedies
available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief
with respect to the Corporation's failure to timely deliver shares of Common Stock upon conversion of the shares of Series D Preferred
Stock as required pursuant to the terms hereof; provided, however, that the Holder shall not be entitled to both (i) require the reissuance
of the shares of Series D Preferred Stock submitted for conversion for which such conversion was not timely honored and (ii) receive
the number of shares of Common Stock that would have been issued if the Corporation had timely complied with its delivery requirements
under Section 6(b)(ii).
Series D Certificate of Designation
Page
(v) Reservation of Shares Issuable Upon Conversion . The Corporation covenants that it will at all times reserve and keep available
out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Series D Preferred
Stock, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holders of the Series D Preferred
Stock, not less than such aggregate number of shares of the Common Stock as shall be issuable (taking into account the adjustments of
Section 7) upon the conversion of all outstanding shares of Series D Preferred Stock. Such reservation shall comply without regard to
the provisions of Section 6(d). The Corporation covenants that all shares of Common Stock that shall be so issuable shall, upon issue,
be duly authorized, validly issued, fully paid, non-assessable and free and clear of all liens and other encumbrances.
(vi) Fractional Shares . No fractional shares or scrip representing fractional shares of Common Stock shall be issued upon the conversion
of the Series D Preferred Stock. All fractional shares shall be rounded down to the nearest whole shares of Common Stock.
(vii) Transfer Taxes . The issuance of book entry notations for Conversion Shares shall be made without charge to any Holder for any
documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such book entry notation, provided that
the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery
of any such book entry notation upon conversion in a name other than that of the registered Holder(s) of such shares of Series D Preferred
Stock and the Corporation shall not be required to issue or deliver such book entry notation unless or until the Person or Persons requesting
the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation
that such tax has been paid.
(c) Status as Stockholder . Upon each Conversion Date in which the Series D Preferred Stock converts into Common Stock: (i) the shares
of Series D Preferred Stock being converted shall be deemed converted into shares of Common Stock; and (ii) the Holder's rights
as a holder of such converted shares of Series D Preferred Stock shall cease and terminate, excepting only the right to receive book
entry notations for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such
Holder because of a failure by the Corporation to comply with the terms of this Certificate of Designation. In all cases, the holder
shall retain all of its rights and remedies for the Corporation's failure to convert Series D Preferred Stock.
(d) Limitations on Conversion . Prior to the Stockholder Approval, no share of Series D Preferred Stock shall be convertible into shares
of Common Stock. Except as set forth in this Section 6(d), a Holder shall not have the right to convert any portion of the Series D Preferred
Stock and such Series D Preferred Stock shall not be automatically converted, to the extent that after giving effect to such conversion,
such Holder (together with such Holder's Affiliates, any other Persons acting as a group together, and any other Persons whose
beneficial ownership of Common Stock would be aggregated with the Holder's and the other Attribution Parties for purposes of Section
13(d) of the Exchange Act (such Persons, “ Attribution Parties ”)) would beneficially own in excess of 19.99%
(the “ Maximum Percentage ”) of the shares of Common Stock outstanding immediately after giving effect to such
conversion. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such Person
and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of the Series D Preferred Stock with respect
to which the determination of such sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (i)
exercise of the remaining, unconverted portion of the Series D Preferred Stock beneficially owned by such Person and its Affiliates and
(ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation beneficially owned by
such Person and its Affiliates (including, without limitation, any convertible notes or convertible preferred stock or warrants) subject
to a limitation on conversion or exercise analogous to the limitation contained herein. For purposes of this Section 6(d), in determining
the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected
in (1) the Corporation's most recent Form 10-K, Proxy Statement, Form 10-Q, Current Report on Form 8-K or other public filing with
the Commission, as the case may be, (2) a more recent public announcement by the Corporation or (3) any other notice by the Corporation
or the Corporation's transfer agent setting forth the number of shares of Common Stock outstanding. For any reason at any time,
upon the written or oral request of a Holder, where such request indicates that it is being made pursuant to this Section 6(d), the Corporation
shall within one Trading Day confirm orally and in writing to such Holder the number of shares of Common Stock then outstanding. In any
case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities
of the Corporation, including the Series D Preferred Stock, by a Holder and its Affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. Upon delivery of a written notice to the Corporation, a Holder may from time to time
increase or decrease the Maximum Percentage to any other percentage (notwithstanding the foregoing, in no event in excess of 49.99%)
as specified in such notice; provided that (i) any such increase in the Maximum Percentage will not be effective until the 61st day after
such notice is delivered to the Corporation and (ii) any such increase or decrease will apply only to such Holder and other Attribution
Parties and not to any other holder of Series D Preferred Stock, provided, for the avoidance of doubt, that no such decrease shall affect
the validity of any prior conversion of the Series D Preferred Stock by Holder or any Attribution Party. For purposes of clarity, the
shares of Common Stock issuable pursuant to the terms hereof in excess of the Maximum Percentage shall not be deemed to be beneficially
owned by a Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the Exchange Act. No prior inability
to convert Series D Preferred Stock pursuant to this Section 6(d) shall have any effect on the applicability of the provisions of this
Section 6(d) with respect to any subsequent determination of whether Series D Preferred Stock may be converted. The provisions of this
paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 6(d) to the
extent necessary to correct this paragraph or any portion of this paragraph which may be defective or inconsistent with the intended
beneficial ownership limitation contained in this Section 6(d) or to make changes or supplements necessary or desirable to properly give
effect to such limitation. The limitations set forth in this Section 6(d) shall not apply to any conversions of the Series D Preferred
Stock that occur prior to and expressly in connection with a Deemed Liquidation Event.
Series D Certificate of Designation
Page
Section
7 Certain Adjustments
(a) Stock Dividends and Stock Splits . If the Corporation, at any time while any shares of Series D Preferred Stock are outstanding:
(i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock with respect to the then
outstanding shares of Common Stock; (ii) subdivides outstanding shares of Common Stock into a larger number of shares; or (iii) combines
(including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares, then the Conversion Price
shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares
of the Corporation) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event (excluding any treasury shares of the Corporation). Any adjustment made pursuant to this Section
7(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend
or distribution and shall become effective immediately after the effective date in the case of a subdivision or combination.
(b) Calculations . All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a share, as the
case may be. For purposes of this Section 7, the number of shares of Common Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Corporation) issued and outstanding.
(c) Notice to the Holders
(i) Adjustment to Conversion Price . Whenever the Conversion Price is adjusted pursuant to any provision of this Section 7, the Corporation
shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement
of the facts requiring such adjustment.
(ii) Other Notices . If (A) the Corporation shall declare a dividend (or any other distribution in whatever form) on the Common Stock,
(B) the Corporation shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Corporation shall
authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock
of any class or of any rights, (D) the approval of any stockholders of the Corporation shall be required in connection with any reclassification
of the Common Stock, any consolidation or merger to which the Corporation is a party, any sale or transfer of all or substantially all
of the assets of the Corporation, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash
or property, or (E) the Corporation shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs
of the Corporation, then, in each case, the Corporation shall cause to be filed at each office or agency maintained for the purpose of
conversion of the shares of Series D Preferred Stock, and shall cause to be delivered to each Holder at its last address as it shall
appear upon the stock books of the Corporation, at least ten calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption,
rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled
to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected
that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to
deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to
be specified in such notice; and provided further, that in each case, the Corporation will only be required to provide such information
to the Holder if such information shall have been made known to the public prior to or in conjunction with such notice being provided
to the Holder.
Series D Certificate of Designation
Page
Section
8 Stockholder Approval The Corporation shall, as soon as practicable
following the Issuance Date, but not more than 30 days thereafter, file a preliminary proxy statement for a vote of its stockholders
to approve the issuance of the Series D Preferred Stock and all Conversion Shares, and any other related transactions, to the extent
required under Nasdaq Listing Rule 5635 (collectively, the “ Proposal ”). The Corporation shall, as soon as practicable
following notification from the staff of the Commission that it has completed its review of the preliminary proxy statement or that it
will not review the preliminary proxy statement, file and mail a definitive proxy statement for the vote of its stockholders to approve
the Proposal. The Corporation covenants and agrees that its Board of Directors shall unanimously recommend that the Proposal be approved
by the Corporation's stockholders at all meetings in which such Proposal is considered and promptly file the necessary amendments
to the Corporation's certificate of incorporation after the Proposal is approved. If the Corporation's stockholders do not
approve the Proposal at the first meeting in which it is voted on by stockholders, the Corporation covenants and agrees that it will
submit the Proposal for approval of the Corporation's stockholders at least semi-annually until such approval is obtained.
Section
9. Miscellaneous
(a) Waiver; Amendment . Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designation shall
not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Certificate
of Designation or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon strict adherence to any term
of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or any other Holder)
of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of Designation. Any waiver
by the Corporation or a Holder must be in writing. Notwithstanding any provision in this Certificate of Designation to the contrary,
any provision contained herein and any right of the Holders of Series D Preferred Stock granted hereunder may be waived or amended, subject
to agreement with the Corporation as required, as to all shares of Series D Preferred Stock (and the Holders thereof) upon the written
consent of the Holders of a majority of the shares of Series D Preferred Stock then outstanding, unless a higher percentage is required
by the DGCL, in which case the written consent of the Holders of not less than such higher percentage shall be required. Any waiver or
amendment effected in accordance with this Section 9(a) shall be binding on all the Holders of Series D Preferred Stock, and all of such
party's successors and permitted assigns, whether or not any such party, successor or assignee entered into or approved such waiver
or amendment.
(b) Severability . If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance of this Certificate
of Designation shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain
applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder
violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the
maximum rate of interest permitted under applicable law.
(c) Next Business Day . Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day.
(d) Headings . The headings contained herein are for convenience only, do not constitute a part of this Certificate of Designation
and shall not be deemed to limit or affect any of the provisions hereof.
(e) Status of Converted Series D Preferred Stock . If any shares of Series D Preferred Stock shall be converted or redeemed by the
Corporation, such shares shall resume the status of authorized but unissued shares of preferred stock and shall no longer be designated
as Series D Preferred Stock.
Series D Certificate of Designation
Page
IN
WITNESS WHEREOF , Biofrontera Inc. has caused this Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible
Preferred Stock to be executed by its duly authorized officer this June 30, 2025.
/s/ E. Fred Leffler, III
By:
E. Fred Leffler, III
Title:
Chief Financial Officer
Series D Certificate of Designation
Page
ANNEX
A
NOTICE
OF CONVERSION
(To
Be Executed by the Registered Holder
in
Order to Convert Shares of Series D Preferred Stock)
The
undersigned Holder hereby irrevocably elects to convert the number of shares of Series D Preferred Stock indicated below, represented
by book-entry notation in the register of the transfer agent, into the number of shares of Common Stock of Biofrontera Inc., a Delaware
corporation (the “ Corporation ”), as of the date written below. If securities are to be issued in the name of
a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Capitalized terms utilized
but not defined herein shall have the meaning ascribed to such terms in that certain Certificate of Designation of Preferences, Rights
and Limitations of Series D Convertible Preferred Stock (the “ Certificate of Designation ”) filed by the Corporation
with the Delaware Secretary of State on June 30, 2025.
The
undersigned Holder's right to convert the shares of Series D Preferred Stock is subject to the Maximum Percentage described in
Section 6(d) of the Certificate of Designation. Therefore, the number of shares of Common Stock beneficially owned by the undersigned
Holder (together with any Attribution Parties), including the number of shares of Common Stock issuable upon conversion of the Series
D Preferred Stock subject to this Notice of Conversion, but excluding (i) exercise of the remaining, unconverted portion of the Series
D Preferred Stock beneficially owned by such Person and its Attribution Parties and (ii) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Corporation beneficially owned by such Person and its Attribution Parties (including,
without limitation, any convertible notes or convertible preferred stock or warrants) subject to a limitation on conversion or exercise
analogous to the limitation contained herein, is 19.99%.
Conversion
calculations:
Date to Effect Conversion:
Number of shares of Series D Preferred Stock owned prior to Conversion:
Number of shares of Series D Preferred Stock to be Converted:
Address for delivery of physical certificates:
OR
for DWAC Delivery:
DWAC Instructions:
Broker no:
Account no:
HOLDER:
By:
Name:
Title:
Date:
Series D Certificate of Designation
Page
Exhibit
3.2
Execution
Version
BIOFRONTERA
INC.
Certificate
of Designation of Preferences, Rights and Limitations
of
Series C Convertible Preferred Stock
Pursuant
To Section 151 of the Delaware General Corporation Law
BIOFRONTERA
INC. , a Delaware corporation (the “ Corporation ”), in accordance with the provisions of Section 103 of the
Delaware General Corporation Law (the “ DGCL ”) does hereby certify that, in accordance with Sections 141(c)
and 151 of the DGCL, the following resolution was duly adopted by a committee of the Board of Directors of the Corporation acting upon
authority delegated by the Board of Directors, which resolution remains in full force and effect on the date hereof:
RESOLVED ,
pursuant to authority expressly set forth in the Certificate of Incorporation of the Corporation (the “ Certificate of Incorporation ”),
the issuance of a series of Preferred Stock designated as the Series C Convertible Preferred Stock, par value $0.001 per share, of the
Corporation is hereby authorized and the designation, number of shares, powers, preferences, rights, qualifications, limitations and
restrictions thereof (in addition to any provisions set forth in the Certificate of Incorporation that are applicable to the Preferred
Stock of all classes and series) are hereby fixed, and the Certificate of Designation of Preferences, Rights and Limitations of Series
C Convertible Preferred Stock is hereby approved as follows:
SERIES
C CONVERTIBLE PREFERRED STOCK
Section
1 Definitions . For the purposes hereof, the following terms shall have
the following meanings:
“ Affiliate ”
means any person or entity that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under
common control with a person or entity, as such terms are used in and construed under Rule 144 under the Securities Act of 1933. With
respect to a Holder, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as
such Holder will be deemed to be an Affiliate of such Holder.
“ Business
Day ” means any day except Saturday, Sunday, any day which shall be 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.
“ Cap ”
means the number of shares equal to 19.99% of the Corporation's outstanding Common Stock as calculated in accordance with Rule
13d-3 of the Securities and Exchange Act of 1934, as amended, as of the Signing Date.
“ Commission ”
means the U.S. Securities and Exchange Commission.
“ Common
Stock ” means the Corporation's common stock, par value $0.001 per share, and stock of any other class of securities
into which such securities may hereafter be reclassified into.
“ Conversion
Date ” means the date on which the Series C Preferred Stock is converted pursuant to Section 6.
“ Conversion
Price ” means, for the Series C Preferred Stock, $0.6249 per share of Common Stock, subject to appropriate adjustment in
the event of any stock dividend, stock split, combination or other similar recapitalization.
“ Conversion
Shares ” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Series C Preferred Stock
in accordance with the terms hereof.
“ Deemed
Liquidation Event ” means (a) a merger or consolidation in which (i) the Corporation is a constituent party or (ii) a subsidiary
of the Corporation is a constituent party and the Corporation issues shares of its capital stock pursuant to such merger or consolidation,
except any such merger or consolidation involving the Corporation or a subsidiary in which the shares of capital stock of the Corporation
outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares of
capital stock that represent, immediately following such merger or consolidation, at least a majority, by voting power, of the capital
stock of (1) the surviving or resulting corporation; or (2) if the surviving or resulting corporation is a wholly owned subsidiary of
another corporation immediately following such merger or consolidation, the parent corporation of such surviving or resulting corporation;
or (b) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions,
by the Corporation or any subsidiary of the Corporation of all or substantially all the assets of the Corporation and its subsidiaries
taken as a whole, or the sale or disposition (whether by merger, consolidation or otherwise) of one or more subsidiaries of the Corporation
if substantially all of the assets of the Corporation and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries,
except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Corporation.
“ DGCL ”
shall mean the Delaware General Corporation Law.
“ Exchange
Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“ Holder ”
means any holder of Series C Preferred Stock.
“ Issuance
Date ” means June 30, 2025.
“ Liquidation ”
has the meaning set forth in Section 5(a).
“ Liquidation
Preference ” has the meaning set forth in Section 5(a).
“ Original
Per Share Price ” means $1,000 per share.
“ Maximum
Percentage ” has the meaning set forth in Section 6(d).
“ Person ”
means any individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“ Proposal ”
has the meaning set forth in Section 8.
“ Requisite
Holders ” means Holders of a majority of the then outstanding shares of Series C Preferred Stock, voting together as a single
class.
“ Securities
Purchase Agreement ” means the agreement for the initial purchase and sale of the Series C Preferred Stock.
“ Series
C Liquidation Amount ” has the meaning set forth in Section 5(a).
“ Series
C Preferred Stock ” has the meaning set forth in Section 2(a).
“ Series
D Preferred Stock ” means the Series D Convertible Preferred Stock, par value $0.001 per share, of the Corporation, expected
to be created contemporaneously with the Series C Preferred Stock.
“ Signing
Date ” means the effective date of the Securities Purchase Agreement.
“ Stockholder
Approval ” means the date that the Corporation's stockholders first approve the Proposal.
“ Trading
Day ” means a day on which the Common Stock is traded for any period on a principal securities exchange or if the Common
Stock is not traded on a principal securities exchange, on a day that the Common Stock is traded on another securities market on which
the Common Stock is then being traded.
Section
2 Designation, Amount and Par Value; Assignment; Ranking
(a) The distinctive serial designations of the series of Preferred Stock designated by this Certificate of Designation shall be
designated as the Corporation's Series C Convertible Preferred Stock (the “ Series C Preferred
Stock ”). Each share of Series C Preferred Stock shall be identical in all respects to every other share of Series C
Preferred Stock. The number of shares of Series C Preferred Stock so designated shall be 11,000. The Series C Preferred Stock shall
have a par value of $0.001 per share.
Series C Certificate of Designation
Page
(b) The Corporation shall register shares of the Series C Preferred Stock, upon records to be maintained by the
Corporation's transfer agent for that purpose (the “ Series C Preferred Stock Register ”), in the name
of the Holders thereof from time to time. The Corporation and its transfer agent may deem and treat the registered Holder of shares
of Series C Preferred Stock as the absolute owner thereof for the purpose of any conversion thereof and for all other purposes.
Shares of Series C Preferred Stock may be issued solely in book-entry form. The Corporation or its transfer agent shall register the
transfer of any shares of Series C Preferred Stock in the Series C Preferred Stock Register, upon surrender of the shares of Series
C Preferred Stock evidencing such shares to be transferred, to the Corporation's transfer agent. Upon any such registration or
transfer, a new or book-entry notation evidencing the shares of Series C Preferred Stock so transferred shall be issued to the
transferee and a new book-entry notation evidencing the remaining portion of the shares not so transferred, if any, shall be issued
to the transferring Holder, in each case, within two Business Days. The provisions of this Certificate of Designation are intended
to be for the benefit of all Holders from time to time and shall be enforceable by any such Holder.
(c) Prior to the Stockholder Approval, the Series C Preferred Stock will be pari passu with the Series D Preferred Stock
and senior to the Common Stock and all other series or classes of stock and equity securities of the Corporation with respect to
dividend rights and rights on the distribution of assets on any voluntary or involuntary Liquidation, dissolution or winding up of
the affairs of the Corporation.
(d)
The Corporation shall not issue or authorize any class of stock with voting rights, liquidation rights or distribution rights senior
to the Series C Preferred Stock without the consent of the Requisite Holders.
Section
3 Dividends
(a)
At all times following the Issuance Date, while shares of Series C Preferred Stock are issued and outstanding, holders of Series C
Preferred Stock shall be entitled to receive, and the Corporation shall pay, dividends on shares of Series C Preferred Stock equal
(on an as-if-converted-to-Common-Stock basis as set forth in Section 6(a) and without regard to any limitations on conversion set
forth herein or otherwise) to and in the same form as dividends actually paid on shares of the Common Stock when, as and if such
dividends are paid on shares of the Common Stock. If such dividends are not declared and paid in cash prior to the Stockholder
Approval, the dividend amounts will be added to the aggregate Liquidation Preference then outstanding of the Series C Preferred
Stock (such dividends will accumulate and will be included (i) in the payments made upon redemption or Liquidation and (ii) for
purposes of conversion and voting, but not to exceed the Cap).
Section
4 Voting Rights
(a)
Subject to the last sentence of this Section 4 and Section 6(d), the Series C Preferred Stock is voting stock. Holders of the Series
C Preferred Stock are entitled to vote together with the Common Stock on an as-if-converted-to-Common-Stock basis as determined by
dividing the aggregate Original Share Price of all shares of Series C Preferred Stock held by each Holder, together with any
dividends declared but unpaid thereon with respect to such shares of Series C Preferred Stock, by the Conversion Price; provided
that the voting power of each Holder (including all shares of Common Stock held by such Holder) does not exceed the Maximum
Percentage. Holders of Common Stock are entitled to one vote for each share of Common Stock held on all matters submitted to a vote
of stockholders. Accordingly, holders of Series C Preferred Stock will be entitled to one vote for each whole share of Common Stock
into which their Series C Preferred Stock is then-convertible, subject to the Maximum Percentage, on all matters submitted to a vote
of stockholders. Until the Stockholder Approval, the number of shares of Common Stock that shall be deemed issued upon conversion of
the Series C Preferred Stock (solely for purposes of calculating the number of aggregate votes the Holders of Series C Preferred
Stock are entitled to on an as-if-converted basis) shall not exceed the Cap, and if the number of shares is equal to the Cap, each
Holder of Series C Preferred Stock will be able to vote the number of shares equal to (i) the percentage of outstanding shares of
Series C Preferred Stock held by such Holder, multiplied by (ii) the Cap but in no event in excess of the Maximum Percentage.
Notwithstanding the foregoing, the Holders of Series C Preferred Stock are not entitled to vote together with the Common Stock on an
as-if-converted basis on the Proposal.
(b)
In addition to Section 4(a), prior to the Requisite Approval, neither the Corporation nor any of its subsidiaries shall take any of
the following actions without the consent of the Requisite Holders:
(i)
effect any Liquidation;
(ii)
materially change the nature of the Corporation's business;
(iii)
amend or waive any provisions of their respective organizational documents in a manner that adversely and disproportionately affects
the rights, preferences, privileges or power of the shares of Series C Preferred Stock;
Series C Certificate of Designation
Page
(iv)
issue additional equity securities senior to or pari passu with the Series C Preferred Stock (other than up to 3,100 Shares
of the Series D Preferred Stock to be issued contemporaneously with the initial issuance of the Series C Preferred
Stock);
(v)
pay any dividends on the Common Stock or any equity securities junior to or pari passu with the Series C Preferred Stock or
repurchase any equity interests (other than repurchases of, or dividends paid (including through payment-in-kind) on, the shares of
Series C Preferred Stock or dividends paid solely in the form of equity securities junior to the Series C Preferred
Stock);
(vi)
enter into or be a party to any transaction with any director, officer, or employee of the Corporation or any
“associate” (as defined in Rule 12b-2 promulgated under the Exchange Act) of any such person or entity except for
transactions made in the ordinary course of business and pursuant to reasonable requirements of the Corporation's business and
upon fair and reasonable terms that are approved by a majority of the Corporation's Board of Directors;
(vii)
sell, assign, license, pledge, or encumber material technology or intellectual property, other than licenses granted in the ordinary
course of business; or
(viii)
enter into any corporate strategic relationship involving the payment, contribution, or assignment by the Corporation or to the
Corporation of money or assets greater than $1,000,000.
Section
5 Liquidation
(a)
Prior to the Stockholder Approval, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, including a change of control transaction, or Deemed Liquidation Event (any such event, a
“ Liquidation ”) the holders of shares of Series C Preferred Stock then outstanding shall be entitled to be paid
out of the assets of the Corporation available for distribution to its stockholders, and in the event of a Deemed Liquidation Event,
the holders of shares of Series C Preferred Stock then outstanding shall be entitled to be paid out of the consideration payable to
stockholders in such Deemed Liquidation Event or the other proceeds available for distribution to stockholders, before any payment
shall be made to the holders of any other shares of capital stock of the Corporation by reason of their ownership thereof, an amount
per share equal to the greater of (i) three times (3X) the Original Per Share Price, together with any dividends declared but unpaid
thereon (the “ Liquidation Preference ”) or (ii) such amount per share as would have been payable had all shares of
Series C Preferred Stock been converted into Common Stock (without regard to any limitations on conversion set forth herein or
otherwise) pursuant to Section 6 immediately prior to such Liquidation (the amount payable pursuant to this sentence is hereinafter
referred to as the “ Series C Liquidation Amount ”). If upon any such Liquidation, the assets of the Corporation
available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series C Preferred Stock the
full Liquidation Preference, the holders of shares of Series C Preferred Stock shall share ratably in any distribution of the assets
available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by
them upon such distribution if all amounts payable on or with respect to such shares were paid in full. After the payment in full of
all Series C Liquidation Amount and all other amounts due to holders of shares of any class of stock that is pari passu with
the Series C Preferred Stock, the remaining assets of the Corporation available for distribution to its stockholders or, in the case
of a Deemed Liquidation Event, the consideration not payable to the holders of shares of Series C Preferred Stock pursuant to the
paragraph above or to holders of any shares of any class of stock that is pari passu with the Series C Preferred Stock, shall
be distributed among the holders of shares of Common Stock and shares of any class of stock that is junior to the Series C Preferred
Stock, pro rata based on the number of shares held by each such holder (or in accordance with the provisions set forth in the
applicable Certificate of Designation of Preferences, Rights and Limitations for any class of stock that is junior to the Series D
Preferred Stock).
(b)
Following the Stockholder Approval, upon any Liquidation, the assets of the Corporation available for distribution to its
stockholders shall be distributed among the holders of the shares of Series C Preferred Stock, Series D Preferred Stock, any other
classes of capital stock with liquidation rights and Common Stock, pro rata based on the number of shares of Common Stock held by
each such holder, treating for this purpose all shares of Series C Preferred Stock as if they had been converted to Common Stock
pursuant to the terms of this Certificate of Designation immediately prior to such Liquidation, without regard to any limitations on
conversion set forth herein or otherwise.
Series C Certificate of Designation
Page
Section
6 Conversion
(a) Conversions at Option of Holder . Subject to the limitations set forth in Section 6(d), at the option of the Holder
thereof, each share of Series C Preferred Stock shall be convertible into the number of shares of Common Stock equal to the Original
Share Price divided by the Conversion Price, rounded down to the nearest whole share. For the avoidance of doubt, when a Holder
converts more than one share of Series C Preferred Stock at the same time pursuant to this Section 6, the number of shares issued
for the block of shares taken together as a whole will be rounded down to the nearest share.
(b) Mechanics
of Conversion
(i) Notice
of Conversion . Holders shall effect conversions by providing the Corporation and its transfer agent with the form of conversion
notice attached hereto as Annex A (“ Notice of Conversion ”), duly completed and executed. The Notice of
Conversion must specify the number of shares of Series C Preferred Stock to be converted, the number of shares of Series C Preferred
Stock owned prior to the conversion at issue, and the number of shares of Common Stock to be issued in respect of the conversion at
issue. Provided the Corporation's transfer agent is participating in the Depository Trust Company
(“ DTC ”) Fast Automated Securities Transfer program, the Notice of Conversion may specify, at the
Holder's election, whether the applicable Conversion Shares shall be credited to the DTC participant account nominated by the
Holder through DTC's Deposit Withdrawal Agent Commission system (a “ DWAC Delivery ”). The date on
which such a conversion shall be deemed effective (an “ Optional Conversion Date ”, or a
“ Conversion Date ”), shall be defined as the Trading Day that the Notice of Conversion, completed and
executed, is sent by facsimile or other electronic transmission to, and received during regular business hours by, the Corporation
and its transfer agent. The calculations set forth in the Notice of Conversion shall control in the absence of manifest or
mathematical error.
(ii) Delivery
of Electronic Issuance Upon Conversion . On or before the earlier of (i) the first (1 st ) Trading Day and (ii) the
number of Trading Days comprising the Standard Settlement Period (as defined below), in each case, following the date on which the
Holder has delivered a Conversion Notice to the Corporation (the “ Share Delivery Date ”), the
Corporation's transfer agent shall (a) in the case of a DWAC Delivery (if so requested by the Holder), electronically transfer
such Conversion Shares by crediting the DTC participant account nominated by the Holder through DTC's DWAC system or (b) if
the shares of Series C Preferred stock being converted have been issued in global form eligible for book-entry settlement with DTC,
the Conversion Shares shall be delivered to the Holder through book-entry transfer through the facilities of DTC. If in the case of
a DWAC Delivery, such shares are not electronically delivered to or as directed by, the applicable Holder by the Share Delivery
Date, the applicable Holder shall be entitled to elect to rescind such Conversion Notice by written notice to the Corporation and
its transfer agent at any time on or before its electronic receipt of such shares, as applicable, in which event the
Corporation's transfer agent shall promptly direct the return of any shares of Common Stock delivered to the Holder through
the DWAC system, representing the shares of Series C Preferred Stock unsuccessfully tendered for conversion to the Corporation. As
used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days on
the Corporation's primary Trading Market with respect to the Common Stock as in effective on the date of delivery of the
Notice of Conversion.
(iii) Obligation
Absolute . Subject to Holder's right to rescind a Conversion Notice pursuant to Section 6(b)(ii) above, the
Corporation's obligation to issue and deliver the Conversion Shares upon conversion of Series C Preferred Stock in accordance
with the terms hereof are absolute and unconditional, irrespective of any action or inaction by a Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the
same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by such Holder or any
other Person of any obligation to the Corporation or any violation or alleged violation of law by such Holder or any other Person,
and irrespective of any other circumstance which might otherwise limit such obligation of the Corporation to such Holder in
connection with the issuance of such Conversion Shares. Nothing herein shall limit a Holder's right to pursue actual damages
for the Corporation's failure to deliver Conversion Shares within the period specified herein and such Holder shall have the
right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief; provided that Holder shall not receive duplicate damages for the Corporation's failure
to deliver Conversion Shares within the period specified herein. The exercise of any such rights shall not prohibit a Holder from
seeking to enforce damages pursuant to any other Section hereof or under applicable law.
Series C Certificate of Designation
Page
(iv) Compensation
for Buy-In on Failure to Timely Deliver Shares Upon Conversion . If the Corporation fails to effect a DWAC Delivery, as
applicable, by the Share Delivery Date pursuant to Section 6(b)(ii) (other than a failure caused by incorrect or incomplete
information provided by Holder to the Corporation), and if after such Share Delivery Date such Holder is required to or otherwise
purchases (in an open market transaction or otherwise), shares of Common Stock to deliver in satisfaction of a sale by such Holder
of the Conversion Shares which such Holder was entitled to receive upon the conversion relating to such Share Delivery Date (a
“ Buy-In ”), then the Corporation shall (A) pay in cash to such Holder (in addition to any other remedies
available to or elected by such Holder) the amount by which (x) such Holder's total purchase price (including any brokerage
commissions) for the shares of Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common
Stock that such Holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale price at which the
sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B) at the option of such
Holder, either reissue (if surrendered) the shares of Series C Preferred Stock, equal to the number of shares of Series C Preferred
Stock, submitted for conversion or deliver to such Holder the number of shares of Common Stock that would have been issued if the
Corporation had timely complied with its delivery requirements under Section 6(b)(ii). For example, if a Holder purchases shares of
Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of shares of Series
C Preferred Stock with respect to which the actual sale price (including any brokerage commissions) giving rise to such purchase
obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Corporation shall be required to pay
such Holder $1,000. The Holder shall provide the Corporation written notice, within three Trading Days after the occurrence of a
Buy-In, indicating the amounts payable to such Holder in respect of such Buy-In together with applicable confirmations and other
evidence reasonably requested by the Corporation. Nothing herein shall limit a Holder's right to pursue any other remedies
available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive
relief with respect to the Corporation's failure to timely deliver shares of Common Stock upon conversion of the shares of
Series C Preferred Stock as required pursuant to the terms hereof; provided, however, that the Holder shall not be entitled to both
(i) require the reissuance of the shares of Series C Preferred Stock submitted for conversion for which such conversion was not
timely honored and (ii) receive the number of shares of Common Stock that would have been issued if the Corporation had timely
complied with its delivery requirements under Section 6(b)(ii).
(v) Reservation
of Shares Issuable Upon Conversion . The Corporation covenants that it will at all times reserve and keep available out of its
authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Series C Preferred Stock,
free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holders of the Series C
Preferred Stock, not less than such aggregate number of shares of the Common Stock as shall be issuable (taking into account the
adjustments of Section 7) upon the conversion of all outstanding shares of Series C Preferred Stock. Such reservation shall comply
without regard to the provisions of Section 6(d). The Corporation covenants that all shares of Common Stock that shall be so
issuable shall, upon issue, be duly authorized, validly issued, fully paid, non-assessable and free and clear of all liens and other
encumbrances.
Series C Certificate of Designation
Page
(vi) Fractional
Shares . No fractional shares or scrip representing fractional shares of Common Stock shall be issued upon the conversion of the
Series C Preferred Stock. All fractional shares shall be rounded down to the nearest whole shares of Common Stock.
(vii) Transfer
Taxes . The issuance of book entry notations for Conversion Shares shall be made without charge to any Holder for any documentary
stamp or similar taxes that may be payable in respect of the issue or delivery of such book entry notation, provided that the
Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and
delivery of any such book entry notation upon conversion in a name other than that of the registered Holder(s) of such shares of
Series C Preferred Stock and the Corporation shall not be required to issue or deliver such book entry notation unless or until the
Person or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have
established to the satisfaction of the Corporation that such tax has been paid.
(c) Status
as Stockholder . Upon each Conversion Date in which the Series C Preferred Stock converts into Common Stock: (i) the shares of
Series C Preferred Stock being converted shall be deemed converted into shares of Common Stock; and (ii) the Holder's rights
as a holder of such converted shares of Series C Preferred Stock shall cease and terminate, excepting only the right to receive book
entry notations for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to
such Holder because of a failure by the Corporation to comply with the terms of this Certificate of Designation. In all cases, the
holder shall retain all of its rights and remedies for the Corporation's failure to convert Series C Preferred
Stock.
(d) Limitations
on Conversion . Prior to the Stockholder Approval, the aggregate total number of shares of the Corporation's Common Stock
that may be issued to all Holders upon conversion of the Series C Preferred Stock shall not exceed the Cap (and each Holder of
Series C Preferred Stock will only be permitted to convert their Series C Preferred Stock into the number of shares of Common Stock
that is not greater than (i) the percentage of outstanding shares of Series C Preferred Stock held by such Holder, multiplied by
(ii) the Cap) but in no event in excess of the Maximum Percentage. Except as set forth in this Section 6(d), a Holder shall not have
the right to convert any portion of the Series C Preferred Stock and such Series C Preferred Stock shall not be automatically
converted, to the extent that after giving effect to such conversion, such Holder (together with such Holder's Affiliates, any
other Persons acting as a group together, and any other Persons whose beneficial ownership of Common Stock would be aggregated with
the Holder's and the other Attribution Parties for purposes of Section 13(d) of the Exchange Act (such Persons,
“ Attribution Parties ”)) would beneficially own in excess of 9.99% (the “ Maximum
Percentage ”) of the shares of Common Stock outstanding immediately after giving effect to such conversion. For
purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such Person and its
Affiliates shall include the number of shares of Common Stock issuable upon conversion of the Series C Preferred Stock with respect
to which the determination of such sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (i)
exercise of the remaining, unconverted portion of the Series C Preferred Stock beneficially owned by such Person and its Affiliates
and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation beneficially
owned by such Person and its Affiliates (including, without limitation, any convertible notes or convertible preferred stock or
warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein. For purposes of this
Section 6(d), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares
of Common Stock as reflected in (1) the Corporation's most recent Form 10-K, Proxy Statement, Form 10-Q, Current Report on
Form 8-K or other public filing with the Commission, as the case may be, (2) a more recent public announcement by the Corporation or
(3) any other notice by the Corporation or the Corporation's transfer agent setting forth the number of shares of Common Stock
outstanding. For any reason at any time, upon the written or oral request of a Holder, where such request indicates that it is being
made pursuant to this Section 6(d), the Corporation shall within one Trading Day confirm orally and in writing to such Holder the
number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined
after giving effect to the conversion or exercise of securities of the Corporation, including the Series C Preferred Stock, by a
Holder and its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. Upon delivery
of a written notice to the Corporation, a Holder may from time to time increase or decrease the Maximum Percentage to any other
percentage and, notwithstanding the foregoing, in no event in excess of 9.99% as specified in such notice; provided that (i) any
such increase in the Maximum Percentage will not be effective until the 61st day after such notice is delivered to the Corporation
and (ii) any such increase or decrease will apply only to such Holder and other Attribution Parties and not to any other holder of
Series C Preferred Stock, provided, for the avoidance of doubt, that no such decrease shall affect the validity of any prior
conversion of the Series C Preferred Stock by Holder or any Attribution Party. For purposes of clarity, the shares of Common Stock
issuable pursuant to the terms hereof in excess of the Maximum Percentage shall not be deemed to be beneficially owned by a Holder
for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the Exchange Act. No prior inability to convert
Series C Preferred Stock pursuant to this Section 6(d) shall have any effect on the applicability of the provisions of this Section
6(d) with respect to any subsequent determination of whether Series C Preferred Stock may be converted. The provisions of this
paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 6(d) to
the extent necessary to correct this paragraph or any portion of this paragraph which may be defective or inconsistent with the
intended beneficial ownership limitation contained in this Section 6(d) or to make changes or supplements necessary or desirable to
properly give effect to such limitation. The limitations set forth in this Section 6(d) shall not apply to any conversions of the
Series C Preferred Stock that occur prior to and expressly in connection with a Deemed Liquidation Event.
Series C Certificate of Designation
Page
Section
7 Certain Adjustments
(a) Stock
Dividends and Stock Splits . If the Corporation, at any time while any shares of Series C Preferred Stock are outstanding: (i)
pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock with respect to the then
outstanding shares of Common Stock; (ii) subdivides outstanding shares of Common Stock into a larger number of shares; or (iii)
combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares, then the
Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding
any treasury shares of the Corporation) outstanding immediately before such event and of which the denominator shall be the number
of shares of Common Stock outstanding immediately after such event (excluding any treasury shares of the Corporation). Any
adjustment made pursuant to this Section 7(a) shall become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in
the case of a subdivision or combination.
(b) Calculations .
All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For
purposes of this Section 7, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the
sum of the number of shares of Common Stock (excluding any treasury shares of the Corporation) issued and outstanding.
(c) Notice
to the Holders
(i) Adjustment
to Conversion Price . Whenever the Conversion Price is adjusted pursuant to any provision of this Section 7, the Corporation
shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.
(ii) Other
Notices . If (A) the Corporation shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B)
the Corporation shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Corporation shall
authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights, (D) the approval of any stockholders of the Corporation shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which the Corporation is a party, any sale or transfer of
all or substantially all of the assets of the Corporation, or any compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property, or (E) the Corporation shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Corporation, then, in each case, the Corporation shall cause to be filed at each
office or agency maintained for the purpose of conversion of the shares of Series C Preferred Stock, and shall cause to be delivered
to each Holder at its last address as it shall appear upon the stock books of the Corporation, at least ten calendar days prior to
the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which
the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to
become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or
in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice; and provided
further, that in each case, the Corporation will only be required to provide such information to the Holder if such information
shall have been made known to the public prior to or in conjunction with such notice being provided to the Holder.
Series C Certificate of Designation
Page
Section
8 Stockholder Approval The Corporation shall, as soon as practicable
following the Issuance Date, but not more than 30 days thereafter, file a preliminary proxy statement for a vote of its stockholders
to approve the issuance of the Series C Preferred Stock and all Conversion Shares to the extent required under Nasdaq Listing Rule
5635 (collectively, the “ Proposal ”). The Corporation shall, as soon as practicable following notification from
the staff of the Commission that it has completed its review of the preliminary proxy statement or that it will not review the
preliminary proxy statement, file and mail a definitive proxy statement for the vote of its stockholders to approve the Proposal.
The Corporation covenants and agrees that its Board of Directors shall unanimously recommend that the Proposal be approved by the
Corporation's stockholders at all meetings in which such Proposal is considered and promptly file the necessary amendments to
the Corporation's certificate of incorporation after the Proposal is approved. If the Corporation's stockholders do not
approve the Proposal at the first meeting in which it is voted on by stockholders, the Corporation covenants and agrees that it will
submit the Proposal for approval of the Corporation's stockholders at least semi-annually until such approval is obtained.
From and after the Stockholder Approval, the Cap shall no longer be applicable for any purposes hereof
Section
9. Miscellaneous
(a) Waiver;
Amendment . Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designation shall not
operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this
Certificate of Designation or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon strict
adherence to any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that
party (or any other Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this
Certificate of Designation. Any waiver by the Corporation or a Holder must be in writing. Notwithstanding any provision in this
Certificate of Designation to the contrary, any provision contained herein and any right of the Holders of Series C Preferred Stock
granted hereunder may be waived or amended, subject to agreement with the Corporation as required, as to all shares of Series C
Preferred Stock (and the Holders thereof) upon the written consent of the Holders of a majority of the shares of Series C Preferred
Stock then outstanding, unless a higher percentage is required by the DGCL, in which case the written consent of the Holders of not
less than such higher percentage shall be required. Any waiver or amendment effected in accordance with this Section 9(a) shall be
binding on all the Holders of Series C Preferred Stock, and all of such party's successors and permitted assigns, whether or
not any such party, successor or assignee entered into or approved such waiver or amendment.
(b) Severability .
If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance of this Certificate of
Designation shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain
applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due
hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered
to equal the maximum rate of interest permitted under applicable law.
(c) Next Business Day . Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day.
(d) Headings .
The headings contained herein are for convenience only, do not constitute a part of this Certificate of Designation and shall not be
deemed to limit or affect any of the provisions hereof.
(e) Status of Converted Series C Preferred Stock . If any shares of Series C Preferred Stock shall be converted or redeemed by
the Corporation, such shares shall resume the status of authorized but unissued shares of preferred stock and shall no longer be
designated as Series C Preferred Stock.
Series C Certificate of Designation
Page
IN
WITNESS WHEREOF , Biofrontera Inc. has caused this Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible
Preferred Stock to be executed by its duly authorized officer this June 30, 2025.
/s/ E. Fred Leffler, III
By:
E. Fred Leffler, III
Title:
Chief Financial Officer
Series C Certificate of Designation
Page
ANNEX
A
NOTICE
OF CONVERSION
(To
Be Executed by the Registered Holder
in Order to Convert Shares of Series C Preferred Stock)
The
undersigned Holder hereby irrevocably elects to convert the number of shares of Series C Preferred Stock indicated below, represented
by book-entry notation in the register of the transfer agent, into the number of shares of Common Stock of Biofrontera Inc., a Delaware
corporation (the “ Corporation ”), as of the date written below. If securities are to be issued in the name of
a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Capitalized terms utilized
but not defined herein shall have the meaning ascribed to such terms in that certain Certificate of Designation of Preferences, Rights
and Limitations of Series C Convertible Preferred Stock (the “ Certificate of Designation ”) filed by the Corporation
with the Delaware Secretary of State on June 30, 2025.
The
undersigned Holder's right to convert the shares of Series C Preferred Stock is subject to (a) prior to Stockholder Approval, the
Cap and (b) at all times, the Maximum Percentage described in Section 6(d) of the Certificate of Designation. Therefore, the number of
shares of Common Stock beneficially owned by the undersigned Holder (together with any Attribution Parties), including the number of
shares of Common Stock issuable upon conversion of the Series C Preferred Stock subject to this Notice of Conversion, but excluding (i)
exercise of the remaining, unconverted portion of the Series C Preferred Stock beneficially owned by such Person and its Attribution
Parties and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation beneficially
owned by such Person and its Attribution Parties (including, without limitation, any convertible notes or convertible preferred stock
or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein, is
Conversion
calculations:
Date to Effect Conversion:
Number of shares of Series C Preferred Stock owned prior to Conversion:
Number of shares of Series C Preferred Stock to be Converted:
Address for delivery of physical certificates:
OR
for DWAC Delivery:
DWAC Instructions:
Broker no:
Account no:
HOLDER:
By:
Name:
Title:
Date:
Series C Certificate of Designation
Page
Exhibit
10.1
Execution
Version
SECURITIES
PURCHASE AGREEMENT
This
Securities Purchase Agreement (this “ Agreement ”) is dated as of June 27, 2025, by and among Biofrontera Inc.,
a Delaware corporation (the “ Company ”), and each purchaser identified on the signature pages hereto (each,
including its successors and assigns, a “ Purchaser ” and collectively, the “ Purchasers ”).
RECITALS
A.
The Company and each Purchaser is executing and delivering this Agreement in reliance upon an exemption from securities registration
afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “ Securities Act ”), and/or Rule 506 of Regulation
D (“ Regulation D ”) as promulgated by the United States Securities and Exchange Commission (the “ Commission ”)
under the Securities Act.
B.
Each Purchaser, severally and not jointly, wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in
this Agreement, (i) on the Initial Closing Date (as defined below), that aggregate number of shares of Series C Convertible Preferred
Stock, par value $0.001 per share, of the Company (the “ Series C Preferred Stock ”), set forth below such Purchaser's
name on the signature page of this Agreement (which aggregate amount for all Purchasers together shall be 8,500 shares of Series C Preferred
Stock at an aggregate purchase price of up to $8,500,000 and shall be collectively referred to herein as the “ Initial Shares ”)
and (ii) on the Subsequent Closing Date (as defined below), that aggregate number of shares of Series C Preferred Stock, set forth below
such Purchaser's name on the signature page of this Agreement (which aggregate amount for all Purchasers together shall be 2,500
shares of Series C Preferred Stock at an aggregate purchase price of up to $2,500,000 and shall be collectively referred to herein as
the “ Subsequent Shares ” and together with the Initial Shares, the “ Shares ”).
C.
Pursuant to the Certificate of Designation of the Series C Preferred Stock, in substantially the form attached hereto as Exhibit A (the “ Certificate of Designation ”), each Share is convertible into shares of common stock, par value $0.001
per share, of the Company (the “ Common Stock ”).
D.
The shares of Common Stock issuable upon conversion of the Shares are referred to herein as the “ Conversion Shares .”
E.
The Shares and the Conversion Shares collectively are referred to herein as the “ Securities .”
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 the Purchasers hereby agree as follows:
ARTICLE
I.
DEFINITIONS
Definitions . In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms
shall have the meanings indicated in this Section 1.1
“ Acquiring
Person ” has the meaning set forth in Section 4.6
“ Action ”
means any action, suit, inquiry, notice of violation, proceeding (including any partial proceeding such as a deposition) or investigation
pending or, to the Company's Knowledge, threatened in writing against the Company, any Subsidiary or any of their respective properties
or any officer, director or employee of the Company or any Subsidiary acting in his or her capacity as an officer, director or employee
before or by any federal, state, county, local or foreign court, arbitrator, governmental or administrative agency, regulatory authority,
stock market, stock exchange or trading facility.
“ Advance
Indemnification Payment ” has the meaning set forth in Section 4.15(c)(iv)
“ Affiliate ”
means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, Controls, is controlled
by or is under common control with such Person, as such terms are used in and construed under Rule 405 under the Securities Act. With
respect to a Purchaser, any investment fund or managed account that is managed on a discretionary basis by the same investment manager
as such Purchaser will be deemed to be an Affiliate of such Purchaser.
“ Agreement ”
has the meaning set forth in the Preamble.
“ Board
of Directors ” means the board of directors of the Company.
“ Business
Day ” means any day except Saturday, Sunday, any day which is a federal legal holiday in the United States or any day on
which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“ Buy-In ”
has the meaning set forth in Section 4.1(f)
“ Certificate
of Designation ” has the meaning set forth in the Recitals.
“ Closing ”
means the Initial Closing or the Subsequent Closing, as applicable.
“ Closing
Bid Price ” means, for any security as of any date, (a) the last reported closing bid price per share of Common Stock for
such security on the Principal Trading Market, as reported by Bloomberg Financial Markets, or, (b) if the Principal Trading Market begins
to operate on an extended hours basis and does not designate the closing bid price then the last bid price of such security prior to
4:00 P.M., New York City time, as reported by Bloomberg Financial Markets, or (c) if the foregoing do not apply, the last closing price
of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg Financial
Markets, or (d) if no closing bid price is reported for such security by Bloomberg Financial Markets, the average of the bid prices of
any market makers for such security as reported in the “pink sheets” by Pink Sheets LLC. If the Closing Bid Price cannot
be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price of such security on such date
shall be the fair market value as mutually determined by the Company and the holder of such security. If the Company and such Purchasers
are unable to agree upon the fair market value of such security with five Trading Days of initiating a discussion regarding such security's
Closing Bid Price, then the Company shall, within two Trading Days thereafter, submit via email or facsimile the disputed determination
of the fair market value of such security to either (a) an independent, reputable investment bank selected by the Company and approved
by the Purchasers, or (b) the Company's independent, outside accountant. The Company shall cause the investment bank or the accountant,
as the case may be, to perform the determinations or calculations and notify the Company and the Purchasers of the results no later than
20 Trading Days from the time it receives the disputed determinations or calculations. Such investment bank's or accountant's
determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error. The expenses of the investment
bank and accountant will be borne by the Company unless the investment bank or accountant determines that the determination of the fair
market value of the security by the Holder was incorrect by more than 25%, in which case the expenses of the investment bank and accountant
will be borne by the Holder. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination
or other similar transaction during the applicable calculation period.
“ Closing
Date ” means the Initial Closing Date or the Subsequent Closing Date, as applicable.
“ Commission ”
has the meaning set forth in the Recitals.
“ Common
Stock ” has the meaning set forth in the Recitals, and also includes any other class of securities into which the Common
Stock may hereafter be reclassified or changed into.
“ Common
Stock Equivalents ” means any securities of the Company or any Subsidiary which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that
is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock or other securities
that entitle the holder to receive, directly or indirectly, Common Stock.
“ Company ”
has the meaning set forth in the Preamble.
“ Company
Counsel ” means McGuireWoods LLP, with offices located at 1251 Avenue of the Americas, 20th Floor, New York, NY 10020.
“ Company
Covered Person ” means, with respect to the Company as an “issuer” for purposes of Rule 506 promulgated under
the Securities Act, any Person listed in the first paragraph of Rule 506(d)(1).
“ Company
Deliverables ” has the meaning set forth in Section 2.2(a)
“ Company
Intellectual Property ” has the meaning set forth in Section 3.1(p)
Securities Purchase Agreement
Page
“ Company's
Knowledge ” means with respect to any statement made to the Company's Knowledge, that the statement is based upon
the actual knowledge of the executive officers of the Company having responsibility for the matter or matters that are the subject of
the statement.
“ Company
Party ” has the meaning set forth in Section 4.15(c)(ii).
“ Control ”
(including the terms “controlling,” “controlled by” or “under common control with”) means the possession,
direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership
of voting securities, by contract or otherwise.
“ Conversion
Shares ” has the meaning set forth in the Recitals.
“ Cut
Back Shares ” has the meaning set forth in Section 4.15(b)
“ Disclosure
Materials ” has the meaning set forth in Section 3.1(h)
“ Disclosure
Schedules ” has the meaning set forth in Section 3.1.
“ DTC ”
has the meaning set forth in Section 4.1(c)
“ Effective
Date ” has the meaning set forth in Section 4.15(a)(vii)
“ Effectiveness
Deadline ” has the meaning set forth in Section 4.15(a)(ii)
“ Environmental
Laws ” has the meaning set forth in Section 3.1(dd)
“ Evaluation
Date ” has the meaning set forth in Section 3.1(t)
“ Exchange
Act ” means the Securities Exchange Act of 1934, as amended, or any successor statute, 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) shares of Common Stock upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities
exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement, provided
that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease
the exercise price, exchange price or conversion price of such securities (other than in connection with stock splits or combinations)
or to extend the term of such securities and (c) shares of Common Stock or Common Stock Equivalents in connection with the Strategic
Transaction and on the terms set forth in the unamended Letter of Intent.
“ FDA ”
has the meaning set forth in Section 3.1(nn)
“ FDCA ”
has the meaning set forth in Section 3.1(nn)
“ Filing
Date ” has the meaning set forth in Section 4.15(a)(i)
“ GAAP ”
means U.S. generally accepted accounting principles, as applied by the Company.
“ Hazardous
Materials ” has the meaning set forth in Section 3.1(dd)
“ Irrevocable
Transfer Agent Instructions ” means, with respect to the Company, the Irrevocable Transfer Agent Instructions, in the form
of Exhibit C , executed by the Company and delivered to and acknowledged in writing by the Transfer Agent.
“ Initial
Closing ” means the closing of the purchase and sale of the Initial Shares pursuant to this Agreement.
“ Initial
Closing Date ” means the Trading Day when all of the Transaction Documents have been executed and delivered by the applicable
parties thereto, and all of the conditions for the Initial Closing set forth in Sections 2.1 and hereof are satisfied or waived, as the case may be, or such other date as the parties may agree.
“ Initial
Shares ” has the meaning set forth in the Recitals.
Securities Purchase Agreement
Page
“ Intellectual
Property Rights ” means any and all of the following statutory and/or common law rights in any jurisdiction throughout the
world: (i) patents, patent applications and patent disclosures; (ii) Internet domain names, trademarks, service marks, trade dress, trade
names, logos and corporate names, and registrations and applications for registration thereof together with all translations, transliterations,
adaptations, derivations and combinations thereof and including all of the goodwill associated therewith; (iii) copyrights and copyrightable
works (registered or unregistered); (iv) trade secrets and other confidential information (including ideas, formulas, recipes, compositions,
inventions, discoveries or invention disclosures and improvements (whether patentable or unpatentable and whether or not reduced to practice)),
know-how, manufacturing and production processes and techniques, research and development information, drawings, specifications, designs,
plans, proposals, non-public data and databases, financial and marketing plans and customer and supplier lists and information; (v) all
rights in software; (vi) registrations and applications for any of the foregoing; and (vii) other proprietary, intellectual property
and/or industrial rights.
“ Late
Registration Payments ” has the meaning set forth in Section 4.15(g)
“ Legend
Removal Date ” has the meaning set forth in Section 4.1(c)
“ Letter
of Intent ” means the unamended letter of intent to be dated June 30, 2025, by and among the Company, Biofrontera AG, Biofrontera
Pharma GmbH and Biofrontera Bioscience GmbH, pursuant to which the Company will acquire the U.S. assets of Biofrontera Pharma GmbH and
Biofrontera Bioscience GmbH and amend the Second Amended and Restated License and Supply Agreement effective as of February 13, 2024
by and among the Company, Biofrontera AG, Biofrontera Pharma GmbH and Biofrontera Bioscience GmbH, a true copy of which has been delivered
to Purchasers.
“ Losses ”
has the meaning set forth in Section 4.15(c)(i)
“ Lien ”
means any lien, charge, claim, encumbrance, security interest, right of first refusal, preemptive right or other restrictions of any
kind.
“ Material
Adverse Effect ” means a material adverse effect on the results of operations, assets, prospects, business or financial
condition of the Company and the Subsidiaries, taken as a whole, except that any of the following, either alone or in combination, shall
not be deemed a Material Adverse Effect: (i) effects caused by changes or circumstances affecting general market conditions in the U.S.
economy or which are generally applicable to the industry in which the Company operates, provided that such effects are not borne
disproportionately by the Company, (ii) effects resulting from or relating to the announcement or disclosure of the sale of the Securities
or other transactions contemplated by this Agreement, or (iii) effects caused by any event, occurrence or condition resulting from or
relating to the taking of any action in accordance with this Agreement.
“ Material
Contract ” means any contract of the Company that has been filed or was required to have been filed as an exhibit to the
SEC Reports pursuant to Item 601(b)(2), Item 601(b)(4) or Item 601(b)(10) of Regulation S-K.
“ Material
Permits ” has the meaning set forth in Section 3.1(n)
“ New
York Courts ” means the state and federal courts sitting in the City of New York, Borough of Manhattan.
“ Outside
Date ” means the fifth Business Day following the date of this Agreement.
“ Person ”
means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint
venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed
herein.
“ Pharmaceutical
Products ” has the meaning set forth in Section 3.1(nn)
“ Preferred
Share Initial Subscription Amount ” means, with respect to each Purchaser, the aggregate amount to be paid for the Initial
Shares purchased hereunder as indicated on such Purchaser's signature page to this Agreement next to the heading “Aggregate
Purchase Price (Preferred Share Initial Subscription Amount)” in United States dollars and in immediately available funds.
“ Preferred
Share Purchase Price ” means $1,000 per Share.
Securities Purchase Agreement
Page
“ Preferred
Share Subsequent Subscription Amount ” means, with respect to each Purchaser, the aggregate amount to be paid for the Subsequent
Shares purchased hereunder as indicated on such Purchaser's signature page to this Agreement next to the heading “Aggregate
Purchase Price (Preferred Share Subsequent Subscription Amount)” in United States dollars and in immediately available funds.
“ Press
Release ” has the meaning set forth in Section 4.5
“ Principal
Trading Market ” means the Trading Market on which the Common Stock is primarily listed on and quoted for trading, which,
as of the date of this Agreement and each Closing Date, shall be The Nasdaq Capital Market.
“ Proceeding ”
means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such
as a deposition), whether commenced or threatened.
“ Proposal ”
has the meaning set forth in Section 4.18
“ Purchaser ”
or “ Purchasers ” has the meaning set forth in the Recitals.
“ Purchaser
Deliverables ” has the meaning set forth in Section 2.2(b)
“ Purchaser
Party ” has the meaning set forth in Section 4.9
“ Registrable
Shares ” means (a) all Conversion Shares issuable upon the conversion of the shares of Series C Preferred Stock purchased
pursuant to this Agreement in the Initial Closing, without taking into account any limitations upon conversion set forth in the Certificate
of Designation (the “ Initial Registrable Shares ”) and (b) all Conversion Shares issuable upon the conversion of the
shares of Series C Preferred Stock purchased pursuant to this Agreement in the Subsequent Closing, without taking into account any limitations
upon conversion set forth in the Certificate of Designation (the “ Subsequent Registrable Shares ”); provided however , that a security shall cease to be a Registrable Share upon the earliest to occur of the following: (i) a Resale Registration
Statement registering such security under the Securities Act has been declared or becomes effective and such security has been sold or
otherwise transferred by the holder thereof pursuant to and in a manner contemplated by such effective Resale Registration Statement,
(ii) such security is sold pursuant to Rule 144 under circumstances in which any legend borne by such security relating to restrictions
on transferability thereof, under the Securities Act or otherwise, is removed by the Company, (iii) such security is eligible to be sold
pursuant to Rule 144 without any limitation as to volume of sales and without the holder complying with any method of sale requirements
or notice requirements under Rule 144, or (iv) such security shall cease to be outstanding following its issuance. “ Regulation
D ” has the meaning set forth in the Recitals.
“ Required
Effective Date ” has the meaning set forth in Section 4.15(g)
“ Resale
Registration Statement ” means a registration statement or registration statements of the Company filed under the Securities
Act pursuant to Section 4.15 hereof, and shall include any preliminary prospectus, final prospectus, exhibit or amendment included
in or relating to such registration statements.
“ Restriction
Termination Date ” has the meaning set forth in Section 4.15(b).
“ Rule
144 ” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time
to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.
“ Sanctioned
Country ” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (at
the time of this Agreement, the so-called Donetsk People's Republic, the so-called Luhansk People's Republic, the Crimea
Region of Ukraine, Cuba, Iran, North Korea and Syria).
“ Sanctioned
Person ” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons, (b) any Person operating,
organized or resident in a Sanctioned Country, (c) any Person owned or controlled by any such Person or Persons described in the foregoing
clauses (a) or (b), or (d) any Person otherwise the subject or target of any Sanctions.
“ Sanctions ”
means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government,
including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of
State or (b) the United Nations Security Council, the European Union, any European Union member state, His Majesty's Treasury of
the United Kingdom or other relevant sanctions authority.
Securities Purchase Agreement
Page
“ SEC
Reports ” has the meaning set forth in Section 3.1(h)
“ SEC
Restrictions ” has the meaning set forth in Section 4.15(b)
“ Secretary's
Certificate ” has the meaning set forth in Section 2.2(a)(vi)
“ Securities
Act ” has the meaning set forth in the Recitals.
“ Series
C Preferred Stock ” has the meaning set forth in the Recitals.
“ Series
D Preferred Stock ” means Series D Convertible Preferred Stock, par value $0.001 per share, of the Company to be issued
pursuant to the Letter of Intent.
“ Shares ”
has the meaning set forth in the Recitals.
“ Short
Sales ” include, without limitation, (i) all “short sales” as defined in Rule 200 promulgated under Regulation
SHO under the Exchange Act, whether or not against the box, and all types of direct and indirect stock pledges, forward sale contracts,
options, puts, calls, short sales, swaps, “put equivalent positions” (as defined in Rule 16a-1(h) under the Exchange Act)
and similar arrangements (including on a total return basis), and (ii) sales and other transactions through non-U.S. broker dealers or
foreign regulated brokers (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).
“ Staff ”
means the staff of the Commission.
“ Stockholder
Approval ” has the meaning set forth in Section 3.1(e)
“ Strategic
Transaction ” refers to the transaction contemplated by the Letter of Intent.
“ Subscription
Amount ” means, with respect to each Purchaser, the Preferred Share Initial Subscription Amount or the Preferred Share Subsequent
Subscription Amount, as applicable.
“ Subsequent
Closing ” means the closing of the purchase and sale of the Subsequent Shares pursuant to this Agreement.
“ Subsequent
Closing Date ” means the Trading Day when all of the Transaction Documents have been executed and delivered by the applicable
parties thereto, and all of the conditions for the Subsequent Closing set forth in Sections 2.1 and hereof are satisfied or waived, as the case may be, or such other date as the parties may agree.
“ Subsequent
Shares ” has the meaning set forth in the Recitals.
“ Subsidiary ”
means any subsidiary of the Company as set forth on Schedule 3.1(a) , and shall, where applicable, include any subsidiary of the
Company formed or acquired after the date hereof.
“ Tax ”
or “ Taxes ” means all federal, state, local, non-U.S. and other taxes, charges, fees, duties, levies, imposts,
customs or other assessments, including all net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
profit share, license, lease, service, service use, value added, withholding, payroll, employment, excise, estimated, severance, stamp,
occupation, premium, real property, personal property, payroll, escheat, unclaimed property, windfall profits, environmental, capital
stock, social security (or similar), unemployment, disability, registration, alternative or add-on minimum, estimated, or other taxes,
fees, assessments, customs, duties, levies, imposts or charges of any kind whatsoever, whether disputed or not, together with any interest,
penalties, additions to tax, fines or other additional amounts imposed thereon or related thereto.
“ Tax
Returns ” means any return, statement, schedule, declaration, claim for refund, report, document or form filed or required
to be filed with respect to Taxes, including any amendment, attachment and supplement thereof.
“ Trading
Affiliate ” has the meaning set forth in Section 3.2(g)
Securities Purchase Agreement
Page
“ Trading
Day ” means (i) a day on which the Common Stock is listed or quoted and traded on its Principal Trading Market (other than
the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a Trading Market (other than the OTC Bulletin Board), a day on
which the Common Stock is traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock
is not quoted on any Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by OTC Markets
Group Inc. (formerly OTC Markets Inc.) (or any similar organization or agency succeeding to its functions of reporting prices); provided ,
that in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean
a Business Day.
“ Trading
Market ” means whichever of the NYSE American, the Nasdaq Capital Market, the Nasdaq
Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, the Pink Open Market, OTCQB or the OTCQX (or any successors
to any of the foregoing) on which the Common Stock is listed or quoted for trading on the date in question.
“ Transaction
Documents ” means this Agreement, the schedules and exhibits attached hereto, the Certificate of Designation, the Irrevocable
Transfer Agent Instructions and any other documents or agreements explicitly contemplated hereunder.
“ Transfer
Agent ” means Computershare Trust Company, N.A., the current transfer agent of the Company, or any successor transfer agent
for the Company.
ARTICLE
II.
PURCHASE AND SALE
Closing
(a) Amount . Subject to the terms and conditions set forth in this Agreement, (i) at the Initial Closing, the Company shall issue and
sell to each Purchaser, and each Purchaser shall, severally and not jointly, purchase from the Company, such number of shares of Series
C Preferred Stock equal to the quotient resulting from dividing (1) the Preferred Share Initial Subscription Amount for such Purchaser
by (2) the Preferred Share Purchase Price, which shall be equal to the number of Shares such Purchaser is purchasing in the Initial Closing
as is set forth on such Purchaser's signature page to this Agreement next to the heading “Number of Initial Shares to be
Acquired;” and (ii) at the Subsequent Closing, the Company shall issue and sell to each Purchaser, and each Purchaser shall, severally
and not jointly, purchase from the Company, such number of shares of Series C Preferred Stock equal to the quotient resulting from dividing
(i) the Preferred Share Subsequent Subscription Amount for such Purchaser by (ii) the Preferred Share Purchase Price, which shall be
equal to the number of Shares such Purchaser is purchasing in the Subsequent Closing as is set forth on such Purchaser's signature
page to this Agreement next to the heading “Number of Subsequent Shares to be Acquired;”
(b) Closing . The Closing of the purchase and sale of each of the Initial Shares and the Subsequent Shares shall take place at the
offices of McGuireWoods LLP, 1251 Avenue of the Americas, 20 th Floor, New York,
New York 10020 on the applicable Closing Date, or at such other locations or remotely by
facsimile or email transmission or other electronic means as the parties may mutually agree. For the avoidance of doubt, each Closing
shall occur within two (2) business days of the satisfaction of all conditions under Sections 5.1 and 5.2 of this Agreement with respect
to the applicable Closing.
(c) Form of Payment . Except as may otherwise be agreed to among the Company and one or more of the Purchasers, on the applicable Closing
Date, each Purchaser shall wire its applicable Subscription Amount, in United States dollars and in immediately available funds, to an
account established by the Company. On the applicable Closing Date, the Company shall irrevocably instruct the Transfer Agent to deliver
to each Purchaser book-entry statements, free and clear of all restrictive and other legends (except as expressly provided in Section
4.1(b) hereof), evidencing the number of Initial Shares or Subsequent Shares such Purchaser is purchasing as is set forth on such
Purchaser's signature page to this Agreement next to the heading “Number of Initial Shares to be Acquired” or “Number
of Subsequent Shares to be Acquired,” as applicable.
Closing Deliveries . (a) On or prior to each Closing (unless specified otherwise), the Company shall issue, deliver or cause to
be delivered to each Purchaser the following (the “ Company Deliverables ”):
(i)
on or prior to the Initial Closing, this Agreement, duly executed by the Company;
(ii)
facsimile or other electronic copies of one or more book-entry statements from the Transfer Agent, free and clear of all restrictive
and other legends (except as provided in Section 4.1(b) hereof), evidencing the Initial Shares or Subsequent Shares, as applicable,
subscribed for by such Purchaser hereunder, registered in the name of such Purchaser as set forth on the Book Entry Questionnaire included
as Exhibit B hereto (the “ Book-Entry Statements ”);
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(iii)
a legal opinion of Company Counsel, dated as of the applicable Closing Date, executed by such counsel and addressed to the Purchasers,
in a form reasonably acceptable to such parties;
(iv)
the Certificate of Designation shall have been filed with the Secretary of State of Delaware on or prior to the Initial Closing Date,
which Certificate of Designation shall continue to be in full force and effect as of each Closing Date;
(v)
duly executed Irrevocable Transfer Agent Instructions acknowledged in writing by the Transfer Agent instructing the Transfer Agent to
deliver, on an expedited basis, the book-entry statements evidencing a number of Initial Shares or Subsequent Shares, as applicable,
equal to such Purchaser's applicable Subscription Amount divided by the Preferred Share Purchase Price, registered in the name
of such Purchaser;
(vi)
a certificate of the Secretary of the Company (the “ Secretary's Certificate ”), dated as of the applicable
Closing Date, (a) certifying the resolutions adopted by the Board of Directors of the Company or a duly authorized committee thereof
approving the transactions contemplated by this Agreement and the other Transaction Documents, the filing of the Certificate of Designation
and the issuance of the Securities, (b) certifying the current versions of the certificate of incorporation, as amended, the Certificate
of Designation and by-laws of the Company and (c) certifying as to the signatures and authority of persons signing the Transaction Documents
and related documents on behalf of the Company, in the form attached hereto as Exhibit D
(vii)
the Compliance Certificate referred to in Section 5.1(i)
(viii)
a certificate evidencing the formation and good standing of the Company issued by the Secretary of State (or comparable office) of the
State of Delaware, as of a date within three Business Days of the applicable Closing Date;
(ix)
a certificate evidencing the Company's qualification as a foreign corporation and good standing issued by the Secretary of State
(or comparable office) of each jurisdiction in which the Company is qualified to do business as a foreign corporation, as of a date within
three Business Days of the applicable Closing Date; and
(x)
a certified copy of the certificate of incorporation and Certificate of Designation, each as certified by the Secretary of State (or
comparable office) of the State of Delaware, as of a date within two Business Days of the Initial Closing Date.
(b)
On or prior to each Closing, each Purchaser shall deliver or cause to be delivered to the Company the following (the “ Purchaser
Deliverables ”):
(i)
on or prior to the Initial Closing, this Agreement, duly executed by such Purchaser;
(ii)
its applicable Subscription Amount, in United States dollars and in immediately available funds, in the amount set forth as the “Purchase
Price” indicated below such Purchaser's name on the applicable signature page hereto under the heading “Aggregate Purchase
Price (Preferred Share Initial Subscription Amount)” or “Aggregate Purchase Price (Preferred Share Subsequent Subscription
Amount),” as applicable, by wire transfer to the Company;
(iii)
a fully completed and duly executed Selling Stockholder Questionnaire in the form attached as Annex A attached hereto; and
(iv)
a fully completed and duly executed Accredited Investor Questionnaire, satisfactory to the Company, and Book Entry Questionnaire in the
forms attached hereto as Exhibits B-1 and B-2 , respectively.
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ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES
Representations and Warranties of the Company . Except (i) as set forth in the schedules delivered herewith (the “ Disclosure
Schedules ”), which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation made herein
to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules, or (ii) disclosed in the SEC Reports,
the Company hereby represents and warrants as of the date hereof and each Closing Date (except for the representations and warranties
that speak as of a specific date, which shall be made as of such date), to each of the Purchasers:
(a) Subsidiaries . The Company has no direct or indirect Subsidiaries other than those listed in the SEC Reports. Except as disclosed
in Schedule 3.1(a) hereto, the Company owns, directly or indirectly, all of the capital stock or comparable equity interests of
each Subsidiary free and clear of any and all Liens, and all the issued and outstanding shares of capital stock or comparable equity
interest of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe
for or purchase securities.
(b) Organization and Qualification . The Company and each of its Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the
requisite corporate power and authority to own or lease and use its properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate of incorporation,
bylaws or other organizational or charter documents. The Company and each of its Subsidiaries is duly qualified to conduct business and
is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be,
would not have or reasonably be expected to result in a Material Adverse Effect, and no Proceeding has been instituted, is pending, or,
to the Company's Knowledge, has been threatened in writing in any such jurisdiction revoking, limiting or curtailing or seeking
to revoke, limit or curtail such power and authority or qualification.
(c) Authorization; Enforcement; Validity . The Company has the requisite corporate power and authority to enter into and to consummate
the transactions contemplated by each of the Transaction Documents to which it is a party and otherwise to carry out its obligations
hereunder and thereunder. The Company's execution and delivery of each of the Transaction Documents to which it is a party and
the consummation by it of the transactions contemplated hereby and thereby (including, but not limited to, the sale and delivery of the
Shares, the reservation for issuance of the Conversion Shares and the issuance of the Conversion Shares in accordance with the terms
of the Transaction Documents) have been duly authorized by all necessary corporate action on the part of the Company, and no further
corporate action is required by the Company, its Board of Directors or its stockholders in connection therewith. Each of the Transaction
Documents to which it is a party has been (or upon delivery will have been) duly executed by the Company and is, or when delivered in
accordance with the terms hereof, will constitute the legal, valid and binding obligation of the Company enforceable against the Company
in accordance with its terms, except (i) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors' rights and remedies
or by other equitable principles of general application, (ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable
law.
(d) No Conflicts . The execution, delivery and performance by the Company of the Transaction Documents to which it is a party and the
consummation by the Company of the transactions contemplated hereby or thereby (including, without limitation, the issuance of the Shares,
the reservation for issuance of the Conversion Shares and the issuance of the Conversion Shares in accordance with the terms of the Transaction
Documents) do not and will not (i) conflict with or violate any provisions of the Company's or any Subsidiary's certificate
of incorporation, bylaws or otherwise result in a violation of the organizational documents of the Company, (ii) conflict with, or constitute
a default (or an event that with notice or lapse of time or both would result in a default) under, result in the creation of any Lien
upon any of the properties or assets of the Company or any Subsidiary or give to others any rights of termination, amendment, acceleration
or cancellation (with or without notice, lapse of time or both) of, any Material Contract, or (iii) conflict with or result in a violation
of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which
the Company or a Subsidiary is subject (including federal and state securities laws and regulations and the rules and regulations, assuming
the correctness of the representations and warranties made by the Purchasers herein, of any self-regulatory organization to which the
Company or its securities are subject, including all applicable Trading Markets), or by which any property or asset of the Company or
a Subsidiary is bound or affected, except in the case of clauses (ii) and (iii) such as would not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect.
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(e) Filings, Consents and Approvals . Neither the Company nor any of its Subsidiaries is 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 (including
the issuance of the Securities), other than (i) the filing with the Commission of one or more Resale Registration Statements in accordance
with the requirements hereof, (ii) filings required by applicable state securities laws, (iii) the filing of a Notice of Sale of Securities
on Form D with the Commission under Regulation D of the Securities Act, (iv) the filing of any requisite notices and/or application(s)
to the Principal Trading Market for the issuance and sale of the Securities and the listing of the Common Stock for trading or quotation,
as the case may be, thereon in the time and manner required thereby; (v) the filings required in accordance with Section 4.5 of
this Agreement and (vi) the approval of the Proposal by the stockholders of the Company (the “ Stockholder Approval ”).
(f) Issuance of the Securities . The Shares have been duly authorized and, when issued and paid for in accordance with the terms of
the Transaction Documents, will be duly and validly issued, fully paid and nonassessable and free and clear of all Liens, other than
restrictions on transfer provided for in the Transaction Documents or imposed by applicable securities laws, and shall not be subject
to preemptive or similar rights. The Conversion Shares issuable upon conversion of the Shares have been duly authorized and, when issued
in accordance with the terms of the Transaction Documents, will be duly and validly issued, fully paid and nonassessable and free and
clear of all Liens, other than restrictions on transfer provided for in the Transaction Documents or imposed by applicable securities
laws, and shall not be subject to preemptive or similar rights. Assuming the accuracy of the representations and warranties of the Purchasers
in this Agreement, the Securities will be issued in compliance with all applicable federal and state securities laws. As of the applicable
Closing Date, the Company shall have reserved from its duly authorized capital stock the maximum number of Conversion Shares issuable
upon conversion of the Shares (without taking into account limitations set forth in the Certificate of Designation). The Company shall,
so long as any of the Shares are outstanding, take all action necessary to reserve and keep available out of its authorized and unissued
capital stock, solely for the purpose of effecting the conversion of the Shares, the maximum number of shares of Common Stock issuable
upon the exercise or conversion thereof (without taking into account any limitations set forth in the Certificate of Designation).
(g) Capitalization . The number of shares and type of all authorized, issued and outstanding capital stock, options and other securities
of the Company (whether or not presently convertible into or exercisable or exchangeable for shares of capital stock of the Company)
as of the date of this Agreement is set forth in Schedule 3.1(g) hereto. The Company has not issued any capital stock since the date
of its most recently filed SEC Report other than to reflect stock option and warrant exercises that do not, individually or in the aggregate,
have a material effect on the issued and outstanding capital stock, options and other securities. The number of shares of preferred stock
and Common Stock issuable upon conversion of such shares pursuant to the Letter of Intent, other than to the Purchasers is set forth
on Schedule 3.1(g) . No Person has any right of first refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by the Transaction Documents that have not been effectively waived as of the applicable
Closing Date. Except as set forth on Schedule 3.1(g) or a result of the purchase and sale of the Shares, there are no outstanding
options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights
or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any shares
of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound
to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Securities will not obligate the
Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right
of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of
the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance
with all applicable 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 other than the Stockholder Approval and such approval
is only required with respect to the Conversion Shares in excess of the Cap (as defined in the Certificate of Designation) and the Subsequent
Shares. Except as disclosed in the SEC Reports, 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 Company's Knowledge, between or among any
of the Company's stockholders. The amount of the Cap as of the date of this Agreement and the Initial Closing Date will be not
less than 1,888,294 shares of Common Stock.
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(h) SEC Reports; Disclosure Materials . The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date
hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including
the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “ SEC Reports ”,
and the SEC Reports, together with the Disclosure Schedules, being collectively referred to as the “ Disclosure Materials ”)
on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration
of any such extension, except where the failure to file on a timely basis would not have or reasonably be expected to result in a Material
Adverse Effect (including, or this purpose only, any failure to qualify to register the Common Stock for resale on Form S-3 or which
would prevent any Purchaser from using Rule 144 to resell any Securities). As of their respective filing dates, or to the extent corrected
by a subsequent restatement, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange
Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements
therein, in 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. Each of the Material Contracts to which the Company or any Subsidiary is a party or to which the property
or assets of the Company or any of its Subsidiaries are subject has been filed as an exhibit to the SEC Reports.
(i) Financial Statements . 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
(or to the extent corrected by a subsequent restatement). Such financial statements have been prepared in accordance with GAAP applied
on a consistent basis during the periods involved, 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 taken as a whole 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.
(j) Material Changes . Since the date of the latest audited financial statements included within the SEC Reports, except as specifically
disclosed in a subsequent SEC Report filed prior to the date hereof, (i) there have been no events, occurrences or developments that
have had or would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect, (ii) the Company
has not incurred any material 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 materially its method
of accounting or the manner in which it keeps its accounting books and records, (iv) the Company has not declared or made any dividend
or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any
shares of its capital stock (other than in connection with repurchases of unvested stock issued to employees of the Company), and (v)
the Company has not issued any equity securities to any officer, director or Affiliate, except Common Stock issued in the ordinary course
as dividends on outstanding preferred stock or issued pursuant to existing Company stock option or stock purchase plans or executive
and director compensation arrangements disclosed in the SEC Reports. Except for the issuance of the Shares and the transactions contemplated
by the Transaction Documents, no event, liability or development has occurred or exists with respect to the Company or its Subsidiaries
or their respective business, properties, operations or financial condition, that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made that has not been publicly disclosed at least one Trading Day prior
to the date that this representation is made.
(k) Litigation . There is no Action which (i) adversely affects or challenges the legality, validity or enforceability of any of the
Transaction Documents or the Securities or (ii) except as specifically disclosed in the SEC Reports, would, if there were an unfavorable
decision, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company
nor any Subsidiary, nor to the Company's Knowledge any director or officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been,
and to the Company's Knowledge 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 of its Subsidiaries under the Exchange Act or the Securities
Act.
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(l) Employment Matters . No material labor dispute exists or, to the Company's Knowledge, is imminent with respect to any of
the employees of the Company which would have or reasonably be expected to result in a Material Adverse Effect. None of the Company's
or any Subsidiary's employees is a member of a union that relates to such employee's relationship with the Company, and neither
the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and each Subsidiary believes
that its relationship with its employees is good. No executive officer of the Company (as defined in Rule 501(f) of the Securities Act)
has notified the Company or any such Subsidiary that such officer intends to leave the Company or any such Subsidiary or otherwise terminate
such officer's employment with the Company or any such Subsidiary. To the Company's Knowledge, no executive officer, to the
Company's Knowledge, is, or is now expected to be, in violation of any term 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 a third party, and to the Company's Knowledge, the continued employment of each such executive officer does not subject
the Company or any Subsidiary 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 would not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect.
(m) Compliance . Neither the Company nor any of its Subsidiaries (i) is in default under or in violation of (and no event has occurred
that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any of its Subsidiaries
under), nor has the Company or any of its Subsidiaries received written notice of a claim that it is in default under or that it is in
violation of, any Material Contract (whether or not such default or violation has been waived), (ii) is in violation of any order of
any court, arbitrator or governmental body having jurisdiction over the Company or its properties or assets, or (iii) is in violation
of, or in receipt of written notice that it is in violation of, any statute, rule or regulation of any governmental authority applicable
to the Company, except in each case as would not, individually or in the aggregate, have or reasonably be expected to result in a Material
Adverse Effect.
(n) Regulatory Permits . The Company and each of its Subsidiaries possess all certificates, authorizations and permits issued by the
appropriate federal, state, local or foreign regulatory authorities necessary to conduct its respective business as currently conducted
and as described in the SEC Reports, except where the failure to possess such permits, individually or in the aggregate, has not and
would not have or reasonably be expected to result in a Material Adverse Effect (“ Material Permits ”), and neither
the Company nor any of its Subsidiaries has received any notice of Proceedings relating to the revocation or modification of any such
Material Permits.
(o) Title to Assets . The Company and its Subsidiaries have good and marketable title in fee simple to all real property owned by them.
Other than as disclosed in the SEC Reports, the Company and its Subsidiaries have good and marketable title to all tangible personal
property owned by them that is material to the business of the Company and its Subsidiaries, taken as whole, in each case free and clear
of all Liens except such as do not materially affect the value of such property and do not interfere with the use made and proposed to
be made of such property by the Company and any of its Subsidiaries. Any real property and facilities held under lease by the Company
and any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material
and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its Subsidiaries.
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(p) Intellectual Property
(i) Schedule 3.1(p) contains a complete and accurate description and list of all (A) patented or registered Intellectual Property
Rights (or applications therefor) owned by the Company or any of its Subsidiaries or filed in the name of the Company or any of its Subsidiaries,
and (B) unregistered Intellectual Property Rights that are material to the conduct of the Company's business or the business of
any of its Subsidiaries, each as presently conducted and as presently proposed to be conducted, including any such Intellectual Property
Rights embodied or used in any product proposed to be developed, produced or marketed by the Company. Except as set forth on Schedule
3.1(p) , the Company or one of its Subsidiaries (A) owns and possesses all right, title and interest in and to all Intellectual Property
Rights set forth, or required to be set forth, on Schedule 3.1(p) , and (B) owns and possesses all right, title and interest in
all other Intellectual Property Rights used in or necessary for the operation of their respective businesses as presently conducted and
as presently proposed to be conducted (the Intellectual Property Rights referred to collectively in (A) and (B), the “ Company
Intellectual Property Rights ”), each, free and clear of all Liens, other than as disclosed in the SEC Reports. No loss
or expiration of any Company Intellectual Property Right is threatened, pending or, to the Company's knowledge, reasonably foreseeable,
except for patents expiring at the end of their statutory term. The Company and each of its Subsidiaries have taken all actions reasonable
under the circumstances to maintain and protect the Company Intellectual Property Rights. Each of the patented or registered Intellectual
Property Rights (or applications therefor) set forth on Schedule 3.1(p) is subsisting, in full force and effect, and valid and
enforceable. All renewal and maintenance fees in respect of each item of patented or registered Intellectual Property Rights (or applications
therefor) set forth on Schedule 3.1(p) have been duly paid and none of the registrations or applications are subject to any challenge,
opposition, nullity proceeding or interference or, to the Company's knowledge, threats to commence the same.
(ii)
There have been no claims made or threatened against the Company or any of its Subsidiaries with respect to the validity, infringement,
use, ownership or enforceability of any of the Company Intellectual Property Rights and, to the Company's knowledge, there is no
basis for any such claim. Neither the Company or any of its Subsidiaries has received any notices of, and has no knowledge of any facts
that indicate a likelihood of, the Company or any of its Subsidiaries infringing, misappropriating, or conflicting with any Intellectual
Property Rights of any other Person (including any demand or request that the Company or any of its Subsidiaries license any rights from
a third party or any unsolicited offer to license a patent). The conduct of the Company's and its Subsidiaries' businesses
has not infringed, misappropriated, violated or conflicted with, and the continued conduct of the Company's and its Subsidiaries'
businesses as presently conducted and as presently proposed to be conducted will not infringe, misappropriate, violate or conflict with,
any Intellectual Property Rights of any other Persons. To the Company's knowledge, the Company Intellectual Property Rights have
not been infringed, misappropriated, violated or conflicted by other Persons.
(iii)
The Company and each of its Subsidiaries have taken steps reasonable under the circumstances to maintain and protect the confidentiality
of their trade secrets and material confidential information. Each employee, officer, consultant, or outside contractor that has had
access to the confidential or proprietary information of the Company or any of its Subsidiaries has executed a confidentiality or similar
agreement for the protection, confidentiality and non-disclosure of such confidential and proprietary information, and neither the Company
nor any of its Subsidiaries has received notice that, nor is aware of any facts that, indicate a likelihood that, any Person is in violation
or breach of any such agreements.
(q) Insurance . The Company and each of the Subsidiaries are insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as the Company believes to be prudent and customary in the businesses and locations in which the
Company and the Subsidiaries are engaged, including, but not limited to, directors and officers insurance coverage and clinical trial
liability coverage. Neither the Company nor any of its Subsidiaries has received any notice of cancellation of any such insurance, nor,
to the Company's Knowledge, will it or any Subsidiary be unable to renew their respective existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant
increase in cost.
(r) Transactions With Affiliates and Employees . Except as set forth in the SEC Reports, none of the officers or directors of the Company
and, to the Company's Knowledge, none of the employees of the Company is presently a party to any transaction with the Company
or any Subsidiary (other than for services as employees, officers and directors), that would be required to be disclosed pursuant to
Item 404 of Regulation S-K promulgated under the Securities Act that has not otherwise been appropriately disclosed in accordance with
the Exchange Act.
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(s) Internal Accounting Controls . The Company maintains a system of internal accounting controls designed to provide reasonable assurance
that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset and liability accountability,
(iii) access to assets or incurrence of liabilities is permitted only in accordance with management's general or specific authorization,
and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals
and appropriate action is taken with respect to any differences.
(t) Sarbanes-Oxley; Disclosure Controls . The Company is in compliance in all material respects with all of the provisions of the Sarbanes-Oxley
Act of 2002 which are applicable to it as of the applicable Closing Date. The Company has established disclosure controls and procedures
(as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) for the Company and designed such disclosure controls
and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange
Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. The
Company's certifying officers have evaluated the effectiveness of the Company's disclosure controls and procedures as of
the end of the period covered by the Company's most recently filed periodic report under the Exchange Act (such date, the “ Evaluation
Date ”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the
certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation
Date. Since the Evaluation Date, there have been no changes in the Company's internal control over financial reporting (as such
term is defined in the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.
(u) Certain Fees . Except as otherwise expressly stated herein, no person or entity will have, as a result of the transactions contemplated
by this Agreement, any valid right, interest or claim against or upon the Company or a Purchaser for any commission, fee or other compensation
pursuant to any agreement, arrangement or understanding entered into by or on behalf of the Company with respect to the offer and sale
of the Shares. 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 paragraph (u) that may be due in connection with the transactions contemplated
by the Transaction Documents. The Company shall indemnify, pay, and hold each Purchaser harmless against, any liability, loss or expense
(including, without limitation, attorneys' fees and out-of-pocket expenses) arising in connection with any such right, interest
or claim.
(v) Private Placement . Assuming the accuracy of the Purchasers' representations and warranties set forth in Section 3.2 of this Agreement and the accuracy of the information disclosed in the Accredited Investor Questionnaires provided by the Purchasers,
no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers under
the Transaction Documents. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading
Market.
(w) 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.
(x) Registration Rights . Other than each of the Purchasers pursuant to Section 4.15 hereof or as set forth in Schedule 3.1(x) hereto, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company
other than those securities which are currently registered on an effective registration statement on file with the Commission.
(y) Listing and Maintenance Requirements . The Company's Common Stock is registered pursuant to Section 12(b) or 12(g) of the
Exchange Act, and the Company has taken no action designed to terminate the registration of the Common Stock under the Exchange Act nor
has the Company received any notification that the Commission is contemplating terminating such registration. Except as set forth in
the SEC Reports, the Company has not, in the twelve months preceding the date hereof, received written notice from any Trading Market
on which the Common Stock is listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements
of such Trading Market. The Company is in compliance with all listing and maintenance requirements of the Principal Trading Market on
the date hereof.
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(z) Application of Takeover Protections; Rights Agreements . The Company and the Board of Directors have taken all necessary action,
if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the Company's charter documents or the laws of its state
of incorporation that is or could reasonably be expected to become applicable to any of 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,
the Company's issuance of the Securities and the Purchasers' ownership of the Securities.
(aa) Disclosure . The Company confirms that it has not provided, and to the Company's Knowledge, none of its officers or directors
nor any other Person acting on its or their behalf has provided, any Purchaser or its respective agents or counsel with any information
that it believes constitutes material, non-public information except insofar as the existence, provisions and terms of the Transaction
Documents and the proposed transactions hereunder may constitute such information, all of which will be disclosed by the Company in the
Press Release as contemplated by Section 4.5 hereof. The Company understands and confirms that the Purchasers will rely on the
foregoing representations in effecting transactions in securities of the Company.
(bb) No Integrated Offering . Assuming the accuracy of the Purchasers' representations and warranties set forth in Section
3.2 , none of the Company, its Subsidiaries nor, to the Company's Knowledge, any of its Affiliates or any Person acting on its
behalf has, directly or indirectly, at any time within the past six months, made any offers or sales of any Company security or solicited
any offers to buy any security under circumstances that would (i) eliminate the availability of the exemption from registration under
Regulation D under the Securities Act in connection with the offer and sale by the Company of the Securities as contemplated hereby or
(ii) cause the offering of the Securities pursuant to the Transaction Documents to be integrated with prior offerings by the Company
for purposes of any applicable law, regulation or stockholder approval provisions, including, without limitation, under the rules and
regulations of any Trading Market on which any of the securities of the Company are listed or designated.
(cc) Tax Matters Except for matters that would not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United
States federal, state and local income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction
to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for
the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are
no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company
or of any Subsidiary know of no basis for any such claim.
(dd) Environmental Matters . The Company and its Subsidiaries (i) are in compliance with all federal, state, local and foreign laws
relating to pollution or protection of human health or the environment (including ambient air, surface water, groundwater, land surface
or subsurface strata), including laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants,
or toxic or hazardous substances or wastes (collectively, “ Hazardous Materials ”) into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands, or demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations, issued, entered, promulgated or approved thereunder (“ Environmental Laws ”);
(ii) have received all permits licenses or other approvals required of them under applicable Environmental Laws to conduct their respective
businesses; and (iii) are in compliance with all terms and conditions of any such permit, license or approval where in each clause (i),
(ii) and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.
(ee) No General Solicitation . Neither the Company nor, to the Company's Knowledge, 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.
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(ff) Foreign Corrupt Practices Neither the Company nor any Subsidiary, nor to the knowledge
of the Company or any Subsidiary, any agent or other person acting on behalf of the Company or any Subsidiary, has (i) directly or indirectly,
used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity,
(ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties
or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by
any person acting on its behalf of which the Company is aware) which is in violation of law or (iv) taken any action that would reasonably
be expected to subject the Company to any damage or penalty in any criminal or governmental litigation or proceeding under any provision
of Foreign Corrupt Practices Act of 1977.
(gg) Off Balance Sheet Arrangements . There is no transaction, arrangement, or other relationship between the Company (or any Subsidiary)
and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in SEC Reports and is not so
disclosed and would have or reasonably be expected to result in a Material Adverse Effect.
(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
hereby and 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) 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.
(jj) PFIC . No Subsidiary of the Company is or intends to become a “passive foreign investment company” within the meaning
of Section 1297 of the U.S. Internal Revenue Code of 1986, as amended (the “ Code ”) or a “controlled foreign
corporation” within the meaning of Section 957 of the Code.
(kk) Real Property Holding Corporation . The Company is not now and has never been a “United States real property holding corporation”
as defined in the Code and any applicable regulations promulgated thereunder.
(ll) Sanctions . Neither the Company nor any Subsidiary nor, to the Company's Knowledge, any director, officer, agent, employee,
Affiliate or Person acting on behalf 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; and the Company will not directly or indirectly use the proceeds of
the sale of the Securities, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or
other Person or entity, for the purpose of financing or facilitating any activities, business or transaction with any Sanctioned Person
or in any Sanctioned Country or in any manner that would result in the violation of any Sanctions applicable to any party hereto.
(mm) No Bad Actors . No “bad actor” disqualifying event described in Rule 506(d)(1)(i)-(viii) of the Securities Act (a “ Disqualification
Event ”) is applicable to the Company or, to the Company's Knowledge, any Company Covered Person, except for a Disqualification
Event as to which Rule 506(d)(2)(ii–iv) or (d)(3) is applicable.
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(nn) FDA As to each product subject to the jurisdiction of the U.S. Food and Drug Administration
(“ FDA ”) under the Federal Food, Drug and Cosmetic Act, as amended, and the regulations thereunder (“ FDCA ”)
that is manufactured, packaged, labeled, tested, distributed, sold, and/or marketed by the Company or any of its Subsidiaries (each such
product, a “ Pharmaceutical Product ”), such Pharmaceutical Product is, to the knowledge of the Company, being
manufactured, packaged, labeled, tested, distributed, sold and/or marketed by the Company in compliance with all applicable requirements
under FDCA and similar laws, rules and regulations relating to registration, investigational use, premarket clearance, licensure, or
application approval, good manufacturing practices, good laboratory practices, good clinical practices, product listing, quotas, labeling,
advertising, record keeping and filing of reports, except where the failure to be in compliance would not have a Material Adverse Effect.
There is no pending, completed or, to the Company's knowledge, threatened, action (including any lawsuit, arbitration, or legal
or administrative or regulatory proceeding, charge, complaint, or investigation) against the Company or any of its Subsidiaries, and
none of the Company or any of its Subsidiaries has received any notice, warning letter or other communication from the FDA or any other
governmental entity, which (i) contests the premarket clearance, licensure, registration, or approval of, the uses of, the distribution
of, the manufacturing or packaging of, the testing of, the sale of, or the labeling and promotion of any Pharmaceutical Product, (ii)
withdraws its approval of, requests the recall, suspension, or seizure of, or withdraws or orders the withdrawal of advertising or sales
promotional materials relating to, any Pharmaceutical Product, (iii) imposes a clinical hold on any clinical investigation by the Company
or any of its Subsidiaries, (iv) enjoins production at any facility of the Company or any of its Subsidiaries, (v) enters or proposes
to enter into a consent decree of permanent injunction with the Company or any of its Subsidiaries, or (vi) otherwise alleges any violation
of any laws, rules or regulations by the Company or any of its Subsidiaries, and which, either individually or in the aggregate, would
have a Material Adverse Effect. The properties, business and operations of the Company have been and are being conducted in all material
respects in accordance with all applicable laws, rules and regulations of the FDA. The Company has not been informed by the FDA that
the FDA will prohibit the marketing, sale, license or use in the United States of any product proposed to be developed, produced or marketed
by the Company nor has the FDA expressed any concern as to approving or clearing for marketing any product being developed or proposed
to be developed by the Company.
(oo) Healthcare Laws . The Company and its Subsidiaries are, and during the last three years, has been, in compliance with all Healthcare
Laws, except where failure to comply would not be expected, individually or in the aggregate, to result in a Material Adverse Effect.
For purposes of this Agreement, “ Healthcare Laws ” means: (i) the FDCA and the Public Health Service Act (42
U.S.C. Section 201 et seq.); (ii) all applicable federal, state, local and foreign health care fraud and abuse laws, including, without
limitation, the Anti-Kickback Statute (42 U.S.C. Section 1320a-7b(b)), the Civil False Claims Act (31 U.S.C. Section 3729 et seq.), the
criminal false statements law (42 U.S.C. Section 1320a-7b(a)), 18 U.S.C. Sections 286, 287, 1347 and 1349, the civil monetary penalties
law (42 U.S.C. Section 1320a-7a), the exclusion law (42 U.S.C. Section 1320a-7), the Physician Payments Sunshine Act (42 U.S.C. Section
1320-7h), and applicable laws governing government funded or sponsored healthcare programs; (iii) the Health Insurance Portability and
Accountability Act (“ HIPAA ”), as amended by the Health Information Technology for Economic and Clinical Health
Act (42 U.S.C. Section 17921 et seq.); (iv) all other similar local, state, federal, national, supranational and foreign laws; and (v)
the regulations promulgated pursuant to such laws set forth in subparts (i) through (iv). Except as would not be expected, individually
or in the aggregate, to result in a Material Adverse Effect. During the last three (3) years, the Company has not received written notice
of any claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from any court or arbitrator
or governmental authority alleging that any product, operation, or activity is in violation of any Healthcare Laws nor, to the Company's
Knowledge, is any such written claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action threatened.
Except as would not be expected, individually or in the aggregate, to result in a Material Adverse Effect, during the last three (3)
years, the Company has filed, maintained or submitted all written reports, documents, forms, notices, applications, records, claims,
submissions and supplements or amendments (“ Submissions ”) as required by any Healthcare Laws, and all such Submissions
were accurate on the date filed (or were corrected or supplemented by a subsequent submission). The Company is not a party to any corporate
integrity agreements, deferred or non-prosecution agreements, monitoring agreements, consent decrees, settlement orders, or similar written
agreements with or imposed by any Governmental Entity. During the last three years, neither the Company nor any of its respective employees,
officers, directors, or, to the Company's Knowledge, agents has been excluded, suspended or debarred from participation in any
U.S. federal health care program or human clinical research.
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(pp) Preclinical Data, Clinical Trials and Regulatory Compliance . The preclinical tests and clinical trials, and other studies (collectively,
“ studies ”) that are described in, or the results of which are referred to in, the SEC Reports were and, if
still pending, are being conducted in all material respects in accordance with the protocols, procedures and controls designed and approved
for such studies and with standard medical and scientific research procedures; each description of the results of such studies is accurate
and complete in all material respects and fairly presents the data derived from such studies, and to the Company's Knowledge no
other studies the results of which are inconsistent with, or otherwise call into question, the results described or referred to in the
SEC Reports; the Company and its Subsidiaries have made all such filings and obtained all such approvals as may be required by the FDA
or the U.S. Department of Health and Human Services or any committee thereof or from any other United States or foreign government or
drug or medical device regulatory agency, or health care facility Institutional Review Board (collectively, the “ Regulatory
Agencies ”); neither the Company nor any of its Subsidiaries has received any notice of, or correspondence from, any Regulatory
Agency requiring the termination, suspension or modification of any clinical trials or preclinical tests that are described or referred
to in the SEC Reports; and the Company and its Subsidiaries have each operated and currently are in compliance in all material respects
with all applicable rules, regulations and policies of the Regulatory Agencies.
(qq) No Additional Agreements . The Company does not have any agreement or understanding with any Purchaser with respect to the transactions
contemplated by the Transaction Documents other than as specified in the Transaction Documents.
(rr) Use of Form S-3 . The Company meets the registration and transaction requirements for use of Form S-3 for the registration of the
Common Stock for resale by the Purchasers.
Representations and Warranties of the Purchasers . Each Purchaser hereby, for itself and for no other Purchaser, represents and
warrants as of the date hereof and as of each Closing Date to the Company as follows:
(a) Organization; Authority . Such Purchaser is an entity validly existing and in good standing under the laws of the jurisdiction
of its organization with the requisite corporate or partnership power and authority to enter into and to consummate the transactions
contemplated by the applicable Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution
and delivery of this Agreement by such Purchaser and performance by such Purchaser of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate or, if such Purchaser is not a corporation, such partnership, limited liability
company or other applicable like action, on the part of such Purchaser. Each Transaction document to which it is a party has been duly
executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally
binding obligation of such Purchaser, enforceable against it in accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the
enforcement of, creditors' rights and remedies or by other equitable principles of general application.
(b) No Conflicts . The execution, delivery and performance by such Purchaser of this Agreement and the consummation by such Purchaser
of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of such Purchaser,
(ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which
such Purchaser is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal
and state securities laws) applicable to such Purchaser, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults,
rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the
ability of such Purchaser to perform its obligations hereunder.
(c) Investment Intent . 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 Shares, and will acquire the Conversion Shares (upon
conversion of the Shares) 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 laws, provided, however , that by making
the representations herein, such Purchaser does not agree to hold any of the Securities for any minimum period of time and reserves the
right, subject to the provisions of this Agreement, at all times to sell or otherwise dispose of all or any part of such Securities pursuant
to an effective registration statement under the Securities Act or under an exemption from such registration and in compliance with applicable
federal and state securities laws. Such Purchaser does not presently have any agreement, plan or understanding, directly or indirectly,
with any Person to distribute or effect any distribution of any of the Securities (or any securities which are derivatives thereof) to
or through any person or entity; such Purchaser is not a registered broker-dealer under Section 15 of the Exchange Act or an entity engaged
in a business that would require it to be so registered as a broker-dealer.
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(d) Purchaser Status . At the time such Purchaser was offered the Shares, it was, and at the date hereof it is, an “accredited
investor” as defined in Rule 501(a) under the Securities Act.
(e) General Solicitation . Such Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or
presented at any seminar or any other general advertisement.
(f) Access to Information . Such Purchaser acknowledges that it has been afforded (i) the opportunity to ask such questions as it has
deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering
of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company and the Subsidiaries
and their respective financial condition, results of operations, business, properties, management and prospects sufficient to enable
it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire
without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Neither
such inquiries nor any other investigation conducted by or on behalf of such Purchaser or its representatives or counsel shall modify,
amend or affect such Purchaser's right to rely on the truth, accuracy and completeness of the Disclosure Materials and the Company's
representations and warranties contained in the Transaction Documents. Such Purchaser has sought such accounting, legal and tax advice
as it has considered necessary to make an informed decision with respect to its acquisition of the Securities.
(g) Certain Trading Activities . Other than with respect to the transactions contemplated herein, since the date a draft of this Agreement
and a draft of the Letter of Intent was provided to such Purchaser, neither the Purchaser nor any Affiliate of such Purchaser which (x)
had knowledge of the transactions contemplated hereby, (y) has or shares discretion relating to such Purchaser's investments or
trading or information concerning such Purchaser's investments, including in respect of the Securities, and (z) is subject to such
Purchaser's review or input concerning such Affiliate's investments or trading (collectively, “ Trading Affiliates ”)
has directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser or Trading Affiliate,
effected or agreed to effect any purchases or sales of the securities of the Company (including, without limitation, any Short Sales
involving the Company's securities). Notwithstanding the foregoing, in the case of a Purchaser and/or Trading Affiliate that is,
individually or collectively, a multi-managed investment bank or vehicle whereby separate portfolio managers manage separate portions
of such Purchaser's or Trading Affiliate'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 or Trading Affiliate's assets, the representation
set forth above shall apply only with respect to the portion of assets managed by the portfolio manager that have knowledge about the
financing transaction contemplated by this Agreement. Other than to other Persons party to this Agreement, such Purchaser has maintained
the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction).
Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude
any actions, with respect to the identification of the availability of, or securing of, available shares to borrow in order to effect
short sales or similar transactions in the future.
(h) Brokers and Finders . Except for legal fees, no Person will have, as a result of the transactions contemplated by this Agreement,
any valid right, interest or claim against or upon the Company or any Purchaser for any commission, fee or other compensation pursuant
to any agreement, arrangement or understanding entered into by or on behalf of the Purchaser.
(i) Independent Investment Decision . Such Purchaser has independently evaluated the merits of its decision to purchase Securities
pursuant to the Transaction Documents, and such Purchaser confirms that it has not relied on the advice of any other Purchaser's
business and/or legal counsel in making such decision. Such Purchaser understands that nothing in this Agreement or any other materials
presented by or on behalf of the Company to the Purchaser in connection with the purchase of the Securities constitutes legal, tax or
investment advice. Such Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary
or appropriate in connection with its purchase of the Securities. Such Purchaser confirms that none of such Persons has made any representations
or warranties to such Purchaser in connection with the transactions contemplated by the Transaction Documents.
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(j) Reliance on Exemptions . Such Purchaser understands that the Securities being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the
truth and accuracy of, and such Purchaser's compliance with, the representations, warranties, agreements, acknowledgements and
understandings of such Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of such
Purchaser to acquire the Securities.
(k) Beneficial Ownership . The purchase by such Purchaser of the Shares issuable to it at the applicable Closing will not result in
such Purchaser (individually or together with any other Person with whom such Purchaser has identified, or will have identified, itself
as part of a “group” in a public filing made with the Commission involving the Company's securities) acquiring, or
obtaining the right to acquire, in excess of 9.99% of the outstanding shares of Common Stock or the voting power of the Company on a
post transaction basis that assumes that such Closing shall have occurred. Such Purchaser does not presently intend to, alone or together
with others, make a public filing with the Commission to disclose that it has (or that it together with such other Persons have) acquired,
or obtained the right to acquire, as a result of such Closing (when added to any other securities of the Company that it or they then
own or have the right to acquire), at one time in excess of 9.99% of the outstanding shares of Common Stock or the voting power of the
Company on a post transaction basis that assumes that each Closing shall have occurred. Notwithstanding the foregoing, in the case of
a Purchaser and/or Trading Affiliate that is, individually or collectively, a multi-managed investment bank or vehicle whereby separate
portfolio managers manage separate portions of such Purchaser's or Trading Affiliate'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
or Trading Affiliate's assets, the representation set forth above shall apply only with respect to the portion of assets managed
by the portfolio manager that has knowledge about the financing transaction contemplated by this Agreement. The foregoing representations
apply after giving effect to blocker and beneficial ownership limitations in the Certificate of Designation and other agreements with
the Company.
(l) Residency . Such Purchaser's residence (if an individual) or offices in which its investment decision with respect to the
Securities was made (if an entity) are located at the address immediately below such Purchaser's name on its signature page hereto.
The
Company and each of the Purchasers acknowledge and agree that no party to this Agreement has made or makes any representations or warranties
with respect to the transactions contemplated hereby other than those specifically set forth in this Article III and the Transaction
Documents.
ARTICLE
IV.
OTHER AGREEMENTS OF THE PARTIES
Transfer Restrictions
(a) Compliance with Laws . Notwithstanding any other provision of this Article IV , each Purchaser covenants that the Securities
may be disposed of only pursuant to an effective registration statement under, and in compliance with the requirements of, 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 compliance with any applicable state and federal securities laws. In connection with any transfer of the Securities other
than (i) pursuant to an effective registration statement, (ii) to the Company, (iii) pursuant to Rule 144 ( provided that the Purchaser
provides the Company with reasonable assurances (in the form of seller and, if applicable, broker representation letters) that the securities
may be sold pursuant to such rule) or (iv) in connection with a bona fide pledge as contemplated in Section 4.1(b) , the Company
may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable
to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer
does not require registration of such transferred Securities under the Securities Act. As a condition of a transfer other than pursuant
to (i) through (iv) above, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights
of a Purchaser under this Agreement with respect to such transferred Securities.
(b) Legends . Certificates, including, if applicable, book entry statements with the Transfer Agent, evidencing the Securities shall
bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form,
until such time as they are not required under Section 4.1(c)
NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION OR EXERCISE OF THESE SECURITIES HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES AND THE SECURITIES
ISSUABLE UPON CONVERSION OR EXERCISE OF THESE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE
OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) 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 OR BLUE SKY
LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT OR (II) UNLESS SOLD PURSUANT
TO RULE 144 UNDER THE SECURITIES ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
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The
Company acknowledges and agrees that a Purchaser may from time to time pledge, and/or grant a security interest in, some or all of the
legended Securities in connection with applicable securities laws, pursuant to a bona fide margin agreement in compliance with a bona
fide margin loan. Such a pledge would not be subject to approval or consent of the Company and no legal opinion of legal counsel to the
pledgee, secured party or pledgor shall be required in connection with the pledge, but such legal opinion shall be required in connection
with a subsequent transfer or foreclosure following default by the Purchaser transferee of the pledge. No notice shall be required of
such pledge, but Purchaser's transferee shall promptly notify the Company of any such subsequent transfer or foreclosure. Each
Purchaser acknowledges that the Company shall not be responsible for any pledges relating to, or the grant of any security interest in,
any of the Securities or for any agreement, understanding or arrangement between any Purchaser and its pledgee or secured party. At the
appropriate Purchaser's expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party
of Securities may reasonably request in connection with a pledge or transfer of the Securities, including the preparation and filing
of any required prospectus supplement under Rule 424(b)(3) of the Securities Act or other applicable provision of the Securities Act
to appropriately amend the list of Selling Stockholders thereunder. Each Purchaser acknowledges and agrees that, except as otherwise
provided in Section 4.1(c) , any Securities subject to a pledge or security interest as contemplated by this Section 4.1(b) shall continue to bear the legend set forth in this Section 4.1(b) and be subject to the restrictions on transfer set forth in Section 4.1(a)
(c) Removal of Legends . The legend set forth in Section 4.1(b) above shall be removed and the Company shall cause its Transfer
Agent to issue book entry statements without such legend or any other legend to the holder of the applicable Securities upon which it
is stamped or issue to such holder by electronic delivery at the applicable balance account at the Depository Trust Company (“ DTC ”),
if (i) such Securities are registered for sale or transfer pursuant to the effective registration statement registering the Securities
for resale (during such time that such registration statement is effective and not withdrawn or suspended, and only as permitted by such
registration statement) or sold or transferred pursuant to Rule 144 (if the transferor is not an Affiliate of the Company), or (ii) such
Securities are eligible for sale 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 securities and without volume or manner-of-sale restrictions. Following the earlier of
(A) one year from the applicable Closing Date or (B) Rule 144 becoming available for the resale of Securities, without the requirement
for the Company to be in compliance with the current public information required under Rule 144 as to such securities and without volume
or manner-of-sale restrictions, upon request of a Purchaser, the Company shall cause Company Counsel to issue to the Transfer Agent the
legal opinion referred to in the Irrevocable Transfer Agent Instructions. Any fees (with respect to the Transfer Agent, Company Counsel
or otherwise) associated with the issuance of such opinion or the removal of such legend shall be borne by the Company. Following such
time as a legend is no longer required for certain Securities, the Company will no later than two Trading Days following the delivery
by a Purchaser to the Company (with notice to the Company) of a legended book entry statement representing Conversion Shares (endorsed
or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer) (such
second Trading Day, the “ Legend Removal Date ”), deliver or cause to be delivered via DTC to such Purchaser
such Securities that are 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 4.1(c) . Electronic certificates for
Conversion Shares subject to legend removal hereunder may be transmitted by the Transfer Agent to the Purchasers by crediting the account
of the Purchaser's prime broker with DTC as directed by such Purchaser.
(d) Irrevocable Transfer Agent Instructions . The Company shall issue irrevocable instructions to its transfer agent, and any subsequent
transfer agent, in the form of Exhibit C attached hereto (the “ Irrevocable Transfer Agent Instructions ”).
The Company represents and warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section
4.1(d) (or instructions that are consistent therewith) will be given by the Company to its transfer agent in connection with this
Agreement, and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and the other Transaction Documents and applicable law. The Company acknowledges that a breach by it of its
obligations under this Section 4.1(d) will cause irreparable harm to a Purchaser. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 4.1(d) will be inadequate and agrees, in the event of a breach
or threatened breach by the Company of the provisions of this Section 4.1(d) , that a Purchaser shall be entitled, in addition
to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer,
without the necessity of showing economic loss and without any bond or other security being required.
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(e) Acknowledgement . Each Purchaser hereunder acknowledges its primary responsibilities under the Securities Act and accordingly will
not sell or otherwise transfer the Securities or any interest therein without complying with the requirements of the Securities Act.
While the Resale Registration Statement remains effective, each Purchaser hereunder may sell the Conversion Shares in accordance with
the plan of distribution contained in the Resale Registration Statement and if it does so it will comply therewith and with the related
prospectus delivery requirements unless an exemption therefrom is available. Each Purchaser, severally and not jointly with the other
Purchasers, agrees that if it is notified by the Company in writing at any time that the Resale Registration Statement registering the
resale of the Conversion Shares is not effective or that the prospectus included in such Resale Registration Statement no longer complies
with the requirements of Section 10 of the Securities Act, the Purchaser will refrain from selling such Conversion Shares until such
time as the Purchaser is notified by the Company that such Resale Registration Statement is effective or such prospectus is compliant
with Section 10 of the Securities Act, unless such Purchaser is able to, and does, sell such Conversion Shares pursuant to an available
exemption from the registration requirements of Section 5 of the Securities Act. Both the Company and its Transfer Agent, and their respective
directors, officers, employees and agents, may rely on this Section 4.1(e) and each Purchaser hereunder will indemnify and hold
harmless each of such persons from any breaches or violations of this Section 4.1(e)
(f) Buy-In . If the Company shall fail for any reason or for no reason to issue via DTC to a Purchaser Securities that are free from
all restrictive and other legends within two Trading Days of receipt of all documents necessary for the removal of the legend set forth
above, then, in addition to all other remedies available to such Purchaser, if on or after the Trading Day immediately following such
two Trading Day period, such Purchaser purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction
of a sale by the holder of shares of Common Stock that such Purchaser anticipated receiving from the Company without any restrictive
legend (a “ Buy-In ”), then the Company shall, within two trading Days after such Purchaser's request and
in such Purchaser's sole discretion, (a) pay in cash to such Purchaser the amount by which (x) such Purchaser's total purchase
price (including any brokerage commissions). for the shares of Common Stock so purchased exceeds (y) the product of (1) the aggregate
number of shares of Common Stock that such Purchaser was entitled to receive from the conversion at issue multiplied by (2) the actual
sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B)
at the option of such Purchaser, either reissue (if surrendered) the shares of Series C Preferred Stock equal to the number of shares
of Series C Preferred Stock submitted for conversion or deliver to such Purchaser the number of shares of Common Stock that would have
been issued if the Company had timely complied with its delivery requirements under this Section 4.1. The Purchaser shall provide the
Company written notice, within two Trading Days after the occurrence of a Buy-In, indicating the amounts payable to such Purchaser in
respect of such Buy-In together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein
shall limit a Purchaser's right to pursue any other remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with respect to the Company's failure to timely deliver shares
of Common Stock upon conversion of the shares of Series C Preferred Stock as required pursuant to the terms hereof; provided, however,
that the Purchaser shall not be entitled to both (i) require the reissuance of the shares of Series C Preferred Stock submitted for conversion
for which such conversion was not timely honored and (ii) receive the number of shares of Common Stock that would have been issued if
the Company had timely complied with its delivery requirements under this Section 4.1.
Reservation of Stock . The Company shall take all action necessary to at all times have authorized and reserved for the purpose
of issuance from and after the applicable Closing Date, for so long as any of the Shares are outstanding, take all action necessary to
reserve and keep available out of its authorized and unissued capital stock, solely for the purpose of effecting the conversion of the
Shares, the maximum number of Conversion Shares issuable upon the conversion thereof (without taking into account any limitations set
forth in the Certificate of Designation).
Furnishing of Information . In order to enable the Purchasers to sell the Securities under Rule 144, for a period of 12 months
from the applicable Closing Date, the Company shall use its commercially reasonable efforts 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. During such 12 month period, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare
and furnish to the Purchasers and make publicly available in accordance with Rule 144(c) such information as is required for the Purchasers
to sell the Securities under Rule 144.
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Integration . The Company shall not, and shall use its commercially reasonable efforts to ensure that no Affiliate of the Company
shall, 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 will be integrated with the offer or sale of the Securities in a manner that would require the registration under
the Securities Act of the sale of the Securities to the Purchasers, or that will be integrated with the offer or sale of the Securities
for purposes of the rules and regulations of any Trading Market such that it would require stockholder approval prior to the closing
of such other transaction unless stockholder approval is obtained before the closing of such subsequent transaction.
Securities Laws Disclosure; Publicity . By 9:00 A.M., New York City time, on the Trading Day immediately following the date hereof,
the Company shall issue a press release (the “ Press Release ”) reasonably acceptable to the Purchasers disclosing
all material terms of the transactions contemplated hereby. On or before 9:00 A.M., New York City time, on the second Trading Day immediately
following the execution of this Agreement, the Company will file a Current Report on Form 8-K with the Commission describing the terms
of the Transaction Documents (and including as exhibits to such Current Report on Form 8-K the material Transaction Documents (including,
without limitation, this Agreement and the Certificate of Designation)) and the contemplated change to the Company's dividend policy
as described in Section 5.1(k) below. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser
or an Affiliate of any Purchaser, or include the name of any Purchaser or an Affiliate of any Purchaser in any press release or filing
with the Commission (other than the Resale Registration Statement) or any regulatory agency or Trading Market, without the prior written
consent of such Purchaser, such consent not to be unreasonably withheld, except (i) as required by federal securities law in connection
with (A) any registration statement contemplated by Section 4.15 hereto and (B) the filing of final Transaction Documents (including
signature pages thereto) with the Commission and (ii) to the extent such disclosure is required by law, request of the Staff or Trading
Market regulations, in which case the Company shall provide the Purchasers with prior written notice of such disclosure permitted under
this subclause (ii). From and after the issuance of the Press Release, no Purchaser shall be in possession of any material, non-public
information received from the Company, any Subsidiary or any of their respective officers, directors, employees or agents, that is not
disclosed in the Press Release unless a Purchaser shall have executed a written agreement regarding the confidentiality and use of such
information. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions
contemplated by this Agreement are required to be publicly disclosed by the Company as described in this Section 4.5 , such Purchaser
will maintain the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms
of this transaction).
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, in either case solely
by virtue of receiving Securities under the Transaction Documents or under any other written agreement between the Company and the Purchasers; provided however , that no such Purchaser owns any equity in the Company prior to its purchase of the Securities hereunder.
Non-Public Information . Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, including this Agreement, or as expressly required by any applicable securities law, the Company covenants and agrees that
neither it, nor any other Person acting on its behalf, will provide any Purchaser or its agents or counsel with any information regarding
the Company that the Company believes constitutes material non-public information without the express written consent of such Purchaser.
The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities
of the Company.
Use of Proceeds . The Company shall use the net proceeds from the sale of the Shares hereunder for working capital and general
corporate purposes and shall not use such proceeds for: (a) the satisfaction of any portion of the Company's debt (other than (i)
debt outstanding as of the date hereof, as disclosed in the SEC Reports, and (ii) payment of trade payables in the ordinary course of
the Company's business and prior practices), (b) the redemption of any Common Stock or Common Stock Equivalents or (c) the settlement
of any outstanding litigation.
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Indemnification of Purchasers . Subject to the provisions of this Section 4.9 (and in addition to the indemnification provisions
set forth in Section 4.15 ), the Company will indemnify and hold each Purchaser and its directors, officers, shareholders, members,
partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding
a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities
Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other
Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title)
of such controlling persons (each, a “ Purchaser Party ”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable
attorneys' fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a)
any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction
Documents or (b) any action instituted against a Purchaser in any capacity, or any of them or their respective Affiliates, by any stockholder
of the Company who is not an Affiliate of such Purchaser, with respect to any of the transactions contemplated by the Transaction Documents
(unless such action is based upon a breach of such Purchaser's representations, warranties or covenants under the Transaction Documents
or any agreements or understandings such Purchaser may have with any such stockholder or any violations by the Purchaser of state or
federal securities laws or any conduct by such Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance).
Promptly after receipt by any Person (the “ Indemnified Person ”) of notice of any demand, claim or circumstances
which would or might give rise to a claim or the commencement of any action, proceeding or investigation in respect of which indemnity
may be sought pursuant to this Section 4.9 , such Indemnified Person shall promptly notify the Company in writing and the Company
shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Person, and shall assume
the payment of all fees and expenses; provided however , that the failure of any Indemnified Person so to notify the Company
shall not relieve the Company of its obligations hereunder except to the extent that the Company is actually and materially prejudiced
by such failure to notify. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person unless: (i) the Company and the Indemnified Person shall
have mutually agreed to the retention of such counsel; (ii) the Company shall have failed promptly to assume the defense of such proceeding
and to employ counsel reasonably satisfactory to such Indemnified Person in such proceeding; or (iii) in the reasonable judgment of counsel
to such Indemnified Person, representation of both parties by the same counsel would be inappropriate due to actual or potential differing
interests between them. The Company shall not be liable for any settlement of any proceeding effected without its written consent, which
consent shall not be unreasonably withheld, delayed or conditioned. Without the prior written consent of the Indemnified Person, which
consent shall not be unreasonably withheld, delayed or conditioned, the Company shall not effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by
such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Person from all liability arising
out of such proceeding.
Principal Trading Market Listing . In the time and manner required by the Principal Trading Market, the Company shall prepare and
file with such Principal Trading Market an additional shares listing application covering all of the Common Stock and shall use its commercially
reasonable efforts to take all steps necessary to cause all of the Common Stock to be approved for listing on the Principal Trading Market
as promptly as possible thereafter. The Company shall use commercially reasonable efforts to maintain the Company's listing on
the Principal Trading Market through the second anniversary of the Subsequent Closing Date.
Form D; Blue Sky . 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 the written request of any Purchaser. The Company, on or before the applicable Closing Date,
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 under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain
an exemption from such qualification) and shall provide evidence of such actions promptly upon the written request of any Purchaser.
Delivery of Shares After Each Closing . The Company shall deliver, or cause to be delivered, the respective Shares purchased by
each Purchaser to such Purchaser within two Trading Days of the applicable Closing Date.
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Short Sales and Confidentiality After The Date Hereof . Such Purchaser shall not, and shall cause its Trading Affiliates not to,
engage, directly or indirectly, in any transactions in the Company's securities (including, without limitation, any Short Sales
involving the Company's securities) during the period from the date hereof until the earlier of such time as (i) the transactions
contemplated by this Agreement are first publicly announced as required by and described in Section 4.5 or (ii) this Agreement
is terminated in full pursuant to Section 6.18 . Each Purchaser, severally and not jointly with the other Purchasers, covenants
that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company as described in Section
4.5 , such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included
in the Transaction Documents and Disclosure Schedules. Notwithstanding the foregoing, no Purchaser makes any representation, warranty
or covenant hereby that it will not engage in Short Sales in the securities of the Company after the time that the transactions contemplated
by this Agreement are first publicly announced as described in Section 4.5 provided, however , each Purchaser agrees, severally
and not jointly with any Purchasers, that they will not enter into any Net Short Sales (as hereinafter defined) from the period commencing
on the applicable Closing Date and ending on the earliest of (x) the Effective Date of the initial Registration Statement, (y) the twenty-four
(24) month anniversary of the applicable Closing Date or (z) the date that such Purchaser no longer holds any Securities. For purposes
of this Section 4.13 , a “ Net Short Sale ” by any Purchaser shall mean a sale of Common Stock by such
Purchaser that is marked as a short sale and that is made at a time when there is no equivalent offsetting long position in Common Stock
held by such Purchaser. For purposes of determining whether there is an equivalent offsetting position in Common Stock held by the Purchaser,
Conversion Shares that have not yet been issued pursuant to the conversion of the Shares shall be deemed to be held long by the Purchaser,
and the amount of shares of Common Stock held in a long position shall be all unconverted Conversion Shares (ignoring any exercise limitations
included therein) issuable to such Purchaser on such date, plus any shares of Common Stock or Common Stock Equivalents otherwise then
held by such Purchaser. Notwithstanding the foregoing, in the event that a Purchaser is a multi-managed investment vehicle whereby separate
portfolio managers manage separate portions of such Purchaser's assets and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other portions of such Purchaser's assets, the representation set
forth above shall apply only with respect to the portion of assets managed by the portfolio manager that have knowledge about the financing
transaction contemplated by this Agreement. Moreover, notwithstanding the foregoing, in the event that a Purchaser has sold Securities
pursuant to Rule 144 prior to the Effective Date of the Resale Registration Statement and the Company has failed to deliver via DTC Securities
that are free of all restrictive and other legends prior to the settlement date for such sale (assuming that such electronic certificates
meet the requirements set forth in Section 4.1(c) for the removal of legends), the provisions of this Section 4.13 shall
not prohibit the Purchaser from entering into Net Short Sales for the purpose of delivering shares of Common Stock in settlement of such
sale.
Subsequent Equity Sales . Except for an Exempt Issuance, from the date hereof until the later of (i) 12 months after the date of
this Agreement, and (ii) 30 days after the later of the Effective Date and receipt of the Stockholder Approval, neither the Company nor
any Subsidiary shall issue shares of Common Stock or Common Stock Equivalents; provided, however , the 30 day period set forth
in this Section 4.14 shall be extended for the number of Trading Days during such period in which (i) trading in the Common Stock
is suspended by any Trading Market, or (ii) following the Effective Date, the Resale Registration Statement is not effective or the prospectus
included in the Resale Registration Statement may not be used by the Purchasers for the resale of the Common Stock.
Registration Rights
(a) Registration Procedures and Expenses . The Company shall:
(i)
(A) within 15 days of the Initial Closing Date, or such other period of time as may be agreed between the Company and the Purchasers,
file a Resale Registration Statement with the Commission to register all of the Initial Registrable Shares on Form S-3 under the Securities
Act (providing for shelf registration of such Registrable Shares under Commission Rule 415), and (B) as soon as practicable following
the Subsequent Closing Date, but, in any event, not later than three days thereafter, file a Resale Registration Statement with the Commission
to register all of the Subsequent Registrable Shares on Form S-3 under the Securities Act (providing for shelf registration of such Registrable
Shares under Commission Rule 415) (each such date, a “ Filing Date ”). In the event that Form S-3 is not available for
the registration of any of the Registrable Shares, the Company shall register the resale of the Registrable Shares on such other form
as is available to the Company;
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(ii)
use its commercially reasonable efforts to cause each such Resale Registration Statements required by Section 4.15(a)(i) to be
declared effective within 60 days following the applicable Filing Date (or, in the event the Staff reviews and has written comments to
any such Resale Registration Statement, within the later of (a) 75 days following the applicable Filing Date and (b) 15 days following
the last comment received from the Staff with respect to such Resale Registration Statement) (the earlier of the foregoing or the applicable
date set forth in Section 4.15(vi) , the “ Effectiveness Deadline ” with respect to such Resale Registration
Statement), such efforts to include, without limiting the generality of the foregoing, preparing and filing with the Commission any financial
statements or other information that is required to be filed prior to the effectiveness of such Resale Registration Statement;
(iii)
prepare and file with the Commission such amendments and supplements to any Resale Registration Statements and the prospectus used in
connection therewith as may be necessary to keep such Resale Registration Statements continuously effective and free from any material
misstatement or omission to state a material fact therein until termination of such obligation as provided in Section 4.15(e) below, subject to the Company's right to suspend pursuant to Section 4.15(d)
(iv)
furnish to the Purchasers such number of copies of prospectuses in conformity with the requirements of the Securities Act and such other
documents as the Purchasers may reasonably request, in order to facilitate the public sale or other disposition of all or any of the
Registrable Shares by the Purchasers;
(v)
file such documents as may be required of the Company for normal securities law clearance for the resale of the Registrable Shares in
such states of the United States as may be reasonably requested by the Purchasers and use its commercially reasonable efforts to maintain
such blue sky qualifications during the period the Company is required to maintain effectiveness of the Resale Registration Statements; provided however , that the Company shall not be required in connection with this Section 4.15(a)(v) to qualify
as a foreign corporation or execute a general consent to service of process in any jurisdiction in which it is not now so qualified or
has not so consented;
(vi)
upon notification by the Commission that a Resale Registration Statement will not be reviewed or is not subject to further review by
the Commission, within one Trading Days following the date of such notification, request acceleration of such Resale Registration Statement
(with the requested effectiveness date to be not more than two Trading Days later);
(vii)
upon notification by the Commission that that a Resale Registration Statement has been declared effective (the date of such notification,
the “ Effective Date ”) by the Commission, file the final prospectus under Rule 424 within the applicable time
period prescribed by Rule 424;
(viii)
advise the Purchasers promptly, and in any event within 24 hours of (A) the effectiveness of a Resale Registration Statement or any post-effective
amendments thereto, (B) any request by the Commission for amendments to the Resale Registration Statement or amendments to the prospectus
or for additional information relating thereto, (C) the issuance by the Commission of any stop order suspending the effectiveness of
a Resale Registration Statement under the Securities Act or of the suspension by any state securities commission of the qualification
of the Registrable Shares for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes
and (D) the existence of any fact and the happening of any event that makes any statement of a material fact made in a Resale Registration
Statement, the prospectus and amendment or supplement thereto, or any document incorporated by reference therein, untrue, or that requires
the making of any additions to or changes in a Resale Registration Statement or the prospectus in order to make the statements therein
not misleading;
(ix)
cause all Registrable Shares to be listed on each securities exchange on which equity securities by the Company are then listed, if any;
(x)
bear all expenses in connection with the procedures in paragraphs (i) through (ix) of this Section 4.15(a) and the registration
of the Registrable Shares on such Resale Registration Statement and the satisfaction of the blue sky laws of such states; and
(xi)
neither the Company nor any of its security holders (other than the Purchasers in such capacity pursuant hereto) may include securities
of the Company in any Registration Statements other than the Registrable Securities. The Company shall not file any other registration
statements until all Registrable Securities are registered pursuant to a Registration Statement that is declared effective by the Commission;
provided, that, the Company may file or amend registration statements in connection with clause (a) and (b) of the definition of Exempt
Issuance. In any event, from the date hereof until the earlier of (a) the date on which all Registrable Securities are registered pursuant
to a Registration Statement that is declared effective by the Commission and, if required, the Stockholder Approval has been obtained
or (b) two and one-half (2-1/2) years after the Closing Date, neither the Company nor any Subsidiary shall file any registration statement
or any amendment or supplement thereto on behalf of the Company or any Subsidiary, in each case other than as permitted pursuant to this
Agreement
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(b) Rule 415 Cutback . If at any time the Staff takes the position that the offering of some or all of the Registrable Shares in a
Resale Registration Statement is not eligible to be made on a delayed or continuous basis under the provisions of Rule 415 under the
Securities Act or requires any Purchaser to be named as an “underwriter,” the Company shall use its commercially reasonable
efforts to persuade the Commission that the offering contemplated by such Resale Registration Statement is a valid secondary offering
and not an offering “by or on behalf of the issuer” as defined in Rule 415 and that none of the Purchasers is an “underwriter.”
The Purchasers shall have the right to review and oversee any registration or matters pursuant to this Section 4.15 , including
any participation in meetings or discussions with the Commission regarding the Commission's position and to comment on any written
submission made to the Commission with respect thereto. In the event that, despite the Company's commercially reasonable efforts
and compliance with the terms of this Section 4.15 , the Staff refuses to alter its position, the Company shall (A) remove from
the Resale Registration Statement such portion of the Registrable Shares (the “ Cut Back Shares ”) and/or (B)
agree to such restrictions and limitations on the registration and resale of the Registrable Shares as the Commission may require to
assure the Company's compliance with the requirements of Rule 415 (collectively, the “ SEC Restrictions ”); provided however , that the Company shall not agree to name any Purchaser as an “underwriter” in such Resale
Registration Statement without the prior written consent of such Purchaser. Any cutback imposed on the Purchasers pursuant to this Section
4.15 shall be allocated among the Purchasers on a pro rata basis and shall be applied first to any of the Registrable Securities
of such Purchaser as such Purchaser shall designate, unless the SEC Restrictions otherwise require or provide or the Purchasers otherwise
agree. No damages shall accrue as to any Cut Back Shares until such date as the Company is able to effect the registration of such Cut
Back Shares in accordance with any SEC Restrictions (such date, the “ Restriction Termination Date ” of such
Cut Back Shares). From and after the Restriction Termination Date applicable to any Cut Back Shares, all of the provisions of this Section
4.15 shall again be applicable to such Cut Back Shares; provided however , that (x) the filing deadline for the Resale
Registration Statement including such Cut Back Shares shall be 10 Trading Days after such Restriction Termination Date, and (y) the Effectiveness
Deadline with respect to such Cut Back Shares shall be the 60th day immediately after the Restriction Termination Date or the 90th day
if the Staff reviews such Resale Registration Statement (but in any event no later than three Trading Days from the Staff indicating
it has no further comments on such Resale Registration Statement). The Company represents that to its best knowledge, not fewer than
all of Registrable Securities may be registered on behalf of the Purchasers in the Initial Registration Statement without reduction for
cutbacks.
(c) Indemnification
(i)
The Company agrees to indemnify and hold harmless each Purchaser Party, to the fullest extent permitted by applicable law, from and against
any losses, claims, damages or liabilities (collectively, “ Losses ”), joint or several, to which they may become
subject (under the Securities Act or otherwise) insofar as such Losses (or actions or proceedings in respect thereof) arise out of, or
are based upon, any material breach of this Agreement by the Company or any untrue or alleged untrue statement of a material fact contained
in a Resale Registration Statement or any omission or alleged omission to state a material fact required to be stated in the prospectus
contained therein or necessary to make the statements in the prospectus contained therein, in light of the circumstances under which
they were made, not misleading or arise out of any failure by the Company to fulfill any undertaking included in the Resale Registration
Statement and the Company will, as incurred, reimburse the Purchaser Parties for any legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim; provided however , that the Company shall not be
liable in any such case to the extent that such Loss arises out of, or is based upon: (A) an untrue statement or omission made in such
Resale Registration Statement in reliance upon and in conformity with written information furnished to the Company by or on behalf of
such Purchaser specifically for inclusion in the Resale Registration Statement or (B) any breach of this Agreement by such Purchaser; provided further however , that the Company shall not be liable to any Purchaser Party (or any partner, member, officer,
director or controlling Person of the Purchasers) to the extent that any such Loss is caused by an untrue statement or omission made
in any preliminary prospectus if either (1) (a) such Purchaser failed to send or deliver a copy of the final prospectus with or prior
to, or such Purchaser failed to confirm that a final prospectus was deemed to be delivered prior to (in accordance with Rule 172 of the
Securities Act), the delivery of written confirmation of the sale by such Purchaser to the Person asserting the claim from which such
Loss resulted and (b) the final prospectus corrected such untrue statement or omission, (2) (x) such untrue statement or omission is
corrected in an amendment or supplement to the prospectus and (y) having previously been furnished by or on behalf of the Company with
copies of the prospectus as so amended or supplemented or notified by the Company that such amended or supplemented prospectus has been
filed with the Commission, in accordance with Rule 172 of the Securities Act, such Purchaser thereafter fails to deliver such prospectus
as so amended or supplemented, with or prior to or a Purchaser fails to confirm that the prospectus as so amended or supplemented was
deemed to be delivered prior to (in accordance with Rule 172 of the Securities Act), the delivery of written confirmation of the sale
by such Purchaser to the Person asserting the claim from which such Loss resulted or (3) such Purchaser sold Registrable Shares in violation
of such Purchasers' covenants contained in Article IV of this Agreement.
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(ii)
Each Purchaser agrees, severally and not jointly, to indemnify and hold harmless the Company and its officers, directors, affiliates,
agents and representatives and each Person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act (each a “ Company Party ” and collectively the “ Company Parties ”),
from and against any Losses to which the Company Parties may become subject (under the Securities Act or otherwise), insofar as such
Losses (or actions or proceedings in respect thereof) arise out of, or are based upon, any material breach of this Agreement by such
Purchaser or untrue statement of a material fact contained in a Resale Registration Statement (or any omission to state therein a material
fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made,
not misleading in each case, on the effective date thereof), if, and only to the extent, such untrue statement or omission was made in
reliance upon and in conformity with written information furnished by or on behalf of such Purchaser specifically for inclusion in the
Resale Registration Statement, and each Purchaser, severally and not jointly, will reimburse each Company Party for any legal or other
expenses reasonably incurred in investigating, defending or preparing to defend any such action, proceeding or claim; provided however , that in no event shall any indemnity under this Section 4.15(c)(ii) be greater in amount than the dollar amount
of the proceeds (net of all expenses paid by such Purchaser in connection with any claim relating to this Section 4.15 and the
amount of any damages such Purchaser has otherwise been required to pay by reason of such untrue statement or omission) received by such
Purchaser upon its sale of the Registrable Shares included in the Resale Registration Statement giving rise to such indemnification obligation.
(iii)
Promptly after receipt by any indemnified Person of a notice of a claim or the beginning of any action in respect of which indemnity
is to be sought against an indemnifying Person pursuant to this Section 4.15(c) , such indemnified Person shall notify the indemnifying
Person in writing of such claim or of the commencement of such action, and, subject to the provisions hereinafter stated, in case any
such action shall be brought against an indemnified Person and such indemnifying Person shall have been notified thereof, such indemnifying
Person shall be entitled to participate therein, and, to the extent that it shall wish, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified Person. After notice from the indemnifying Person to such indemnified Person of its election to assume
the defense thereof, such indemnifying Person shall not be liable to such indemnified Person for any legal expenses subsequently incurred
by such indemnified Person in connection with the defense thereof; provided however , that if there exists or shall exist
a conflict of interest that would make it inappropriate in the reasonable judgment of the indemnified Person for the same counsel to
represent both the indemnified Person and such indemnifying Person or any affiliate or associate thereof, the indemnified Person shall
be entitled to retain its own counsel at the expense of such indemnifying Person; provided further , that no indemnifying
Person shall be responsible for the fees and expense of more than one separate counsel for all indemnified parties. The indemnifying
party shall not settle an action without the consent of the indemnified party, which consent shall not be unreasonably withheld.
(iv)
If after proper notice of a claim or the commencement of any action against the indemnified party, the indemnifying party does not choose
to participate, then the indemnified party shall assume the defense thereof and upon written notice by the indemnified party requesting
advance payment of a stated amount for its reasonable defense costs and expenses, the indemnifying party shall advance payment for such
reasonable defense costs and expenses (the “ Advance Indemnification Payment ”) to the indemnified party. In
the event that the indemnified party's actual defense costs and expenses exceed the amount of the Advance Indemnification Payment,
then upon written request by the indemnified party, the indemnifying party shall reimburse the indemnified party for such difference;
in the event that the Advance Indemnification Payment exceeds the indemnified party's actual costs and expenses, the indemnified
party shall promptly remit payment of such difference to the indemnifying party.
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(v)
If the indemnification provided for in this Section 4.15(c) is held by a court of competent jurisdiction to be unavailable to
an indemnified party with respect to any losses, claims, damages or liabilities referred to herein, the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall to the extent permitted by applicable law contribute to the amount paid or payable
by such indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and of the indemnified party on the other, as well as any other relevant equitable considerations; provided , that in no event shall any contribution by an indemnifying party hereunder be greater in amount than the dollar amount
of the proceeds received by such indemnifying party upon the sale of such Registrable Shares. No person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from any person not guilty of such fraudulent
misrepresentation.
(d) Prospectus Suspension . Each Purchaser acknowledges that there may be times when the Company must suspend the use of the prospectus
forming a part of a Resale Registration Statement until such time as an amendment to such Resale Registration Statement has been filed
by the Company and declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission
pursuant to the Exchange Act. Each Purchaser hereby covenants that it will not sell any Registrable Shares pursuant to said prospectus
during the period commencing at the time at which the Company gives the Purchasers notice of the suspension of the use of said prospectus
and ending at the time the Company gives the Purchasers notice that the Purchasers may thereafter effect sales pursuant to said prospectus; provided , that such suspension periods shall in no event exceed 30 consecutive days or a total of 60 days in any 12-month period
and that, in the good faith judgment of the Company's Board of Directors, the Company would, in the absence of such delay or suspension
hereunder, be required under state or federal securities laws to disclose any corporate development, a potentially significant transaction
or event involving the Company, or any negotiations, discussions, or proposals directly relating thereto, in either case the disclosure
of which would reasonably be expected to have a Material Adverse Effect upon the Company or its stockholders.
(e) Termination of Obligations . The obligations of the Company pursuant to Section 4.15(a) hereof shall cease and terminate,
with respect to any Registrable Shares, upon the earlier to occur of (i) such time such Registrable Shares have been resold, or (ii)
such time as such shares no longer remain Registrable Shares.
(f) Reporting Requirements . With a view to making available the benefits of certain rules and regulations of the Commission that may
at any time permit the sale of the Registrable Shares to the public without registration or pursuant to a registration statement on Form
S-3, the Company agrees to:
(i)
make and keep public information available, as those terms are understood and defined in Rule 144; and
(ii)
so long as a Purchaser owns Registrable Shares, to furnish to such Purchaser upon request (A) a written statement by the Company as to
whether it is in compliance with the reporting requirements of Rule 144 and the Exchange Act, or whether it is qualified as a registrant
whose securities may be resold pursuant to Commission Form S-3 and (B) such other information as may be reasonably requested to permit
the Purchaser to sell such securities pursuant to Rule 144.
(g)
If a Resale Registration Statement has not been declared effective by the Commission on or before the earlier of the applicable Effectiveness
Deadline or the date set forth in Section 4.15(a)(vi) (the “ Required Effective Date ”), the Company shall,
on the business day immediately following the Required Effective Date and each 30 th day thereafter, make a payment to the
Purchasers as partial liquidated damages for such delay (together, the “ Late Registration Payments ”) equal
to 1% of the aggregate Preferred Share Purchase Price of the Securities then owned by the Purchasers until the Resale Registration Statement
is declared effective by the Commission. Late Registration Payments will be prorated on a daily basis during each 30-day period and will
be paid to the Purchasers by wire transfer or check within five business days after the earlier of (i) the end of each 30-day period
following the Required Effective Date or (ii) the effective date of the Resale Registration Statement. If the Company fails to pay any
liquidated damages pursuant to this section in full within seven days after the date payable, the Company will pay interest thereon at
a rate of 12% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Purchasers, accruing daily
from the date such liquidated damages are due until such amounts, plus all such interest thereon, are paid in full.
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Noteholder Consent . Each of the Purchasers who is a holder of the Company's 10.0% Senior Secured Convertible Notes Due November
22, 2027 (the “ Notes ”), in their capacity as a holder of the Notes, hereby represent that such Purchasers,
as of the date hereof, hold the Principal amount of Notes stated on the signature page hereto, which such amount may be applied towards
a 70% super-majority in interest of the Notes, and, in such capacity, hereby consents to entering into the Transaction Documents and
the performance of the transactions contemplated by the Transaction Documents, including the sale and issuance of the Initial Shares
and the Subsequent Shares and the issuance of any Conversion Shares in accordance with the terms of the Transaction Documents and hereby
agrees that the Transaction Documents and the transactions contemplated thereunder do not constitute a violation or breach of any of
the covenants under Section 14 of the Notes. In addition, each of the Purchasers who is a holder of the Notes, in such capacity, hereby
consents to the Strategic Transaction and agrees that the Strategic Transaction does not constitute a violation or breach of any of the
covenants under Section 14 of the Notes and hereby waive any right to enforce the terms of the Notes with respect to the Strategic Transaction.
Furthermore, the Purchasers who are holders of the Notes acknowledge that, for purposes of Section 4(a)(xi) of the Notes, they have received
adequate written notice from the Company of the Transaction Documents, the transactions contemplated thereunder and the Strategic Transaction.
Participation Right
(a)
Until the first anniversary of the Subsequent Closing Date, neither the Company nor any of its Subsidiaries shall, directly or indirectly,
effect any securities offering unless the Company shall have first complied with this Section 4.17. The Company acknowledges and agrees
that the right set forth in this Section 4.17 is a right granted by the Company, separately, to each Purchaser. For the avoidance of
doubt, the right set forth in this Section 4.17 does not apply to the issuance of Securities in the Strategic Transaction.
(b)
At least two Trading Days prior to such securities offering, the Company shall deliver to each Purchaser a written notice of the Company's
intention to effect a subsequent securities offering which notice shall describe in reasonable detail the proposed terms of such securities
offering, the amount of proceeds intended to be raised thereunder and the Person or Persons through or with whom such securities offering
is proposed to be effected and shall include a term sheet and transaction documents relating thereto as an attachment.
(c)
Any Purchaser desiring to participate in such securities offering must provide written notice to the Company by 6:30 am (New York City
time) on the Trading Day following the date on which the notice described in Section 4.17(b) is delivered to such Purchaser that such
Purchaser is willing to participate in the securities offering (which notice shall serve as irrevocable instructions to participate in
such securities offering), 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 notice described in Section 4.17(b) above and,
in the event the Company receives such notice from the Purchaser, the Company shall allow the Purchaser to participate in the securities
offering on the terms set forth in the Purchaser's notice if the securities offering is consummated. If the Company receives no
such notice from a Purchaser as of such time specified in this Section 4.17(c), such Purchaser shall be deemed to have notified the Company
that it does not elect to participate in such securities offering. If more than one Purchaser wish to participate in such securities
offering and their respective participation requests exceed the total amount of the securities offering, the Purchasers shall participate
on a pro rata basis based on the number of shares of Common Stock held by such Purchasers treating all convertible securities on an as
if fully converted to Common Stock basis.
Stockholder Approval . The Company shall, as soon as practicable following the Closing, but not more than 30 days thereafter, file
a preliminary proxy statement for a vote of its stockholders to approve the issuance of the Shares and all Conversion Shares upon conversion
of the Shares, if required by Nasdaq Listing Rule 5635 (or any successor thereto). It is the Company's responsibility to determine
the applicability of Nasdaq Listing Rule 5635 (or any successor thereto). The Company shall, as soon as practicable following notification
from the Staff that it has completed its review of a preliminary proxy statement filed in accordance with this Section 4.18 or that it
will not review such preliminary proxy statement, file and mail a definitive proxy statement for the vote of its stockholders to approve
the Proposal. The Company covenants and agrees that its Board of Directors shall unanimously recommend that the Proposal be approved
by the Company's stockholders at all meetings in which the Proposal is considered. If the Company's stockholders do not approve
the Initial Proposal at the first meeting in which the Proposal is voted on by stockholders, the Company covenants and agrees that it
will submit the Proposal for approval of the Company's stockholders at least semi-annually until such approval is obtained.
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Amendment of Terms and Provisions of the Letter of Intent . The material terms and provisions of the Letter of Intent and any documents
prepared in connection therewith, including Series D Preferred Stock, may not be amended, modified or the material conditions therein
waived without the consent of the Purchasers which consent will not be unreasonably withheld. Any modification or waiver that negatively
impacts a Purchaser is deemed material under this Section 4.19.
ARTICLE
V.
CONDITIONS PRECEDENT TO CLOSING
Conditions Precedent to the Obligations of the Purchasers to Purchase Securities . The obligation of each Purchaser to acquire
Shares at each Closing is subject to the fulfillment to such Purchaser's satisfaction, on or prior to the applicable Closing Date,
of each of the following conditions, any of which may be waived by such Purchaser (as to itself only):
(a) Representations and Warranties . The representations and warranties of the Company contained herein shall be true and correct in
all material respects (except for those representations and warranties which are qualified as to materiality, in which case such representations
and warranties shall be true and correct in all respects) as of the date when made and as of the applicable Closing Date, as though made
on and as of such date, except for such representations and warranties that speak as of a specific date.
(b) Performance . The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements
and conditions required by the Transaction Documents to be performed, satisfied or complied with by it at or prior to the applicable
Closing Date.
(c) No Injunction . No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents.
(d) Consents . The Company shall have obtained in a timely fashion any and all consents, permits, approvals, registrations and waivers
necessary for consummation of the purchase and sale of the applicable Securities, and with respect to the Subsequent Closing, the Stockholder
Approval if required under the Nasdaq Listing Rules, all of which shall be and remain so long as necessary in full force and effect.
(e) Adverse Changes . Since the date of execution of this Agreement, no event or series of events shall have occurred that has had
or would reasonably be expected to have a Material Adverse Effect.
(f) Listing . The Company or Company Counsel shall have submitted a Listing of Additional Shares notification form with the Nasdaq
Stock Market LLC covering the Conversion Shares issuable upon conversion of the applicable Shares.
(g) No Suspensions of Trading in Common Stock . The Common Stock shall not have been suspended, as of or prior to any Closing Date,
by the Commission or the Principal Trading Market from trading on the Principal Trading Market nor shall suspension by the Commission
or the Principal Trading Market have been threatened, as of or prior to any applicable Closing Date, either (i) in writing by the Commission
or the Principal Trading Market or (ii) by falling below the minimum listing maintenance requirements of the Principal Trading Market.
(h) Company Deliverables . The Company shall have delivered the Company Deliverables in accordance with Section 2.2(a)
(i) Compliance Certificate . The Company shall have delivered to each Purchaser a certificate, dated as of the applicable Closing Date
and signed by its Chief Executive Officer or its Chief Financial Officer, dated as of the applicable Closing Date, certifying to the
fulfillment of the conditions specified in Sections 5.1(a) and (b) in the form attached hereto as Exhibit E
(j) Due Diligence . The Company shall have provided the Purchasers with all documents and materials reasonably requested by the Purchasers
in connection with their due diligence review.
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(k) Dividend Policy . The Company shall modify its dividend policy to state that, subject to compliance with any restrictive covenants
in any of the Company's existing debt facilities, the Company shall consider in good faith the issuance of dividends or share buybacks,
from time to time, from the Company's annual net cash flow.
(l) Termination . This Agreement shall not have been terminated as to such Purchaser in accordance with Section 6.18 herein.
(m) Strategic Transaction . Prior to the Subsequent Closing, the Company shall have entered into definitive documentation with respect
to the Strategic Transaction, no default by any party thereto not under the Letter of Intent shall have occurred and not been cured,
and the Letter of Intent is still in force.
(n) Cross Default . A default by the Company of a material term, covenant, warranty or undertaking of any other agreement to which
the Company and Purchasers are both parties, or the occurrence of an event of default under any such other agreement to which the Company
and Purchasers are both parties which is not cured after any required notice and/or cure period.
(o) Mutual Closing Condition . Any Purchaser or the Company may, upon prior notice to the other, not effect the Closing if from the
date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company's principal
Trading Market, and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have
been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service,
or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities
nor shall there have occurred any material outbreak or escalation of hostilities, pandemic or other national or international calamity
of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment
of the Company or such Purchaser, makes it impracticable or inadvisable to sell or purchase the Series C Preferred Stock at the Closing.
Conditions Precedent to the Obligations of the Company to sell Securities . The Company's obligation to sell and issue the
Shares at the applicable Closing to the Purchasers is subject to the fulfillment to the satisfaction of the Company on or prior to the
applicable Closing Date of the following conditions, any of which may be waived by the Company:
(a) Representations and Warranties . The representations and warranties made by the Purchasers in Section 3.2 hereof shall be
true and correct in all material respects (except for those representations and warranties which are qualified as to materiality, in
which case such representations and warranties shall be true and correct in all respects) as of the date when made, and as of the applicable
Closing Date as though made on and as of such date, except for representations and warranties that speak as of a specific date.
(b) Performance . Such Purchaser shall have performed, satisfied and complied in all material respects with all covenants, agreements
and conditions required by the Transaction Documents to be performed, satisfied or complied with by such Purchaser at or prior to the
applicable Closing Date.
(c) No Injunction . No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents.
(d) Consents . The Company shall have obtained in a timely fashion any and all consents, permits, approvals, registrations and waivers
necessary for consummation of the purchase and sale of the Securities, all of which shall be and remain so long as necessary in full
force and effect.
(e) Purchasers Deliverables . Such Purchaser shall have delivered its Purchaser Deliverables in accordance with Section 2.2(b)
(f) Termination . This Agreement shall not have been terminated as to such Purchaser in accordance with Section 6.18 herein.
ARTICLE
VI.
MISCELLANEOUS
Fees and Expenses . The Company shall pay the Purchasers' counsel a legal fee of $20,000, all Transfer Agent fees, stamp
taxes and other taxes and duties levied in connection with the sale and issuance of the Securities to the Purchasers and all expenses
in connection with obtaining Stockholder Approval and the registration of the Common Stock. Each party shall otherwise pay its own expenses
in connection with the transactions contemplated by the Transaction Documents.
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Entire Agreement . The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding
of the parties with respect to the subject matter hereof and supersede all prior agreements, understandings, discussions and representations,
oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
At or after the applicable Closing, and without further consideration, the Company and the Purchasers will execute and deliver to the
other such further documents as may be reasonably requested in order to give practical effect to the intention of the parties under the
Transaction Documents.
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 (provided the sender receives a machine-generated confirmation of successful transmission) at the facsimile number specified
in this Section 6.3 prior to 5:00 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 delivered via facsimile at the facsimile number specified in this Section 6.3 on a day that
is not a Trading Day or later than 5:00 P.M., New York City time, on any Trading Day, (c) the Trading Day following the date of mailing,
if sent by U.S. nationally recognized overnight courier service with next day delivery specified, 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 follows:
If to the Company:
Biofrontera Inc.
120 Presidential Way, Suite 330
Woburn, Massachusetts 01801
Attention: Fred Leffler
Email: f.leffler@bfinc.com
With a copy to:
(which shall not constitute notice)
McGuireWoods LLP
1251 Avenue of the Americas, 20 th Floor
New York, New York 10020
Attention: Stephen Older and Andrew Terjesen
Email: solder@mcguirewoods.com
aterjesen@mcquirewoods.com
If to a Purchaser:
To the address set forth under such Purchaser's name on the signature page hereof:
Or such other address as may be designated in writing hereafter, in the same manner, by such Person.
Amendments; Waivers; No Additional Consideration . No provision of this Agreement may be waived, modified, supplemented or amended
except in a written instrument signed, in the case of an amendment, by the Company and the Purchasers of at least a majority in interest
of the Securities, if prior to the applicable Closing Date, to be purchased by the Purchasers hereunder, or, if after the applicable
Closing Date, still held by Purchasers or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought.
No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall
any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right. No consideration
shall be offered or paid to any Purchaser to amend or consent to a waiver or modification of any provision of any Transaction Document
unless the same consideration is also offered to all Purchasers who then hold Securities. Unless expressly stated herein, the Transaction
Documents do not amend, waive, or modify the terms and obligations of any other agreement to which both the Company and any Purchaser
are parties or under which obligations are created or owed by the Company and any Purchaser, each to the other.
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Construction . 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. The language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent, and no rules of strict construction will be applied against any party. This Agreement shall be
construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement or any of the Transaction Documents.
Successors and Assigns . The provisions of this Agreement shall inure to the benefit of and be binding upon the parties and their
successors and permitted assigns. This Agreement, or any rights or obligations hereunder, may not be assigned by the Company without
the prior written consent of each Purchaser. Any Purchaser may assign its rights hereunder in whole or in part to any Person to whom
such Purchaser assigns or transfers any Securities in compliance with the Transaction Documents and applicable law, provided such transferee
shall agree in writing to be bound, with respect to the transferred Securities, by the terms and conditions of this Agreement that apply
to the “Purchasers.”
No Third-Party Beneficiaries . This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except each Purchaser
Party is an intended third party beneficiary of Section 4.9.
Governing Law . All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be
governed by and construed and enforced in accordance with the internal laws of the State of Delaware, without regard to the principles
of conflicts of law thereof. Each party agrees that all 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,
employees or agents) shall be commenced exclusively in the Delaware Court of Chancery. Each party hereto hereby irrevocably submits to
the exclusive jurisdiction of the Delaware Court of Chancery 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 Proceeding, any claim that it is not personally subject to
the jurisdiction of any such Delaware Court, or that such Proceeding has been commenced in an improper or inconvenient forum. Each party
hereto hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a
copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect
for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH
PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Survival . Subject to applicable statute of limitations, the representations, warranties, agreements and covenants contained herein
shall survive each Closing and the delivery of the Securities.
Execution . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Delivery of an executed Agreement by one party to the other may be made by facsimile,
electronic mail (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act,
the Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com) or other transmission method and any counterpart
so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
Severability . If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability
of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt
to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.
Rescission and Withdrawal Right . Notwithstanding anything to the contrary contained in (and without limiting any similar provisions
of) the Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and
the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw,
in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part
without prejudice to its future actions and rights.
Securities Purchase Agreement
Page
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, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company and the Transfer
Agent of such loss, theft or destruction and the execution by the holder thereof of a customary lost certificate affidavit of that fact
and an agreement to indemnify and hold harmless the Company and the Transfer Agent for any losses in connection therewith or, if required
by the Transfer Agent, a bond in such form and amount as is required by the Transfer Agent. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Securities.
If a replacement certificate or instrument evidencing any Securities is requested due to a mutilation thereof, the Company may require
delivery of such mutilated certificate or instrument as a condition precedent to any issuance of a replacement.
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 described in the foregoing
sentence and hereby agree to waive in any action for specific performance of any such obligation (other than in connection with any action
for a temporary restraining order) the defense that a remedy at law would be adequate.
Payment Set Aside . To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document
or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise
or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by
or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including,
without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such enforcement or setoff had not occurred.
Adjustments in Share Numbers and Prices . In the event of any stock split, subdivision, dividend or distribution payable in shares
of Common Stock (or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly shares
of Common Stock), combination or other similar recapitalization or event occurring after the date hereof and prior to the applicable
Closing, each reference in any Transaction Document to a number of shares or a price per share shall be deemed to be amended to appropriately
account for such event.
Independent Nature of Purchasers' Obligations and Rights . The obligations of each Purchaser under any Transaction Document
are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance
of the obligations of any other Purchaser under any Transaction Document. The decision of each Purchaser to purchase Securities pursuant
to the Transaction Documents has been made by such Purchaser independently of any other Purchaser and independently of any information,
materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company or any Subsidiary which may have been made or given by any other Purchaser or by
any agent or employee of any other Purchaser, and no Purchaser and any of its agents or employees shall have any liability to any other
Purchaser (or any other Person) relating to or arising from any such information, materials, statement or opinions. Nothing contained
herein or in any Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers
as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any
way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each
Purchaser acknowledges that no other Purchaser has acted as agent for such Purchaser in connection with making its investment hereunder
and that no Purchaser will be acting as agent of such Purchaser in connection with monitoring its investment in the Securities or enforcing
its rights under the Transaction Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including
without limitation the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary
for any other Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented by
its own separate legal counsel in its review and negotiation of the Transaction Documents. 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 Purchaser.
Securities Purchase Agreement
Page
Termination . This Agreement may be terminated and the sale and purchase of the Shares abandoned at any time prior to the Initial
Closing by either the Company or any Purchaser (with respect to itself only) upon written notice to the other, if the Initial Closing
has not been consummated on or prior to 5:00 P.M., New York City time, on the Outside Date; provided, however , that the right
to terminate this Agreement under this Section 6.18 shall not be available to any Person whose failure to comply with its obligations
under this Agreement has been the cause of or resulted in the failure of the applicable Closing to occur on or before such time. Nothing
in this Section 6.18 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions
of this Agreement or the other Transaction Documents or to impair the right of any party to compel specific performance by any other
party of its obligations under this Agreement or the other Transaction Documents. In the event of a termination pursuant to this Section
6.18 , the Company shall promptly notify all non-terminating Purchasers. Upon a termination in accordance with this Section 6.18 ,
the Company and the terminating Purchaser(s) shall not have any further obligation or liability (including arising from such termination)
to the other, and no Purchaser will have any liability to any other Purchaser under the Transaction Documents as a result therefrom.
Waiver of Conflicts. Each party to this Agreement acknowledges that Company Counsel, counsel for the Company, may have in the
past performed, and may continue to or in the future perform, legal services for the Purchasers in matters that are similar, but not
substantially related, to the transactions described in this Agreement, including the representation of the Purchasers in financings
and other matters. Accordingly, each party to this Agreement hereby acknowledges that (a) they have had an opportunity to ask for information
relevant to this disclosure and (b) Company Counsel represents only the Company with respect to the Agreement and the transactions contemplated
hereby. Each Purchaser gives its informed consent to Company Counsel's representation of the Purchasers in matters not substantially
related to this Agreement, and the Purchasers give their informed consent to Company Counsel's representation of the Company, in
connection with this Agreement and the transactions contemplated hereby.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
Securities Purchase Agreement
Page
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.
BIOFRONTERA, INC.
By:
Name:
Title:
Securities Purchase Agreement
Page
NAME OF PURCHASER:
By:
Name:
Title:
Aggregate Purchase Price (Preferred Share Initial Subscription Amount): $
Aggregate Purchase Price (Preferred Share Subsequent Subscription Amount): $
Number of Initial Shares to be Acquired:
Number of Subsequent Shares to be Acquired:
Section 4.16 Principal Amount of Notes held $
Tax ID No.:
Address for Notice:
Telephone No.:
Facsimile No.:
E-mail Address:
Attention:
Delivery Instructions:
(if different than above)
c/o
Street:
City/State/Zip:
Attention:
Telephone No.:
Securities Purchase Agreement
Page
EXHIBITS
A:
Certificate of Designation
B:
Book Entry Questionnaire
C:
Form of Irrevocable Transfer Agent Instructions
D:
Form of Secretary's Certificate
E:
Form of Officer's Certificate
F:
Wire Instructions
SCHEDULES
3.1(a)
Subsidiaries
3.1(g)
Capitalization
3.1
(p) Intellectual Property
3.1(x)
Registration Rights
ANNEXES:
Annex
A: Selling Securityholder Notice and Questionnaire
Securities Purchase Agreement
Page
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