Celularity Inc 8-K, filed Sep 28, 2026
Celularity Inc (CELU)
About this 8-K
Celularity Inc filed this 8-K on September 28, 2026, reporting on events of September 18, 2026.
Items reported
- Item 1.01: Entered into a material agreement
- Item 2.03: New debt or off-balance-sheet obligation
- Item 3.02: Unregistered sale of equity
- Item 5.02: Director or officer change, or executive pay
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 1.01. Entry into a Material Definitive Agreement.
Securities Purchase Agreement
On September 23, 2026, Celularity Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with the purchasers party thereto (collectively, the “Purchasers”), pursuant to which the Company may issue and sell up to an aggregate principal amount of $25.0 million of senior secured convertible promissory notes (the “Notes”), together with warrants (the “Warrants”) to purchase shares of the Company’s Class A Common Stock (“Common Stock”), in two tranches.
On September 24, 2026, the Company completed the initial closing under the Purchase Agreement (the “Initial Closing”), pursuant to which the Company issued Notes having an aggregate principal amount of approximately $11.01 million for aggregate gross cash proceeds of approximately $11.01 million, before fees and expenses, together with Warrants initially exercisable for an aggregate of approximately 4,037,000 shares of Common Stock.
The first tranche (“Tranche 1”) provides for the issuance of up to $15.0 million aggregate principal amount of Notes. Notes issued in the Initial Closing are convertible into Common Stock at an initial conversion price of $1.50 per share, and were issued together with Warrants having an initial exercise price of $1.50 per share and representing eleven Warrant Shares for every twenty shares of Common Stock initially issuable upon conversion of the principal amount of the applicable Note. Accordingly, the $11.01 million aggregate principal amount of Notes issued at the Initial Closing is initially convertible into approximately 7,340,000 shares of Common Stock, excluding shares issuable in respect of accrued interest or as a result of adjustments under the Notes.
The Purchase Agreement permits the Company to complete additional closings under Tranche 1 for the remaining amount available thereunder, subject to the terms and conditions of the Purchase Agreement. Notes and Warrants issued during the initial additional closing period will generally have an initial conversion price and exercise price, respectively, of $1.50 per share. Notes and Warrants issued during the additional five-Business-Day period provided for in the Purchase Agreement will have an initial conversion price and exercise price, respectively, of $1.60 per share.
The second tranche (“Tranche 2”) provides for the potential issuance of an additional $10.0 million aggregate principal amount of Notes, together with Warrants, at the election of the applicable Purchasers through September 30, 2027. Notes issued in Tranche 2 will have an initial conversion price of $2.00 per share, and Warrants issued in connection therewith will have an initial exercise price of $2.00 per share and will initially cover one share of Common Stock for each share of Common Stock issuable upon conversion of the principal amount of the applicable Note.
Terms of the Notes and Warrants
The Notes bear interest at a rate of 10% per annum, which compounds annually, and mature 24 months following their respective original issue dates. Accrued and unpaid interest is payable at maturity, and no cash payment of interest is required prior to maturity. Upon the occurrence and during the continuance of an event of default, the Notes bear interest at a rate of 15% per annum.
The Notes are convertible, at the option of the applicable holder, into Common Stock at the applicable conversion price. The Notes also provide for mandatory conversion in connection with certain qualified financings and, at the Company’s election and subject to specified conditions, following a period during which the Common Stock satisfies specified trading price and volume thresholds. The conversion prices of the Notes are subject to customary adjustments for stock splits, combinations and similar events and to adjustments in connection with certain subsequent issuances of Common Stock or Common Stock equivalents below the applicable conversion price, subject to specified exceptions and a minimum conversion price of $1.25 per share.
The Warrants are exercisable for a period of five years and may be exercised for cash or, in certain circumstances, on a cashless basis. The exercise prices of the Warrants are subject to adjustment for stock splits, combinations and similar events and to weighted-average anti-dilution adjustments in connection with certain subsequent issuances below the applicable exercise price, subject to specified exceptions and a minimum exercise price of $1.25 per share.
The Notes and Warrants contain customary beneficial ownership limitations and limitations designed to comply with applicable Nasdaq rules. The Company has also agreed to seek any stockholder approval required under Nasdaq Listing Rule 5635 in connection with the issuance of shares of Common Stock pursuant to the transaction documents. If the required stockholder approval has not been obtained on or prior to December 19, 2026, the then-current conversion price of each outstanding Note and exercise price of each outstanding Warrant will automatically be reduced by 10%, effective December 20, 2026, subject to the terms of the Purchase Agreement.
Security Agreement and Intercreditor Agreement
In connection with the Initial Closing, the Company and certain of its subsidiaries entered into a Security Agreement with Philip Barach, as collateral agent for the Purchasers (the “Collateral Agent”), pursuant to which the Company and such subsidiaries granted the Collateral Agent, for the benefit of the Purchasers, a continuing security interest in substantially all of their assets, subject to specified excluded assets and permitted liens. Following the release of the security interest securing certain pre-existing indebtedness to the Philip & Daniele Barach Family Trust (the “Trust”), the security interest securing the Notes is intended to constitute a first-priority security interest, subject to permitted liens. The Purchasers also entered into an Intercreditor Agreement pursuant to which, among other matters, the obligations owing to the Purchasers under the Notes are treated on a pari passu basis and Philip Barach was appointed to act as Collateral Agent on behalf of the Purchasers.
Registration Rights Agreement
The Company also entered into a Registration Rights Agreement with the Purchasers pursuant to which the Company agreed to register for resale the shares of Common Stock issuable upon conversion of the Notes and exercise of the Warrants. Subject to the terms of the Registration Rights Agreement, the Company is required to file an initial resale registration statement within 45 calendar days following September 23, 2026 and to use its best efforts to cause such registration statement to become effective within the time periods specified therein.
Board Rights Agreement
In connection with the Initial Closing, the Company and the Trust entered into a Board Rights Agreement providing for certain rights with respect to the composition of the Company’s Board of Directors (the “Board”). Pursuant to the Board Rights Agreement, Philip A. Barach was appointed to the Board effective September 24, 2026. The Board Rights Agreement also provides for additional changes to the composition of the Board, subject to compliance with applicable law, Nasdaq requirements and Rule 14f-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
The Company has agreed to take the corporate actions required to implement the contemplated Board composition in accordance with applicable law. Until such Board composition has been fully implemented, the Board Rights Agreement contains certain interim restrictions on the use of financing proceeds and the Company’s entry into agreements involving expenditures above specified thresholds.
Amendment and Restatement of Existing Trust Securities
In connection with the transactions described above, the Company also amended and restated its outstanding $3.0 million senior secured convertible promissory note originally issued to the Trust on December 19, 2025. The amended and restated note has a conversion price of $1.50 per share, bears interest at 10% per annum and matures 24 months following September 23, 2026. The amended and restated note is treated as one of the Notes outstanding under the Purchase Agreement and is secured pursuant to the Security Agreement.
The Company also amended and restated the Class A Common Stock purchase warrant previously issued to the Trust on December 19, 2025. The amended and restated warrant is exercisable for up to 1,258,740 shares of Common Stock at an exercise price of $1.50 per share and expires on September 23, 2031.
A portion of the proceeds from the Initial Closing was used to repay amounts outstanding under the Company’s June 29, 2026 secured loan from the Trust and to obtain the release of the related security interest.
The foregoing descriptions of the Purchase Agreement, Notes, Warrants, Security Agreement, Registration Rights Agreement, Board Rights Agreement, Intercreditor Agreement, amended and restated Trust note and amended and restated Trust warrant do not purport to be complete and are qualified in their entirety by reference to the full text of such agreements and instruments, copies or forms of which are filed as exhibits to this Current Report on Form 8-K and incorporated herein by reference.
Helena Settlement
On September 18, 2026, the Company entered into a Settlement, Release and Termination Agreement with Helena Global Investment Opportunities 1 Ltd (“Helena”) to resolve outstanding obligations and disputes under the parties’ prior financing and settlement arrangements. At closing, Helena converted $1.197 million of principal under its outstanding Exchange Promissory Note at $1.71 per share (the “Exchange Note”) into 700,000 shares of Common Stock, and the Company issued Helena an additional 2,000,000 shares of Common Stock as settlement consideration. Upon issuance of the 700,000 shares, the Exchange Note was permanently satisfied and cancelled, Helena’s related security interests and liens were released, and Helena waived the remaining $200,000 of installment payments under the parties’ prior settlement agreement and certain asserted liquidated damages relating to warrant share delivery.
The Company agreed to become current in its reporting obligations under the Exchange Act, by October 20, 2026. If the Company satisfies the performance conditions specified in the settlement agreement, on November 16, 2026 Helena will return the portion of the 2,000,000 additional shares that it is not entitled to retain under a share-based make-whole provision tied to the closing price of the Common Stock on that date. If the Company fails to satisfy the applicable performance conditions, Helena will be entitled to retain all 2,000,000 additional shares and may also be entitled to additional shares under the make-whole provision.
Helena also agreed to assign to the Company, subject to escrow and satisfaction of the applicable performance conditions, $1.25 million principal amount of the $2.5 million promissory note issued by NEXGEL, Inc. to Helena, together with the related proportionate interest and rights.
The foregoing description of the Settlement, Release and Termination Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such agreement, which is filed as Exhibit 10.6 to this Current Report on Form 8-K and incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 of this Current Report on Form 8-K under the headings “Securities Purchase Agreement,” “Terms of the Notes and Warrants,” “Security Agreement and Intercreditor Agreement” and “Amendment and Restatement of Existing Trust Securities” is incorporated into this Item 2.03 by reference.
Item 3.02. Unregistered Sales of Equity Securities.
Financing
The information set forth under Item 1.01 of this Current Report on Form 8-K concerning the Purchase Agreement, Notes and Warrants is incorporated into this Item 3.02 by reference.
At the Initial Closing, the Company issued to the Purchasers Notes having an aggregate principal amount of approximately $11.01 million, initially convertible at $1.50 per share into approximately 7,340,000 shares of Common Stock, excluding shares issuable in respect of accrued interest or pursuant to adjustments under the Notes, together with Warrants initially exercisable at $1.50 per share for approximately 4,037,000 shares of Common Stock.
The Company also amended and restated the $3.0 million convertible note and warrant previously issued to the Trust, as described in Item 1.01 above. The amended and restated Trust note is initially convertible at $1.50 per share into 2,000,000 shares of Common Stock, excluding shares issuable in respect of accrued interest or pursuant to adjustments under the note, and the amended and restated Trust warrant is exercisable at $1.50 per share for 1,258,740 shares of Common Stock.
The Notes, Warrants and the shares of Common Stock issuable upon conversion or exercise thereof have not been registered under the Securities Act of 1933, as amended (the “Securities Act”) and were offered and sold in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated thereunder. Each Purchaser represented to the Company that it is an “accredited investor” as defined in Rule 501(a) of Regulation D. The Company did not engage in any general solicitation or general advertising in connection with the offering.
The Company has agreed to register for resale the shares of Common Stock issuable upon conversion of the Notes and exercise of the Warrants pursuant to the Registration Rights Agreement described in Item 1.01 above.
Helena Settlement
The information set forth under Item 1.01 of this Current Report on Form 8-K under the heading “Helena Settlement” is incorporated into this Item 3.02 by reference.
At the closing under the Helena Settlement Agreement, the Company issued Helena 700,000 shares of Common Stock upon conversion of $1.197 million principal amount of the Exchange Note at a fixed conversion price of $1.71 per share and issued Helena an additional 2,000,000 shares of Common Stock as settlement consideration. The Helena Settlement Agreement may also require the Company to issue additional shares of Common Stock, or in certain circumstances a pre-funded warrant, pursuant to the make-whole provisions described in Item 1.01 above.
The 700,000 shares issued upon conversion of the Exchange Note were issued in a transaction intended to qualify for the exemption from registration provided by Section 3(a)(9) of the Securities Act. The additional 2,000,000 shares and any additional securities issuable pursuant to the make-whole provisions were or will be issued in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act and applicable exemptions under state securities laws.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Effective September 24, 2026, Geoffrey Ling, M.D., Ph.D. resigned from the Board. Dr. Ling’s resignation was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
Effective September 24, 2026, the Board appointed Philip A. Barach to serve as a director of the Company. Mr. Barach was appointed pursuant to the Board Rights Agreement described under Item 1.01 of this Current Report on Form 8-K and will serve until his successor is duly elected and qualified or until his earlier death, resignation or removal.
As described under Item 1.01 above, the Trust is a party to the Company’s September 23, 2026 financing transactions, including the amendment and restatement of its existing $3.0 million senior secured convertible promissory note and related warrant. The information set forth under Item 1.01 under the headings “Board Rights Agreement” and “Amendment and Restatement of Existing Trust Securities” is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
* Certain schedules, exhibits and similar attachments to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule, exhibit or similar attachment to the Securities and Exchange Commission upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CELULARITY INC. | ||
| Dated: September 28, 2026 | ||
| By: | /s/ K. Harold Fletcher | |
| Name: | K. Harold Fletcher, Esq. | |
| Title: | Chief Legal & Strategy Officer | |
Exhibit 4.1
NEITHER THIS NOTE NOR THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF APPLICABLE STATES. THIS NOTE AND SUCH SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION UNDER SUCH LAWS OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS. INVESTOR SHOULD BE AWARE THAT IT MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THIS NOTE AND ANY SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ALL APPLICABLE STATE SECURITIES LAWS.
Original
Issue Date: September 23, 2026
Conversion Price: $1.50
Principal Amount: $_____________
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
THIS SENIOR SECURED CONVERTIBLE PROMISSORY NOTE (this “Note”) is a duly authorized and validly issued debt obligation of Celularity Inc., a Delaware corporation (the “Company” or the “Borrower”), having its principal place of business at 170 Park Avenue, Florham Park, NJ 07932. This Note is one of a series of Notes (the “Notes”) issued by the Company pursuant to that certain Securities Purchase Agreement, dated as of September 23, 2026, by and among the Company and the Purchasers party thereto, as amended, modified or supplemented from time to time (the “Purchase Agreement”; capitalized terms not otherwise defined in this Note shall have the meanings set forth in the Purchase Agreement).
FOR VALUE RECEIVED, the Company promises to pay to the order of [Purchaser] or its registered assigns (the “Holder”), or shall have paid pursuant to the terms hereunder, the principal sum of $________, together with all accrued and unpaid interest and all other amounts due hereunder on the Maturity Date (as defined below), or such earlier date as this Note is required or permitted to be repaid as provided hereunder, and to pay interest to the Holder on the then outstanding principal amount of this Note in accordance with the provisions hereof. This Note is subject to the following additional provisions:
Section 1. Definitions. For the purposes hereof, in addition to the terms defined elsewhere in this Note and in the Purchase Agreement, the following terms shall have the following meanings:
“Bankruptcy Event” means any of the following events with respect to any juridical entity: (a) the entity commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the entity, (b) there is commenced against the entity any such case or proceeding that is not dismissed within sixty (60) days after commencement, (c) the entity is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the entity suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within sixty (60) calendar days after such appointment, (e) the entity makes a general assignment for the benefit of creditors, (f) the entity calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts or (g) the entity, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.
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“Beneficial Ownership Limitation” has the meaning set forth in Section 3(f).
“Change of Control Transaction” means the occurrence after the date hereof of any of the following: (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of fifty percent (50%) of the voting securities of the Company, (b) the Company merges into or consolidates with any other Person, or any Person merges into or consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company immediately prior to such transaction own less than fifty-one percent (51%) of the aggregate voting power of the Company or the successor entity of such transaction, (c) the Company sells or transfers all or substantially all of its assets to another Person and the stockholders of the Company immediately prior to such transaction own less than fifty-one percent (51%) of the aggregate voting power of the acquiring entity immediately after the transaction, (d) a replacement at one time or within a three (3) year period of more than one-half of the members of the Board of Directors which is not approved by a majority of the directors then in office, excluding, for the avoidance of doubt, any Board changes contemplated by the Purchase Agreement or the Board Rights Agreement, including the appointment, nomination or election of the Purchaser Designees, or, or (e) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (d) above. For the avoidance of doubt, none of the transactions contemplated by the Purchase Agreement or the conversion of the Notes or exercise of Warrants issued thereunder shall be considered in any determination with respect to whether or not a Change of Control Transaction has occurred.
“Common Stock” means the Company’s Class A common stock, par value $0.0001 per share, and any capital stock into which such Common Stock shall have been changed or any share capital resulting from a reclassification of such Common Stock.
“Common Stock Equivalents” means any securities of the Company or its Subsidiaries which would entitle the holder thereof to acquire at any time any shares of Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into, exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, any shares of Common Stock.
“Conversion Amount” means 100% of the outstanding principal amount of this Note and all accrued and unpaid interest hereon (with respect to both interest at the Regular Interest Rate and/or the Default Interest Rate) through the Conversion Date.
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“Conversion Date” shall have the meaning set forth in Section 3(c)(i).
“Conversion Price” means, with respect to this Note, the Conversion Price set for on the first page hereof, as adjusted (to the extent applicable) pursuant to the terms hereof.
“Conversion Shares” means the shares of Common Stock issuable upon conversion of this Note.
“Event of Default” shall have the meaning set forth in Section 5(a).
“Interest Compounding Date” shall have the meaning set forth in Section 2(a).
“Mandatory Default Amount” means the payment of 100% of the outstanding principal amount of this Note and accrued and unpaid interest hereon (with respect to both interest at the Regular Interest Rate and/or the Default Interest Rate), in addition to the payment in cash of all other amounts, costs, expenses and liquidated damages due in respect of this Note including, without limitation, the costs and expenses incurred in connection with the collection of all amounts due hereunder, as provided herein.
“Maturity Date” the date that is twenty-four (24) months following the Original Issue Date.
“Nasdaq Listing Rule 5635” means Nasdaq Listing Rule 5635, including any successor rule, guidance, interpretation or related Nasdaq change-in-control requirement applicable to the transactions contemplated by the Transaction Documents.
“Note Register” shall have the meaning set forth in Section 2(b).
“Original Conversion Price” means the initial Conversion Price established pursuant to Section 3(a) on the Original Issue Date, prior to giving effect to any adjustment under this Note.
“Original Issue Date” means the date of the first issuance of this Note, as set forth on the first page hereof, regardless of any transfers of this Note and regardless of the number of instruments which may be issued to evidence this Note.
“Permitted Security Interests” means Liens expressly permitted under the Purchase Agreement and the Security Agreement, including the security interests granted to a collateral agent (if applicable) for the benefit of the Holder and the other Purchasers, and any Liens permitted to remain outstanding pursuant to the Purchase Agreement.
“Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, entity, party or government, including, without limitation, any instrumentality, division, agency, body or department thereof.
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“Purchaser Designees” means the three representatives designated by the Purchasers to serve on the Board of Directors pursuant to the Purchase Agreement and the Board Rights Agreement.
“Regular Interest Rate” shall have the meaning set forth in Section 2(a).
“Requisite Holders” means holders of Notes owning Notes in the aggregate principal amount greater than fifty percent (50.0%) of all Notes then outstanding.
Section 2. Interest; Pari Passu Status.
a) Accrual and Compounding of Interest. The Company shall pay interest to the Holder on the aggregate outstanding principal amount of this Note at the rate of ten percent (10%) (the “Regular Interest Rate”) per annum. Interest shall accrue from the Original Issue Date and shall compound annually on each anniversary of the Original Issue Date (each such date, an “Interest Compounding Date”). On each Interest Compounding Date, all accrued and unpaid interest as of such date shall be added to the outstanding principal amount of this Note for purposes of calculating interest accruing thereafter. All accrued and unpaid interest on this Note shall be payable in cash on the Maturity Date (or such earlier date as this Note is required or permitted to be repaid as provided hereunder). No cash payment of interest shall be required prior to the Maturity Date. Upon the occurrence and during the continuance of an Event of Default, the Company shall pay interest to the Holder on the aggregate outstanding principal amount of this Note at the rate of fifteen percent (15%) per annum (the “Default Interest Rate”).
b) Interest Calculations. Interest at the Regular Interest Rate and the Default Interest Rate shall be calculated for the actual number of days elapsed on the basis of a 365-day year and shall compound annually on each Interest Compounding Date as set forth in Section 2(a). Interest hereunder will be paid to the Person in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note (the “Note Register”).
c) Pari Passu Notes. The Holder acknowledges and agrees that the payment of all or any portion of the outstanding principal amount of this Note and all interest hereon shall be pari passu in right of payment and in all other respects to any other Notes. In the event the Holder receives payments in excess of its pro rata share of the Company’s payments to the holders of all of the Notes, then the Holder shall hold in trust all such excess payments for the benefit of the holders of the other Notes and shall pay such amounts held in trust to such other holders upon demand by such holders.
Section 3. Conversion. Holders of this Note shall have the conversion rights as follows.
a) Optional Conversion. The Conversion Amount of this Note shall be convertible, at the option of the Holder, at any time, and without the payment of additional consideration by the Holder, into such number of fully-paid and nonassessable shares of Common Stock of the Company at the Conversion Price in effect at the time of conversion. The number of shares of Common Stock issuable upon conversion shall be determined by dividing (i) the Conversion Amount on the Conversion Date by (ii) the applicable Conversion Price.
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b) Mandatory Conversion Upon Qualified Financing. Upon the consummation of a Qualified Financing, the Conversion Amount of this Note shall automatically convert into such number of shares of the Company’s Common Stock as is determined by dividing (i) the Conversion Amount at the closing of the Qualified Financing by (ii) the applicable Conversion Price. The Company shall provide written notice to the Holder at least two (2) Business Days prior to signing definitive documentation for a Qualified Financing with the Company’s good faith understanding of the expected terms of the Qualified Financing (“Notice of Qualified Financing”). Notwithstanding anything to the contrary herein, any conversion upon a Qualified Financing shall be subject to the Nasdaq Limitations and those limitations set forth in Section 3(g); provided, however, that such automatic conversion shall not occur unless (A) the Company has timely filed all reports required to be filed by it under the Exchange Act and (B) the Underlying Shares are either (1) subject to an effective registration statement under the Securities Act permitting the resale thereof by the Holder or (2) freely saleable by the Holder without registration under Rule 144 promulgated under the Securities Act. To the extent that any shares of Common Stock are not issuable upon automatic conversion as a result of Section 3(g), the portion of the Conversion Amount that is not convertible as a result of such limitation shall remain outstanding (with the amount of Converted Amount so converted applied first to accrued but unpaid interest and thereafter to the amount of principal of this Note) and shall convert if and when such conversion would not violate Section 3(g) or after the Company has obtained any required stockholder approval.
c) Mandatory Conversion Upon Stock Price Condition.
i. Triggering Event. If, at any time while this Note is outstanding, for each of thirty (30) consecutive Trading Days (such period, the “Measurement Period”), on each of which Trading Days the VWAP of the Common Stock on Nasdaq (or such other Trading Market on which the Common Stock is then listed or quoted) equals or exceeds $6.00 per share (the “Stock Price Threshold”), provided that (A) the Common Stock remains listed on Nasdaq or another national securities exchange throughout the Measurement Period, (B) the average daily trading volume during the Measurement Period equals or exceeds 1,000,000 shares, (C) no Event of Default has occurred and is continuing, (D) the Company has sufficient authorized but unissued shares of Common Stock available to effect such conversion, and (E) the Company has not publicly announced or entered into a definitive agreement with respect to any merger, consolidation, business combination, recapitalization or similar extraordinary transaction that, in the reasonable judgment of the Board of Directors, would be materially impaired by such conversion, then, subject to the terms and conditions set forth in this Section 3(c), the Company may, in its sole discretion, by written notice delivered to the Holder within ten (10) Business Days following the expiration of the Measurement Period, elect to cause all of the outstanding Conversion Amount of this Note to convert (without any action on the part of the Holder) into shares of Common Stock at the Conversion Price then in effect on the Trading Day immediately following the last Trading Day of such Measurement Period (such conversion, a “Mandatory Stock Price Conversion” and such date, the “Mandatory Conversion Date”); provided, however, that such automatic conversion shall not occur unless (A) the Company has timely filed all reports required to be filed by it under the Exchange Act and (B) the Underlying Shares are either (1) subject to an effective registration statement under the Securities Act permitting the resale thereof by the Holder or (2) freely saleable by the Holder without registration under Rule 144 promulgated under the Securities Act. For purposes of this Section 3(c), “VWAP” means, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTCQB Venture Market (“OTCQB”) or the OTCQX Best Market (“OTCQX”) is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market operated by the OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Requisite Holders and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
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ii. Adjustments to Stock Price Threshold. The Stock Price Threshold shall be subject to equitable adjustment upon the occurrence of any stock split, stock dividend, stock combination, recapitalization or other similar event affecting the Common Stock in a manner consistent with the adjustments set forth in Section 3(d)(vii)(A).
iii. Notice of Mandatory Stock Price Conversion. No later than three (3) Business Days following the Mandatory Conversion Date, the Company shall deliver written notice to the Holder (a “Mandatory Conversion Notice”) stating (A) that a Mandatory Stock Price Conversion has occurred, (B) the Mandatory Conversion Date, (C) the Conversion Amount converted, (D) the applicable Conversion Price and (E) the number of shares of Common Stock issuable to the Holder upon such conversion. The Company’s failure to timely deliver a Mandatory Conversion Notice shall not affect the validity of the Mandatory Stock Price Conversion or otherwise constitute an Event of Default under this Note.
iv. Delivery of Conversion Shares. Upon any Mandatory Stock Price Conversion, the Company shall deliver or cause to be delivered to the Holder the applicable Conversion Shares in accordance with the share delivery procedures set forth in this Section 3. Upon delivery of the applicable Conversion Shares, the corresponding Conversion Amount shall be deemed fully satisfied, cancelled and of no further force or effect. No fractional shares shall be issued upon any Mandatory Stock Price Conversion. In lieu of any fractional share, the Company shall pay cash equal to the fractional interest multiplied by the VWAP on the Mandatory Conversion Date.
v. Limitations on Mandatory Stock Price Conversion. Notwithstanding anything to the contrary herein, any Mandatory Stock Price Conversion shall be subject to the Beneficial Ownership Limitation, the Nasdaq Limitations and those limitations set forth in Section 3(f) and Section 3(g). To the extent that any shares of Common Stock are not issuable upon a Mandatory Stock Price Conversion as a result of Section 3(f) or Section 3(g), the portion of the Conversion Amount that is not convertible as a result of such limitation shall remain outstanding as a continuing obligation of the Company (with the portion of the Conversion Amount so converted applied first to accrued but unpaid interest and thereafter to the principal amount of this Note) and shall automatically convert if and when such conversion would not violate Section 3(f) or Section 3(g) or after the Company has obtained any required stockholder approval. Nothing contained herein shall require the Company to seek stockholder approval solely for purposes of effecting a Mandatory Stock Price Conversion if the Board of Directors determines in good faith that such conversion would materially interfere with a pending financing or strategic transaction.
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vi. Holder Conversion Right Preserved. For the avoidance of doubt, the Holder’s right to convert this Note pursuant to Section 3(a) shall remain in full force and effect at all times prior to a Mandatory Stock Price Conversion, and the Holder may elect to convert all or any portion of the Conversion Amount at any time prior to the Mandatory Conversion Date. For the avoidance of doubt, nothing in this Section 3(c) shall limit the Company’s right, if otherwise permitted under this Note, to repay the outstanding principal and accrued interest in cash prior to the Mandatory Conversion Date.
d) Mechanics of Conversion.
i. Notice of Conversion. The Holder shall effect conversions by providing the Company with the form of conversion notice attached hereto as Annex A (a “Notice of Conversion”). Each Notice of Conversion shall specify the amount of this Note to be converted and the date on which such conversion is to be effected, which date may not be prior to the date the applicable Holder delivers by facsimile, email or otherwise such Notice of Conversion to the Company (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion to the Company is deemed delivered hereunder. No Notice of Conversion shall be required for any mandatory conversion pursuant to Section 3(b) or Section 3(c).
ii. Delivery of Certificate Upon Conversion. Not later than the date that is the earlier of (i) two (2) Trading Days after delivery of the Notice of Conversion and (ii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Share Delivery Date”), the Company shall deliver, or cause to be delivered, to the converting Holder a certificate or certificates which, on or after the Effectiveness Date (as defined in the Registration Rights Agreement), shall be free of restrictive legends and trading restrictions (other than those which may then be required by the Transaction Documents) representing the number of Common Stock being acquired upon the conversion of this Note. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise. On or after the Effectiveness Date, the Company shall, upon request of such Holder, use its reasonable efforts to deliver any certificate or certificates required to be delivered by the Company under this Section electronically through The Depository Trust Company or another established clearing corporation performing similar functions. If in the case of any Notice of Conversion such certificate or certificates are not delivered to or as directed by the applicable Holder by the fifth (5th) Business Day after the Conversion Date, the applicable Holder shall be entitled to elect by written notice to the Company at any time on or before its receipt of such certificate or certificates, to rescind such Notice of Conversion by written notice to the Company.
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iii. Obligation Absolute. The Company’s obligation to issue and deliver the Conversion Shares in accordance with the terms hereof is 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 Company; provided, however, that such delivery shall not operate as a waiver by the Company of any such action that the Company may have against such Holder. Notwithstanding the foregoing, the Company shall not be required to issue any shares of Common Stock to the extent such issuance would violate Section 3(g).
iv. Compensation for Buy-In on Failure to Timely Deliver Conversion Shares Upon Conversion. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Conversion Shares in accordance with the provisions of Section 3(d)(i) above pursuant to an exercise on or before the Conversion Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, Common Stock to deliver in satisfaction of a sale by the Holder of the Conversion Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the Common Stock so purchased exceeds (y) the product of (1) the number of Conversion Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Note and equivalent number of Conversion Shares for which such exercise was not honored (in which case such conversion shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver Common Stock upon conversion of the Note as required pursuant to the terms hereof.
v. Reservation of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Note, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder of this Note, not less than such aggregate number of shares of Common Stock as shall be issuable upon the conversion of all outstanding principal balance and accrued but unpaid interest under this Note at the Conversion Price, subject to the limitations set forth in Section 3(g). The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issuance, be duly authorized, validly issued, fully paid and nonassessable.
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vi. No Fractional Shares. The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share.
vii. Certain Adjustments.
(A) Stock Dividends and Splits. If the Company, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any Common Stock Equivalents payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of this Note or any other Note), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of Common Stock issuable upon conversion of this Note shall be proportionately adjusted such that the aggregate Conversion Price of this Note shall remain unchanged. Any adjustment made pursuant to this Section 3(a)(vii)(A) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
(B) Subsequent Equity Sales. If and whenever on or after the Subscription Date, the Company shall sell, enter into an agreement to sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents (but excluding any Excluded Securities), at an effective price per share less than the Conversion Price then in effect (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”) (it being understood and agreed that if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is less than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive Issuance at such effective price), then simultaneously with the consummation (or, if earlier, the announcement) of each Dilutive Issuance the Conversion Price shall be reduced and only reduced to equal the Base Share Price. Notwithstanding the foregoing, no adjustments shall be made, paid or issued under this Section 2(b) in respect of any issuances of Excluded Securities. The Company shall notify the Holder, in writing, no later than the Trading Day following the issuance or deemed issuance of any Common Stock or Common Stock Equivalents subject to this Section 2(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms. Notwithstanding anything herein to the contrary, no adjustment shall be made pursuant to this Section 3(d)(vii)(B) unless the aggregate gross proceeds received by the Company from the applicable Dilutive Issuance exceed $500,000 or the aggregate number of shares of Common Stock issued (or deemed issued) exceeds one percent (1%) of the Company’s outstanding Common Stock (on a fully diluted basis) immediately prior to such issuance.
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(1) Excluded Issuances. For purposes of this Section 3(d)(vii)(B), “Excluded Issuances” means any issuance or sale (or deemed issuance or sale) of shares of Common Stock: (a) upon conversion of this Note or any other Notes; (b) upon exercise of any warrants issued pursuant to the Purchase Agreement; (c) to employees, officers, directors or consultants of the Company or any Subsidiary pursuant to equity incentive plans or agreements approved by the Board of Directors, provided that the aggregate number of shares of Common Stock issued pursuant to this clause (c) does not exceed 15% of the fully-diluted Common Stock outstanding as of the Original Issue Date; (d) as a dividend or distribution on the Common Stock for which an adjustment is made pursuant to Section 3(d)(vii)(A); (e) upon exercise or conversion of any Common Stock Equivalents outstanding as of the Original Issue Date; (f) in connection with any bona fide strategic transaction (including any joint venture, licensing arrangement, technology partnership, research collaboration, manufacturing agreement, supply agreement, distribution agreement, commercial alliance, asset acquisition, merger, business combination, debt restructuring or similar commercial transaction, or similar arrangement) approved by the Board of Directors, provided that the primary purpose of such transaction is the development, manufacture, commercialization, acquisition, disposition or strategic advancement of the Company’s business and not to raise capital; (g) pursuant to bona fide debt financing, equipment financing, working capital facility, refinancing transaction or other credit arrangement by and between the Company and a commercial bank or similar institutional lender, approved by the Board of Directors, including any warrants (but not conversion rights) issued in connection therewith; (h) pursuant to any settlement of litigation, commercial dispute, creditor workout, restructuring or similar negotiated resolution approved by the Board of Directors; upon the exercise, conversion or exchange of any security whose issuance constituted an Excluded Issuance; (i) issued in connection with inducement awards permitted under Nasdaq Listing Rule 5635(c)(4) or any successor rule; (j) issued pursuant to anti-dilution adjustments contained in securities outstanding on the Original Issue Date; (k) any issuance approved in writing by the Holder; and (l) any issuance of Common Stock or Common Stock Equivalents in connection with any merger, consolidation, business combination, recapitalization, reorganization, share exchange, acquisition of assets or equity interests, or similar strategic transaction approved by the Board of Directors, whether or not such transaction includes a concurrent financing, provided that the primary purpose of such issuance is to effect such transaction and not to circumvent the provisions of this Section 3(d)(vii)(B).
(2) Determination of Consideration. For purposes of this Section 3(d)(vii)(B), the aggregate consideration received or receivable by the Company for any issuance or sale (or deemed issuance or sale) of Common Stock shall be computed as follows:
(i) to the extent it consists of cash, on the basis of the gross amount of cash received by the Company before deduction of any underwriting or similar commissions, compensation, concessions or discounts paid or allowed by the Company in connection with such issuance or sale;
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(ii) to the extent it consists of property other than cash, at the fair market value of such property as reasonably determined in good faith by the Board of Directors; provided that if the Holder disputes such determination, the fair market value shall be determined by an independent nationally recognized valuation firm jointly selected by the Holder and the Company and if the parties are unable to agree upon such firm within ten (10) Business Days, each shall appoint one nationally recognized valuation firm and such firms shall jointly appoint a third valuation firm whose determination shall be final and binding with the costs of such appraisal shall be borne equally by the Company and the Holder; and
(iii) if shares of Common Stock are issued or sold together with other securities or other assets of the Company for a consideration that covers both, the consideration computed as provided in clauses (i) and (ii) above allocable to such shares of Common Stock shall be determined in good faith by the Board of Directors; provided that if the Holder disputes such determination, the allocation shall be determined by an independent nationally recognized valuation firm jointly selected by the Holder and the Company and if the parties are unable to agree upon such firm within ten (10) Business Days, each shall appoint one nationally recognized valuation firm and such firms shall jointly appoint a third valuation firm whose determination shall be final and binding with the costs of such appraisal shall be borne equally by the Company and the Holder.
(3) Deemed Issuances of Common Stock. For purposes of this Section 3(d)(vii)(B), if the Company issues or sells any Common Stock Equivalents and the lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof (taking into account any anti-dilution or similar adjustments therein) is less than the Applicable Price, then such share of Common Stock shall be deemed to have been issued and sold by the Company at the time of the issuance or sale of such Common Stock Equivalent for such price per share. Notwithstanding the foregoing, no adjustment shall result from any amendment or modification that is administrative in nature, extends maturity, waives defaults, adjusts registration rights, modifies covenants, or otherwise does not reduce the effective consideration payable for the applicable Common Stock Equivalent. If the terms of any Common Stock Equivalent are amended or modified after the Original Issue Date such that the lowest price per share for which one share of Common Stock is issuable upon conversion, exercise or exchange thereof is decreased below the Applicable Price, then such Common Stock Equivalent shall be deemed to have been issued at the time of such amendment or modification for such reduced price per share. For purposes of this Section 3(c)(vii)(B)(3), the “lowest price per share for which one share of Common Stock is issuable upon conversion, exercise or exchange” shall equal the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Common Stock Equivalent and upon conversion, exercise or exchange thereof. No adjustment shall be made pursuant to this Section 3(d)(vii)(B) upon the actual issuance of shares of Common Stock upon conversion, exercise or exchange of a Common Stock Equivalent to the extent an adjustment was previously made with respect to such Common Stock Equivalent pursuant to this Section 3(d)(vi)(B)(3). For the avoidance of doubt, adjustments shall only be made where the primary purpose of the amendment is to reduce the effective conversion or exercise price applicable to such Common Stock Equivalent
(4) No Increase in Conversion Price. Notwithstanding any other provision of this Section 3(d)(vii)(B), in no event shall any adjustment made pursuant to this Section 3(d)(vii)(B) result in an increase in the Conversion Price.
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(5) Minimum Conversion Price. The Conversion Price shall in no event be reduced pursuant to the terms of this Section 3(d)(vii)(B) below $1.25 per share, subject to giving effect to any adjustments pursuant to Section 3(d)(vii)(A).
(C) Calculations. All calculations under this Section 3(d)(vii) shall be made by rounding to the nearest cent or the nearest 1/100th of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.
(D) Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 3(d)(vii), the Company shall promptly deliver to the Holder by email a notice setting forth the Conversion Price after such adjustment and any resulting adjustment to the number of the shares of Common Stock issuable upon conversion of this Note and setting forth a brief statement of the facts requiring such adjustment.
e) Fundamental Transactions. If, at any time while this Note is outstanding, the Company effects any merger, consolidation, sale of all or substantially all assets, tender offer, exchange offer, reclassification, compulsory share exchange or other similar transaction pursuant to which the Common Stock is converted into, exchanged for or represents the right to receive securities, cash or other property, then the Holder shall have the right thereafter to receive, upon conversion of this Note, the same amount and kind of securities, cash or property as the Holder would have been entitled to receive upon the occurrence of such transaction if this Note had been converted immediately prior to such transaction, subject to Section 3(g).
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f) Beneficial Ownership Limitation. The Company shall not effect any conversion of this Note, and the Holder shall not have the right to convert any portion of this Note, to the extent that, after giving effect to the conversion set forth in the applicable Notice of Conversion or any mandatory conversion, the Holder (together with the Holder’s Affiliates, and any Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)) would beneficially own in excess of the Beneficial Ownership Limitation. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Attribution Parties shall include the number of shares of Common Stock issuable upon conversion of this Note with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (A) conversion of the remaining, unconverted portion of this Note beneficially owned by the Holder or any of its Attribution Parties and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any Warrants issued to the Holder under the Purchase Agreement) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 3(f), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 3(f) applies, the determination of whether this Note is convertible (in relation to other securities owned by the Holder together with any Attribution Parties) and of what principal amount of this Note is convertible shall be in the sole discretion of the Holder, and the submission of a Notice of Conversion shall be deemed to be the Holder’s determination of whether this Note may be converted (in relation to other securities owned by the Holder together with any Attribution Parties) and which principal amount of this Note is convertible, in each case subject to the Beneficial Ownership Limitation. The Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 3(f), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Company’s most recent periodic or annual filing with the Securities and Exchange Commission, as the case may be, (ii) a more recent public announcement by the Company or (iii) a more recent written notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within one (1) Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. The “Beneficial Ownership Limitation” shall be 4.99% (or, upon election by a Holder prior to the issuance of any Notes, 9.99%) of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Note held by the Holder. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 3(f); provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Note held by the Holder, and provided further that any increase in the Beneficial Ownership Limitation will not be effective until the sixty-first (61st) day after such notice is delivered to the Company. Notwithstanding the foregoing, the Beneficial Ownership Limitation shall not apply to any Holder that, together with its Attribution Parties, beneficially owned shares of Common Stock (including shares of Common Stock issuable upon conversion of Notes or exercise of Warrants issued under the Purchase Agreement) in excess of the Beneficial Ownership Limitation as of the Original Issue Date (each such Holder, a “Grandfathered Holder”); provided that such Grandfathered Holder shall remain subject to the limitations set forth in Section 3(g) and any applicable limitations under Nasdaq Listing Rule 5635. The Beneficial Ownership Limitation provisions of this Section 3(f) shall apply to a successor holder of this Note (other than a successor to a Grandfathered Holder that, together with its Attribution Parties, beneficially owned shares of Common Stock in excess of the Beneficial Ownership Limitation immediately prior to such succession). The provisions of this Section 3(f) shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 3(f) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation.
g) Deferred Issuance. Any shares of Common Stock not issuable as a result of Sections 3(f) shall remain issuable if and when such issuance would not violate Nasdaq rules or after the Company has obtained any required stockholder approval. The Company shall use commercially reasonable efforts to seek and obtain any required stockholder approval if requested by the Holder or if otherwise necessary to permit the full conversion of this Note in accordance with its terms.
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Section 4. Registration of Transfers and Exchanges.
a) Different Denominations. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be payable for such registration of transfer or exchange.
b) Investment Representations. This Note has been issued subject to certain investment representations of the original Holder set forth in the Purchase Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement and applicable federal and state securities laws and regulations.
c) Reliance on Note Register. Prior to due presentment for transfer to the Company of this Note, the Company and any agent of the Company may treat the Person in whose name this Note is duly registered on the Note Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary. The Company shall update the Note Register to reflect permitted transferees and assignees of the Note.
Section 5. Events of Default.
a) “Event of Default” means, wherever used herein, any of the following events, whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body:
i. any default in the payment of (A) the principal amount of this Note or (B) interest, liquidated damages and other amounts owing to the Holder on this Note, as and when the same shall become due and payable (whether on a Maturity Date or by acceleration or otherwise) which default, solely in the case of an interest payment or other default under clause (B) above, is not cured within five (5) Trading Days;
ii. the Company shall fail to observe or perform any other covenant or agreement contained in this Note;
iii. a breach, default, event of default or the failure observe or perform any covenant or agreement (subject to any grace or cure period provided in the applicable agreement, document or instrument) shall occur under (A) any of the Transaction Documents or (B) any other material agreement, lease, document or instrument to which the Company or any Subsidiary is obligated, including the other Notes (and not covered by clause (v) below);
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iv. the Company experiences a Material Adverse Effect;
v. any Person shall breach any agreement delivered to the Holder or the Purchasers pursuant to Section 2.2 of the Purchase Agreement;
vi. any representation or warranty made in this Note, any other Transaction Documents, any written statement pursuant hereto or thereto or any other report, financial statement or certificate made or delivered to the Holder shall be untrue or incorrect in any material respect (or, to the extent such representation or warranty is qualified by materiality or Material Adverse Effect, in any respect) as of the date when made or deemed made;
vii. the Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation greater than $100,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;
viii. the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy Event;
ix. the Company shall be a party to any Change of Control Transaction or shall agree to sell or dispose of all or in excess of fifty percent (50%) of its assets in one transaction or a series of related transactions (whether or not such sale would constitute a Change of Control Transaction);
x. the occurrence of any levy upon or seizure or attachment of, or any uninsured loss of or damage to, any property of the Borrower or any Subsidiary having an aggregate fair value or repair cost (as the case may be) in excess of $100,000 individually or in the aggregate, and any such levy, seizure or attachment shall not be set aside, bonded or discharged within forty-five (45) days after the date thereof;
xi. any monetary judgment, writ or similar final process shall be entered or filed against the Company, any Subsidiary or any of their respective property or other assets for more than $100,000, and such judgment, writ or similar final process shall remain unvacated, unbonded or unstayed for a period of forty-five (45) calendar days;
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xii. prior to the payment in full and satisfaction of the amount owed under this Note, any security interest and Lien purported to be created by any Transaction Document shall cease to be in full force and effect, or shall cease to give the Holder or Collateral Agent, as applicable, the Liens, rights, powers and privileges purported to be created and granted under such Transaction Documents (including a perfected priority security interest in and Lien on all of the Collateral thereunder (except as otherwise expressly provided in such Transaction Document)) in favor of the Holder, or Collateral Agent, as applicable, or shall be asserted by the Company or any Affiliate(s) not to be a valid, perfected, priority (except as otherwise expressly provided in this Note, any such Transaction Document or the transaction documents entered into in connection with the Additional Note) security interest in or Lien on the Collateral covered thereby; or
xiii. except as set forth in Schedule 5 (xiii), any attempt by the Borrower or its officers, directors, and/or affiliates to transmit, convey, disclose, or any actual transmittal, conveyance, or disclosure by the Borrower or its officers, directors, and/or affiliates of, material non-public information concerning the Borrower, to the Holder or its successors and assigns, which is not immediately cured by Borrower’s public disclosure of such information on that same date.
b) Remedies Upon Event of Default. If any Event of Default occurs (other than the one described in (viii) above), upon written request of the Holder, the Mandatory Default Amount through the date of acceleration shall be paid to the Holder in cash. In the case an Event of Default described above in (viii) occurs, then the Mandatory Default Amount, through the date of acceleration, shall be immediately due and payable to the Holder in cash without any demand, notice or action on the part of the Holder. Commencing on the occurrence of any Event of Default and for as long an Event of Default is not cured, the interest rate on this Note as set forth in Section 2 above shall accrue at the Default Interest Rate. Upon the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender this Note to or as directed by the Company. In connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Except for an Event of Default described above in (viii), such acceleration may be rescinded and annulled by the Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder receives full payment pursuant to this Section 5(b). No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.
Section 6. Negative Covenants. As long as any portion of this Note remains outstanding, unless the Holder shall have otherwise given prior written consent, the Company shall not, and shall not permit any of its Subsidiaries (whether or not a Subsidiary on the Original Issue Date) to, directly or indirectly:
a) except for Permitted Indebtedness, enter into, create, incur, assume, or suffer to exist any indebtedness for borrowed money of any kind;
b) except for Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any of its property, assets or revenues now owned or hereafter acquired;
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c) merge, dissolve, liquidate, consolidate with or into another Person, or sell, transfer, license, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets whether now owned or hereafter acquired;
d) pay cash dividends or distributions on any equity securities of the Company;
e) pay any cash employment bonuses either for calendar year 2025 or from the proceeds of this Note;
f) enter into any agreement with respect to any of the foregoing;
g) make any payment or prepayment on any indebtedness that is subordinated to the Notes, except to the extent expressly permitted by the applicable subordination agreement or approved in writing by the Holder;
h) issue any shares of Common Stock or Common Stock Equivalents in violation of Nasdaq Listing Rule 5635 or the limitations set forth in Section 3(f) or Section 3(g); or
i) use the proceeds of this Note for any purpose other than as permitted under the Purchase Agreement.
Section 7. Affirmative Covenants. As long as any portion of this Note remains outstanding, the Company shall, and shall as applicable cause its Subsidiaries to:
a) promptly notify the Holder and the holder(s) of any other Notes of the occurrence of any Event of Default and the occurrence of any matter or that has had or could reasonably be expected to have a Material Adverse Effect;
b) preserve, renew and maintain in full force and effect its legal existence and good standing under the laws of the jurisdiction of its organization and take all reasonable action to maintain all rights, licenses, permits, privileges and franchises necessary or desirable in the normal conduct of its business;
c) comply with the requirements of all laws and all orders, writs, injunctions and decrees applicable to it;
d) maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied are made of all financial transactions and matters involving the assets and business of the Company;
e) permit representatives of the Holder to visit and inspect any of the Company’s properties, to examine its organizational, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss the Company’s affairs, finances and accounts with the Company’s directors and officers, all at the reasonable expense of the Company and at such reasonable times during normal business hours and as often as may be reasonably requested;
f) use commercially reasonable efforts to maintain the listing or quotation of the Common Stock on Nasdaq or another Trading Market;
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g) use commercially reasonable efforts to obtain any stockholder approval required under Nasdaq Listing Rule 5635 if requested by the Requisite Holders or if otherwise necessary to permit the full conversion of this Note and the other Notes and the full exercise of the Warrants issued pursuant to the Purchase Agreement in accordance with their terms; and
h) take all actions reasonably necessary to preserve the first-priority security interest granted under the Security Agreement, subject only to Permitted Liens.
Section 8. Miscellaneous.
a) Notices. Any and all notices or other communications or deliveries to be provided by the Holder hereunder shall be in writing and delivered personally, by facsimile, electronic mail or sent by a nationally recognized overnight courier service, addressed to the Company, at the facsimile number, email address or mailing address set forth on its signature page hereto, or such other facsimile number, electronic mail or address as the Company may specify for such purposes by notice to the Holder delivered in accordance with this Section 8(a). Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by electronic mail, by facsimile, or sent by a nationally recognized overnight courier service addressed to the Holder at the email address, facsimile number or address of the Holder appearing on the books of the Company, or if no such email address or facsimile number or address appears on the books of the Company, at the principal place of business of such Holder, as set forth in the Purchase Agreement, or such other facsimile number, electronic mail or address as the Holder may specify for such purposes by notice to the Company delivered in accordance with this Section 8(a). Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via electronic mail or facsimile prior to 5:30 p.m. (New York City time) on any Trading Day, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via electronic mail or facsimile on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required to be given.
b) Absolute Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable, on this Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of the Company.
c) Lost or Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, reasonably satisfactory to the Company.
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d) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced in accordance with the laws of the State of New York (including, without limitation, Section 5-1401 of the New York General Obligations Law (“NY GOL”)), without regard to any other conflicts of law rules or principles. Each party agrees that all legal Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Note (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in New York, New York. Pursuant to NY GOL 5-1402, each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City, County and State of New York 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 this Note), 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 court, that such Proceeding is improper or is an inconvenient venue for such Proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such 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 Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.
e) Amendment; Waiver. Any term of this Note may be amended or waived with the written consent of the Company and the Requisite Holders. Upon the effectuation of such waiver or amendment with the consent of the Requisite Holders in conformance with this paragraph, such amendment or waiver shall be effective as to, and binding against the holders of, all of the Notes and the Company shall promptly give written notice thereof to each Holder if the Holder has not previously consented to such amendment or waiver in writing; provided that the failure to give such notice shall not affect the validity of such amendment or waiver. Notwithstanding the foregoing, no amendment or waiver shall disproportionately and adversely affect the Holder relative to the holders of the other Notes.
f) Severability. If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.
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g) Costs of Collection and Enforcement. The Company agrees to pay any collection expense, court costs and, to the extent allowed by applicable law, reasonable attorneys’ fees and legal fees (whether or not suit is commenced) which are incurred in the collection or enforcement of this Note or of any part hereof or any of the other Transaction Documents; and in the event suit is brought to enforce payment hereof, that such expenses, costs and fees be determined by a court sitting without a jury. Attorneys’ fees shall include any such fees incurred in any Bankruptcy Event, appellate or related ancillary or supplemental proceedings, whether before or after final judgment related to the enforcement or defense of this Note and any of the other Transaction Documents.
h) Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note. The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and without any bond or other security being required. The Company shall provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Note.
i) 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.
j) Headings. The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit or affect any of the provisions hereof.
k) Secured Obligation. The obligations of the Company under this Note are secured by certain assets of the Company pursuant to the Security Agreement, dated as of September 23, 2026, by and among the Company and the Collateral Agent, for the benefit of the Holder and the other Purchasers. The obligations under this Note are intended to constitute senior secured obligations of the Company, ranking senior to all indebtedness of the Company other than indebtedness expressly permitted under the Purchase Agreement or otherwise subject to an intercreditor, subordination or other arrangement acceptable to the Holder. Notwithstanding the foregoing, the Holder acknowledges that the effectiveness of the first-priority security interest granted for the benefit of the Holder and the other Purchasers may be subject to the payment of any amounts payable to the Trust and the release and termination of the Trust’s security interest, in each case as contemplated by the Purchase Agreement.
(Signature Pages Follow)
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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by a duly authorized officer as of the date first above indicated.
| CELULARITY INC. | ||
| By: | ||
| Name: | Robert J. Hariri | |
| Title: | CEO | |
Mailing Address for Notices:
170 Park Avenue, Florham Park, NJ 07932
Email Address for delivery of Notices: kyle.fletcher@celularity.com | ||
[Signature Page for Convertible Note]
ANNEX A
NOTICE OF CONVERSION
Reference is made to the Convertible Note (the “Note”) issued to the undersigned by Celularity Inc. (the “Company”). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the unpaid principal balance of the Note and accrued interest indicated below into shares of Common Stock of the Company, as of the date specified below.
Date of conversion:
Unpaid principal balance to be converted:
Unpaid accrued interest to be converted:
Please confirm the following information:
A. Conversion Price:
B. Number of shares of Common Stock to be issued:
C. Please deliver the stock certificate representing the shares of Common Stock to the following address:
| By: | ||
| Name: | ||
| Title, | if applicable: |
|
ANNEX B
ASSIGNMENT FORM
(To assign the foregoing Note, execute this form and supply required information. Do not use this form to convert shares.)
FOR VALUE RECEIVED, the foregoing Note and all rights evidenced thereby are hereby assigned to the following:
Name of Assignee: ________________________________________
Address of Assignee: ______________________________________________________________________
Phone Number of Assignee: _________________________________
Email Address of Assignee: __________________________________
SSN/EIN of Assignee: _______________________________________
| By: | ||
Name of Holder: Address of Holder: Date: |
Exhibit 4.2
NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
CLASS A COMMON STOCK PURCHASE WARRANT
CELULARITY INC.
| Warrant Shares: _____ | Date: September 23, 2026 |
THIS CLASS A COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, [Purchaser]or its assigns (the “Holder”) is entitled, upon the terms and the conditions hereinafter set forth, at any time on or after September 23, 2026 (the “Initial Exercise Date”) and on or prior to the close of business at 5:00 p.m. (New York City time) on the fifth (5th) anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Celularity Inc., a Delaware corporation (the “Company”), up to 55,000 shares (as subject to adjustment hereunder, the “Warrant Shares”) of the Company’s Class A Common Stock, par value $0.0001 per share (the “Common Stock”). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions. In addition to the terms defined elsewhere in this Warrant, capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement, dated as of September 23, 2026, by and among the Company and the Purchasers party thereto from time to time, as amended, supplemented or otherwise modified from time to time (the “Purchase Agreement”).
Section 2. Exercise.
a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed PDF copy submitted by electronic mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (“Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within two (2) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
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b) Exercise Price. The exercise price per share of the Common Stock under this Warrant shall be $1.50, subject to adjustment hereunder (the “Exercise Price”).
c) Cashless Exercise.
| i. | This Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where: |
(A) = as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. (“Bloomberg”) as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day;
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(B) = the Exercise Price of this Warrant, as adjusted hereunder; and
(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.
| ii. | “Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company. |
| iii. | “VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTCQB Venture Market (“OTCQB”) or the OTCQX Best Market (“OTCQX”) is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market operated by the OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Requisite Purchasers and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company. |
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| iv. | If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the holding period of the Warrant Shares being issued may be tacked on to the holding period of this Warrant. The Company agrees not to take any position contrary to this Section 2(c). |
d) Mechanics of Exercise.
| i. | Delivery of Warrant Shares Upon Exercise. Subject to the requirements of applicable law, the Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner of sale limitations pursuant to Rule 144, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earlier of (i) two (2) Trading Days after delivery of the Notice of Exercise and, if the exercise is not a cashless exercise pursuant to the provisions of Section 2(c), the aggregate Exercise Price to the Company and (ii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate (but not Rule 144) purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that if the exercise of this Warrant is not a cashless exercise pursuant to Section 2(c), payment of the aggregate Exercise Price is received by the Company is received within the earlier of (i) three (3) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise. |
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| ii. | Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant. |
| iii. | Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise. |
| iv. | Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the Common Stock so purchased exceeds (y) the product of (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver Common Stock upon exercise of the Warrant as required pursuant to the terms hereof. |
| v. | No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share. |
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| vi. | Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to The Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares. The Company shall pay all attorney fees required for the issuance of attorney legal opinions for removal of restrictive legends on Warrant Shares. |
| vii. | Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof. |
e) Beneficial Ownership Limitation. The Company shall not effect any exercise of this Warrant, and the Holder shall not have the right to exercise this Warrant, to the extent that, after giving effect to the exercise set forth in the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)) would beneficially own in excess of the Beneficial Ownership Limitation. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (A) exercise of the remaining, unexercised portion of this Warrant beneficially owned by the Holder or any of its Attribution Parties and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any Notes issued to the Holder under the Purchase Agreement) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Attribution Parties) and of the number of shares of Common Stock for which this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant may be so exercised (in relation to other securities owned by the Holder together with any Attribution Parties) and for which number of shares of Common Stock this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation. The Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Company’s most recent periodic or annual filing with the Securities and Exchange Commission, as the case may be, (ii) a more recent public announcement by the Company or (iii) a more recent written notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within one (1) Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. The “Beneficial Ownership Limitation” shall be 4.99% (or, upon election by a Holder prior to the issuance of any Warrants, 9.99%) of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant held by the Holder. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e); provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder, and provided further that any increase in the Beneficial Ownership Limitation will not be effective until the sixty-first (61st) day after such notice is delivered to the Company. Notwithstanding the foregoing, the Beneficial Ownership Limitation shall not apply to any Holder that, together with its Attribution Parties, beneficially owned shares of Common Stock (including shares of Common Stock issuable upon conversion of Notes or exercise of Warrants issued under the Purchase Agreement) in excess of the Beneficial Ownership Limitation as of the Original Issue Date (each such Holder, a “Grandfathered Holder”); provided that such Grandfathered Holder shall remain subject to the limitations set forth in Section 2(e) and any applicable limitations under Nasdaq Listing Rule 5635. The Beneficial Ownership Limitation provisions of this Section 2(e) shall apply to a successor holder of this Warrant (other than a successor to a Grandfathered Holder that, together with its Attribution Parties, beneficially owned shares of Common Stock in excess of the Beneficial Ownership Limitation immediately prior to such succession). The provisions of this Section 2(e) shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation.
| -6- |
f) Deferred Issuance. Any shares of Common Stock not issuable as a result of Section 2(e) shall remain issuable if and when such issuance would not violate Nasdaq rules or after the Company has obtained any required stockholder approval. The Company shall use commercially reasonable efforts to seek and obtain any required stockholder approval if requested by the Holder or if otherwise necessary to permit the full exercise of this Warrant in accordance with its terms.
Section 3. Certain Adjustments.
a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any Common Stock Equivalent payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant or any Note), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b) Subsequent Equity Sales. If, at any time while this Warrant is outstanding, the Company issues or sells, or is deemed to have issued or sold (including pursuant to Section 3(b)(3) below), any shares of Common Stock (other than Excluded Issuances) for a consideration per share (the “New Issuance Price”) less than a price equal to the Exercise Price in effect immediately prior to such issue or sale (such Exercise Price, the “Applicable Price”) (the foregoing, a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an amount equal to the product of (i) the Applicable Price multiplied by (ii) a fraction, (x) the numerator of which shall be the sum of (I) the number of shares of Common Stock outstanding immediately prior to such Dilutive Issuance (calculated on a fully-diluted basis and including any shares of Common Stock issuable upon exercise of this Warrant, assuming full exercise hereof at the Applicable Price) plus (II) the number of shares of Common Stock that the aggregate consideration received or receivable by the Company for such Dilutive Issuance would purchase at the Applicable Price, and (y) the denominator of which shall be the sum of (I) the number of shares of Common Stock outstanding immediately prior to such Dilutive Issuance (calculated on a fully-diluted basis and including any shares of Common Stock issuable upon exercise of this Warrant, assuming full exercise hereof at the Applicable Price) plus (II) the number of shares of Common Stock actually issued or sold (or deemed issued or sold) in such Dilutive Issuance. Notwithstanding the foregoing, no adjustments shall be made, paid or issued under this Section 3(b) in respect of any issuances of Excluded Securities (as defined below). The Company shall notify the Holder, in writing, no later than the Trading Day following the issuance or deemed issuance of any Common Stock or Common Stock Equivalents subject to this Section 3(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms. Notwithstanding anything herein to the contrary, no adjustment shall be made pursuant to this Section 3 (b) unless the aggregate gross proceeds received by the Company from the applicable Dilutive Issuance exceed $500,000 or the aggregate number of shares of Common Stock issued (or deemed issued) exceeds one percent (1%) of the Company’s outstanding Common Stock (on a fully diluted basis) immediately prior to such issuance.
| -7- |
(1) Excluded Issuances. For purposes of this Section 3(b), “Excluded Issuances” means any issuance or sale (or deemed issuance or sale) of shares of Common Stock: (a) upon exercise of this Warrant or any other Warrants; (b) upon conversion of any Notes issued pursuant to the Purchase Agreement; (c) to employees, officers, directors or consultants of the Company or any Subsidiary pursuant to equity incentive plans or agreements approved by the Board of Directors, provided that the aggregate number of shares of Common Stock issued pursuant to this clause (c) does not exceed 10% of the fully-diluted Common Stock outstanding as of the Original Issue Date; (d) as a dividend or distribution on the Common Stock for which an adjustment is made pursuant to Section 3(a); (e) upon exercise or conversion of any Common Stock Equivalents outstanding as of the Original Issue Date; or (f) in connection with any bona fide strategic transaction (including any joint venture, licensing arrangement, technology partnership or similar arrangement) approved by the Board of Directors (including at least one Purchaser Designee), provided that the primary purpose of such transaction is not to raise capital.
(2) Determination of Consideration. For purposes of this Section 3(b), the aggregate consideration received or receivable by the Company for any issuance or sale (or deemed issuance or sale) of Common Stock shall be computed as follows:
(i) to the extent it consists of cash, on the basis of the gross amount of cash received by the Company before deduction of any underwriting or similar commissions, compensation, concessions or discounts paid or allowed by the Company in connection with such issuance or sale;
(ii) to the extent it consists of property other than cash, at the fair market value of such property as reasonably determined in good faith by the Board of Directors; provided that if the Holder disputes such determination, the fair market value shall be determined by an independent appraiser selected by the Holder and reasonably acceptable to the Company (the costs of which shall be borne by the Company); and
| -8- |
(iii) if shares of Common Stock are issued or sold together with other securities or other assets of the Company for a consideration that covers both, the consideration computed as provided in clauses (i) and (ii) above allocable to such shares of Common Stock shall be determined in good faith by the Board of Directors; provided that if the Holder disputes such determination, the allocation shall be determined by an independent appraiser selected by the Holder and reasonably acceptable to the Company (the costs of which shall be borne by the Company).
(3) Deemed Issuances of Common Stock. For purposes of this Section 3(b), if the Company issues or sells any Common Stock Equivalents and the lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof (taking into account any anti-dilution or similar adjustments therein) is less than the Applicable Price, then such share of Common Stock shall be deemed to have been issued and sold by the Company at the time of the issuance or sale of such Common Stock Equivalent for such price per share. If the terms of any Common Stock Equivalent are amended or modified after the Original Issue Date such that the lowest price per share for which one share of Common Stock is issuable upon conversion, exercise or exchange thereof is decreased below the Applicable Price, then such Common Stock Equivalent shall be deemed to have been issued at the time of such amendment or modification for such reduced price per share. For purposes of this Section 3(b)(3), the “lowest price per share for which one share of Common Stock is issuable upon conversion, exercise or exchange” shall equal the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Common Stock Equivalent and upon conversion, exercise or exchange thereof. No adjustment shall be made pursuant to this Section 3(b) upon the actual issuance of shares of Common Stock upon conversion, exercise or exchange of a Common Stock Equivalent to the extent an adjustment was previously made with respect to such Common Stock Equivalent pursuant to this Section 3(b)(3).
(4) No Increase in Exercise Price. Notwithstanding any other provision of this Section 3(b), in no event shall any adjustment made pursuant to this Section 3(b) result in an increase in the Exercise Price.
(5) Minimum Exercise Price. The Exercise Price shall in no event be reduced pursuant to the terms of this Section 3(b) below $1.25 per share, subject to any adjustments pursuant to Section 3(a).
c) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) or 3(b) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.
| -9- |
d) Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution.
e) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(c) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (not to be unreasonably withheld, conditioned or delayed) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.
| -10- |
f) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g) Voluntary Adjustment by Company. Subject to the rules and regulations of the Trading Market and the consent of the Requisite Purchasers, the Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors.
h) Notice to Holder.
i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously publicly disseminate such notice. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
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Section 4. Transfer of Warrant.
a) Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date the Holder delivers an assignment form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the original Issue Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
d) Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, comply with the provisions of the Purchase Agreement.
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e) Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.
Section 5. Miscellaneous.
a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.
b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity and/or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.
d) Authorized Shares.
The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
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Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its second amended and restated certificate of incorporation, as amended, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.
f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, may have restrictions upon resale imposed by state and federal securities laws.
g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
h) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.
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i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
(Signature Page Follows)
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
| CELULARITY INC. | ||
| By: | ||
| Name: | Robert J. Hariri, MD, PhD | |
| Title: | Chairman and Chief Executive Officer | |
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NOTICE OF EXERCISE
| To: | celularity inc. |
(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form of lawful money of the United States.
(3) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________________________
The Warrant Shares shall be delivered to the following DWAC Account Number:
______________________________________________
______________________________________________
______________________________________________
(4) The undersigned acknowledges that the exercise of this Warrant is subject to the Beneficial Ownership Limitation set forth in the Warrant.
(5) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.
[SIGNATURE OF HOLDER]
Name of Investing Entity: ________________________________________________________________________
Signature of Authorized Signatory of Investing Entity: _________________________________________________
Name of Authorized Signatory: ___________________________________________________________________
Title of Authorized Signatory: ____________________________________________________________________
Date: ________________________________________________________________________________________
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ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
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| Holder’s Signature: ______________________________ | |
| Holder’s Address: _______________________________ |
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Exhibit 4.3
This Amended and Restated Senior Secured Convertible Note (this “Note”) amends and restates in its entirety that certain Senior Secured Convertible Promissory Note originally issued by the Company to Philip & Daniele Barach Family Trust on December 19, 2025, in the original principal amount of $3,000,000 (the “Original Note”). The Original Note is being amended and restated as of September 23, 2026 (the “Amendment and Restatement Date”) and, as of such date, the indebtedness of the Company evidenced by the Original Note will be deemed to have been issued pursuant to that certain Securities Purchase Agreement, dated as of September 23, 2026, by and among the Company and the Purchasers party thereto, as amended, modified or supplemented from time to time (the “Purchase Agreement”; capitalized terms not otherwise defined in this Note shall have the meanings set forth in the Purchase Agreement) and secured by liens on the assets described in the Amended and Restated Security Agreement (as defined below). For the avoidance of doubt, from and after the Amendment and Restatement Date, the Original Note shall be superseded and replaced by this Note which shall constitute one of the series of Notes issued or outstanding pursuant to the Purchase Agreement.
This Note is intended to amend and restate, and not to novate, discharge, satisfy or extinguish, the indebtedness and other obligations evidenced by the Original Note. All outstanding principal, accrued and unpaid interest and other amounts owing under the Original Note immediately prior to the Amendment and Restatement Date shall continue as obligations under this Note, subject to the amended and restated terms set forth herein
NEITHER THIS NOTE NOR THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF APPLICABLE STATES. THIS NOTE AND SUCH SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION UNDER SUCH LAWS OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS. INVESTOR SHOULD BE AWARE THAT IT MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THIS NOTE AND ANY SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ALL APPLICABLE STATE SECURITIES LAWS.
Original Issue Date: December 19, 2025
Amendment
and Restatement Date: September 23, 2026
Conversion Price: $1.50
Principal Amount: $3,000,000
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Amended and restated
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
THIS AMENDED AND RESTATED SENIOR SECURED CONVERTIBLE PROMISSORY NOTE (this “Note”) is a duly authorized and validly issued debt obligation of Celularity Inc., a Delaware corporation (the “Company” or the “Borrower”), having its principal place of business at 170 Park Avenue, Florham Park, NJ 07932.
FOR VALUE RECEIVED, FOR VALUE RECEIVED, the Company promises to pay to the order of Philip & Daniele Barach Family Trust or its registered assigns (the “Holder”), or shall have paid pursuant to the terms hereunder, the aggregate outstanding principal amount of $3,000,000, together with all accrued and unpaid PIK Interest accruing from and after the Amendment and Restatement Date and all other amounts due hereunder on the Maturity Date (as defined below), or such earlier date as this Note is required or permitted to be repaid as provided hereunder, and to pay interest to the Holder on the then-outstanding principal amount of this Note in accordance with the provisions hereof:
Section 1. Definitions. For the purposes hereof, in addition to the terms defined elsewhere in this Note and in the Purchase Agreement, the following terms shall have the following meanings:
“Amendment and Restatement Date” has the meaning attributed to it on the legend hereof.
“Bankruptcy Event” means any of the following events with respect to any juridical entity: (a) the entity commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the entity, (b) there is commenced against the entity any such case or proceeding that is not dismissed within sixty (60) days after commencement, (c) the entity is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the entity suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within sixty (60) calendar days after such appointment, (e) the entity makes a general assignment for the benefit of creditors, (f) the entity calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts or (g) the entity, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.
“Change of Control Transaction” means the occurrence after the date hereof of any of the following: (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of fifty percent (50%) of the voting securities of the Company, (b) the Company merges into or consolidates with any other Person, or any Person merges into or consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company immediately prior to such transaction own less than fifty-one percent (51%) of the aggregate voting power of the Company or the successor entity of such transaction, (c) the Company sells or transfers all or substantially all of its assets to another Person and the stockholders of the Company immediately prior to such transaction own less than fifty-one percent (51%) of the aggregate voting power of the acquiring entity immediately after the transaction, (d) a replacement at one time or within a three (3) year period of more than one-half of the members of the Board of Directors which is not approved by a majority of the directors then in office, excluding, for the avoidance of doubt, any Board changes contemplated by the Purchase Agreement or the Board Rights Agreement, including the appointment, nomination or election of the Purchaser Designees, or, or (e) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (d) above. For the avoidance of doubt, none of the transactions contemplated by the Purchase Agreement or the conversion of the Notes or exercise of Warrants issued thereunder shall be considered in any determination with respect to whether or not a Change of Control Transaction has occurred.
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“Common Stock” means the Company’s Class A common stock, par value $0.0001 per share, and any capital stock into which such Common Stock shall have been changed or any share capital resulting from a reclassification of such Common Stock.
“Common Stock Equivalents” means any securities of the Company or its Subsidiaries which would entitle the holder thereof to acquire at any time any shares of Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into, exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, any shares of Common Stock.
“Conversion Amount” means 100% of the outstanding principal amount of this Note and all accrued and unpaid interest hereon (with respect to both interest at the Regular Interest Rate and/or the Default Interest Rate) through the Conversion Date.
“Conversion Date” shall have the meaning set forth in Section 3(c)(i).
“Conversion Cap” means the limitation on issuance of shares of Common Stock set forth in Section 3(f), pursuant to which, unless and until the Company has obtained any stockholder approval required under Nasdaq Listing Rule 5635, the Company shall not issue, and the Holder shall not be entitled to receive, shares of Common Stock in excess of the limits set forth therein.
“Conversion Price” means, with respect to this Note, $1.50, as it may be adjusted from time to time pursuant to the terms hereof.
“Conversion Shares” means the shares of Common Stock issuable upon conversion of this Note.
“Event of Default” shall have the meaning set forth in Section 5(a).
“Intercreditor Agreement” means that certain Intercreditor Agreement, dated as of the Amendment and Restatement Date, by and among the Holder, the other Purchasers named in the Purchase Agreement, and the Company.
“Interest Compounding Date” shall have the meaning set forth in Section 2(a).
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“Mandatory Default Amount” means the payment of 100% of the outstanding principal amount of this Note and accrued and unpaid interest hereon (with respect to both interest at the Regular Interest Rate and/or the Default Interest Rate), in addition to the payment in cash of all other amounts, costs, expenses and liquidated damages due in respect of this Note including, without limitation, the costs and expenses incurred in connection with the collection of all amounts due hereunder, as provided herein.
“Maturity Date” the date that is twenty-four (24) months following the Amendment and Restatement Date.
“Nasdaq Listing Rule 5635” means Nasdaq Listing Rule 5635, including any successor rule, guidance, interpretation or related Nasdaq change-in-control requirement applicable to the transactions contemplated by the Transaction Documents.
“Note Register” shall have the meaning set forth in Section 2(b).
“Original Conversion Price” means $1.50, prior to giving effect to any adjustment under this Note.
“Original Issue Date” means December 19, 2025, the date on which the Original Note was first issued, regardless of any amendment, restatement, transfer or exchange of the Original Note or this Note and regardless of the number of instruments issued to evidence the indebtedness represented hereby.
“Permitted Security Interests” means Liens expressly permitted under the Purchase Agreement and the Security Agreement, including the security interests granted to a collateral agent (if applicable) for the benefit of the Holder and the other Purchasers, and any Liens permitted to remain outstanding pursuant to the Purchase Agreement.
“Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, entity, party or government, including, without limitation, any instrumentality, division, agency, body or department thereof.
“Purchaser Designees” means the three representatives designated by the Purchasers to serve on the Board of Directors pursuant to the Purchase Agreement and the Board Rights Agreement.
“Regular Interest Rate” shall have the meaning set forth in Section 2(a).
“Requisite Holders” means holders of Notes owning Notes in the aggregate principal amount greater than fifty percent (50.0%) of all Notes then outstanding.
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Section 2. Interest and Redemption.
a) Accrual and Compounding of Interest. The Company shall pay interest to the Holder on the aggregate outstanding principal amount of this Note at the rate of ten percent (10%) (the “Regular Interest Rate”) per annum. Interest shall accrue from the Original Issue Date and shall compound annually on each anniversary of the Original Issue Date (each such date, an “Interest Compounding Date”). On each Interest Compounding Date, all accrued and unpaid interest as of such date shall be added to the outstanding principal amount of this Note for purposes of calculating interest accruing thereafter. All accrued and unpaid interest on this Note shall be payable in cash on the Maturity Date (or such earlier date as this Note is required or permitted to be repaid as provided hereunder). No cash payment of interest shall be required prior to the Maturity Date. Upon the occurrence and during the continuance of an Event of Default, the Company shall pay interest to the Holder on the aggregate outstanding principal amount of this Note at the rate of fifteen percent (15%) per annum (the “Default Interest Rate”).
b) Interest at the Regular Interest Rate and the Default Interest Rate shall be calculated for the actual number of days elapsed on the basis of a 365-day year and shall compound annually on each Interest Compounding Date as set forth in Section 2(a). Interest hereunder will be paid to the Person in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note (the “Note Register”).
c) Pari Passu Notes. The Holder acknowledges and agrees that the payment of all or any portion of the outstanding principal amount of this Note and all interest hereon shall be pari passu in right of payment and in all other respects to any other Notes. In the event the Holder receives payments in excess of its pro rata share of the Company’s payments to the holders of all of the Notes, then the Holder shall hold in trust all such excess payments for the benefit of the holders of the other Notes and shall pay such amounts held in trust to such other holders upon demand by such holders.
Section 3. Conversion. Holders of this Note shall have the conversion rights as follows.
a) Optional Conversion. The Conversion Amount of this Note shall be convertible, at the option of the Holder, at any time, and without the payment of additional consideration by the Holder, into such number of fully-paid and nonassessable shares of Common Stock of the Company at the Conversion Price in effect at the time of conversion. The number of shares of Common Stock issuable upon conversion shall be determined by dividing (i) the Conversion Amount on the Conversion Date by (ii) the applicable Conversion Price.
b) Mandatory Conversion Upon Qualified Financing. Upon the consummation of a Qualified Financing, the Conversion Amount of this Note shall automatically convert into such number of shares of the Company’s Common Stock as is determined by dividing (i) the Conversion Amount at the closing of the Qualified Financing by (ii) the applicable Conversion Price. The Company shall provide written notice to the Holder at least two (2) Business Days prior to signing definitive documentation for a Qualified Financing with the Company’s good faith understanding of the expected terms of the Qualified Financing (“Notice of Qualified Financing”). Notwithstanding anything to the contrary herein, any conversion upon a Qualified Financing shall be subject to the Nasdaq Limitations and those limitations set forth in Section 3(g); provided, however, that such automatic conversion shall not occur unless (A) the Company has timely filed all reports required to be filed by it under the Exchange Act and (B) the Underlying Shares are either (1) subject to an effective registration statement under the Securities Act permitting the resale thereof by the Holder or (2) freely saleable by the Holder without registration under Rule 144 promulgated under the Securities Act. To the extent that any shares of Common Stock are not issuable upon automatic. To the extent that any shares of Common Stock are not issuable upon mandatory conversion as a result of Section 3(g), the portion of the Conversion Amount that is not convertible as a result of such limitation shall remain outstanding (with the amount of Converted Amount so converted applied first to accrued but unpaid interest and thereafter to the amount of principal of this Note) and shall convert if and when such conversion would not violate Section 3(g) or after the Company has obtained any required stockholder approval.
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c) Mandatory Conversion Upon Stock Price Condition.
i. Triggering Event. I If, at any time while this Note is outstanding, for each of thirty (30) consecutive Trading Days (such period, the “Measurement Period”), on each of which Trading Days the VWAP of the Common Stock on Nasdaq (or such other Trading Market on which the Common Stock is then listed or quoted) equals or exceeds $6.00 per share (the “Stock Price Threshold”), provided that (A) the Common Stock remains listed on Nasdaq or another national securities exchange throughout the Measurement Period, (B) the average daily trading volume during the Measurement Period equals or exceeds 1,000,000 shares, (C) no Event of Default has occurred and is continuing, (D) the Company has sufficient authorized but unissued shares of Common Stock available to effect such conversion, and (E) the Company has not publicly announced or entered into a definitive agreement with respect to any merger, consolidation, business combination, recapitalization or similar extraordinary transaction that, in the reasonable judgment of the Board of Directors, would be materially impaired by such conversion, then, subject to the terms and conditions set forth in this Section 3(c), the Company may, in its sole discretion, by written notice delivered to the Holder within ten (10) Business Days following the expiration of the Measurement Period, elect to cause all of the outstanding Conversion Amount of this Note to convert (without any action on the part of the Holder) into shares of Common Stock at the Conversion Price then in effect on the Trading Day immediately following the last Trading Day of such Measurement Period (such conversion, a “Mandatory Stock Price Conversion” and such date, the “Mandatory Conversion Date”); provided, however, that such automatic conversion shall not occur unless (A) the Company has timely filed all reports required to be filed by it under the Exchange Act and (B) the Underlying Shares are either (1) subject to an effective registration statement under the Securities Act permitting the resale thereof by the Holder or (2) freely saleable by the Holder without registration under Rule 144 promulgated under the Securities Act. For purposes of this Section 3(c), “VWAP” means, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTCQB Venture Market (“OTCQB”) or the OTCQX Best Market (“OTCQX”) is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market operated by the OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Requisite Holders and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
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ii. Adjustments to Stock Price Threshold. The Stock Price Threshold shall be subject to equitable adjustment upon the occurrence of any stock split, stock dividend, stock combination, recapitalization or other similar event affecting the Common Stock in a manner consistent with the adjustments set forth in Section 3(d)(vii)(A).
iii. Notice of Mandatory Stock Price Conversion. No later than three (3) Business Days following the Mandatory Conversion Date, the Company shall deliver written notice to the Holder (a “Mandatory Conversion Notice”) stating (A) that a Mandatory Stock Price Conversion has occurred, (B) the Mandatory Conversion Date, (C) the Conversion Amount converted, (D) the applicable Conversion Price and (E) the number of shares of Common Stock issuable to the Holder upon such conversion. The Company’s failure to timely deliver a Mandatory Conversion Notice shall not affect the validity of the Mandatory Stock Price Conversion or otherwise constitute an Event of Default under this Note.
iv. Delivery of Conversion Shares. Upon any Mandatory Stock Price Conversion, the Company shall deliver or cause to be delivered to the Holder the applicable Conversion Shares in accordance with the share delivery procedures set forth in this Section 3. Upon delivery of the applicable Conversion Shares, the corresponding Conversion Amount shall be deemed fully satisfied, cancelled and of no further force or effect. No fractional shares shall be issued upon any Mandatory Stock Price Conversion. In lieu of any fractional share, the Company shall pay cash equal to the fractional interest multiplied by the VWAP on the Mandatory Conversion Date.
v. Limitations on Mandatory Stock Price Conversion. Notwithstanding anything to the contrary herein, any Mandatory Stock Price Conversion shall be subject to the Beneficial Ownership Limitation, the Nasdaq Limitations and those limitations set forth in Section 3(f) and Section 3(g). To the extent that any shares of Common Stock are not issuable upon a Mandatory Stock Price Conversion as a result of Section 3(f) or Section 3(g), the portion of the Conversion Amount that is not convertible as a result of such limitation shall remain outstanding as a continuing obligation of the Company (with the portion of the Conversion Amount so converted applied first to accrued but unpaid interest and thereafter to the principal amount of this Note) and shall automatically convert if and when such conversion would not violate Section 3(f) or Section 3(g) or after the Company has obtained any required stockholder approval. Nothing contained herein shall require the Company to seek stockholder approval solely for purposes of effecting a Mandatory Stock Price Conversion if the Board of Directors determines in good faith that such conversion would materially interfere with a pending financing or strategic transaction.
vi. Holder Conversion Right Preserved. For the avoidance of doubt, the Holder’s right to convert this Note pursuant to Section 3(a) shall remain in full force and effect at all times prior to a Mandatory Stock Price Conversion, and the Holder may elect to convert all or any portion of the Conversion Amount at any time prior to the Mandatory Conversion Date. For the avoidance of doubt, nothing in this Section 3(c) shall limit the Company’s right, if otherwise permitted under this Note, to repay the outstanding principal and accrued interest in cash prior to the Mandatory Conversion Date.
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d) Mechanics of Conversion.
i. Notice of Conversion. The Holder shall effect conversions by providing the Company with the form of conversion notice attached hereto as Annex A (a “Notice of Conversion”). Each Notice of Conversion shall specify the amount of this Note to be converted and the date on which such conversion is to be effected, which date may not be prior to the date the applicable Holder delivers by facsimile, email or otherwise such Notice of Conversion to the Company (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion to the Company is deemed delivered hereunder. No Notice of Conversion shall be required for any mandatory conversion pursuant to Section 3(b) or Section 3(c).
ii. Delivery of Certificate Upon Conversion. Not later than the date that is the earlier of (i) two (2) Trading Days after delivery of the Notice of Conversion and (ii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Share Delivery Date”), the Company shall deliver, or cause to be delivered, to the converting Holder a certificate or certificates which, on or after the Effectiveness Date (as defined in the Registration Rights Agreement), shall be free of restrictive legends and trading restrictions (other than those which may then be required by the Transaction Documents) representing the number of Common Stock being acquired upon the conversion of this Note. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise. On or after the Effectiveness Date, the Company shall, upon request of such Holder, use its reasonable efforts to deliver any certificate or certificates required to be delivered by the Company under this Section electronically through The Depository Trust Company or another established clearing corporation performing similar functions. If in the case of any Notice of Conversion such certificate or certificates are not delivered to or as directed by the applicable Holder by the fifth (5th) Business Day after the Conversion Date, the applicable Holder shall be entitled to elect by written notice to the Company at any time on or before its receipt of such certificate or certificates, to rescind such Notice of Conversion by written notice to the Company.
iii. Obligation Absolute. The Company’s obligation to issue and deliver the Conversion Shares in accordance with the terms hereof is 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 Company; provided, however, that such delivery shall not operate as a waiver by the Company of any such action that the Company may have against such Holder. Notwithstanding the foregoing, the Company shall not be required to issue any shares of Common Stock to the extent such issuance would violate Section 3(g).
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iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Conversion. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Conversion Shares in accordance with the provisions of Section 3(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the Common Stock so purchased exceeds (y) the product of (1) the number of Conversion Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Note and equivalent number of Conversion Shares for which such exercise was not honored (in which case such conversion shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver Common Stock upon conversion of the Note as required pursuant to the terms hereof.
v. Reservation of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Note, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder of this Note, not less than such aggregate number of shares of Common Stock as shall be issuable upon the conversion of all outstanding principal balance and accrued but unpaid interest under this Note at the Conversion Price, subject to the limitations set forth in Section 3(g). The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issuance, be duly authorized, validly issued, fully paid and nonassessable.
vi. No Fractional Shares. The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share.
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vii. Certain Adjustments.
(A) Stock Dividends and Splits. If the Company, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any Common Stock Equivalents payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of this Note or any other Note, (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of Common Stock issuable upon conversion of this Note shall be proportionately adjusted such that the aggregate Conversion Price of this Note shall remain unchanged. Any adjustment made pursuant to this Section 3(a)(vi)(A) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
(B) Subsequent Equity Sales. If and whenever on or after the Subscription Date, the Company shall sell, enter into an agreement to sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents (but excluding any Excluded Securities), at an effective price per share less than the Conversion Price then in effect (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”) (it being understood and agreed that if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is less than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive Issuance at such effective price), then simultaneously with the consummation (or, if earlier, the announcement) of each Dilutive Issuance the Conversion Price shall be reduced and only reduced to equal the Base Share Price. Notwithstanding the foregoing, no adjustments shall be made, paid or issued under this Section 2(b) in respect of any issuances of Excluded Securities. The Company shall notify the Holder, in writing, no later than the Trading Day following the issuance or deemed issuance of any Common Stock or Common Stock Equivalents subject to this Section 2(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms. Notwithstanding anything herein to the contrary, no adjustment shall be made pursuant to this Section 3(d)(vii)(B) unless the aggregate gross proceeds received by the Company from the applicable Dilutive Issuance exceed $500,000 or the aggregate number of shares of Common Stock issued (or deemed issued) exceeds one percent (1%) of the Company’s outstanding Common Stock (on a fully diluted basis) immediately prior to such issuance.
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(1) Excluded Issuances. For purposes of this Section 3(d)(vii)(B), “Excluded Issuances” means any issuance or sale (or deemed issuance or sale) of shares of Common Stock: (a) upon conversion of this Note or any other Notes; (b) upon exercise of any warrants issued pursuant to the Purchase Agreement; (c) to employees, officers, directors or consultants of the Company or any Subsidiary pursuant to equity incentive plans or agreements approved by the Board of Directors, provided that the aggregate number of shares of Common Stock issued pursuant to this clause (c) does not exceed 15% of the fully-diluted Common Stock outstanding as of the Amendment and Restatement Date; (d) as a dividend or distribution on the Common Stock for which an adjustment is made pursuant to Section 3(d)(vi)(A); (e) upon exercise or conversion of any Common Stock Equivalents outstanding as of the Amendment and Restatement Date; (f) in connection with any bona fide strategic transaction (including any joint venture, licensing arrangement, technology partnership, research collaboration, manufacturing agreement, supply agreement, distribution agreement, commercial alliance, asset acquisition, merger, business combination, debt restructuring or similar commercial transaction, or similar arrangement) approved by the Board of Directors, provided that the primary purpose of such transaction is the development, manufacture, commercialization, acquisition, disposition or strategic advancement of the Company’s business and not to raise capital; (g) pursuant to bona fide debt financing, equipment financing, working capital facility, refinancing transaction or other credit arrangement by and between the Company and a commercial bank or similar institutional lender, approved by the Board of Directors, including any warrants (but not conversion rights) issued in connection therewith; (h) pursuant to any settlement of litigation, commercial dispute, creditor workout, restructuring or similar negotiated resolution approved by the Board of Directors; upon the exercise, conversion or exchange of any security whose issuance constituted an Excluded Issuance; (i) issued in connection with inducement awards permitted under Nasdaq Listing Rule 5635(c)(4) or any successor rule; (j) issued pursuant to anti-dilution adjustments contained in securities outstanding on the Amendment and Restatement Date; (k) any issuance approved in writing by the Holder; and (l) any issuance of Common Stock or Common Stock Equivalents in connection with any merger, consolidation, business combination, recapitalization, reorganization, share exchange, acquisition of assets or equity interests, or similar strategic transaction approved by the Board of Directors, whether or not such transaction includes a concurrent financing, provided that the primary purpose of such issuance is to effect such transaction and not to circumvent the provisions of this Section 3(d)(vi)(B).
(2) Determination of Consideration. For purposes of this Section 3(d)(vii)(B), the aggregate consideration received or receivable by the Company for any issuance or sale (or deemed issuance or sale) of Common Stock shall be computed as follows:
(i) to the extent it consists of cash, on the basis of the gross amount of cash received by the Company before deduction of any underwriting or similar commissions, compensation, concessions or discounts paid or allowed by the Company in connection with such issuance or sale;
(ii) to the extent it consists of property other than cash, at the fair market value of such property as reasonably determined in good faith by the Board of Directors; provided that if the Holder disputes such determination, the fair market value shall be determined by an independent nationally recognized valuation firm jointly selected by the Holder and the Company and if the parties are unable to agree upon such firm within ten (10) Business Days, each shall appoint one nationally recognized valuation firm and such firms shall jointly appoint a third valuation firm whose determination shall be final and binding with the costs of such appraisal shall be borne equally by the Company and the Holder; and
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(iii) if shares of Common Stock are issued or sold together with other securities or other assets of the Company for a consideration that covers both, the consideration computed as provided in clauses (i) and (ii) above allocable to such shares of Common Stock shall be determined in good faith by the Board of Directors; provided that if the Holder disputes such determination, the allocation shall be determined by an independent nationally recognized valuation firm jointly selected by the Holder and the Company and if the parties are unable to agree upon such firm within ten (10) Business Days, each shall appoint one nationally recognized valuation firm and such firms shall jointly appoint a third valuation firm whose determination shall be final and binding with the costs of such appraisal shall be borne equally by the Company and the Holder.
(3) Deemed Issuances of Common Stock. For purposes of this Section 3(d)(vii)(B), if the Company issues or sells any Common Stock Equivalents and the lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof (taking into account any anti-dilution or similar adjustments therein) is less than the Applicable Price, then such share of Common Stock shall be deemed to have been issued and sold by the Company at the time of the issuance or sale of such Common Stock Equivalent for such price per share. Notwithstanding the foregoing, no adjustment shall result from any amendment or modification that is administrative in nature, extends maturity, waives defaults, adjusts registration rights, modifies covenants, or otherwise does not reduce the effective consideration payable for the applicable Common Stock Equivalent. If the terms of any Common Stock Equivalent are amended or modified after the Amendment and Restatement Date such that the lowest price per share for which one share of Common Stock is issuable upon conversion, exercise or exchange thereof is decreased below the Applicable Price, then such Common Stock Equivalent shall be deemed to have been issued at the time of such amendment or modification for such reduced price per share. For purposes of this Section 3(d)(vii)(B)(3), the “lowest price per share for which one share of Common Stock is issuable upon conversion, exercise or exchange” shall equal the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Common Stock Equivalent and upon conversion, exercise or exchange thereof. No adjustment shall be made pursuant to this Section 3(d)(vi)(B) upon the actual issuance of shares of Common Stock upon conversion, exercise or exchange of a Common Stock Equivalent to the extent an adjustment was previously made with respect to such Common Stock Equivalent pursuant to this Section 3(d)(vi)(B)(3). For the avoidance of doubt, adjustments shall only be made where the primary purpose of the amendment is to reduce the effective conversion or exercise price applicable to such Common Stock Equivalent.
(4) No Increase in Conversion Price. Notwithstanding any other provision of this Section 3(d)(vii)(B), in no event shall any adjustment made pursuant to this Section 3(d)(vii)(B) result in an increase in the Conversion Price.
(5) Minimum Conversion Price. The Conversion Price shall in no event be reduced pursuant to the terms of this Section 3(d)(vii)(B) below $1.25 per share, subject to giving effect to any adjustments pursuant to Section 3(d)(vii)(A).
(C) Calculations. All calculations under this Section 3(c)(vii) shall be made by rounding to the nearest cent or the nearest 1/100th of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.
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(D) Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 3(d)(vii), the Company shall promptly deliver to the Holder by email a notice setting forth the Conversion Price after such adjustment and any resulting adjustment to the number of the shares of Common Stock issuable upon conversion of this Note and setting forth a brief statement of the facts requiring such adjustment.
e) Fundamental Transactions. If, at any time while this Note is outstanding, the Company effects any merger, consolidation, sale of all or substantially all assets, tender offer, exchange offer, reclassification, compulsory share exchange or other similar transaction pursuant to which the Common Stock is converted into, exchanged for or represents the right to receive securities, cash or other property, then the Holder shall have the right thereafter to receive, upon conversion of this Note, the same amount and kind of securities, cash or property as the Holder would have been entitled to receive upon the occurrence of such transaction if this Note had been converted immediately prior to such transaction, subject to Section 3(g).
f) Beneficial Ownership Limitation. The Company shall not effect any conversion of this Note, and the Holder shall not have the right to convert any portion of this Note, to the extent that, after giving effect to the conversion set forth in the applicable Notice of Conversion or any mandatory conversion, the Holder (together with the Holder’s Affiliates, and any Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)) would beneficially own in excess of the Beneficial Ownership Limitation. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Attribution Parties shall include the number of shares of Common Stock issuable upon conversion of this Note with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (A) conversion of the remaining, unconverted portion of this Note beneficially owned by the Holder or any of its Attribution Parties and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any Warrants issued to the Holder under the Purchase Agreement) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 3(f), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 3(f) applies, the determination of whether this Note is convertible (in relation to other securities owned by the Holder together with any Attribution Parties) and of what principal amount of this Note is convertible shall be in the sole discretion of the Holder, and the submission of a Notice of Conversion shall be deemed to be the Holder’s determination of whether this Note may be converted (in relation to other securities owned by the Holder together with any Attribution Parties) and which principal amount of this Note is convertible, in each case subject to the Beneficial Ownership Limitation. The Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 3(f), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Company’s most recent periodic or annual filing with the Securities and Exchange Commission, as the case may be, (ii) a more recent public announcement by the Company or (iii) a more recent written notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within one (1) Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. The “Beneficial Ownership Limitation” shall be 4.99% (or, upon election by a Holder prior to the issuance of any Notes, 9.99%) of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Note held by the Holder. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 3(f); provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Note held by the Holder, and provided further that any increase in the Beneficial Ownership Limitation will not be effective until the sixty-first (61st) day after such notice is delivered to the Company. Notwithstanding the foregoing, the Beneficial Ownership Limitation shall not apply to any Holder that, together with its Attribution Parties, beneficially owned shares of Common Stock (including shares of Common Stock issuable upon conversion of Notes or exercise of Warrants issued under the Purchase Agreement) in excess of the Beneficial Ownership Limitation as of the Original Issue Date (each such Holder, a “Grandfathered Holder”); provided that such Grandfathered Holder shall remain subject to the limitations set forth in Section 3(g) and any applicable limitations under Nasdaq Listing Rule 5635. The Beneficial Ownership Limitation provisions of this Section 3(f) shall apply to a successor holder of this Note (other than a successor to a Grandfathered Holder that, together with its Attribution Parties, beneficially owned shares of Common Stock in excess of the Beneficial Ownership Limitation immediately prior to such succession). The provisions of this Section 3(f) shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 3(f) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation..
g) Deferred Issuance. Any shares of Common Stock not issuable as a result of Sections 3(f) shall remain issuable if and when such issuance would not violate Nasdaq rules or after the Company has obtained any required stockholder approval. The Company shall use commercially reasonable efforts to seek and obtain any required stockholder approval if requested by the Holder or if otherwise necessary to permit the full conversion of this Note in accordance with its terms.
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Section 4. Registration of Transfers and Exchanges.
a) Different Denominations. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be payable for such registration of transfer or exchange.
b) Investment Representations. This Note has been issued subject to certain investment representations of the original Holder set forth in the Purchase Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement and applicable federal and state securities laws and regulations.
c) Reliance on Note Register. Prior to due presentment for transfer to the Company of this Note, the Company and any agent of the Company may treat the Person in whose name this Note is duly registered on the Note Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary. The Company shall update the Note Register to reflect permitted transferees and assignees of the Note.
Section 5. Events of Default.
a) “Event of Default” means, wherever used herein, any of the following events, whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body:
i. any default in the payment of (A) the principal amount of this Note or (B) interest, liquidated damages and other amounts owing to the Holder on this Note, as and when the same shall become due and payable (whether on a Maturity Date or by acceleration or otherwise) which default, solely in the case of an interest payment or other default under clause (B) above, is not cured within five (5) Trading Days;
ii. the Company shall fail to observe or perform any other covenant or agreement contained in this Note;
iii. a breach, default, event of default or the failure observe or perform any covenant or agreement (subject to any grace or cure period provided in the applicable agreement, document or instrument) shall occur under (A) any of the Transaction Documents or (B) any other material agreement, lease, document or instrument to which the Company or any Subsidiary is obligated, including the other Notes (and not covered by clause (v) below);
iv. the Company experiences a Material Adverse Effect;
v. any Person shall breach any agreement delivered to the Holder or the Purchasers pursuant to Section 2.2 of the Purchase Agreement;
vi. any representation or warranty made in this Note, any other Transaction Documents, any written statement pursuant hereto or thereto or any other report, financial statement or certificate made or delivered to the Holder shall be untrue or incorrect in any material respect (or, to the extent such representation or warranty is qualified by materiality or Material Adverse Effect, in any respect) as of the date when made or deemed made;
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vii. the Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation greater than $100,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;
viii. the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy Event;
ix. the Company shall be a party to any Change of Control Transaction or shall agree to sell or dispose of all or in excess of fifty percent (50%) of its assets in one transaction or a series of related transactions (whether or not such sale would constitute a Change of Control Transaction);
x. the occurrence of any levy upon or seizure or attachment of, or any uninsured loss of or damage to, any property of the Borrower or any Subsidiary having an aggregate fair value or repair cost (as the case may be) in excess of $100,000 individually or in the aggregate, and any such levy, seizure or attachment shall not be set aside, bonded or discharged within forty-five (45) days after the date thereof;
xi. any monetary judgment, writ or similar final process shall be entered or filed against the Company, any Subsidiary or any of their respective property or other assets for more than $100,000, and such judgment, writ or similar final process shall remain unvacated, unbonded or unstayed for a period of forty-five (45) calendar days;
xii. prior to the payment in full and satisfaction of the amount owed under this Note, any security interest and Lien purported to be created by any Transaction Document shall cease to be in full force and effect, or shall cease to give the Holder or Collateral Agent, as applicable, the Liens, rights, powers and privileges purported to be created and granted under such Transaction Documents (including a perfected priority security interest in and Lien on all of the Collateral thereunder (except as otherwise expressly provided in such Transaction Document)) in favor of the Holder, or Collateral Agent, as applicable, or shall be asserted by the Company or any Affiliate(s) not to be a valid, perfected, priority (except as otherwise expressly provided in this Note, any such Transaction Document or the transaction documents entered into in connection with the Additional Note) security interest in or Lien on the Collateral covered thereby; or
xiii. except as set forth in Schedule 5 (xiii), any attempt by the Borrower or its officers, directors, and/or affiliates to transmit, convey, disclose, or any actual transmittal, conveyance, or disclosure by the Borrower or its officers, directors, and/or affiliates of, material non-public information concerning the Borrower, to the Holder or its successors and assigns, which is not immediately cured by Borrower’s public disclosure of such information on that same date.
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b) Remedies Upon Event of Default. If any Event of Default occurs (other than the one described in (viii) above), upon written request of the Holder, the Mandatory Default Amount through the date of acceleration shall be paid to the Holder in cash. In the case an Event of Default described above in (viii) occurs, then the Mandatory Default Amount, through the date of acceleration, shall be immediately due and payable to the Holder in cash without any demand, notice or action on the part of the Holder. Commencing on the occurrence of any Event of Default and for as long an Event of Default is not cured, the interest rate on this Note as set forth in Section 2 above shall accrue at the Default Interest Rate. Upon the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender this Note to or as directed by the Company. In connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Except for an Event of Default described above in (viii), such acceleration may be rescinded and annulled by the Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder receives full payment pursuant to this Section 5(b). No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.
Section 6. Negative Covenants. As long as any portion of this Note remains outstanding, unless the Holder shall have otherwise given prior written consent, the Company shall not, and shall not permit any of its Subsidiaries (whether or not a Subsidiary on the Amendment and Restatement Date) to, directly or indirectly:
a) except for Permitted Indebtedness, enter into, create, incur, assume, or suffer to exist any indebtedness for borrowed money of any kind;
b) except for Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any of its property, assets or revenues now owned or hereafter acquired;
c) merge, dissolve, liquidate, consolidate with or into another Person, or sell, transfer, license, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets whether now owned or hereafter acquired;
d) pay cash dividends or distributions on any equity securities of the Company;
e) pay any cash employment bonuses either for calendar year 2025 or from the proceeds of this Note;
f) enter into any agreement with respect to any of the foregoing;
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g) make any payment or prepayment on any indebtedness that is subordinated to the Notes, except to the extent expressly permitted by the applicable subordination agreement or approved in writing by the Holder;
h) issue any shares of Common Stock or Common Stock Equivalents in violation of Nasdaq Listing Rule 5635 or the limitations set forth in Section 3(e) or Section 3(f); or
i) use the proceeds of this Note for any purpose other than as permitted under the Purchase Agreement, provided that the Company may use a portion of the proceeds from Tranche 1 to pay the amount necessary to obtain the release and termination of the Trust’s security interest in the assets of the Company and its Subsidiaries.
Section 7. Affirmative Covenants. As long as any portion of this Note remains outstanding, the Company shall, and shall as applicable cause its Subsidiaries to:
a) promptly notify the Holder and the holder(s) of any other Notes of the occurrence of any Event of Default and the occurrence of any matter or that has had or could reasonably be expected to have a Material Adverse Effect;
b) preserve, renew and maintain in full force and effect its legal existence and good standing under the laws of the jurisdiction of its organization and take all reasonable action to maintain all rights, licenses, permits, privileges and franchises necessary or desirable in the normal conduct of its business;
c) comply with the requirements of all laws and all orders, writs, injunctions and decrees applicable to it;
d) maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied are made of all financial transactions and matters involving the assets and business of the Company;
e) permit representatives of the Holder to visit and inspect any of the Company’s properties, to examine its organizational, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss the Company’s affairs, finances and accounts with the Company’s directors and officers, all at the reasonable expense of the Company and at such reasonable times during normal business hours and as often as may be reasonably requested;
f) use commercially reasonable efforts to maintain the listing or quotation of the Common Stock on Nasdaq or another Trading Market;
g) use commercially reasonable efforts to obtain any stockholder approval required under Nasdaq Listing Rule 5635 if requested by the Requisite Holders or if otherwise necessary to permit the full conversion of this Note and the other Notes and the full exercise of the Warrants issued pursuant to the Purchase Agreement in accordance with their terms;
h) in the case of Tranche 1, use the applicable portion of the proceeds of this Note other than as permitted under the Purchase Agreement; and
i) take all actions reasonably necessary to preserve the first-priority security interest granted under the Security Agreement, subject only to Permitted Liens.
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Section 8. Miscellaneous.
a) Notices. Any and all notices or other communications or deliveries to be provided by the Holder hereunder shall be in writing and delivered personally, by facsimile, electronic mail or sent by a nationally recognized overnight courier service, addressed to the Company, at the facsimile number, email address or mailing address set forth on its signature page hereto, or such other facsimile number, electronic mail or address as the Company may specify for such purposes by notice to the Holder delivered in accordance with this Section 8(a). Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by electronic mail, by facsimile, or sent by a nationally recognized overnight courier service addressed to the Holder at the email address, facsimile number or address of the Holder appearing on the books of the Company, or if no such email address or facsimile number or address appears on the books of the Company, at the principal place of business of such Holder, as set forth in the Purchase Agreement, or such other facsimile number, electronic mail or address as the Holder may specify for such purposes by notice to the Company delivered in accordance with this Section 8(a). Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via electronic mail or facsimile prior to 5:30 p.m. (New York City time) on any Trading Day, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via electronic mail or facsimile on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required to be given.
b) Absolute Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable, on this Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of the Company.
c) Lost or Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, reasonably satisfactory to the Company.
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d) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced in accordance with the laws of the State of New York (including, without limitation, Section 5-1401 of the New York General Obligations Law (“NY GOL”)), without regard to any other conflicts of law rules or principles. Each party agrees that all legal Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Note (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in New York, New York. Pursuant to NY GOL 5-1402, each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City, County and State of New York 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 this Note), 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 court, that such Proceeding is improper or is an inconvenient venue for such Proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such 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 Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.
e) Amendment; Waiver. Any term of this Note may be amended or waived with the written consent of the Company and the Requisite Holders. Upon the effectuation of such waiver or amendment with the consent of the Requisite Holders in conformance with this paragraph, such amendment or waiver shall be effective as to, and binding against the holders of, all of the Notes and the Company shall promptly give written notice thereof to the Holder if the Holder has not previously consented to such amendment or waiver in writing; provided that the failure to give such notice shall not affect the validity of such amendment or waiver. Notwithstanding the foregoing, no amendment or waiver shall, without the written consent of the Holder, disproportionately and adversely affect the Holder relative to the holders of the other Notes.
f) Severability. If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.
g) Costs of Collection and Enforcement. The Company agrees to pay any collection expense, court costs and, to the extent allowed by applicable law, reasonable attorneys’ fees and legal fees (whether or not suit is commenced) which are incurred in the collection or enforcement of this Note or of any part hereof or any of the other Transaction Documents; and in the event suit is brought to enforce payment hereof, that such expenses, costs and fees be determined by a court sitting without a jury. Attorneys’ fees shall include any such fees incurred in any Bankruptcy Event, appellate or related ancillary or supplemental proceedings, whether before or after final judgment related to the enforcement or defense of this Note and any of the other Transaction Documents.
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h) Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note. The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and without any bond or other security being required. The Company shall provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Note.
i) 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.
j) Headings. The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit or affect any of the provisions hereof.
k) Secured
Obligation. The obligations of the Company under this Note are secured by certain assets of the Company pursuant to the Security
Agreement, dated as of September 23, 2026, by and among the Company and the Collateral Agent, for the benefit of the Holder and the
other Purchasers. The obligations under this Note are intended to constitute senior secured obligations of the Company, ranking
senior to all indebtedness of the Company other than indebtedness expressly permitted under the Purchase Agreement or otherwise
subject to an intercreditor, subordination or other arrangement acceptable to the Holder. Notwithstanding the foregoing, the Holder
acknowledges that the effectiveness of the first-priority security interest granted for the benefit of the Holder and the other
Purchasers may be subject to the payment of
any amounts payable to the Trust and the release and termination of the
Trust’s security interest, in each case as contemplated by the Purchase Agreement.
(Signature Pages Follow)
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IN WITNESS WHEREOF, the Company has caused this Amended and Restated Senior Secured Convertible Promissory Note to be duly executed by a duly authorized officer of the Company.
| CELULARITY INC. | ||
| By: | ||
| Name: | Robert J. Hariri, MD, PhD | |
| Title: | CEO | |
Mailing Address for Notices:
170 Park Avenue, Florham Park, NJ 07932
Email Address for delivery of Notices: kyle.fletcher@celularity.com | ||
[Signature Page for Convertible Note]
ANNEX A
NOTICE OF CONVERSION
Reference is made to the Convertible Note (the “Note”) issued to the undersigned by Celularity Inc. (the “Company”). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the unpaid principal balance of the Note and accrued interest indicated below into shares of Common Stock of the Company, as of the date specified below.
Date of conversion:
Unpaid principal balance to be converted:
Unpaid accrued interest to be converted:
Please confirm the following information:
A. Conversion Price:
B. Number of shares of Common Stock to be issued:
C. Please deliver the stock certificate representing the shares of Common Stock to the following address:
| By: | ||
| Name: | ||
| Title, | if applicable: | |
[Signature Page for Convertible Note]
ANNEX B
ASSIGNMENT FORM
(To assign the foregoing Note, execute this form and supply required information. Do not use this form to convert shares.)
FOR VALUE RECEIVED, the foregoing Note and all rights evidenced thereby are hereby assigned to the following:
Name of Assignee: ________________________________________
Address of Assignee: ______________________________________________________________________
Phone Number of Assignee: _________________________________
Email Address of Assignee: __________________________________
SSN/EIN of Assignee: _______________________________________
| By: | ||
Name of Holder: Address of Holder: Date: |
[Signature Page for Convertible Note]
Exhibit 4.4
NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
AMENDED AND RESTATED CLASS A COMMON STOCK PURCHASE WARRANT
CELULARITY INC.
| Warrant Shares: 1,258.740 | Date: September 23, 2026 |
THIS AMENDED AND RESTATED CLASS A COMMON STOCK PURCHASE WARRANT (this “Warrant”) is made effective as of September 23, 2026 (the “Amendment and Restatement Date”) and amends and restates in its entirety that certain Class A Common Stock Purchase Warrant issued on December 19, 2025 (the “Original Issuance Date” and such warrant, the “Original Warrant”). This Warrant supersedes the Original Warrant in its entirety; provided that this amendment and restatement shall not constitute a novation of the rights and obligations evidenced by the Original Warrant. This Warrant certifies that, for value received, Philip & Daniele Barach Family Trust or its assigns (the “Holder”) is entitled, upon the terms and the conditions hereinafter set forth, at any time on or prior to the close of business at 5:00 p.m. (New York City time) on September 23, 2031 (the “Termination Date”) but not thereafter, to subscribe for and purchase from Celularity Inc., a Delaware corporation (the “Company”), up to 1,258,740 shares (as subject to adjustment hereunder, the “Warrant Shares”) of the Company’s Class A Common Stock, par value $0.0001 (the “Common Stock”). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions. In addition to the terms defined elsewhere in this Warrant, the capitalized terms shall have the meanings indicated in that certain Securities Purchase Agreement (the “Purchase Agreement”; capitalized terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement), dated September 23, 2026 by and among the Company and the Purchasers.
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Section 2. Exercise.
a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or before the Termination Date by delivery to the Company of a duly executed facsimile copy or PDF copy submitted by electronic mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (“Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within two (2) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
b) Exercise Price. The exercise price per share of the Common Stock under this Warrant shall be $1.50, subject to adjustment hereunder (the “Exercise Price”).
c) Intentionally Omitted.
d) Mechanics of Exercise.
i. Delivery of Warrant Shares Upon Exercise. Subject to the requirements of applicable law, the Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner of sale limitations pursuant to Rule 144, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earlier of (i) the earlier of (A) three (3) Trading Days after the delivery to the Company of the Notice of Exercise and (B) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (ii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate (but not Rule 144) purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price is received by the Company is received within the earlier of (i) three (3) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth (5th) Trading Day after the first Business Day following the Warrant Share Delivery Date) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.
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ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the Common Stock so purchased exceeds (y) the product of (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
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v. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
vi. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to The Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares. The Company shall pay all attorney fees required for the issuance of attorney legal opinions for removal of restrictive legends on Warrant Shares.
vii. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
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Section 3. Certain Adjustments.
a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any Common Stock Equivalent payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant or the Note), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.
c) Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution.
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d) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(d) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (not to be unreasonably withheld, conditioned or delayed) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.
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e) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
f) Voluntary Adjustment by Company. Subject to the rules and regulations of the Trading Market and the consent of the Requisite Holders, the Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors.
g) Notice to Holder.
i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously publicly disseminate such notice. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
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Section 4. Transfer of Warrant.
a) Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date the Holder delivers an assignment form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Original Issuance Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
d) Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, comply with the provisions of the Purchase Agreement.
e) Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.
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Section 5. Miscellaneous.
a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.
b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity and/or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.
d) Authorized Shares.
The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its second amended and restated certificate of incorporation, as amended, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
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Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.
f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, may have restrictions upon resale imposed by state and federal securities laws.
g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
h) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.
i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
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j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
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(Signature Page Follows)
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the Amendment and Restatement Date.
| CELULARITY INC. | ||
| By: | ||
| Name: | Robert J. Hariri, MD, PhD | |
| Title: | CEO | |
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NOTICE OF EXERCISE
| To: | celularity inc. |
(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form of lawful money of the United States.
(3) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
________________________________________________
The Warrant Shares shall be delivered to the following DWAC Account Number:
_______________________________________________
_______________________________________________
_______________________________________________
(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.
[SIGNATURE OF HOLDER]
Name of Investing Entity: ________________________________________________________________________
Signature of Authorized Signatory of Investing Entity: _________________________________________________
Name of Authorized Signatory: ___________________________________________________________________
Title of Authorized Signatory: ____________________________________________________________________
Date: ________________________________________________________________________________________
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ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
| Name: | |
| (Please Print) | |
| Address: | |
| (Please Print) | |
| Phone Number: | |
| Email Address: | |
| Dated: _______________ __, ______ | |
| Holder’s Signature: ______________________________ | |
| Holder’s Address: _______________________________ |
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Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the “Agreement”) is made as of September 23, 2026, by and among Celularity Inc., a Delaware corporation (and together with all of its current and future, direct and/or indirect, wholly owned and/or partially owned Subsidiaries, collectively, the “Company”), and the one or more persons and entities identified on the signature pages hereto and on the Schedule of Purchasers attached hereto as Schedule 1, each individually, a “Purchaser,” and collectively, the “Purchasers.”
RECITALS
A. The Company and the Purchasers are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act (as defined below), and/or Rule 506(b) of Regulation D (“Regulation D”) as promulgated by the SEC (as defined below).
B. The Purchasers wish to purchase, and the Company wishes to sell at each closing, upon the terms and conditions stated in this Agreement, the Securities (as defined below), all in the amounts and for the price set forth on Schedule 1 hereto.
C. The Company has agreed to secure performance of its obligations under this Agreement by granting and pledging to the Purchasers, or an agent acting on their behalf, a Lien (as defined below) on the Company’s existing and future assets.
D. The Securities are being issued pursuant to a two-tranche senior secured convertible note financing providing for the issuance and sale of Notes (as defined below) in an aggregate principal amount of up to Maximum Amount (as defined below), together with related Warrants (as defined below), on the terms set forth herein.
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
1
DEFINITIONS
1.1 Defined Terms. In addition to terms defined elsewhere in this Agreement or in any supplement, amendment or exhibit hereto, when used herein, the following terms shall have the following meanings:
(a) “Additional Tranche 1 Closing” has the meaning set forth in Section 2.1(a).
(b) “Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 of the Securities Act, including, among others, executive officers, directors, large stockholders, subsidiaries, parent entities and sister companies.
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(c) “Amended and Restated Existing Trust Convertible Note” means the amended and restated Existing Trust Convertible Note to be delivered by the Company to the Trust at the Initial Tranche 1 Closing, in form and substance reasonably acceptable to the Trust.
(d) “Amended and Restated Existing Trust Convertible Warrant” means the amended and restated Existing Trust Convertible Warrant to be delivered by the Company to the Trust at the Initial Tranche 1 Closing, in form and substance reasonably acceptable to the Trust.
(e) “Board” shall mean the board of directors of the Company.
(f) “Board Recommendation” has the meaning set forth in Section 4.26(b).
(g) “Board Rights Agreements” means the board designation, nomination and related rights agreements by and between the Company and the Trust in the form attached hereto as Exhibit E.
(h) “Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
(i) “Closing” has the meaning set forth in Section 2.1.
(j) “Closing Date” has the meaning set forth in Section 2.1(d).
(k) “Code” means the Internal Revenue Code of 1986, as amended.
(l) “Collateral” shall have the meaning ascribed to such term as set forth in the Security Agreement.
(m) “Collateral Agent” means Philip Barach and any successor Collateral Agent designated or appointed pursuant to the terms of the Security Agreement.
(n) “Common Stock” means (i) the Company’s Class A common stock, par value $0.0001 per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(o) “Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
(p) “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.
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(q) “Control Agreement” means any tri-party agreement entered into among the Company, as depositor, the Collateral Agent, as secured party, and the applicable bank or securities intermediary, as depository, pursuant to which the Purchasers perfect their security interest in the cash or financial assets held in an account in the name of the Company with such securities intermediary.
(r) “Conversion Price” means, with respect to each Note, the applicable fixed conversion price set forth below: (a) $1.50 per share for Notes issued at a Tranche 1 Closing and (b) $2.00 per share for Notes issued at a Tranche 2 Closing, in each case subject to adjustment as set forth in the applicable Note.
(s) “Conversion Shares” means all shares of Common Stock issuable upon conversion of any portion of the Notes including, at a Purchaser’s election pursuant to the conditions set forth in the Note, accrued and unpaid interest thereon.
(t) “Dollar(s)” and “$” means lawful money of the United States.
(u) “Effective Date” means the date that the initial Registration Statement filed by the Company pursuant to the Registration Rights Agreement is first declared effective by the Commission.
(v) “Election Notice” has the meaning set forth in Section 2.1(c).
(w) “Event of Default” shall have the meaning set forth in the Notes.
(w) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
(x) “Exempted Securities” means (a) shares of Common Stock or options to purchase shares of Common Stock to employees, officers, directors, services providers, advisors or consultants 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 or a majority of the members of a committee of non-employee directors established for such purpose for services rendered to the Company, (b) securities issuable upon the exercise, exchange 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, or (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that such securities are issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the filing of any registration statement in connection therewith during the thirty (30) days after the date of this Agreement, and provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.
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(y) “Existing Trust Convertible Note” means the convertible promissory note in the principal amount of $3,000,000 dated December 19, 2025 issued by the Company to the Trust.
(z) “Existing Trust Loan Agreement” means that certain Loan Agreement, dated June 29, 2026, as modified or amended through the date hereof, by and between the Company and the Trust, pursuant to which the Trust made a secured loan to the Company in the original principal amount of $1,000,000.
(aa) “Existing Trust Loan Payoff Amount” means the aggregate amount required to repay in full all outstanding obligations of the Company under the Existing Trust Loan Agreement, including all outstanding principal, accrued and unpaid interest, and any other amounts then due and payable thereunder.
(bb) “Existing Trust Warrants” means those warrants to purchase 1,258,740 shares of Common Stock issued by the Company to the Trust in connection with the issuance of the Existing Trust Convertible Note.
(cc) “GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time.
(dd) “Indebtedness” means, with respect to any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (but excluding trade payables incurred in the ordinary course of business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or the Purchaser under such agreement in the event of default are limited to repossession or sale of such property), (e) all capital lease obligations of such Person, (f) all obligations of such Person, contingent or otherwise, as an account party or applicant under acceptance, letter of credit, surety bond or similar facilities, (g) all obligations of such Person, contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any capital stock of such Person, (h) all obligations for any earn-out consideration, (i) the liquidation value of preferred capital stock of such Person, (j) all guarantee obligations of such Person in respect of obligations of the kind referred to in clauses (a) through (i) above, (k) all obligations of the kind referred to in clauses (a) through (i) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any lien on property (including, without limitation, accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation and all obligations of such Person in respect of hedge agreements; and (l) all Contingent Obligations in respect to indebtedness or obligations of any Person of the kind referred to in clauses (a)-(k) above. The Indebtedness of any Person shall include, without duplication, the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness expressly provide that such Person is not liable therefor.
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(ee) “Initial Purchaser” means a Purchaser that purchases Notes in the Initial Tranche 1 Closing.
(ff) “Initial Tranche 1 Closing” has the meaning set forth in Section 2.1(a).
(gg) Intercreditor Agreement” means that certain Intercreditor Agreement, dated as of the Closing Date, by and among the Purchasers named in this Agreement providing for the respective rights, priorities and obligations of the parties thereto, with respect to the exercise of their rights as secured lenders against the Company under any one or more of the Transaction Documents.
(hh) “Initial Purchaser Investment Percentage” means the applicable percentage of Notes purchased by an Initial Purchaser of the aggregate principal value of Notes issued at the Initial Tranche 1 Closing.
(ii) “Investment Percentage” means the applicable percentage of Notes purchased by a Purchaser of the aggregate principal value of Notes issued in Tranche 1 as set forth on Schedule 1.
(jj) “Lien” means a lien, mortgage, charge pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction, or other clouds on title.
(kk) “Liabilities” means all direct or indirect liabilities, Indebtedness and obligations of any kind of Company to any Purchaser, howsoever created, arising or evidenced, whether now existing or hereafter arising (including those acquired by assignment), absolute or contingent, due or to become due, primary or secondary, joint or several, whether existing or arising through discount, overdraft, purchase, direct loan, participation, operation of law, or otherwise, including, but not limited to, pursuant to the Notes, this Agreement and/or any of the other Transaction Documents, all accrued but unpaid interest on the Notes, the principal, any letter of credit, any standby letter of credit, and/or outside attorneys’ and paralegals’ fees or charges relating to the preparation of the Transaction Documents and the enforcement of the Purchasers’ rights, remedies and powers under this Agreement, the Notes and/or the other Transaction Documents.
(ll) “Material Adverse Effect” means a material adverse effect on (a) the business, assets, property, operations, or condition (financial or otherwise) of the Company, (b) the validity or enforceability of this Agreement or any of the other Transaction Documents, (c) the rights or remedies of the Purchasers hereunder or thereunder, or (d) the ability of the Company to perform its obligations under any Transaction Document.
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(mm) “Material Permits” has the meaning set forth in Section 3.1(dd).
(nn) “Maximum Amount” means an amount equal to $25,000,000.
(oo) “Nasdaq” means The Nasdaq Stock Market LLC.
(pp) “Notes” means (i) the Senior Secured Convertible Promissory Notes which, subject to the terms and conditions set forth in this Agreement, shall be purchased from the Company pursuant to this Agreement in the form of the Note attached hereto as Exhibit A, (ii) the Amended and Restated Existing Trust Convertible Note, (iii) and any and all Notes issued in exchange, transfer or replacement of the Notes.
(qq) “Permitted Indebtedness” means (a) the indebtedness evidenced by the Notes, (b) the indebtedness of the Company outstanding as of the date of this Agreement as set forth on Schedule 3.1(x) hereto, (c) indebtedness approved in advance in writing by the Purchasers, and (d) indebtedness that is expressly subordinated to the Notes pursuant to an intercreditor or subordination agreement in form and substance satisfactory to the Purchasers.
(rr) “Permitted Lien” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Company) have been established in accordance with GAAP; (b) Liens imposed by law which were incurred in the ordinary course of the Company’s business, such as carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other similar Liens arising in the ordinary course of the Company’s business, and which (x) do not individually or in the aggregate materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business of the Company and its consolidated Subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject to such Lien; (c) Liens incurred in connection with Permitted Indebtedness thereunder; (d) Liens in favor of the Purchasers or any Collateral Agent acting for the benefit of the Purchasers and (e) other Liens expressly approved in advance in writing by the Purchasers.
(ss) “Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, institution, entity, party or government (whether national, federal, state, county, city, municipal or otherwise including, without limitation, any instrumentality, division, agency, body or department thereof).
(tt) “Principal Market” means the principal Trading Market on which the Common Stock is listed or quoted for trading on the date in question.
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(uu) “Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.
(vv) “Purchase Price” shall have the meaning as set forth on Schedule 1 under the heading “Purchase Price,” in Dollars.
(ww) “Purchaser” and “Purchasers” have the meanings set forth in the premises hereto.
(xx) “Purchaser Party” shall have the meaning set forth in Section 4.9.
(yy) “Qualified Financing” means the closing after the date hereof of one or more related bona fide equity financing transactions resulting in gross proceeds to the Company of at least $25,000,000 at a price per share of Class A Common Stock (or, if other equity securities, on an as-converted or as-exercised basis) of at least $3.00 (the “Minimum Financing Price”), excluding the proceeds received from the issuance of the Notes; provided, that if the Company, at any time while any Notes are outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any Common Stock Equivalents payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of any Note), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split or otherwise) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Minimum Financing Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event; provided, further, that as of the date of the closing of the financing transaction or the first of such related financing transactions, for each of the thirty (30) consecutive Trading Days prior thereto (such period, the “Measurement Period”), on each of such Trading Days (x) the VWAP (as defined in the Notes) of the Common Stock on Nasdaq (or such other Trading Market on which the Common Stock is then listed or quoted) equals or exceeds the Minimum Financing Price and (y) the average daily trading volume during the Measurement Period equals or exceeds 1,000,000 shares.
(zz) “Registration Rights Agreement” means the Registration Rights Agreement, dated as of the Closing Date, by and among the Company and the Purchasers party thereto, as hereinafter amended and/or supplemented, together with all exhibits, schedules and annexes thereto, in the form attached hereto as Exhibit D.
(aaa) “Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale of the Underlying Shares issuable upon conversion of the Notes and exercise of the Warrants as provided for in the Registration Rights Agreement.
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(bbb) “Requisite Purchasers” means Purchasers owning Notes in the aggregate principal amount greater than fifty percent (50.0%) of all Notes then outstanding.
(ccc) “SEC” or “Commission” means the United States Securities and Exchange Commission.
(ddd) “SEC Reports” means all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two (2) years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material).
(eee) “Second Election Notice” has the meaning set forth in Section 2.1(c).
(fff) “Securities” means the Notes and the Warrants purchased pursuant to this Agreement and all Underlying Shares and any securities of the Company issued to any Purchaser in replacement, substitution and/or in connection with any exchange, conversion, exercise and/or any other transaction involving all or any of such securities of the Company.
(ggg) “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
(hhh) “Security Agreement” means the Security Agreement, dated as of the date hereof, by and among the Company, its applicable Subsidiaries and the Collateral Agent, as hereinafter amended and/or supplemented, together with all exhibits, schedules and annexes thereto, the form of which Security Agreement in the form attached hereto as Exhibit C.
(iii) “Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).
(jjj) “Subscription Amount” means, as to each Purchaser, the aggregate amount to be paid for Notes purchased hereunder as specified next to such Purchaser’s name on Schedule 1 hereto under the heading “Purchase Price,” in United States dollars and in immediately available funds.
(kkk) “Stockholder Approval” has the meaning set forth in Section 4.26(a).
(lll) “Subsidiary” means, with respect to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person.
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(mmm) “Tax” means any and all taxes, charges, fees, levies or other assessments, including, without limitation, local and/or foreign income, net worth, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, share capital, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, service, service use, transfer, registration, recording, ad-valorem, value-added, alternative or add-on minimum, estimated, or other taxes, assessments or charges of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.
(nnn) “Tax Return” means any federal, state, local and foreign tax return, report or similar statement required to be filed with respect to any Tax (including any attached schedules), including, without limitation, any information return, claim for refund, amended return or declaration of estimated Tax.
(ooo) “Taxing Authority” means the U.S. Internal Revenue Service and any other governmental authority responsible for the administration of any Tax.
(ppp) “Trading Day” means a day on which the principal Trading Market is open for trading.
(qqq) “Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or any market or quotation service of the OTC Markets Group (or any successors to any of the foregoing).
(rrr) “Tranche” means each of Tranche 1 and Tranche 2, as each such term is defined in Section 2.1.
(sss) “Tranche 1 Closing” has the meaning set forth in Section 2.1(a).
(ttt) “Tranche 1 Closing Date” has the meaning set forth in Section 2.1(a).
(uuu) “Tranche 2 Expiration Date” has the meaning set forth in Section 2.1(b).
(vvv) “Tranche 2 Unsold Balance” has the meaning set forth in Section 2.1(c).
(www) “Tranche 2 Unsold Balance Notice” has the meaning set forth in Section 2.1(c).
(xxx) “Transaction Documents” means, collectively, this Agreement, the Notes, the Warrants, the Registration Rights Agreement, the Security Agreement, the Board Rights Agreement, the Intercreditor Agreement and all financing statements (or comparable documents now or hereafter filed in accordance with the UCC or other comparable or similar laws, rules or regulations) in favor of the Collateral Agent and/or the Purchasers as secured parties perfecting all Liens the Collateral Agent and/or the Purchasers have on the Collateral (which security interests and Liens shall be senior to all Indebtedness of the Company), any Control Agreement or similar agreement, and such other documents, instruments, certificates, supplements, amendments, exhibits and schedules required and/or attached pursuant to this Agreement and/or any of the above documents, and/or any other document and/or instrument related to the above agreements, documents and/or instruments, and the transactions hereunder and/or thereunder and/or any other agreement, documents or instruments required or contemplated hereunder or thereunder, whether now existing or at any time hereafter arising.
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(yyy) “Transfer Agent” means Continental Stock Transfer & Trust Company the current transfer agent of the Company, with an address of One State Street Plaza, 30th Floor New York, New York 10004, and any successor transfer agent of the Company.
(zzz) “Trust” means the Philip & Daniele Barach Family Trust, a trust formed under the laws of California.
(aaaa) “UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided, however, that, in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, priority, or remedies with respect to the Collateral Agent’s Liens on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies.
(bbbb) “Underlying Shares” means all Conversion Shares, Warrant Shares and shares of Common stock issuable upon the conversion of the Amended and Restated Existing Trust Convertible Note and the exercise of the Amended and Restated Existing Trust Convertible Warrant.
(cccc) “Warrants” means the Common Stock purchase warrants delivered to the Purchasers in accordance with Article 2 hereof, in the form attached hereto as Exhibit B.
(dddd) “Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants.
1.2 Other Definitional Provisions.
(a) Use of Defined Terms. Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the other Transaction Documents or any certificate or other document made or delivered pursuant hereto or thereto.
(b) Accounting Terms. As used herein and in the other Transaction Documents, and any certificate or other document made or delivered pursuant hereto or thereto, accounting terms relating to the Company not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP (provided that all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts referred to herein shall be made without giving effect to (i) any election under Accounting Standards Codification 825-10-25 (previously referred to as Statement of Financial Accounting Standards 159) (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Company at “fair value”, as defined therein, and (ii) any treatment of Indebtedness in respect of convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof).
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(c) Construction. The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and section, schedule and exhibit references are to this Agreement unless otherwise specified. The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.
(d) UCC Terms. Terms used in this Agreement that are defined in the UCC shall, unless the context indicates otherwise or are otherwise defined in this Agreement, have the meanings provided for by the UCC.
ARTICLE
2
PURCHASE AND SALE
2.1 Closings; Tranches. Subject to the terms and conditions set forth herein, the Company may issue and sell to the Purchasers, and the Purchasers may purchase from the Company, in one or more closings (each, a “Closing”), Notes in an aggregate principal amount of up to the Maximum Amount, together with Warrants, in two tranches as follows:
(a) “Tranche 1” shall consist of Notes in an aggregate principal amount of up to Fifteen Million Dollars ($15,000,000) which Notes shall be convertible at a Conversion Price of $1.50 per share, together with Warrants, exercisable at an exercise price of $1.50 per Warrant Share, to purchase the number of Warrant Shares equal to eleven (11) Warrant Shares for each twenty (20) Conversion Shares into which such Notes are convertible. The initial Tranche 1 Closing (the “Initial Tranche 1 Closing”) shall occur on the date hereof, or such later date as the Company and the Purchasers participating in Tranche 1 may agree; provided, that the Initial Tranche 1 Closing shall not occur unless Notes in an aggregate principal amount of at least Seven Million Dollars ($7,000,000) are purchased at such Initial Tranche 1 Closing. Following the Initial Tranche 1 Closing, the Company may sell, and Purchasers may purchase, the balance of Notes and accompanying Warrants in Tranche 1 (up to the aggregate maximum Tranche 1 principal amount of Fifteen Million Dollars ($15,000,000)) in one or more additional Tranche 1 closings (each, an “Additional Tranche 1 Closing”), which Additional Tranche 1 Closings shall occur no later than (i) five (5) Business Days following the Initial Tranche 1 Closing, on such other terms and subject to such conditions as may be agreed by the Company and the participating Purchasers, and (ii) five (5) additional Business Days after the Initial Tranche 1 Closing; provided that the Conversion Price for the Notes and the exercise price for the Warrants (as initially established therein) issued in any Closing in such additional five (5) Business Day period shall each be $1.60 per share. References in this Agreement to the “Tranche 1 Closing” shall mean, as the context requires, the Initial Tranche 1 Closing or any Additional Tranche 1 Closing, and references to “Tranche 1 Closing Date” shall mean, as applicable, the date of the Initial Tranche 1 Closing or any Additional Tranche 1 Closing.
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(b) “Tranche 2” shall consist of Notes in the aggregate principal amount of Ten Million Dollars ($10,000,000), which Notes shall be convertible at a Conversion Price of $2.00 per share, together with Warrants, exercisable at an exercise price of $2.00 per Warrant Share, to purchase the number of Warrant Shares equal to one (1) Warrant Share for each Conversion Share into which such Notes are convertible. The right of the applicable Initial Purchasers to fund Tranche 2 shall expire on September 30, 2027 (the “Tranche 2 Expiration Date”), unless otherwise agreed by the Company and Initial Purchasers holding Notes in an aggregate principal amount in excess of a majority of the Notes issued in the Initial Tranche 1 Closing.
(c) The Initial Purchasers may elect to purchase Notes and accompanying Warrants in Tranche 2 by delivering to the Company prior to the Tranche 2 Expiration Date a written election notice (each, an “Election Notice”) to purchase such Initial Purchaser’s Subscription Amount, up to such Initial Purchaser’s applicable Investment Percentage, of such Notes and Warrants and a proposed Closing Date which shall be a Business Day not more than five Business Days after the date of delivery of the Election Notice. In the event that the Initial Purchasers do not elect to purchase all of the Notes and Warrants to be sold in Tranche 2 prior to the Tranche 2 Expiration Date, the Company shall within two (2) Business Days thereafter notify all of the Purchasers (the “Tranche 2 Unsold Balance Notice”) that the aggregate principal amount of Notes not yet purchased or committed to be purchased in Tranche 2 (the “Tranche 2 Unsold Balance”) remains available for issuance, and each Purchaser shall have the right to purchase Notes in the aggregate principal amount of the Tranche 2 Balance and accompanying Warrants by delivery of a written election notice to the Company (the “Second Election Notice”) within five (5) Business Days after receipt of the Tranche 2 Unsold Balance Notice of its intent to purchase some or all of the Notes and accompanying Warrants comprising the Tranche 2 Unsold Balance. To the extent that two or more Purchasers provide Second Election Notices indicating an aggregate interest to purchase Notes in excess of the Tranche 2 Unsold Balance, such rights to purchase Notes and accompanying Warrants shall be allocated among such electing Purchasers according to the Investment Percentages of all such Purchasers delivering Second Election Notices on a pro rata basis. The closing of any such sales of Notes and accompanying Warrants shall be held on a Closing Date determined by the Company, upon due notice to the electing Purchasers, which shall be a Business Day not more than five Business Days after the date of delivery of the last Second Election Notice received by the Company.
(d) On the date of each Closing (each, a “Closing Date”), time being of the essence, subject to the occurrence of the other conditions set forth in Section 2.3 and upon the terms and subject to the conditions set forth herein, each Purchaser participating in such Closing shall provide to the Company such Purchaser’s Subscription Amount in consideration for the Notes and Warrants in such amounts as indicated on Schedule 1 hereto or as provided in an Election Notice. Each such Purchaser shall deliver to the Company, via wire transfer, immediately available funds equal to its Subscription Amount on each Closing Date, and the Company shall deliver to each such Purchaser the Note and Warrant issuable to such Purchaser on each Closing Date.
2.2 Deliveries.
(a) On or prior to a Closing Date, the Company shall deliver or cause to be delivered to each Purchaser participating in such Closing the following:
(i) in the case of the Initial Tranche 1 Closing, this Agreement duly executed by the Company;
(ii) a Note registered in the name of the Purchaser with such principal amount as set forth on Schedule 1, duly executed by the Company;
(iii) a Warrant registered in the name of the Purchaser to purchase up to the number of shares of Common Stock set forth on Schedule 1 based on the applicable warrant coverage for the Tranche being funded, duly executed by the Company;
(iv) in the case of the Initial Tranche 1 Closing, the Security Agreement, each duly executed by the Company, and UCC-1s naming the Collateral Agent, as secured party, and the Company, as debtor;
(v) in the case of the Initial Tranche 1 Closing, the Intercreditor Agreement, duly executed by the Company;
(vi) in the case of the Initial Tranche 1 Closing, the Registration Rights Agreement, duly executed by the Company;
(vii) in the case of the Initial Tranche 1 Closing, the Board Rights Agreement, duly executed by the Company; and
(viii) a legal opinion of Sheppard, Mullin, Richter & Hampton LLP, counsel to the Company, reasonably acceptable to the Requisite Purchasers;
(ix) In the case of the Initial Tranche 1 Closing, evidence reasonably satisfactory to the Purchasers that the Existing Trust Loan Agreement has been repaid in full (or will be repaid contemporaneously with the Initial Tranche 1 Closing from the proceeds thereof) and that all Liens securing the obligations thereunder shall be released immediately upon such repayment;
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(x) in the case of the Initial Tranche 1 Closing, the Amended and Restated Existing Trust Convertible Note and the Amended and Restated Existing Trust Convertible Warrant, each duly executed by the Company and in form and substance reasonably acceptable to the Trust; and
(xi) such other documents, instruments, opinions or certificates relating to the transactions contemplated by this Agreement as the Purchaser or its counsel may reasonably request.
(b) On or prior to the Closing, each Purchaser participating (as applicable) shall deliver or cause to be delivered to the Company the following:
(i) this Agreement duly executed by such Purchaser;
(ii) the Purchase Price for such Purchaser’s Securities by wire transfer in immediately available funds;
(iii) in the case of the Initial Tranche 1 Closing, the Trust shall exchange the Existing Trust Convertible Note and the Existing Trust Warrants for the Amended and Restated Existing Trust Convertible Note and the Amended and Restated Existing Trust Warrants, and the aggregate amount then outstanding under the Existing Trust Convertible Note in respect of principal, interest and fees and expenses, if any, shall be deemed contributed as payment of the applicable portion of the Purchase Price payable by the Trust;
(iv) in the case of the Initial Tranche 1 Closing, a payoff letter executed by the Trust setting forth the amount required to repay the Existing Trust Loan Agreement in full and confirming that, upon receipt of such amount, the Trust will terminate the Existing Trust Loan Agreement and release all Liens and security interests granted thereunder;
(v) in the case of the Initial Tranche 1 Closing, the Intercreditor Agreement, duly executed by each Purchaser;
(vi) in the case of the Initial Tranche 1 Closing, the Registration Rights Agreement duly executed by each Purchaser; and
(vii) in the case of the Initial Tranche 1 Closing, the Board Rights Agreement, duly executed by the Trust.
(c) Additional Initial Tranche 1 Closing Requirements. At the Initial Tranche 1 Closing, the Company and the applicable Purchasers shall have received:
(i) the Security Agreement, duly executed by the Collateral Agent; and
(ii) the Intercreditor Agreement, duly executed by the Collateral Agent.
(d) Existing Trust Loan Repayment. Contemporaneously with or immediately following the Initial Tranche 1 Closing, the Company shall repay in full all obligations outstanding under the Existing Trust Loan Agreement. Upon such repayment, the parties shall take all actions reasonably necessary to terminate the Existing Trust Loan Agreement and release any Liens or security interests granted thereunder.
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2.3 Conditions to Purchase the Securities. Subject to the terms and conditions of this Agreement, each Purchaser will at each respective Closing purchase from the Company the Securities in the amounts and for the Purchase Price as set forth on Schedule 1, or as set forth in an Election Notice, provided the following:
(a) The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:
(i) the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) when made and on the date of the Closing of the representations and warranties of the Purchaser contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);
(ii) all obligations, covenants and agreements of the Purchaser required to be performed at or prior to the date of the Closing shall have been performed;
(iii) the delivery by the Purchaser of the items set forth in Section 2.2(b) of this Agreement;
(iv) there shall have been no Material Adverse Effect with respect to the Company since the date hereof; and
(v) no statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or other federal, state, local or other governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents.
(b) The obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:
(i) the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) when made and on the Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);
(ii) all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed in all material respects;
(iii) the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;
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(iv) there shall have been no Material Adverse Effect with respect to the Company since the date hereof;
(v) the Company shall have obtained all governmental, regulatory and third party consents and approvals, if any, necessary for the entry into the Transaction Documents and the sale of the Securities;
(vi) no statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or other federal, state, local or other governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents;
(vii) the Purchasers shall be satisfied, in their discretion, with the results of their business, clinical, financial, regulatory, legal and intellectual property due diligence;
(viii) in the case of the Initial Tranche 1 Closing, the Company shall have obtained all board approvals and other corporate approvals required to appoint two (2) designees of the Trust to the Board at or promptly following the Initial Tranche 1 Closing and to nominate such designees for election at each applicable meeting of stockholders thereafter, subject to the terms of the Board Rights Agreement;
(ix) the Company shall have obtained all consents, approvals, waivers and releases necessary to grant to the Collateral Agent, for the benefit of the Purchasers, a perfected first-priority security interest in the Collateral, subject only to Permitted Liens;
(x) in the case of the Initial Tranche 1 Closing, the Company shall have delivered evidence reasonably satisfactory to the Purchasers that the current interest rate on the outstanding note issued to the Company’s Chief Executive Officer has been adjusted to 6% per annum; and
(xi) in the case of the Initial Tranche 1 Closing, the Company shall have delivered to the Trust the Amended and Restated Existing Trust Convertible Note and the Amended and Restated Existing Trust Convertible Warrant, each duly executed by the Company and in form and substance reasonably acceptable to the Trust.
2.4 Purchase Price and Payment of the Purchase Price for the Securities. The Purchase Price for the Securities to be purchased by each Purchaser on each Closing Date shall be as set forth on Schedule 1 or in an Election Notice and shall be paid on such Closing Date by such Purchaser by wire transfer of immediately available funds to the Company in accordance with the Company’s written wiring instructions, against delivery of the Securities.
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ARTICLE
3
REPRESENTATIONS AND WARRANTIES; OTHER ITEMS
3.1 Representation and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules (but in no event shall qualify any indemnity obligation of the Company hereunder), the Company (which for purposes of this Section 3.1 means the Company on its own behalf and on behalf of all of its Subsidiaries) represents and warrants to the Purchasers that on each Closing Date (unless as of a specific date set forth below):
(a) Organization and Qualification. The Company and each of the direct and indirect Subsidiaries of the Company listed on Schedule 3.1(a), which comprise all of the Subsidiaries of the Company, is an entity duly organized, validly existing and in good standing under the laws of its state of incorporation or formation. The Company and each of its Subsidiaries is duly qualified to do business, and is in good standing in the states required due to (i) the ownership or lease of real or personal property for use in the operation of the Company’s business or (ii) the nature of the business conducted by the Company, except where the failure to so qualify would not, individually or in the aggregate, have a Material Adverse Effect. The Company and each of its Subsidiaries has all requisite power, right and authority to own, operate and lease its properties and assets, to carry on its business as now conducted, to execute, deliver and perform its obligations under this Agreement and the other Transaction Documents to which it is a party, and to carry out the transactions contemplated hereby and thereby. All actions on the part of the Company and its officers and directors necessary for the authorization, execution, delivery and performance of this Agreement and the other Transaction Documents, the consummation of the transactions contemplated hereby and thereby, and the performance of all of the Company’s obligations under this Agreement and the other Transaction Documents have been taken or will be taken prior to the Closing. This Agreement has been, and the other Transaction Documents to which the Company is a party at a Closing will be, duly executed and delivered by the Company, and this Agreement is, and each of the other Transaction Documents to which it is a party at a Closing will be, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as may be limited by bankruptcy, reorganization, insolvency, moratorium and similar laws of general application relating to or affecting the enforcement of rights of creditors, and except as enforceability of the obligations hereunder are subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or law) and except as rights to indemnification and to contribution may be limited by federal or state securities laws. All of the Subsidiaries and the Company’s ownership interests therein are set forth on Schedule 3.1(a). The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens except Permitted Liens, and all of the issued and outstanding shares of capital stock or membership interests 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.
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(b) Authority. The Company has the requisite power and authority to enter into and perform its obligations under this Agreement and each of the other Transaction Documents and to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Securities, have been duly authorized by the Board and the applicable governing body of each Subsidiary and no further filing (other than a Form D and a Schedule 14f-1 with the SEC and any other filings as may be required by any state securities agencies, a Current Report on Form 8-K and an application with the Principal Market regarding the listing of additional shares of Common Stock), consent, or authorization is required by the Company, the Board of Directors or the Company’s stockholders. Notwithstanding the foregoing, the Company shall not issue any Conversion Shares upon conversion of the Notes or Warrant Shares upon the exercise of the Warrants to the extent such issuance would require stockholder approval under Nasdaq Listing Rule 5635 unless and until such stockholder approval has been obtained.
(c) Capitalization. The capitalization of the Company is as set forth on Schedule 3.1(c). All of such outstanding shares of the Company’s capital stock are duly authorized and have been, or upon issuance will be, validly issued and are fully paid and nonassessable. Except as disclosed in SEC Documents and/or in Schedule 3.1(c) hereto: (i) none of the Company’s or any Subsidiary’s share capital is subject to preemptive rights or any other similar rights or any Liens suffered or permitted by the Company or any Subsidiary; (ii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any share capital of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional share capital of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any share capital of the Company or any of its Subsidiaries; (iii) except for the existing Indebtedness of the Company and all other debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments, there are no outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound; (iv) other than with respect to the current Permitted Indebtedness of the Company or any of its Subsidiaries, there are no financing statements securing obligations in any amounts filed in connection with the Company or any of its Subsidiaries; (v) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the Securities Act; (vi) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (vii) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities; (viii) neither the Company nor any Subsidiary has any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement; and (ix) neither the Company nor any of its Subsidiaries has any liabilities or obligations required to be disclosed in the SEC Documents which are not so disclosed in the SEC Documents, other than those incurred in the ordinary course of the Company’s or its Subsidiaries’ respective businesses and which, individually or in the aggregate, do not or could not have a Material Adverse Effect. As of the date hereof, the Company has reserved from its duly authorized capital stock a sufficient number of shares of Common Stock for the issuance of the Underlying Shares, assuming the issuance by the Company of the Maximum Amount of Notes and accompanying Warrants hereunder.
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(d) Consents. Neither the Company nor any of its Subsidiaries is required to obtain any consent from, authorization or order of, or make any filing (other than a Current Report on Form 8-K, a Schedule 14f-1, an application with the Principal Market regarding the listing of additional shares of Common Stock and as contemplated by the Registration Rights Agreement) or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its respective obligations under or contemplated by the Transaction Documents, in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings (other than a Current Report on Form 8-K, a Schedule 14f-1, an application with the Principal Market regarding the listing of additional shares of Common Stock and as contemplated by the Registration Rights Agreement) and registrations which the Company or any of its Subsidiaries is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the applicable Closing Date and neither the Company nor any of its Subsidiaries is aware of any facts or circumstances which might prevent the Company or any of its Subsidiaries from obtaining or effecting any of the registration, application or filings contemplated by the Transaction Documents. As of the date of this Agreement, other than as set forth on Schedule 3.1(d), the Company is not in violation of the requirements of the Principal Market and has no knowledge of any facts or circumstances which could reasonably lead to delisting or suspension of the Common Stock in the foreseeable future.
(e) Conflicts; Non-Contravention; No Violations. The execution, delivery and performance of this Agreement and the other Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby will not (A) result in a violation of the certificate of incorporation or other organizational documents of the Company or any of its Subsidiaries, any share capital of the Company or any of its Subsidiaries or bylaws of the Company or any of its Subsidiaries, (B) 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 the Company or any of its Subsidiaries is a party, or (C) result in a violation of any law, rule, regulation, order, judgment or decree, including foreign, federal and state securities laws and regulations and the rules and regulations of the Principal Market applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected except, in the case of clause (B) or (C) above, to the extent such violations that could not reasonably be expected to have a Material Adverse Effect.
(f) Taxes Related to the Securities. On each date the Company issues Securities to the Purchaser, all share transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the issuance of the Securities hereunder on such date will be, or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.
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(g) SEC Documents; Financial Statements. Except for the Company’s Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2026 and June 30, 2026, which have not been timely filed with the SEC (the “Delayed Filings”), the Company has, during the preceding 12 months, filed with the SEC all reports and other materials required to be filed by Section 13 or 15(d) of the Exchange Act, as applicable (all such reports and other materials filed prior to the date hereof, including all exhibits, financial statements, notes and schedules thereto and documents incorporated by reference therein, collectively, the “SEC Documents”). As of their respective filing dates, the SEC Documents complied in all material respects with the requirements of the Exchange Act and the applicable rules and regulations of the SEC, and none of the SEC Documents, when filed, contained any untrue statement of a material fact or omitted to state 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. As of their respective filing dates, the financial statements included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC then in effect. Such financial statements were prepared in accordance with GAAP, consistently applied during the periods involved, except as otherwise disclosed therein and, in the case of unaudited interim financial statements, subject to the absence of certain footnotes and normal year-end audit adjustments, and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods presented. Except for the Delayed Filings and any related notices or consequences arising under applicable SEC or Nasdaq requirements, the Company is not aware of any event or circumstance that would reasonably be expected to prevent it from filing future reports required under Section 13 or 15(d) of the Exchange Act in compliance in all material respects with applicable requirements.
(h) No Material Non-Public Information. The Company confirms that neither it nor any other Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that constitutes or could reasonably be expected to constitute material, non-public information concerning the Company or any of its Subsidiaries, other than the existence of the transactions contemplated by this Agreement and the Transaction Documents. The Company understands and confirms that the Purchaser will rely on the foregoing representations in effecting transactions in securities of the Company. To the knowledge of the Company after reasonable inquiry, all disclosures provided to the Purchaser regarding the Company and its Subsidiaries, their businesses and the transactions contemplated hereby, including the schedules to this Agreement, furnished by or on behalf of the Company or any of its Subsidiaries is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.
(i) Valid Issuance of Underlying Shares. The issuance of each of the Underlying Shares are duly authorized and, upon issuance in accordance with the terms of this Agreement, the Notes and the Warrants, as applicable, will be validly issued, fully paid and non-assessable and free and clear of all Liens and rights of refusal of any kind. The issuance of the Warrants is duly authorized by the Company and, when executed and delivered by the Company, each of the Warrants will be a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles.
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(j) Certain Fees. Except as set forth in Section 5.1 , no brokerage or finder’s fees or commissions are or will be payable by the Company or any of its Subsidiaries to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.
(k) Acknowledgement of Dilution. The Company acknowledges and agrees that (i) the issuance of the Underlying Shares pursuant to this Agreement, the Notes and the Warrants may have a dilutive effect, which may be substantial, (ii) neither the Company nor any of the Company’s Subsidiaries has or will provide the Purchaser with any material non-public information regarding the Company or its securities, and (iii) the Purchasers have no obligation of confidentiality to the Company and may sell any of such Purchaser’s Warrants or Notes or Underlying Shares issued pursuant to this Agreement, the Notes and the Warrants at any time but subject to compliance with applicable laws and regulations.
(l) Status of the Purchaser. The Company acknowledges and agrees that with respect to this Agreement and the transactions contemplated hereby, (i) each Purchaser is acting solely in an arm’s length capacity, (ii) each Purchaser does not make and has not made any representations or warranties, other than those specifically set forth in this Agreement, (iii) except as set forth in this Agreement, the Company’s obligations hereunder are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of any claim the Company may have against any Purchaser, (iv) each Purchaser has not and is not acting as a legal, financial, accounting or tax advisor to the Company, or agent or fiduciary of the Company, or in any similar capacity, and (v) any statement made by a Purchaser or any of such Purchaser’s representatives, agents or attorneys is not advice or a recommendation to the Company.
(m) Listing and Maintenance Requirements; Principal Market Regulation. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the SEC is contemplating terminating such registration. The Company has received (i) a notice from Nasdaq that the Company is not in compliance with Nasdaq Listing Rule 5250(c)(1) as a result of its failure to timely file its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2026, and (ii) a notice from Nasdaq that the Company is not in compliance with Nasdaq Listing Rule 5550(b)(2) because the Company’s Market Value of Listed Securities was below the minimum level required for continued listing. The Company is actively pursuing compliance with each such requirement and has submitted, or is in the process of submitting, a compliance plan with respect to Rule 5250(c)(1), while evaluating and implementing actions designed to regain compliance with Rule 5550(b)(2). Other than the foregoing, or as otherwise disclosed in the SEC Documents, the Company has not, in the twelve (12) months preceding the date hereof, received notice from any Principal Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Principal Market. Except as disclosed on Schedule 3.1(m), the Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.
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(n) Shell Company Status. The Company is not an issuer identified in, or subject to, Rule 144(i) under the Securities Act.
(o) No Nasdaq Inquiries; Delisting. Except for (i) Nasdaq’s notices of noncompliance with Listing Rule 5250(c)(1) relating to the Delayed Filings and (ii) Nasdaq’s notice of noncompliance with Listing Rule 5550(b)(2) relating to the Company’s Market Value of Listed Securities, the Company has not, during the 12 months preceding the date of this Agreement, received notice from any national securities exchange or automated quotation system on which the Common Stock is listed or quoted that the Company is not in compliance with its applicable listing or continued-listing requirements. The Company has not received notice that Nasdaq has made a final determination to delist the Common Stock. The Company is pursuing the applicable procedures to regain compliance with Nasdaq’s continued-listing requirements; provided, however, that no assurance is given that the Company will regain or maintain such compliance.
(p) SEC and Nasdaq Matters. The Company’s Common Stock is listed on the Principal Market (or traded on other exchange or market reasonably acceptable to the Requisite Purchasers). No suspension of trading of the Company’s Common Stock is in effect.
(q) DTC Eligibility. The Company, through its Transfer Agent, currently participates in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) Program and utilizes DTC’s Deposit/Withdrawal at Custodian (“DWAC”) service, and the shares of Common Stock may be issued and transferred electronically to third parties via DTC’s DWAC service. The Company has not, in the 12 months preceding the date of this Agreement, received any notice from DTC to the effect that a suspension of, or restriction on, accepting additional deposits of the shares of Common Stock, or electronic trading or settlement services with respect to the shares of Common Stock are being imposed or are contemplated by DTC.
(r) Reserved.
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(s) Blue Sky Matters. The Company shall take such action as the Requisite Purchasers shall reasonably determine is necessary in order to qualify the Securities issuable to the Purchasers hereunder under applicable securities or “blue sky” laws of the states of the United States for the issuance to the Purchasers hereunder and for resale by the Purchasers to the public (or to obtain an exemption from such qualification). Without limiting any other obligation of the Company hereunder, the Company shall timely make all filings and reports relating to the offer and issuance of such Securities required under all applicable securities laws (including, without limitation, all applicable federal securities laws and all applicable state securities or “blue sky” laws), and the Company shall comply with all applicable federal, state, local and foreign laws, statutes, rules, regulations and the like relating to the offering and issuance of such Securities to the Purchasers.
(t) Litigation. There is no Proceeding pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties except as set forth in Schedule 3.1(t), or against or affecting the Company’s current or former officers or directors in their capacity as such, before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect, and neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the company, there is not pending or contemplated, any investigation by the SEC involving the Company or any current or former director or officer of the Company that is likely to lead to action that can reasonably be expected to result in a Material Adverse Effect. There has not been, and to the knowledge of the company, there is not pending or contemplated, any investigation by the SEC involving the Company or any current or former director or officer of the Company. The SEC has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.
(u) No Defaults. Except as disclosed in SEC Documents and/or in Schedule 3.1(u) hereof, the Company is not in a default under, or has given to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party.
(v) Employee Relations. Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or employs any member of a union. The Company believes that its and its Subsidiaries’ relations with their respective employees are good. The Company and its Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except as disclosed in Schedule 3.1(v) or where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
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(w) Tax Matters.
(i) All Tax Returns required to be filed by or on behalf of the Company have been duly and timely filed with the appropriate Taxing Authority in all jurisdictions in which such Tax Returns are required to be filed (after giving effect to any valid extensions of time in which to make such filings), and all such Tax Returns are true, complete and correct in all material respects. All Taxes payable by or on behalf of the Company (whether or not shown on any Tax Return) have been fully and timely paid. With respect to any period for which Tax Returns have not yet been filed or for which Taxes are not yet due or owing, the Company has made due and sufficient accruals for such Taxes in the GAAP Financial Statements and in its books and records. All required estimated Tax payments sufficient to avoid any underpayment penalties or interest have been made by or on behalf of the Company. The Company has complied in all material respects with all applicable Legal Requirements relating to the payment and withholding of Taxes in connection with amounts paid or owing to any employee, independent contractor, creditor, equity owner or other third party and has duly and timely withheld and paid over to the appropriate Taxing Authority all amounts required to be so withheld and paid under all applicable Legal Requirements.
(ii) The Company has not (i) requested any extension of time within which to file any Tax Return, which Tax Return has since not been filed, (ii) granted any extension for the assessment or collection of Taxes, which Taxes have not since been paid, or (iii) granted to any Person any power of attorney that is currently in force with respect to any Tax matter. The Company is not a foreign person within the meaning of Sections 7701(a)(1) and 7701(a)(5) of the Code. The Company has never been a shareholder of any consolidated, combined, affiliated or unitary group of corporations for any Tax purposes. The Company is not a party to any Tax allocation or Tax sharing agreement nor has any liability for the Taxes of any Person under Treasury Regulation Section 1.1502-6(a) (or any predecessor or successor thereof of any analogous or similar provision under Legal Requirement), as a transferee or successor, by contract, or otherwise.
(iii) The Company has not made any payments, is not obligated to make any payments, or is not a party to any agreement that obligates it to make any payments that are not deductible under Section 280G of the Code. The Company has not been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(a)(ii) of the Code.
(x) Indebtedness and Other Contracts. Except as set forth on Schedule 3.1(x), neither the Company nor any of its Subsidiaries (i) has any outstanding Indebtedness, (ii) is a party to any contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract, agreement or instrument could reasonably be expected to result in a Material Adverse Effect, (iii) is in violation of any term of, or in default under, any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect, or (iv) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment of the Company’s officers, has or is expected to have a material adverse effect on the Company’s business, operations or financial condition.
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(y) Absence of Certain Changes. Other than as disclosed in the SEC Documents, since the date of the Company’s most recent audited financial statements contained in an Annual Report on Form 10-K, there has been no material adverse change and no material adverse development in the business, assets, liabilities, properties, operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any of its Subsidiaries. Except as disclosed in the SEC Documents, since the date of the Company’s most recent audited financial statements contained in an Annual Report on Form 10-K, neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, outside of the ordinary course of business or (iii) made any capital expenditures, individually or in the aggregate, outside of the ordinary course of business. Neither the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does the Company or any Subsidiary have any knowledge or reason to believe that any of their respective creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so. The Company and its Subsidiaries, on a consolidated basis, are not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at the Closing, will not be Insolvent (as defined below). For purposes of this Section 3(y), “Insolvent” means, with respect to the Company and its Subsidiaries, on a consolidated basis, (A) the present fair saleable value of the Company’s and its Subsidiaries’ assets is less than the amount required to pay the Company’s and its Subsidiaries’ total indebtedness, (B) the Company and its Subsidiaries are unable to pay their debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured or (C) the Company and its Subsidiaries intend to incur or believe that they will incur debts that would be beyond their ability to pay as such debts mature. Neither the Company nor any of its Subsidiaries has engaged in any business or in any transaction, and is not about to engage in any business or in any transaction, for which the Company’s or such Subsidiary’s remaining assets constitute unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.
(z) No Undisclosed Events, Liabilities, Developments or Circumstances. Since the date of the latest audited financial statements included within the SEC Reports, except as set forth in the SEC Reports: (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any 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 the SEC Documents, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) except as set forth on Schedule 3.1(z), the Company has not issued any equity securities to any officer, director or Affiliate. The Company does not have pending before the SEC any request for confidential treatment of information. Except for the issuance of the Securities contemplated by this Agreement or as set forth on Schedule 3.1(z), no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries or their respective businesses, properties, operations, assets or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least two Trading Days prior to the date that this representation is made.
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(aa) No Disqualification Events. None of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the transactions contemplated hereby, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event.
(bb) General Solicitation. None of the Company, any of its Affiliates or any person acting on behalf of the Company or such Affiliate will solicit any offer to buy or offer or sell the Securities by means of any form of general solicitation or general advertising within the meaning of Regulation D, including: (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar medium or broadcast over television or radio; and (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.
(cc) Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to the Employee Retirement Income Security Act of 1974, taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.
(dd) Regulatory Permits. The Company and the Subsidiaries possess all approvals, certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Documents, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.
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(ee) Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property (if any) owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except as set forth on Schedule 3.1(ee) and except for (i) Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made in accordance with GAAP and the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries is held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance, or where the failure of a lease to be enforceable would not result in a Material Adverse Effect.
(ff) Intellectual Property.
(i) The term “Intellectual Property Rights” includes:
(A) the name of the Company and each Subsidiary, all fictional business names, trading names, registered and unregistered trademarks, service marks, and applications of the Company and each Subsidiary (collectively, “Marks”);
(B) all patents, patent applications, and inventions and discoveries that may be patentable of the Company and each Subsidiary (collectively, “Patents”);
(C) all copyrights in both unpublished works and published works of the Company and each Subsidiary (collectively, “Copyrights”);
(D) all rights in mask works of the Company and each Subsidiary; and
(E) all know-how, trade secrets, confidential information, customer lists, software, technical information, data, process technology, plans, drawings, and blueprints (collectively, “Trade Secrets”); owned, used, or licensed by the Company and each Subsidiary as licensee or licensor.
(ii) Agreements. Except as set forth on Schedule 3.1(ff), there are no outstanding and, to the Company’s knowledge, no threatened disputes or disagreements with respect to any agreements relating to any Intellectual Property Rights to which the Company is a party or by which the Company is bound.
(iii) Know-How Necessary for the Business. The Intellectual Property Rights are all those necessary for the operation of the Company’s businesses as it is currently conducted. The Company is the owner of all right, title, and interest in and to each of the Intellectual Property Rights, except as set forth on Schedule 3.1(ff), free and clear of all Liens, charges, equities, and other adverse claims, and has the right to use all of the Intellectual Property Rights. To the Company’s knowledge, no employee of the Company has entered into any contract that restricts or limits in any way the scope or type of work in which the employee may be engaged or requires the employee to transfer, assign, or disclose information concerning his work to anyone other than of the Company.
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(iv) Patents. The Company is the owner of, or has acquired the right and maintains the right to use, all right, title and interest in and to each of the Patents, free and clear of all Liens and other adverse claims. All of the issued Patents are currently in compliance with formal legal requirements (including payment of filing, examination, and maintenance fees and proofs of working or use), are valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety days after the Initial Tranche Closing Date. No Patent has been or is now involved in any interference, reissue, reexamination, or opposition proceeding. To the Company’s knowledge except as set forth in Schedule 3.1(ff): (1) there is no potentially interfering patent or patent application of any third party, and (2) no Patent is infringed or has been challenged or threatened in any way. To the Company’s knowledge, none of the products manufactured and sold, nor any process or know-how used, by the Company infringes or is alleged to infringe any patent or other proprietary right of any other Person.
(v) Trademarks. The Company is the owner of all right, title, and interest in and to each of the Marks, free and clear of all Liens and other adverse claims. All Marks that have been registered with the United States Patent and Trademark Office are currently in compliance with all formal legal requirements (including the timely post-registration filing of affidavits of use and incontestability and renewal applications), are valid and enforceable, and except as set forth on Schedule 3.1(ff) are not subject to any maintenance fees or taxes or actions falling due within ninety days after the date hereof. Except as set forth in Schedule 3.1(ff), no Mark has been or is now involved in any opposition, invalidation, or cancellation and, to the Company’s knowledge, no such action is threatened with respect to any of the Marks. To the Company’s knowledge: (1) there is no potentially interfering trademark or trademark application of any third party, and (2) no Mark is infringed or has been challenged or threatened in any way. To the Company’s knowledge, none of the Marks used by the Company infringes or is alleged to infringe any trade name, trademark, or service mark of any third party.
(vi) Copyrights. The Company is the owner of all rights, title, and interest in and to each of the Copyrights, free and clear of all Liens and other adverse claims. All the Copyrights have been registered and are currently in compliance with formal requirements, are valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety days after the date of the Closing. To the Company’s knowledge, no Copyright is infringed or has been challenged or threatened in any way. To the Company’s knowledge, none of the subject matter of any of the Copyrights infringes or is alleged to infringe any copyright of any third party or is a derivative work based on the work of a third party. All works encompassed by the Copyrights have been marked with the proper copyright notice.
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(vii) Trade Secrets. With respect to each Trade Secret, the documentation relating to such Trade Secret is current, accurate, and sufficient in detail and content to identify and explain it and to allow its full and proper use without reliance on the knowledge or memory of any individual. The Company has taken all reasonable precautions to protect the secrecy, confidentiality, and value of its Trade Secrets. The Company has good title and an absolute and exclusive right to use the Trade Secrets. The Trade Secrets are not part of the public knowledge or literature, and, to the Company’s knowledge, have not been used, divulged, or appropriated either for the benefit of any Person (other the Company) or to the detriment of the Company, except as disclosed on Schedule 3.1(ff). No Trade Secret is subject to any adverse claim or has been challenged or threatened in any way.
(gg) Stock Option Plans. Each stock option granted by the Company under the stock option plan was granted (i) in accordance with the terms of such stock option plan and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date such stock option would be considered granted under GAAP and applicable law. No stock option granted under any stock option plan has been backdated. The Company has not knowingly granted, and there is no and has been no Company policy or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.
(hh) Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director, officer, agent, employee or affiliate of the Company is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).
(ii) Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance in all material respects with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or any Subsidiary, threatened.
(jj) No Integrated Transaction. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of: (i) the Securities Act which would require the registration of any such securities under the Securities Act, or (ii) any applicable stockholder approval provisions of the Principal Market on which any of the securities of the Company are listed or designated.
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(kk) Sarbanes-Oxley; Internal Accounting Controls. The Company and the Subsidiaries are in material compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the SEC thereunder that are effective as of the date hereof and as of the date hereof. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that, except as set forth in the SEC Documents: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and 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.
(ll) Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited to, directors and officers insurance coverage at least equal to the Subscription Amount, except as set forth on Schedule 3.1(ll). Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.
(mm) Disclosure. All of the disclosure furnished by or on behalf of the Company to the Purchaser regarding the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, when taken together as a whole, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees that the Purchaser neither makes nor has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth herein.
(nn) 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) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.
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(oo) Bank Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
(pp) Accountants and Lawyers. The Company’s independent registered public accounting firm is set forth on Schedule 3.1(pp). To the knowledge and belief of the Company, such accounting firm: (i) is an independent registered public accounting firm and (ii) has expressed its opinion with respect to the financial statements included in the Company’s Annual Report for the fiscal year ended December 31, 2025. There are no disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents.
(qq) Promotional Stock Activities. To the knowledge of the Company, neither the Company, its officers, its directors, nor any Affiliates or agents of the Company have engaged in any stock promotional activity that could give rise to a complaint, inquiry, or trading suspension by the SEC alleging (i) a violation of the anti-fraud provisions of the federal securities laws, (ii) violations of the anti-touting provisions, (iii) improper “gun-jumping; or (iv) promotion without proper disclosure of compensation.
(rr) No “Off-balance Sheet Arrangements.” Other than as set forth in Schedule 3.1(rr), neither the Company nor any of its Affiliates is involved in any “Off-balance Sheet Arrangements”. For purposes hereof an “Off-balance Sheet Arrangement” means any transaction or contract to which an entity unconsolidated with the Company or any of its Affiliates is a party and under which either the Company or any such Affiliate has: (i) any obligation under a guarantee contract pursuant to which the Company or any of its Affiliates could be required to make payments to the guaranteed party, including any standby letter of credit, market value guarantee, performance guarantee, indemnification agreement, keep-well or other support agreement; (ii) any retained or contingent interest in assets transferred to such unconsolidated entity that serves as credit, liquidity or market risk support to the entity in respect of such assets; (iii) any variable interest held in such unconsolidated entity where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research and development services with the Company of any of its Affiliates; and (iv) any liability or obligation of the same nature as those described in clauses (i) through (iii) of this sentence even if of a different name (whether absolute, accrued, contingent or otherwise) that would not be required to be reflected in the Company or any of its Affiliates’ financial statements.
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3.2 Representation and Warranties of the Purchaser. Each Purchaser, severally and not jointly, hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows:
(a) Organization; Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company, trust or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate, partnership, limited liability company, trust or similar action, as applicable, on the part of such Purchaser. Each Transaction Document to which it is a party has been duly executed by such Purchaser, 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 may be limited by bankruptcy, reorganization, insolvency, moratorium and similar laws of general application relating to or affecting the enforcement of rights of creditors, and except as enforceability of the obligations hereunder are subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or law) and except as rights to indemnification and to contribution may be limited by federal or state securities laws.
(b) Own Account. Such Purchaser understands that the Securities and the Underlying Shares are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account and not with a view to or for distributing or reselling such Securities or Underlying Shares or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities or Underlying Shares in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities or Underlying Shares in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting such Purchaser’s right to sell the Securities and Underlying Shares pursuant to an effective registration statement or otherwise in compliance with applicable federal and state securities laws). The Purchaser is acquiring the Securities hereunder in the ordinary course of its business.
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(c) Purchaser Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is an “accredited investor” as defined in Rule 501(a) under the Securities Act.
(d) Experience of Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.
(e) General Solicitation. Such Purchaser is not, to such Purchaser’s knowledge, purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.
(f) Access to Information. Such Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including all exhibits and schedules thereto) and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company and its 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.
(g) Certain Transactions and Confidentiality. Such Purchaser has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing, if such 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 only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement. Other than to other Persons party to this Agreement or to such Purchaser’s representatives, including, without limitation, its officers, directors, partners, legal and other advisors, employees, agents and Affiliates, 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).
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The Company acknowledges and agrees that the representations contained in this Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby.
ARTICLE
4
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) The Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of the Purchaser or in connection with a 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 transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights and obligations of the Purchaser under this Agreement.
(b) Each Purchaser agrees to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following form:
[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [CONVERTIBLE/EXERCISABLE] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY [AND THE SECURITIES ISSUABLE UPON CONVERSION/EXERCISE OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
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The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such pledge. At a 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, if the Securities are then registered for resale on a registration statement, the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of selling stockholders thereunder.
(c) Certificates evidencing the Underlying Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof): (i) when they have been sold while a registration statement (including the Registration Statement) covering the resale of such security is effective under the Securities Act, (ii) following any sale of such Underlying Shares pursuant to Rule 144, (iii) if such Underlying Shares are eligible for sale under Rule 144 and a sale or transfer will be taking place prior to the Company’s next periodic report becomes due under the Exchange Act or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission). The Company shall cause its counsel to issue a legal opinion to the Transfer Agent promptly after the Effective Date or at such time as such legend is no longer required under this Section 4.1(c) if required by the Transfer Agent to effect the removal of the legend hereunder, or if requested by a Purchaser. If any portion of the Note is converted or Warrant is exercised at a time when there is an effective registration statement to cover any sale of the Underlying Shares, or if such Underlying Shares have been sold under Rule 144 and the Company is then in compliance with the current public information required under Rule 144, or if the Underlying Shares may be sold under Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Underlying Shares and without volume or manner-of-sale restrictions provided the conditions of Rule 144(i)(2) have been satisfied and a sale of such shares will be taking place prior to the Company’s next annual or quarterly report becoming due under its reporting obligations under the Exchange Act or if such legend is not otherwise required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission) then such Underlying Shares shall be issued free of all legends. The Company agrees that following the Effective Date or at such time as such legend is no longer required under this Section 4.1(c), it will, no later than the earlier of (i) five (5) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined below) following the delivery by the Purchaser to the Company or the Transfer Agent of certificate(s) representing the Underlying Shares, as applicable, issued with a restrictive legend (such Trading Day, the “Legend Removal Date”), deliver or cause to be delivered to the Purchaser a certificate representing such shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4.1. Certificates for Underlying Shares subject to legend removal hereunder shall be transmitted by the Transfer Agent to a Purchaser by crediting the account of such Purchaser’s prime broker with the Depository Trust Company System as directed by such Purchaser. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of a certificate representing the Underlying Shares, as applicable, issued with a restrictive legend.
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(d) In lieu of delivering physical certificates representing the unlegended shares, upon request of a Purchaser, so long as the certificates therefor do not bear a legend and such Purchaser is not obligated to return such certificate for the placement of a legend thereon and provided it is commercially reasonable for the Company to do so, the Company shall cause its transfer agent to electronically transmit the unlegended shares by crediting the account of such Purchaser’s prime broker with The Depository Trust Company through its DWAC system, provided that the Company’s Common Stock is DTC eligible and the Company’s transfer agent participates in the DWAC system and such Securities are Underlying Shares. Such delivery must be made on or before the Legend Removal Date.
(e) In the event a Purchaser shall request delivery of unlegended shares as described in this Section 4.1 and the Company is required to deliver such unlegended shares, the Company may not refuse to deliver unlegended shares based on any claim that the Purchaser or anyone associated or affiliated with such Purchaser has not complied with Purchaser’s obligations under the Transaction Documents, or for any other reason, unless, an injunction or temporary restraining order from a court, on notice, restraining and or enjoining delivery of such unlegended shares shall have been sought and obtained by the Company and the Company has posted a surety bond for the benefit of the Purchaser in the amount of the greater of (i) 100% of the amount of the aggregate stated value of the Underlying Shares which is subject to the injunction or temporary restraining order, or (ii) the VWAP of the Common Stock on the Trading Day before the issue date of the injunction multiplied by the number of unlegended shares to be subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the dispute and the proceeds of which shall be payable to such Purchaser to the extent such Purchaser obtains judgment in Purchaser’s favor. “VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Stock is not then listed or quoted for trading on a Trading Market and if prices for the Common Stock are then reported on the OTC Pink Marketplace maintained by OTC Markets Group Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent closing price per share of the Common Stock so reported, or (c) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchaser and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
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4.2. Furnishing of Information. As long as a Purchaser owns Securities, the Company covenants 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. Upon the request of a Purchaser, the Company shall deliver to such Purchaser a written certification of a duly authorized officer as to whether it has complied with the preceding sentence. For as long as a Purchaser owns Underlying Shares, if the Company is not required to file reports pursuant to such laws, it will prepare and furnish to such Purchaser and make publicly available in accordance with Rule 144(c) such information as is required for such Purchaser to sell the Underlying Shares under Rule 144. The Company further covenants that it will take such further action as any holder of Underlying Shares may reasonably request, all to the extent required from time to time to enable such Person to sell such Underlying Shares without registration under the Securities Act within the limitation of the exemptions provided by Rule 144.
4.3. Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities or that would 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 shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.
4.4. Securities Laws Disclosure; Publicity. The Company shall timely file a Current Report on Form 8-K (the “Form 8-K”) as required by this Agreement, and may issue a press release, in each case reasonably acceptable to the Purchasers, disclosing the material terms of the transactions contemplated hereby. The Company and the Purchasers shall consult with each other in issuing any press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release or otherwise make any such public statement without the prior consent of the Company, with respect to any such press release of any Purchaser, or without the prior consent of the Requisite Purchasers, with respect to any such press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law or the rules and regulations of the Principal Market, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of such Purchaser in any filing with the SEC or any regulatory agency or Principal Market, without the prior written consent of the Purchaser, except (i) as contained in the Form 8-K and press release described above, (ii) as required by federal securities law in connection with any registration statement under which the securities are registered, (iii) to the extent such disclosure is required by law or the rules and regulations of the Principal Market, in which case the Company shall provide Purchaser with prior notice of such disclosure, or (iv) to the extent such disclosure is required in any filing made with the SEC filed by the Company.
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4.5. Most Favored Nation Status. From the date hereof through the date that no Notes are outstanding, the Company shall not enter into any public or private offering of its securities (including securities convertible into shares of Common Stock) with any individual or entity (an “Other Investor”) that has the effect of establishing rights or otherwise benefiting such Other Investor in a manner more favorable to such Other Investor than the rights and benefits established in favor of the Purchaser by the Notes and the other Transaction Documents, unless, in any such case, the (i) the Company shall notify the Purchasers of such additional or more favorable term within five (5) Business Days of the issuance of the respective security, and (ii) such term, at each Purchaser’s option, shall become a part of the Transaction Documents with the Company (regardless of whether the Company complied with the notification provision of this Section 4.5). The types of terms contained in another security that may be more favorable to the holder of such security include, but are not limited to, terms addressing redemption features, rights of first refusal, dividends and conversion lookback periods.
4.6. Passive Foreign Investment Company. The Company shall conduct its business in such a manner as will ensure that the Company will not be deemed to constitute a passive foreign investment company within the meaning of Section 1297 of the U.S. Internal Revenue Code of 1986, as amended.
4.7. Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company covenants and agrees that neither it, nor any other Person acting on its behalf will provide any Purchaser or its agents or counsel with any information that constitutes, or the Company reasonably believes constitutes, material non-public information, unless prior thereto the Requisite Purchasers shall have consented to the receipt of such information and agreed with the Company to keep such information confidential. The Company understands and confirms that the Purchasers shall be relying on the foregoing covenant in effecting transactions in securities of the Company. To the extent that the Company delivers any material, non-public information to a Purchaser without the consent of the Requisite Purchasers, the Company hereby covenants and agrees that such Purchaser shall not have any duty of confidentiality to the Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees or Affiliates, or a duty to the Company, any of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates not to trade on the basis of, such material, non-public information, provided that such Purchaser shall remain subject to applicable law. To the extent that any notice provided pursuant to any Transaction Document constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Company understands and confirms that the Purchasers shall be relying on the foregoing covenant in effecting transactions in securities of the Company.
4.8. Access to Information. At all times during which the Notes are outstanding, the Company shall permit representatives and independent contractors of the Purchasers to visit and inspect any of its properties, to examine its organizational, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors and officers, all at the reasonable expense of the Company and at such reasonable times during normal business hours and as often as may be reasonably requested.
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4.9. Indemnification of Purchasers. Subject to the provisions of this Section 4.9, the Company will indemnify and hold each Purchaser and its respective 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, as incurred, arising out of or relating to (i) any untrue or alleged untrue statement of a material fact contained in any registration statement filed by the Company, any prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that such untrue statements or omissions are based solely upon information regarding such Purchaser Party furnished in writing to the Company by such Purchaser Party expressly for use therein, or (ii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder in connection therewith. If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (x) the employment thereof has been specifically authorized by the Company in writing, (y) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (z) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (1) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (2) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by this Section 4.9 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law.
4.10. Merger; Consolidation; Asset Sales. The Company shall not merge, dissolve, liquidate, consolidate with or into another person, or sell, transfer, license, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired), without the prior written consent of the Requisite Purchasers. Notwithstanding the foregoing, the Company may use proceeds of Tranche 1 to pay off amounts due under the Existing Trust Loan Agreement and such use of proceeds shall not constitute a breach of this Agreement or any other Transaction Document.
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4.11. Listing of Common Stock. The Company hereby agrees to use reasonable best efforts to maintain the listing or quotation of the Common Stock on the Trading Market on which it is currently listed, and on the Closing Date, the Company shall apply to list or quote all of the Underlying Shares on such Trading Market and promptly secure the listing of all of the Underlying Shares on such Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market it will then include in such application all of the Underlying Shares, and will take such other action as is necessary to cause all of the Underlying Shares to be listed or quoted on such other Trading Market as promptly as possible. The Company will then take all action reasonably necessary to continue the listing and trading of its Common Stock on such Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market. The Company agrees to maintain the eligibility of the Common Stock for electronic transfer through The Depository Trust Company or another established clearing corporation, including, without limitation, by timely payment of fees to The Depository Trust Company or such other established clearing corporation in connection with such electronic transfer.
4.12. Certain Transactions and Confidentiality. Each Purchaser covenants that neither it nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including Short Sales of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly disclosed in a Current Report on Form 8-K. Each Purchaser covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company in a Current Report on Form 8-K, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in the Disclosure Schedules. Notwithstanding the foregoing and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated by this Agreement are first publicly in a Current Report on Form 8-K, (iii) no Purchaser has been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling Securities which have been issued under the terms of this Agreement or any other Transaction Document, or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified term, (iv) no Purchaser shall be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative” transaction, (v) each Purchaser may engage in hedging activities, other than Short Sales at various times during the period that the Securities are outstanding, and (vi) no Purchaser shall have any duty of confidentiality or duty not to trade in the securities of the Company to the Company or its Subsidiaries after the filing of the Form 8-K. Except as contemplated above, Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.
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4.13. Conduct of Business. The business of the Company shall not be conducted in violation of any law, ordinance or regulation of any governmental entity.
4.14. Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities with the Commission as required under Regulation D, and with the applicable securities regulators in the states in which the Securities were sold, and to provide copies thereof, promptly upon request of the Purchaser. The Company shall take such further 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 on the Closing Dates under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of the Purchasers.
4.15. Maintenance of Property. So long as the Notes and Warrants remain outstanding, the Company shall use its commercially reasonable efforts to keep all of its property including, but not limited to, the Collateral, which is necessary or useful to the conduct of its business, in good working order and condition, ordinary wear and tear excepted.
4.16. Preservation of Corporate Existence. So long as the Notes and Warrants remain outstanding, the Company shall preserve and maintain its corporate existence, rights, privileges and franchises in the jurisdiction of its incorporation, and qualify and remain qualified, as a foreign corporation in each jurisdiction in which such qualification is necessary in view of its business or operations and where the failure to qualify or remain qualified would reasonably be expected to have a Material Adverse Effect.
4.17. DTC Program. At all times that the Securities are outstanding, the Company will employ as the transfer agent for the Common Stock and Underlying Shares a participant in The Depository Trust Company Automated Securities Transfer Program and cause the Common Stock to be transferable pursuant to such program.
4.18. Conversion Procedures. The form of Notice of Conversion in the Notes sets forth the totality of the procedures required of the Purchaser in order to convert the Notes. No additional legal opinion, other information or instructions shall be required of the Purchaser to convert the Notes. Without limiting the preceding sentences, no ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required in order to covert the Notes. The Company shall honor conversions of the Notes and shall deliver the shares of Common Stock issuable upon conversion of the Notes in accordance with the terms, conditions and time periods set forth in the Transaction Documents.
4.19. Exercise Procedures. The form of Notice of Exercise included in the Warrant sets forth the totality of the procedures required of the Purchaser in order to exercise the Warrant. No additional legal opinion, other information or instructions shall be required of the Purchaser to exercise their Warrant. Without limiting the preceding sentences, no ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required in order to exercise the Warrant. The Company shall honor exercises of the Warrant and shall deliver Underlying Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents.
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4.20. Right of Participation.
(a) From the date hereof until the date on which no Notes remain outstanding and the Purchasers no longer hold at least ten percent (10%) of the Notes, Conversion Shares, Warrant Shares or other securities issued in connection with the transactions contemplated hereby, calculated on an as-converted basis by the Company of Common Stock or Common Stock Equivalents for cash consideration, Indebtedness or a combination of units thereof (a “Subsequent Financing”), the Purchasers shall have the right to participate in up to their pro rata portion of such Subsequent Financing, or such greater amount as the Company and the applicable Purchasers may agree, on the same terms, conditions and price provided for in the Subsequent Financing.
(b) Between the time period of 4:00 pm (New York City time) and 6:00 pm (New York City time) on the Trading Day immediately prior to the Trading Day of the expected announcement of the Subsequent Financing (or, if the Trading Day of the expected announcement of the Subsequent Financing is the first Trading Day following a holiday or a weekend (including a holiday weekend), between the time period of 4:00 pm (New York City time) on the Trading Day immediately prior to such holiday or weekend and 2:00 pm (New York City time) on the day immediately prior to the Trading Day of the expected announcement of the Subsequent Financing), the Company shall deliver to each Purchaser a written notice of the Company’s intention to effect a Subsequent Financing (a “Subsequent Financing Notice”), which notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing is proposed to be effected and shall include a term sheet and transaction documents relating thereto as an attachment.
(c) Any Purchaser desiring to participate in such Subsequent Financing must provide written notice to the Company by 6:30 am (New York City time) on the third Trading Day following the date on which the Subsequent Financing Notice is delivered to such Purchaser (the “Notice Termination Time”) that such Purchaser is willing to participate in the Subsequent Financing, the amount of such Purchaser’s participation, and representing and warranting that such Purchaser has such funds ready, willing, and available for investment on the terms set forth in the Subsequent Financing Notice. If the Company receives no such notice from a Purchaser as of such Notice Termination Time, such Purchaser shall be deemed to have notified the Company that it does not elect to participate in such Subsequent Financing.
(d) If, by the Notice Termination Time, notifications by the Purchasers of their willingness to participate in the Subsequent Financing (or to cause their designees to participate) is, in the aggregate, less than the total amount of the Subsequent Financing, then the Company may effect the remaining portion of such Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing Notice.
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(e) If, by the Notice Termination Time, the Company receives responses to a Subsequent Financing Notice from Purchasers seeking to purchase more than the aggregate amount of the securities to be offered in the Subsequent Financing, each such Purchaser shall have the right to purchase its Pro Rata Portion (as defined below) of the securities to be offered in the Subsequent Financing. “Pro Rata Portion” means the ratio of (x) the Subscription Amount of Securities purchased by a Purchaser participating under this Section 4.20 and (y) the sum of the aggregate Subscription Amounts of Securities purchased by all Purchasers as set forth on Schedule 1 participating under this Section 4.20.
(f) The Company must provide the Purchasers with a second Subsequent Financing Notice, and the Purchasers will again have the right of participation set forth above in this Section 4.20, if the definitive agreement related to the initial Subsequent Financing Notice is not entered into for any reason on the terms set forth in such Subsequent Financing Notice within two (2) Trading Days after the date of delivery of the initial Subsequent Financing Notice.
(g) The Company and each Purchaser agree that, if any Purchaser elects to participate in the Subsequent Financing, the transaction documents related to the Subsequent Financing shall not include any term or provision that, directly or indirectly, will, or is intended to, exclude one or more of the Purchasers from participating in a Subsequent Financing, including, but not limited to, provisions whereby such Purchaser shall be required to agree to any restrictions on trading as to any of the Securities purchased hereunder or be required to consent to any amendment to or termination of, or grant any waiver, release or the like under or in connection with, this Agreement, without the prior written consent of such Purchaser. In addition, the Company and each Purchaser agree that, in connection with a Subsequent Financing, the transaction documents related to the Subsequent Financing shall include a requirement for the Company to issue a widely disseminated press release by 9:30 am (New York City time) on the Trading Day of execution of the transaction documents in such Subsequent Financing (or, if the date of execution is not a Trading Day, on the immediately following Trading Day) that discloses the material terms of the transactions contemplated by the transaction documents in such Subsequent Financing.
(h) Notwithstanding anything to the contrary in this Section 4.20 and unless otherwise agreed to by such Purchaser, the Company shall either confirm in writing to such Purchaser that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly disclose its intention to issue the securities in the Subsequent Financing, in either case in such a manner such that such Purchaser will not be in possession of any material, non-public information, by 9:30 am (New York City time) on the second (2nd) Trading Day following date of delivery of the Subsequent Financing Notice. If by 9:30 am (New York City time) on such second (2nd) Trading Day, no public disclosure regarding a transaction with respect to the Subsequent Financing has been made, and no notice regarding the abandonment of such transaction has been received by such Purchaser, such transaction shall be deemed to have been abandoned and such Purchaser shall not be deemed to be in possession of any material, non-public information with respect to the Company or any of its Subsidiaries. Should the Company decide to pursue such transaction with respect to the offered securities, the Company shall provide such Purchaser with another Subsequent Financing Notice and such Purchaser will again have the right of participation set forth in this Section 4.20. The Company shall not be permitted to deliver more than one such Subsequent Financing Notice to such Purchaser in any sixty (60) day period, except with respect to an amendment or modification of terms and conditions of a Subsequent Financing, which shall be delivered to each Purchaser as a new Subsequent Financing Notice with new time periods commencing in accordance herewith as of the time of delivery of such new Subsequent Financing Notice in accordance herewith.
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(i) The restrictions contained in this Section 4.20 shall not apply in connection with any issuance of Exempted Securities.
4.21. Primary Market Compliance. Notwithstanding anything in this Agreement or any other Transaction Document to the contrary, the parties shall use commercially reasonable efforts to comply with the rules and regulations of the Principal Market, including the listing requirements, and as long as the Common Stock remains listed on the Principal Market the parties shall not enforce any provision of any Transaction Document which does not comply with the rules and regulations of the Principal Market.
4.22. Reservation of Shares. The Company shall initially duly authorize and reserve a sufficient number of shares of Common Stock and thereafter shall have a sufficient number of duly authorized shares of Common Stock to be able to issue the Underlying Shares to the Purchasers assuming that the Company has issued Notes (and accompanying Warrants) in an aggregate principal amount equal to the Maximum Amount.
4.23. Listing. The Company shall promptly secure the listing or designation for quotation (as the case may be) of all of the Underlying Shares upon each trading market and national securities exchange and automated quotation system, if any, upon which the Common Stock is then listed or designated for quotation (as the case may be) (so that all such Underlying Shares may be traded on the foregoing, subject to official notice of issuance) and shall maintain such listing or designation for quotation (as the case may be) of all Underlying Shares from time to time issuable under the terms of the Transaction Documents on such national securities exchange or automated quotation system. The Company shall maintain the Common Stock’s listing or designation for quotation (as the case may be) on the Principal Market. The Company shall not take any action which could be reasonably expected to result in the delisting or suspension of the Common Stock on the Principal Market. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4.23.
4.24. Notice of Disqualification Events. The Company will notify the Purchasers in writing, prior to any Closing Date of (i) any Disqualification Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification Event relating to any Issuer Covered Person not otherwise disclosed herein.
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4.25. Post-Closing Duties. Within thirty (30) days after the date hereof, the Company shall have delivered to the Collateral Agent on behalf of the Purchasers any necessary Control Agreements or other instruments or documents required to perfect the security interest in the Collateral described in the Security Agreements.
4.26. Stockholder Approval.
(a) The Company shall seek and use its best efforts to obtain the approval of the Company’s stockholders (the “Stockholder Approval”) as may be required under Nasdaq Listing Rule 5635 or any successor rule (including, without limitation, approval required under Nasdaq Listing Rule 5635(d) for (i) the approval of all the transactions and actions taken or required to be taken in the performance of the Transaction Documents, including without limitation the issuance of the Securities. Within ninety (90) days following the Initial Tranche 1 Closing Date, the Company shall file a proxy statement with the SEC (and shall use its best efforts to respond to any comments of the SEC or its staff) seeking any applicable Stockholder Approval at a meeting of stockholders to be held not later than one-hundred eighty (180) days following the Initial Tranche 1 Closing Date.
(b) In connection with obtaining the Stockholder Approval, the Company shall (i) include in the proxy statement the recommendation of the Board, as constituted both prior to and after the Initial Tranche 1 Closing, that stockholders vote in favor of the Stockholder Approval (the “Board Recommendation”), (ii) not withdraw, qualify, modify or change the Board Recommendation in a manner adverse to the Purchasers or publicly announce any intention to do so, (iii) use its best efforts to solicit proxies in favor of the Stockholder Approval, and (iv) not take any action that would reasonably be expected to jeopardize the continued listing of the Common Stock on Nasdaq in connection with obtaining the Stockholder Approval.
(c) In the event the Stockholder Approval has not been obtained on or prior to December 19, 2026 (a “Stockholder Approval Failure”), then (i) the Conversion Price of each Note and the exercise Price of each Warrant then outstanding shall automatically be reduced by ten percent (10%) from the applicable Conversion Price then in effect for such Note and exercise Price then in effect for each Warrant, effective as of December 20, 2026. For the avoidance of doubt, such reduction shall be in addition to, and shall not limit, any other rights or remedies available to the Purchasers under this Agreement or any other Transaction Document.
ARTICLE
5
MISCELLANEOUS
5.1 Fees and Expenses. Except as expressly set forth below and in the Transaction Documents to the contrary, each party shall pay the reasonable, documented fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company and any exercise notice delivered by the Purchasers), filing fees in connection with the registration rights relating to the Underlying Shares, stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchaser. Notwithstanding the foregoing, the Company agrees to pay to the Company’s financial advisor, Odeon Capital Group LLC, a cash fee equal to six percent (6%) of principal, and issue Odeon Capital Group LLC five-year warrants to purchase shares of the Company’s Common Stock at a rate of 1,333 warrants per $100,000 of Notes issued hereunder. The Company shall at the Initial Tranche 1 Closing pay on behalf of or reimburse the Purchasers for reasonable, documented out-of-pocket expenses, including fees of counsel, consultants and accountants, diligence and related expenses, incurred in connection with the transactions contemplated hereby, in an aggregate amount not to exceed $125,000.
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5.2 Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
5.3 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile or email attachment at the facsimile number or email address as set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Business Day, (b) the next Business Day after the date of transmission, if such notice or communication is delivered via facsimile or email attachment at the facsimile number or email address as set forth on the signature pages attached hereto on a day that is not a Business Day or later than 5:30 p.m. (New York City time) on any Business Day, (c) the second (2nd) Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.
5.4 Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and, except as otherwise specifically provided herein, by the Requisite Purchasers or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right. Any amendment effected in accordance with accordance with this Section 5.4 shall be binding upon the Purchasers and holder of Securities and the Company.
5.5 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchasers then holding the outstanding Notes and Warrants. Purchasers may assign any or all of its rights under this Agreement to any Person to whom a Purchaser assigns or transfers any Securities in compliance with the Transaction Documents, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to such Purchaser, and provided further that (i) such transferee is an “accredited investor” within the meaning of Rule 501 under the Securities Act and (ii) such transferee is not a direct competitor of the Company or any Subsidiary.
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5.6 No Third-Party Beneficiaries. Other than as set forth in Section 4.9, 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.
5.7 Governing Law; Exclusive Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, (including, without limitation, Section 5-1401 of the New York General Obligations Law (“NY GOL”)), without regard to any other conflicts of law rules or principles. Each party agrees that all legal Proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents shall be commenced exclusively in the state and federal courts sitting in the State of New York, County of New York. Pursuant to Section 5-1402 of the NY GOL, each party hereby irrevocably submits to the nonexclusive jurisdiction of the state and federal courts sitting in the City, County and State of New York, 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 court, that such Proceeding is improper or is an inconvenient venue for such Proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If any party shall commence a Proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company elsewhere in this Agreement, the prevailing party in such Proceeding shall be reimbursed by the non-prevailing party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding.
5.8 Survival. The representations and warranties contained herein shall survive each Closing Date and the delivery of the Securities on each Closing Date.
5.9 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.
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5.10 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired, or invalidated, as long as the essential terms and conditions for each party remain valid, binding, and enforceable. The parties shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction.
5.11 Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever a 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; provided, however, that, in the case of a rescission of a conversion of a Note or an exercise of the Warrant, such Purchaser shall be required to return any shares of Common Stock subject to any such rescinded conversion or exercise notice concurrently with the return to such Purchaser of the aggregate exercise price paid to the Company for such shares.
5.12 Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.
5.13 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchaser and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any Action for specific performance of any such obligation the defense that a remedy at law would be adequate.
5.14 Usury. It is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to the Purchaser with respect to indebtedness evidenced by the Transaction Documents, such excess shall be applied by the Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at the Purchaser’s election.
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5.15 Payment Set Aside. To the extent that the Company makes a payment or payments to a 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.
5.16 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.
5.17 Participation Rights. To the extent that any party (other than the Company) to that certain securities purchase agreement dated as of July 14, 2025 by and between the Company and the other parties thereto exercises any of the participation rights available to such party under section 4.13 thereof, the Company and the Purchasers shall use their commercially reasonable efforts to assist the Company in satisfying its obligations thereunder.
5.18 Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto.
5.19 Representation by Pierson Ferdinand LLP. Each Purchaser (other than the Trust) acknowledges and agrees that Pierson Ferdinand LLP has acted as counsel solely to the Trust in connection with this Agreement, the Notes, the Warrants and the other Transaction Documents and the transactions contemplated hereby and thereby and has not acted as counsel to any Purchaser (other than the Trust) in connection herewith or therewith. Each Purchaser (other than the Trust) has been advised to seek, and has had the opportunity to seek, independent legal counsel with respect to this Agreement, the Notes, the Warrants and the other Transaction Documents and has either done so or has voluntarily declined to do so. No Purchaser (other than the Trust) is relying on Pierson Ferdinand LLP for any legal advice. Each Purchaser (other than the Trust) hereby (i) acknowledges that there may exist conflicts of interest between and among the Trust and the other Purchasers and (ii) waives, to the fullest extent permitted by applicable law, any claim or right to assert that a conflict of interest exists or that Pierson Ferdinand LLP has provided inadequate representation to such Purchaser or has any liability or obligation to any Purchaser (other than the Trust) in connection with this Agreement, the Notes, the Warrants and the other Transaction Documents and the transactions contemplated hereby and thereby.
5.20 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
(Signature Pages Follow)
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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.
| CELULARITY INC. | Address for Notice: | ||
| By: | 170 Park Avenue | ||
| Name: | Robert J. Hariri, MD, PhD | Florham Park, NJ 07932 | |
| Title: | Chief Executive Officer | Attn: K. Harold Fletcher, Esq. | |
| Email: kyle.fletcher@celularity.com | |||
With a copy to (which shall not constitute notice):
Sheppard, Mullin, Richter & Hampton LLP
30 Rockefeller Plaza, 39th Floor
New York, NY 10112
Attn: Jeffrey Fessler, Esq.
Email: JFessler@sheppardmullin.com
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR PURCHASERS FOLLOW]
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PURCHASER SIGNATURE PAGES TO SECURITIES Purchase Agreement
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
Name of Purchaser: Philip & Daniele Barach Family Trust
Signature of Authorized Signatory of Purchaser: __________________________________
Name of Authorized Signatory: Philip A. Barach
Title of Authorized Signatory: Trustee
Email Address of Authorized Signatory: barachphilip@gmail.com
Address for Notice to Purchaser:
434
Surfview Drive
Pacific Palisades, CA 90272
With a copy to (which shall not constitute notice):
Pierson
Ferdinand LLP
1650 Market Street, 36th Floor
Philadelphia, PA 19103
Attn: Jay Coogan, Esq.
Email: jay.coogan@pierferd.com
Address for Delivery of Securities to Purchaser (if not same as address for notice):
FEIN Number: __________________________________
SSN Number: __________________________________
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PURCHASER SIGNATURE PAGES TO Securities Purchase Agreement
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
Name of Purchaser: Igal Namdar
Signature of Authorized Signatory of Purchaser: __________________________________
Name of Authorized Signatory:
Title of Authorized Signatory: [_______________________]
Email Address of Authorized Signatory: egal@namdarllc.com
Address for Notice to Purchaser:
150 Great Neck Road
Suite 304
Great Neck, NY 1102
With
a copy to (which shall not constitute notice):
[_____________________]
Address for Delivery of Securities to Purchaser (if not same as address for notice):
FEIN Number: _________________________________
SSN Number: __________________________________
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PURCHASER SIGNATURE PAGES TO Securities Purchase Agreement
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
Name of Purchaser:
Signature of Authorized Signatory of Purchaser: __________________________________
Name of Authorized Signatory:
Title of Authorized Signatory: [_______________________]
Email Address of Authorized Signatory:
Address for Notice to Purchaser:
[______________________]
With
a copy to (which shall not constitute notice):
[_____________________]
Address for Delivery of Securities to Purchaser (if not same as address for notice):
FEIN Number: _________________________________
SSN Number: __________________________________
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EXHIBIT A
Form of Note
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EXHIBIT B
Form of Warrant
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EXHIBIT C
Form of Security Agreement
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EXHIBIT D
Form of Registration Rights Agreement
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EXHIBIT E
Form of Board Rights Agreement
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Schedule 1
Purchase Price; Securities Purchased
| Name
of Purchaser | Purchase Price | Aggregate Face Value of Note being Purchased | Number of Warrants to be Issued | |||||||||
| Philip & Daniele Barach Family Trust | $ | $ | ||||||||||
| TOTAL | $ | $ | ||||||||||
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Exhibit 10.2
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of September 23, 2026 (as amended, supplemented or otherwise modified from time to time in accordance with the provisions hereof, this “Agreement”), made by and among Celularity Inc. (the “Company” and each of the Company’s subsidiaries named on the signature pages hereto (each, a “Grantor” and collectively, the “Grantors”) and Philip Barach, as collateral agent (in such capacity, the “Collateral Agent”), for the benefit of the Purchasers (as defined below) party to the Purchase Agreement (as defined below) from time to time, together with their respective successors, endorsees, transferees and permitted assigns (collectively, the “Secured Party”).
W I T N E S S E T H:
WHEREAS, on the date hereof, the Company and the Secured Party entered into that certain Securities Purchase Agreement, dated September 23, 2026, by and among the purchasers named therein from time to time (the “Purchasers”), the Company and the Secured Party, (as amended, supplemented or otherwise modified from time to time, the “Purchase Agreement”), pursuant to which the Company may issue and sell to the Purchasers senior secured convertible promissory notes in an aggregate principal amount of up to $25,000,000 in two tranches pursuant to the terms thereof (as amended, supplemented, restated, exchanged, replaced or otherwise modified from time to time, the “Convertible Notes”), together with related warrants;
WHEREAS, each of the Purchasers, the Company and the Collateral Agent have entered into that certain Intercreditor Agreement, dated September 23, 2026, pursuant to which the Purchasers (i) appoint Philip Barach as Collateral Agent to act on their behalf under such Intercreditor Agreement, this Agreement and the other Transaction Documents, and (ii) agree the Secured Obligations held by any Purchaser from time to time will, in all respects, be treated pari passu with the Secured Obligations held by any other Purchaser from time to time;
WHEREAS, this Agreement is given by the Grantors in favor of the Collateral Agent for the benefit of the Secured Party to secure the payment and performance of all of the Secured Obligations (as defined below);
WHEREAS, the Grantors will derive substantial direct and indirect benefits from the issuance and sale of the Convertible Notes and from the other transactions contemplated by the Transaction Documents (as defined below); and
WHEREAS, this Agreement is required by the terms of the Transaction Documents, and it is a condition to the obligations of the Secured Party to purchase the Convertible Notes it has committed to purchase under the Transaction Documents that the Grantors execute and deliver this Agreement.
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NOW, THEREFORE, in consideration of the mutual covenants, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Definitions.
(a) Unless otherwise specified herein, all references to Sections and Schedules herein are to Sections and Schedules of this Agreement.
(b) Unless otherwise defined herein, terms used herein that are defined in the UCC shall have the meanings assigned to them in the UCC. However, if a term is defined in Article 9 of the UCC differently than in another Article of the UCC, the term has the meaning specified in Article 9.
(c) In addition to the terms defined elsewhere in this Agreement, capitalized terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement.
(d) For purposes of this Agreement, the following terms shall have the following meanings:
“Collateral” means the collateral described in Section 2 of this Agreement.
“Convertible Notes” shall have the meaning set forth in the recitals hereto.
“Event of Default” has the meaning set forth in the Convertible Notes.
“Excluded Account” means (i) any deposit, securities or concentration account held by a Grantor, the deposits in which shall not at any time exceed $250,000 in the aggregate and (ii) any payroll, trust, tax withholding, fiduciary, escrow, tax payment or employee wages and benefits accounts held by a Grantor and used exclusively for such purposes and so long as no other funds are commingled in such accounts.
“Excluded Assets” means (a) any Excluded Account, (b) any “intent to use” trademark application for which a statement of use has not been filed and accepted by the United States Patent and Trademark Office, but only to the extent and for so long as the grant of a security interest therein would impair the validity or enforceability of such application under applicable law, (c) voting equity interests in a controlled foreign corporation, as defined in the Internal Revenue Code, solely to the extent the grant of a security interest therein would reasonably be expected to result in material adverse tax consequences to the Grantor, and (d) any property or asset to the extent that the grant of a security interest therein is prohibited by applicable law or by the express terms of a binding agreement in effect on the date hereof and such prohibition is not rendered ineffective under the UCC or other applicable law; provided, however, that Excluded Assets shall not include any Proceeds, substitutions or replacements of any Excluded Asset unless such Proceeds, substitutions or replacements would independently constitute Excluded Assets.
“First Priority” means, with respect to any lien and security interest purported to be created in any Collateral pursuant to this Agreement, such lien and security interest is the most senior lien to which such Collateral is subject, subject only to Permitted Liens and, until released as contemplated by the Purchase Agreement, the security interest held by the Trust.
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“Intellectual Property” means the collective reference to all rights, priorities and privileges relating to intellectual property arising under United States laws or otherwise, including, without limitation, (i) all copyrights arising under the laws of the United States or any political subdivision thereof, whether registered or unregistered and whether published or unpublished, all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, all registrations, recordings and applications in the United States Copyright Office, (ii) all letters patent of the United States or any political subdivision thereof, all reissues and extensions thereof, and all applications for letters patent of the United States and all divisions, continuations and continuations-in-part thereof, (iii) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade dress, service marks, logos, domain names and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any political subdivision thereof, or otherwise, and all common law rights related thereto, (iv) all trade secrets arising under the laws of the United States or any political subdivision thereof, (v) all rights to obtain any reissues, renewals or extensions of the foregoing, (vi) all licenses for any of the foregoing, and (vii) all causes of action for infringement of the foregoing. Notwithstanding the foregoing, “Intellectual Property” shall exclude any intellectual property that is now or hereafter sublicensed to the Company solely to the extent the grant of a security interest therein is prohibited by the terms of the applicable license or sublicense and such prohibition is not rendered ineffective under the UCC or other applicable law.
“Majority Directive” means a written direction delivered to the Collateral Agent by the Requisite Holders.
“Pledged Equity” means the voting equity capital of any Subsidiary of the Company that is pledged to the Collateral Agent for the benefit of the Secured Party as Collateral for the Secured Obligations.
“Proceeds” means “proceeds” as such term is defined in section 9-102 of the UCC and, in any event, shall include, without limitation, all dividends or other income from the Collateral, collections thereon or distributions with respect thereto.
“Secured Obligations” has the meaning set forth in Section 3.
“Transaction Documents” means this Agreement, the Convertible Notes, the Purchase Agreement, the Warrants, the Intercreditor Agreement, the Registration Rights Agreement, the Board Rights Agreement and all other security instruments relating to the Collateral, all agreements, and instruments delivered in connection with or related to the foregoing.
“Trust Release” means the release and termination of the Trust’s security interest in the assets of the Company and its subsidiaries, in form and substance reasonably satisfactory to the Secured Party, as contemplated by the Purchase Agreement.
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“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York or, when the laws of any other state govern the method or manner of the perfection or enforcement of any security interest in any of the Collateral, the Uniform Commercial Code as in effect from time to time in such state.
2. Grant of Security Interest.
(a) To secure the prompt payment and performance in full when due, whether by lapse of time, acceleration, mandatory prepayment or otherwise, of the Secured Obligations, each Grantor hereby pledges and grants to the Collateral Agent for the benefit of the Secured Party, and hereby creates a continuing First Priority lien and security interest in favor of the Collateral Agent for the benefit of the Secured Party in and to all of its right, title and interest in and to all of its respective assets, other than Excluded Assets, including, but not limited to, the following, wherever located, whether now existing or hereafter from time to time arising or acquired:
(i) all Accounts;
(ii) all cash, currency and Cash Equivalents;
(iii) all Chattel Paper (including Electronic Chattel Paper and Tangible Chattel Paper);
(iv) the Commercial Tort Claims described on Schedule 2 hereto;
(v) all Contracts together with all Contract Rights;
(vi) all Deposit Accounts;
(vii) all Documents;
(viii) all Equipment;
(ix) all Fixtures;
(x) all General Intangibles;
(xi) all Goods;
(xii) all Instruments;
(xiii) all Intellectual Property;
(xiv) all Inventory;
(xv) all Investment Property;
(xvi) all Letter-of-Credit Rights;
| -4- |
(xvii) all Payment Intangibles;
(xviii) all Supporting Obligations;
(xix) all right, title and interest of the Company in and to the Pledged Equity and all products and proceeds thereof; and
(xx) all Proceeds and products of each of the foregoing, all books and records relating to the foregoing, all supporting obligations related thereto, and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, and any and all Proceeds of any insurance, indemnity, warranty or guaranty payable to such Grantor from time to time with respect to any of the foregoing.
All of the foregoing, together with all other collateral described herein, is referred to herein as the “Collateral.”
(b) The Grantor hereby acknowledges and agrees that the security interest created hereby in the Collateral constitutes continuing collateral security for all of the Secured Obligations, whether now existing or hereafter arising, including any amounts currently outstanding and any future advances.
(c) Notwithstanding anything to the contrary contained herein or in any other Transaction Document, the security interest granted hereby shall not attach to any Excluded Asset; provided that immediately upon the ineffectiveness, lapse or termination of any restriction that caused any asset to constitute an Excluded Asset, such asset shall automatically constitute Collateral and shall be subject to the security interest granted hereby.
(d) The parties acknowledge that the Company is permitted under the Purchase Agreement to use a portion of the proceeds from Tranche 1 to pay amounts owing to the Trust in order to satisfy the applicable release conditions and obtain the Trust Release. The security interest granted hereby shall become a First Priority security interest upon the effectiveness of the Trust Release, subject only to Permitted Liens.
3. Secured Obligations. The Collateral secures the due and prompt payment and performance of:
(a) all obligations, including, without limitation, the obligations of the Grantors from time to time arising under (i) the Convertible Notes, (ii) the Purchase Agreement; (iii) this Agreement, and (iv) all other Transaction Documents, or otherwise with respect to the due and prompt payment of (a) the principal of and premium, if any, and interest on the Convertible Notes (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise;
(b) all other monetary obligations, including fees, costs, attorneys’ fees and disbursements, reimbursement obligations, contract causes of action, expenses and indemnities, whether primary or secondary, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Grantor under or in respect of the Convertible Notes or this Agreement; and
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(c) all other covenants, duties, debts, obligations and liabilities of any kind of the Grantor under or in respect of the Convertible Notes, this Agreement, or any other Transaction Document as well as any other document made, delivered or given in connection with any of the foregoing, in each case whether evidenced by a note or other writing, whether allowed in any bankruptcy, insolvency, receivership or other similar proceeding, whether arising from an extension of credit, issuance of a letter of credit, acceptance, loan, guaranty, indemnification or otherwise, and whether primary or secondary, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, fixed or otherwise.
(all such obligations, covenants, duties, debts, liabilities, sums and expenses set forth in this Section 3 being herein collectively called the “Secured Obligations”).
4. Perfection of Security Interests and Further Assurances.
(a) Each Grantor shall, from time to time, as may be required by the Collateral Agent, acting pursuant to a Majority Directive, with respect to the Collateral, take all actions as may be reasonably requested by the Secured Party to perfect the First Priority security interest of the Collateral Agent, for the benefit of the Secured Party, in the Collateral including, without limitation, assets over which control may be obtained within the meaning of sections 8-106, 9-104, 9-105, 9-106 and 9-107 of the UCC, section 201 of the federal Electronic Signatures in Global and National Commerce Act and, as the case may be, section 16 of the Uniform Electronic Transactions Act, as applicable, such Grantor shall take all actions as may be reasonably requested from time to time by the Collateral Agent for the benefit of the Secured Party so that control of the Collateral is obtained and at all times held by the Collateral Agent acting for the Secured Party. All of the foregoing shall be at the sole cost and expense of the Grantor.
(b) Each Grantor hereby irrevocably authorizes the Collateral Agent at any time and from time to time to file in any relevant jurisdiction any financing statements and amendments thereto that contain the information required by Article 9 of the UCC of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Collateral, including any financing or continuation statements or other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the security interest granted by such Grantor hereunder, without the signature of such Grantor where permitted by law, including the filing of a financing statement describing the Collateral as “all assets” or “all personal property” of such Grantor, whether now owned or hereafter acquired, together with all products and Proceeds thereof, subject to Excluded Assets. Each Grantor agrees to provide all information required by the Collateral Agent pursuant to this Section promptly to the Collateral Agent upon request.
(c) Each Grantor hereby further authorizes the Collateral Agent to file with the United States Patent and Trademark Office and the United States Copyright Office (and any successor office and any similar office in any state of the United States) this Agreement and any other necessary documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the security interest granted by such Grantor hereunder, without the signature of such Grantor where permitted by law.
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(d) If any Grantor shall at any time hold or acquire any certificated securities, promissory notes, tangible chattel paper, negotiable documents or warehouse receipts relating to the Collateral, such Grantor shall endorse, assign and deliver the same to the Collateral Agent, acting for the benefit of the Secured Party, accompanied by such instruments of transfer or assignment duly executed in blank as the Collateral Agent, acting for the Secured Party, may from time to time specify.
(e) If any Grantor shall at any time hold or acquire a commercial tort claim, the Grantor shall notify the Collateral Agent, acting for the benefit of the Secured Party, in a writing signed by such Grantor of the particulars thereof and grant to the Collateral Agent, for the benefit of the Secured Party, in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement.
(f) If any Collateral is at any time in the possession of a bailee, the applicable Grantor shall promptly notify the Collateral Agent thereof and, at the Collateral Agent’s request and option, shall promptly obtain an acknowledgment from the bailee, in form and substance satisfactory to the Collateral Agent, that the bailee holds such Collateral for the benefit of the Collateral Agent on behalf of Secured Party and the bailee agrees to comply, without further consent of such Grantor, at any time with instructions of the Collateral Agent, as to such Collateral.
(g) Each Grantor agrees that at any time and from time to time, at the expense of such Grantor, such Grantor will promptly execute and deliver all further instruments and documents, obtain such agreements from third parties, and take all further action, that may be necessary or desirable, or that the Collateral Agent may reasonably request, in order to create and/or maintain the validity, perfection or priority of and protect any security interest granted or purported to be granted hereby or to enable the Collateral Agent, acting on behalf of the Secured Party, to exercise and enforce its rights and remedies hereunder or under any other agreement with respect to any Collateral.
5. Representations and Warranties. Each Grantor represents and warrants to the Collateral Agent and the Secured Party, as of the Closing Date, as follows:
(a) It has the requisite corporate or limited liability company power and authority to enter into this Agreement and otherwise to carry out its obligations hereunder. The execution, delivery and performance by the Grantor of this Agreement and the filings contemplated herein have been duly authorized by all necessary action on the part of the Grantor and no further action is required by the Grantor. This Agreement constitutes a legal, valid and binding obligation of the Grantor enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditor’s rights generally.
(b) The Grantor represents and warrants that it has no place of business or offices where its respective books of account and records are kept or places where Collateral is stored or located, except for the Business Premises or any other locations disclosed to the Collateral Agent.
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(c) The Grantor is the sole owner of the Collateral (except for non-exclusive licenses granted by the Grantor in the Grantor’s ordinary course of business), free and clear of any and all encumbrances other than Permitted Liens and, until the effectiveness of the Trust Release, Liens held by the Trust. The Grantor is fully authorized to grant the security interests in and to pledge the Collateral to the Collateral Agent for the benefit of the Secured Party. There is not on file in any agency, land records or other office of any governmental authority, an effective financing statement, security agreement, license or transfer or any notice of any of the foregoing (other than those that have been filed in favor of the Collateral Agent for the benefit of the Secured Party pursuant to this Agreement, the Trust, or holders of other Permitted Liens) covering or affecting any of the Collateral. So long as this Agreement shall be in effect, the Grantor shall not execute and shall not permit to be on file in any such agency, land records or other office any such financing statement or other document or instrument except with respect to Permitted Liens or as otherwise permitted under the Transaction Documents.
(d) No part of the Collateral has been judged invalid or unenforceable. No claim, proceeding or other notice or other similar item has been received by the Grantor that any Collateral or the Grantor’s use of any Collateral violates the rights of any Person. There has been no adverse decision or claim to the Grantor’s ownership rights in or exclusive rights to use the Collateral in any jurisdiction or to the Grantor’s right to keep and maintain such Collateral in full force and effect, and there is no claim or proceeding of any nature involving said rights pending or, to the best knowledge of the Grantor, threatened, before any governmental authority.
(e) Upon making the filings described in the immediately following sentence or by possession or control of such Collateral by the Collateral Agent, acting for the Secured Party, or delivery of such Collateral to the Collateral Agent, for the benefit of the Secured Party, this Agreement creates, in favor of the Collateral Agent, for the benefit of the Secured Party, a valid, perfected, security interest in the Collateral. Except for the filing of financing statements on Form UCC-1 under the Uniform Commercial Code in the State of Delaware, no authorization or approval of, or filing with, or notice to any governmental authority is required either: (A) for the grant by any Grantor of, or the effectiveness of, the security interest granted hereby or for the execution, delivery and performance of this Agreement by such Grantor; or (B) for the perfection of or exercise by the Collateral Agent for the benefit of the Secured Party, of its rights and remedies hereunder.
(f) Simultaneous with the execution of this Agreement, each Grantor hereby authorizes the Collateral Agent, acting for the Secured Party, to file one or more UCC financing statements, and any continuations, amendments, or assignments thereof with respect to the security interests on the Collateral granted hereby and pursuant to the terms of this Agreement, with the State of Delaware and in such other jurisdictions as may be requested or desired by the Secured Party.
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(g) The execution, delivery and performance of this Agreement, and the granting of the security interests contemplated hereby, will not: (A) constitute a violation of or conflict with the certificate of incorporation, bylaws or any other organizational or governing documents of the Grantor; (B) constitute a violation of, or a default or breach under (either immediately, upon notice, upon lapse of time, or both), or conflicts with, or gives to any other Person any rights of termination, amendment, acceleration or cancellation of, any provision of any contract or agreement to which the Grantor is a party or by which any of the Collateral may be bound; (C) constitute a violation of, or a default or breach under (either immediately, upon notice, upon lapse of time, or both), or conflicts with, any judgment of any governmental authority; (D) constitute a violation of, or conflict with, any law; or (E) result in the loss or adverse modification of, or the imposition of any fine, penalty or other encumbrance with respect to, any permit granted or issued to, or otherwise held by or for the use of, the Grantor or any of the Collateral. No consent (including from stockholders or creditors of the Grantor) is required for the Grantor to enter into and perform its obligations hereunder except for consents, approvals, releases or terminations contemplated by the Purchase Agreement, including the Trust Release, or any Nasdaq or stockholder approval requirements applicable to the issuance of securities under the Purchase Agreement.
(h) All information heretofore, herein or hereafter supplied to the Collateral Agent and/or the Secured Party by or on behalf of each Grantor with respect to the Collateral is accurate and complete in all material respects as of the date furnished.
(i) Each Grantor shall have all risk of loss of the Collateral. Neither the Collateral Agent nor the Secured Party shall have any liability or duty, either before or after the occurrence and continuance of an Event of Default, on account of loss of or damage to, to collect or enforce any of its rights against, the Collateral, to collect any income accruing on the Collateral, or to preserve rights against Persons with prior interests in the Collateral. If the Collateral Agent, acting for the Secured Party, actually receives any notices requiring action with respect to Collateral in the Collateral Agent’s or Secured Party’s possession, the Collateral Agent, acting for the Secured Party, shall take reasonable steps to forward such notices to the Grantors. Each Grantor is responsible for responding to notices concerning the Collateral, voting the Collateral, and exercising rights and options, calls and conversions of the Collateral. The sole responsibility of the Collateral Agent, acting on behalf of the Secured Party, is to take such action as is reasonably requested by a Grantor in writing; however, the Collateral Agent, acting for the Secured Party, is not responsible to take any action that, in the Collateral Agent’s sole judgment, would affect the value of the Collateral as security for the Secured Obligations adversely. While the Collateral Agent, acting for the Secured Party, is not required to take certain actions, if action is needed, in the Secured Party’s sole discretion, to preserve and maintain the Collateral, each Grantor authorizes the Collateral Agent to take such actions, but neither the Collateral Agent nor the Secured Party is obligated to do so.
(j) During normal business hours and subject to prior reasonable notice from the Secured Party (through the Collateral Agent) to any of the Grantors (which notice may be e-mail or telephonic notice), the Collateral Agent, acting for the Secured Party, and its agents and designees may enter the business premises and any other premises of any Grantor and inspect the Collateral and all books and records of such Grantor (in whatever form) once per calendar quarter, and the Grantors shall pay the reasonable costs of such inspections.
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(k) At the time the Collateral becomes subject to the lien and security interest created by this Agreement, such Grantor will be the sole, direct, legal and beneficial owner thereof, free and clear of any lien, security interest, encumbrance, claim, option or right of others except for the security interest created by this Agreement and except as otherwise set forth in the Transaction Documents and Permitted Liens.
(l) The pledge of the Collateral pursuant to this Agreement creates a valid and perfected First Priority security interest in the Collateral, securing the payment and performance when due of the Secured Obligations, subject only to Permitted Liens and, until the effectiveness of the Trust Release, Liens held by the Trust.
(m) Except for authorization and approval previously obtained, or other actions previously taken, no authorization, approval, or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the issuance and sale of the Convertible Notes and the pledge by the Grantors of the Collateral pursuant to this Agreement or for the execution and delivery of the Convertible Notes, this Agreement and the other Transaction Documents by the Grantors or the performance by each of the Grantors of its obligations thereunder except for UCC filings, intellectual property filings, filings contemplated by the Purchase Agreement, Nasdaq notices or approvals, and the Trust Release.
(n) To the extent requested by the Collateral Agent, acting for the Secured Party, each Grantor has taken or will take all action required on its part for the Collateral Agent, acting for the Secured Party, to obtain control (as defined in sections 8-106, 9-104, 9-105, 9-106 and 9-107 of the UCC, section 201 of the federal Electronic Signatures in Global and National Commerce Act and, as the case may be, section 16 of the Uniform Electronic Transactions Act, as applicable) over all Collateral with respect to which such control may be obtained pursuant to the UCC. Except as set forth in the Transaction Documents, no person other than the Collateral Agent, acting for Secured Party has control or possession of all or any part of the Collateral other than holders of Permitted Liens and, until the effectiveness of the Trust Release, the Trust.
(o) Each Grantor acknowledges and agrees that (i) Philip Barach has been appointed and has accepted to serve as Collateral Agent under Article IV of the Intercreditor Agreement, and (ii) such appointment provisions shall be incorporated in this Agreement mutatis mutandis.
6. Covenants. Each of the Grantors covenants to the Collateral Agent and the Secured Party as follows:
(a) The Grantor shall use a portion of the proceeds from Tranche 1 to pay amounts owing to the Trust in order to satisfy the applicable release conditions and obtain the Trust Release, as contemplated by the Purchase Agreement. The Grantor shall deliver to the Collateral Agent such evidence of the Trust Release as the Collateral Agent may reasonably request.
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(b) The Grantor shall at all times maintain its books of account and records relating to the Collateral and maintain the Collateral at the Business Premises, and the Grantor shall not relocate such books of account and records or Collateral, except and unless: (A) the Collateral Agent, at the Majority Directive of the Secured Party, first approves of such relocation, which approval may be withheld in the Secured Party’ssole and absolute discretion; (B) evidence that appropriate financing statements and other necessary documents have been filed and recorded and other steps have been taken to create in favor of the Collateral Agent for the benefit of the Secured Party, valid, perfected and continuing liens in the Collateral; or (C) Collateral is moved or relocated in the Grantor’s ordinary course of business, provided, however, that any permanent relocation of any of the Collateral shall require a Majority Directive evidencing the Secured Party’s prior written approval (acting through the Collateral Agent).
(c) The Grantor shall at all times maintain the liens and security interests provided for hereunder as valid and perfected liens and security interests in the Collateral in favor of the Collateral Agent for the benefit of the Secured Party until this Agreement and the security interests hereunder shall terminate. The Grantor shall at all times safeguard and protect all Collateral, at its own expense, for the account of the Collateral Agent for the benefit of the Secured Party. At the request of the Collateral Agent, the Grantor will sign and deliver to the Collateral Agent for the benefit of the Secured Party at any time, or from time to time, one or more financing statements pursuant to the Code (or any other applicable statute) in form reasonably satisfactory to the Collateral Agent, and will pay the cost of filing the same in all public offices wherever filing is, or is deemed by the Collateral Agent to be, necessary or desirable to effect the rights and obligations provided for herein. Without limiting the generality of the foregoing, the Grantor shall pay all fees, taxes and other amounts necessary to maintain the Collateral and the security interests granted hereunder, and the Grantor shall obtain and furnish to the Collateral Agent for the benefit of the Secured Party, from time to time, upon demand, such releases and/or subordinations of claims and liens which may be required to maintain the priority of the security interests hereunder.
(d) The Grantor will not transfer, pledge, hypothecate, encumber, license, sell or otherwise dispose of any of the Collateral (except for the sale of all or a portion of the assets related to the Company’s biomaterials business) without the prior written consent of the Collateral Agent, acting for the Secured Party, which consent may be withheld in the Secured Party’ssole and absolute discretion, except for transfers, sales or licenses made in the Grantor’s ordinary course of business or as otherwise expressly permitted under the Purchase Agreement.
(e) The Grantor shall keep, maintain and preserve all of the Collateral in good condition, repair and order and the Grantor will use, operate and maintain the Collateral in compliance with all laws, and in compliance with all applicable insurance requirements and regulations, ordinary wear and tear excepted.
(f) The Grantor shall, within five (5) days of obtaining knowledge thereof, advise the Collateral Agent on behalf of the Secured Party promptly, in sufficient detail, of any substantial or material change in the Collateral, and of the occurrence of any event which could, with the passage of time or giving of notice, or both, constitute an Event of Default.
(g) The Grantor shall promptly execute and deliver to the Collateral Agent acting for the Secured Party such further deeds, mortgages, assignments, security agreements, financing statements or other instruments, documents, certificates and assurances and take such further action as the Collateral Agent for the benefit of the Secured Party, may from time to time request and may in its sole discretion deem necessary to perfect, protect or enforce its security interest in the Collateral, including, placing legends on Collateral or on books and records pertaining to Collateral stating that the Secured Party has a security interest therein.
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(h) The Grantor will take all steps reasonably necessary to diligently pursue and seek to preserve, enforce and collect any rights, claims, causes of action and accounts receivable in respect of the Collateral.
(i) The Grantor shall promptly notify the Collateral Agent on behalf of the Secured Party in sufficient detail upon becoming aware of any claim, proceeding, or any other litigation, attachment, garnishment, execution or other legal process levied against any Collateral or of any claim, proceeding or any other litigation, attachment, garnishment, execution or other legal process which the Grantor knows or has reason to believe is pending or threatened against it or the Collateral, and of any other information received by the Grantor that may materially affect the value of the Collateral, the security interests granted hereunder or the rights and remedies of the Collateral Agent acting on behalf of the Secured Party hereunder.
(j) The Grantor will promptly pay when due all taxes and all transportation, storage, warehousing and all other charges and fees affecting or arising out of or relating to the Collateral and shall defend the Collateral, at the Grantor’s expense, against all claims of any Persons claiming any interest in the Collateral adverse to the Grantor or the Collateral Agent acting for the Secured Party, except for Permitted Liens.
(k) The Grantor shall maintain comprehensive casualty insurance on the Collateral against such risks, in such amounts, with such loss deductible amounts and with such companies as may be reasonably satisfactory to the Collateral Agent acting for Secured Party, and each such policy shall contain a clause or endorsement satisfactory to the Collateral Agent acting for the Secured Party as loss payee and a clause or endorsement satisfactory to the Collateral Agent on behalf of the Secured Party that such policy may not be canceled or altered and the Collateral Agent, acting for the Secured Party, may not be removed as loss payee without at least thirty (30) days prior written notice to the Collateral Agent acting for the Secured Party. In all events, the amounts of such insurance coverages shall conform to prudent business practices and shall be in such minimum amounts that the Grantor will not be deemed a co-insurer under applicable insurance laws, policies or practices. The Grantor hereby assigns to the Collateral Agent for the benefit of the Secured Party, and grants to the Collateral Agent for the benefit of the Secured Party, a security interest in any and all proceeds of such policies and authorizes and empowers the Collateral Agent on behalf of the Secured Party to adjust or compromise any loss under such policies and to collect and receive all such proceeds. The Grantor hereby authorizes and directs each insurance company to pay all such proceeds directly and solely to the Collateral Agent for the benefit of the Secured Party and not to the Grantor and the Collateral Agent jointly. The Grantor authorizes and empowers the Collateral Agent, acting for the Secured Party, to execute and endorse in the Grantor’s name all proofs of loss, drafts, checks and any other documents or instruments necessary to accomplish such collection, and any persons making payments to the Collateral Agent for the benefit of the Secured Party, under the terms of this subsection are hereby relieved absolutely from any obligation or responsibility to see to the application of any sums so paid. After deduction from any such proceeds of all costs and expenses (including attorney’s fees) incurred by the Collateral Agent or the Secured Party in the collection and handling of such proceeds, the net proceeds shall be applied as follows: if no Event of Default shall have occurred and be continuing, such net proceeds may be applied, at the Grantor’s option, either toward replacing or restoring the Collateral, in a manner and on terms satisfactory to the Collateral Agent acting for the Secured Party, or as a credit against such of the Secured Obligations, whether matured or unmatured, as the Collateral Agent acting upon a Majority Directive from the Secured Party shall determine. In the event that the Grantor may and does elect to replace or restore any of the Collateral as aforesaid, then such net proceeds shall be deposited in a segregated account opened in the name and for the benefit of the Collateral Agent for the benefit of the Secured Party, and such net proceeds shall be disbursed therefrom by the Collateral Agent acting for the Secured Party in such manner and at such times as the Secured Party deems appropriate to complete and insure such replacement or restoration; provided, however, that if an Event of Default shall occur at any time before or after replacement or restoration has commenced, then thereupon the Collateral Agent, acting pursuant to a Majority Directive, shall have the option to apply all remaining net proceeds either toward replacing or restoring the Collateral, in a manner and on terms satisfactory to the Secured Party, or as a credit against such of the Secured Obligations, whether matured or unmatured, as the Secured Party shall determine in the Secured Party’s sole discretion. If an Event of Default shall have occurred prior to such deposit of the net proceeds, then the Collateral Agent acting pursuant to a Majority Directive from the Secured Party may apply such net proceeds either toward replacing or restoring the Collateral, in a manner and on terms satisfactory to the Secured Party, or as a credit against such of the Secured Obligations, whether matured or unmatured, as the Secured Party, shall determine in such Majority Directive.
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(l) The Grantor shall cooperate with the Collateral Agent acting for the Secured Party to obtain and keep in effect one or more control agreements in Deposit Accounts, Electronic Chattel Paper, Investment Property and Letter-of-Credit Rights Collateral.
(m) The Grantor shall not file any amendments, correction statements or termination statements concerning the Collateral without the prior written consent of the Collateral Agent, acting at the direction of the Secured Party.
(n) The Grantor will not, without providing at least thirty (30) days’ prior written notice to the Collateral Agent on behalf of the Secured Party, change its legal name, identity, type of organization, jurisdiction of organization, corporate structure, location of its chief executive office or its principal place of business or its organizational identification number. The Grantor will, prior to any change described in the preceding sentence, take all actions requested by the Collateral Agent on behalf of the Secured Party to maintain the perfection and priority of the Secured Party’s security interest in the Collateral.
(o) The Grantor shall, at its own cost and expense, defend title to the Collateral and the First Priority lien and security interest of the Collateral Agent, for the benefit of the Secured Party, therein against the claim of any person claiming against or through the Grantor and shall maintain and preserve such perfected First Priority security interest for so long as this Agreement shall remain in effect.
(p) Except as permitted under the Transaction Documents, the Grantor will not sell, offer to sell, dispose of, convey, assign or otherwise transfer, grant any option with respect to, restrict, or grant, create, permit or suffer to exist any mortgage, pledge, lien, security interest, option, right of first offer, encumbrance or other restriction or limitation of any nature whatsoever on, any of the Collateral or any interest therein; provided that sale of all or a portion of the assets related to the Company’s biomaterials business shall be permitted.
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7. Collateral Agent Appointed Attorney-in-Fact. Each of the Grantors hereby appoints the Collateral Agent, acting for the benefit of the Secured Party, the Grantor’s attorney-in-fact, with full authority in the place and stead of the Grantor and in the name of the Grantor or otherwise, from time to time to follow a Majority Directive during the existence of an Event of Default, to take any action and to execute any instrument which the Collateral Agent, acting upon such Majority Directive, may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation, to receive, endorse and collect all instruments made payable to the Grantor representing any dividend, interest payment or other distribution in respect of the Collateral or any part thereof and to give full discharge for the same (but neither the Collateral Agent nor the Secured Party shall be obligated to and shall have no liability to such Grantor or any third party for failure to do so or take action). Such appointment, being coupled with an interest, shall be irrevocable. Each of the Grantors hereby ratifies all that said attorney shall lawfully do or cause to be done by virtue hereof.
8. Secured Party May Perform. If any Grantor fails to perform any obligation contained in this Agreement, or if any representation or warranty on the part of any Grantor contained herein shall be breached, then, during the existence of an Event of Default, the Collateral Agent acting on behalf of the Secured Party may perform, or cause performance of, such obligation, or remedy such breach, and the expenses of the Collateral Agent acting on behalf of the Secured Party incurred in connection therewith shall be payable by the Grantors on a joint and several basis; provided that neither the Collateral Agent nor the Secured Party shall be required to perform or discharge any obligation of any Grantor. Neither the provisions of this Section 8 nor any action taken by the Collateral Agent or the Secured Party pursuant to the provisions of this Section 8 shall prevent any such failure to observe any covenant contained in this Agreement or any breach of representation or warranty from constituting an Event of Default.
9. Regarding the Collateral Agent.
(a) Assignment by the Collateral Agent. The Collateral Agent may from time to time assign the Security Interests and any and all other rights created in favor of the Secured Party hereunder to a successor agent appointed in accordance with the Purchase Agreement, and such successor agent shall be entitled to all of the rights and remedies of the Collateral Agent under this Agreement in relation thereto.
(b) The Collateral Agent’s Duty of Care. Other than the exercise of reasonable care to assure the safe custody of the Collateral while being held by the Collateral Agent hereunder and the accounting for moneys actually received by the Collateral Agent in accordance with the terms of this Agreement, neither the Collateral Agent nor the Secured Party shall have any duty or liability to preserve rights pertaining thereto (it being understood and agreed that the Grantor shall be responsible for preservation of all rights in the Collateral, and the Collateral Agent and the Secured Party shall be relieved of all responsibility for the Collateral upon surrendering it or tendering the surrender of it to the Grantors). The Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which the Collateral Agent accords its own property, which shall be no less than the treatment employed by a reasonable and prudent agent in the industry, it being understood that the Collateral Agent shall not have responsibility for taking any necessary steps to preserve rights against any parties with respect to any of the Collateral; provided that the Collateral Agent shall not have acted with gross negligence, bad faith or willful misconduct. In the event of a public or private sale, the Collateral Agent shall have no responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relating to any Collateral, whether or not the Secured Party has or is deemed to have knowledge of such matters, or (ii) taking any steps to clean, repair or otherwise prepare the Collateral for sale.
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(c) Liability with Respect to Accounts. Anything herein to the contrary notwithstanding, each of the Grantors shall remain liable under each of the Accounts to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise to each such Account. Neither the Collateral Agent nor any Secured Party shall have any obligation or liability under any Account (or any agreement giving rise thereto) by reason of or arising out of this Agreement or the receipt by the Collateral Agent or the Secured Party of any payment relating to such Account pursuant hereto, nor shall the Collateral Agent or the Secured Party be obligated in any manner to perform any of the obligations of any Grantor under or pursuant to any Account (or any agreement giving rise thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party under any Account (or any agreement giving rise thereto), to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.
(d) License. For the purpose of enabling the Collateral Agent to exercise rights and remedies hereunder (including to take possession of, hold, preserve, process, assemble, prepare for sale, market for sale, sell or otherwise dispose of Collateral), each Grantor hereby grants to the Collateral Agent for the benefit of the Secured Party a nonexclusive license (exercisable at any time during the continuance of an Event of Default without payment of royalty or other compensation to such Grantor) to use, license or sublicense any Intellectual Property now owned or hereafter acquired by such Grantor, and wherever the same may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof.
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10. Remedies Upon Default.
(a) If any Event of Default shall have occurred and be continuing, the Collateral Agent acting for the Secured Party pursuant to a Majority Directive may, without any other notice to or demand upon any Grantor, assert all rights and remedies of a secured party under the UCC or other applicable law, including, without limitation, the right to take possession of, hold, collect, sell, lease, deliver, grant options to purchase or otherwise retain, liquidate or dispose of all or any portion of the Collateral in a public or private sale. If notice prior to disposition of the Collateral or any portion thereof is necessary under applicable law, written notice mailed to the applicable Grantor at its notice address as provided herein fifteen (15) days prior to the date of such disposition (or such longer period as required by law) shall constitute reasonable notice. So long as the sale of the Collateral is made in a commercially reasonable manner, the Collateral Agent acting for the Secured Party may sell such Collateral on such terms and to such purchaser(s) as the Collateral Agent acting for the Secured Party in its absolute discretion may choose, without assuming any credit risk and without any obligation to advertise or give notice of any kind other than that necessary under applicable law. Without precluding any other methods of sale, the sale of the Collateral or any portion thereof shall have been made in a commercially reasonable manner if conducted in conformity with reasonable commercial practices of creditors disposing of similar property. At any sale of the Collateral, if permitted by applicable law, the Collateral Agent acting for the Secured Party may be the purchaser, licensee, assignee or recipient of the Collateral or any part thereof and shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold, assigned or licensed at such sale, to use and apply any of the Secured Obligations as a credit on account of the purchase price of the Collateral or any part thereof payable at such sale. To the extent permitted by applicable law, each Grantor waives all claims, damages and demands it may acquire against the Collateral Agent or the Secured Party arising out of the exercise by it of any rights hereunder. Each Grantor hereby waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Collateral, whether before or after sale hereunder, and all rights, if any, of marshalling the Collateral and any other security for the Secured Obligations or otherwise. At any such sale, unless prohibited by applicable law, the Collateral Agent acting for the Secured Party may bid for and purchase all or any part of the Collateral so sold free from any such right or equity of redemption. The Collateral Agent and the Secured Party shall not be liable for failure to collect or realize upon any or all of the Collateral or for any delay in so doing, nor shall either be under any obligation to take any action whatsoever with regard thereto. The Collateral Agent, acting for the Secured Party, shall not be obligated to clean-up or otherwise prepare the Collateral for sale.
(b) If any Event of Default shall have occurred and be continuing, any cash held by the Secured Party as Collateral and all cash Proceeds received by the Secured Party in respect of any sale of, collection from, or other realization upon all or any part of the Collateral shall be applied in whole or in part by the Secured Party to the payment of expenses incurred by the Secured Party in connection with the foregoing or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Secured Party hereunder, including attorneys’ fees, and the balance of such proceeds shall be applied or set off against all or any part of the Secured Obligations in such order as the Secured Party shall elect. Any surplus of such cash or cash Proceeds held by the Secured Party and remaining after indefeasible payment in full of all the Secured Obligations shall be paid over to the applicable Grantor or to whomsoever may be lawfully entitled to receive such surplus. Each Grantor shall remain liable for any deficiency if such cash and the cash Proceeds of any sale or other realization of the Collateral are insufficient to pay the Secured Obligations and the fees and other charges of any attorneys employed by the Secured Party to collect such deficiency.
| -16- |
(c) If the Secured Party shall determine to exercise its rights to sell all or any of the Collateral pursuant to this Section, each Grantor agrees that, upon request of the Secured Party, each Grantor will, at its own expense, do or cause to be done all such acts and things as may be necessary to make such sale of the Collateral or any part thereof valid and binding and in compliance with applicable law.
(d) After an Event of Default shall have occurred, the Collateral Agent, acting for the Secured Party, shall have the right at any and all times to enforce each Grantor’s rights against all persons obligated on any of the Collateral, including the right to: (i) notify and/or require the Grantor to notify any or all persons obligated on any of the Collateral to make payments directly to the Collateral Agent for the benefit of the Secured Party, or in care of a post office lock box under the sole control of the Collateral Agent for the benefit of the Secured Party, established at the Grantor’s expense, and to take any or all action with respect to Collateral as the Collateral Agent acting for the Secured Party shall determine in its sole discretion, including, the right to demand, collect, sue for and receive any money or property at any time due, payable or receivable on account thereof, compromise and settle with any person liable thereon, and extend the time of payment or otherwise change the terms thereof, without incurring any liability or responsibility to the Grantor whatsoever; and/or (ii) require the Grantor to segregate and hold in trust for the Secured Party and, on the day of the Grantor’s receipt thereof, transmit to the Secured Party in the exact form received by the Company (except for such assignments and endorsements as may be required by the Collateral Agent acting at the direction of the Secured Party), all cash, checks, drafts, money orders and other items of payment constituting any portion of the Collateral or proceeds of the Collateral. The Collateral Agent’s collection and enforcement of Collateral for the benefit of the Secured Party against persons obligated thereon shall be deemed to be commercially reasonable if the Collateral Agent exercises the care and follows the procedures that the Collateral Agent generally applies to the collection of obligations owed to the Collateral Agent on behalf of the Secured Party.
11. No Waiver and Cumulative Remedies. The Collateral Agent, acting for the Secured Party shall not by any act (except by a written instrument pursuant to Section 13), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any default or Event of Default. All rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies provided by law.
12. SECURITY INTEREST ABSOLUTE. Each Grantor hereby waives demand, notice, protest, notice of acceptance of this Agreement, notice of loans made, credit extended, Collateral received or delivered or other action taken in reliance hereon and all other demands and notices of any description. All rights of the Collateral Agent for the benefit of the Secured Party, and liens and security interests hereunder, and all Secured Obligations of such Grantor hereunder, shall be absolute and unconditional irrespective of:
(a) any illegality or lack of validity or enforceability of any Secured Obligation or any related agreement or instrument;
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(b) any change in the time, place or manner of payment of, or in any other term of, the Secured Obligations, or any rescission, waiver, amendment or other modification of the Convertible Notes, this Agreement, the other Transaction Documents or any other agreement, including any increase in the Secured Obligations resulting from any extension of additional credit or otherwise;
(c) any taking, exchange, substitution, release, impairment or non-perfection of any Collateral or any other collateral, or any taking, release, impairment, amendment, waiver or other modification of any guaranty, for all or any of the Secured Obligations;
(d) any manner of sale, disposition or application of proceeds of any Collateral or any other collateral or other assets to all or part of the Secured Obligations;
(e) any default, failure or delay, willful or otherwise, in the performance of the Secured Obligations;
(f) any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to, or be asserted by, such Grantor against the Collateral Agent or the Secured Party; or
(g) any other circumstance (including, without limitation, any statute of limitations) or manner of administering the Convertible Notes or any existence of or reliance on any representation by the Collateral Agent or the Secured Party that might vary the risk of such Grantor or otherwise operate as a defense available to, or a legal or equitable discharge of, such Grantor or any other grantor, guarantor or surety.
13. Amendments. None of the terms or provisions of this Agreement may be amended, modified, supplemented, terminated or waived, and no consent to any departure by any Grantor therefrom shall be effective unless the same shall be in writing and signed by the Collateral Agent, the Requisite Holders and all of the Grantors, and then such amendment, modification, supplement, waiver or consent shall be effective only in the specific instance and for the specific purpose for which made or given.
14. Addresses For Notices. All notices and other communications provided for in this Agreement shall be in writing and shall be given in the manner and become effective as set forth in the Purchase Agreement, and addressed to the respective parties at their addresses as specified on the signature pages hereof or as to either party at such other address as shall be designated by such party in a written notice to each other party.
15. Additional Grantors. If, at the option of the Company, the Company shall cause any Subsidiary that is not a Grantor to become a Grantor hereunder, such Subsidiary shall execute and deliver to the Collateral Agent a Joinder Agreement substantially in the form of Annex 1 and shall thereafter for all purposes be a party hereto and have the same rights, benefits and obligations as a Grantor party hereto on the Closing Date.
16. Continuing Security Interest; Further Actions. This Agreement shall create a continuing First Priority lien and security interest in the Collateral and shall (a) subject to Section 17, remain in full force and effect until payment and performance in full of the Secured Obligations, (b) be binding upon each Grantor, its successors and permitted assigns, and (c) inure to the benefit of the Collateral Agent acting for the Secured Party and its respective successors, permitted transferees and permitted assigns; provided that no Grantor may assign or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of the Requisite Holders.
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17. Termination; Release. On the date on which the Convertible Notes and other Secured Obligations have been indefeasibly paid in full in cash and performed in full, the Secured Party, will (a) duly assign, transfer and deliver to or at the direction of the Grantor (without recourse and without any representation or warranty) such of the Collateral as may then remain in the possession of the Collateral Agent for the benefit of the Secured Party, together with any monies at the time held by the Secured Party hereunder, (b) execute and deliver to the Grantors a proper instrument or instruments acknowledging the satisfaction and termination of this Agreement, and (c) authorize the Grantors to terminate all applicable UCC filings.
18. Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial. This Agreement and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement and the transactions contemplated hereby and thereby shall be governed by, and construed as set forth in the Purchase Agreement.
19. Other Security. To the extent that any of the Secured Obligations are now or hereafter secured by property other than the Collateral, or by a guarantee, endorsement or property of any other Person, then the Secured Party shall have the right to proceed against such other property, guarantee or endorsement, and the Collateral Agent on behalf of the Secured Party shall have the right, in its sole discretion, to determine which rights, security, liens, security interests or remedies the Secured Party shall at any time pursue, relinquish, subordinate, modify or take with respect thereto, without in any way modifying or affecting any of them or the Secured Obligations or any of the rights of the Collateral Agent for the benefit of the Secured Party or the holders of the Secured Obligations under this Agreement, under any other of the Transaction Documents or under any other document relating to the Secured Obligations.
20. Counterparts. This Agreement and any amendments, waivers, consents or supplements hereto may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page to this Agreement in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement. This Agreement, together with the other Transaction Documents, constitutes the entire contract among the parties with respect to the subject matter hereof and supersedes all previous agreements and understandings, oral or written, with respect thereto.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
| Grantor: | ||
| CELULARITY INC., a Delaware corporation | ||
| By | ||
| Name: | ||
| Title: | ||
| CELULARITY LLC, a Delaware limited liability company | ||
| By | ||
| Name: | ||
| Title: | ||
| CARICORD INC., a Delaware corporation | ||
| By | ||
| Name: | ||
| Title: | ||
| ANTHROGENESIS LLC, a New Jersey limited liability company | ||
| By | ||
| Name: | ||
| Title: | ||
Address for Notices:
Celularity Inc.
170 Park Avenue
Florham Park, NJ 07932
Email: kyle.fletcher@celularity.com |
| |
With a copy to (which shall not constitute notice):
Sheppard, Mullin, Richter & Hampton LLP
30 Rockefeller Plaza, 39th Floor
New York, NY 10112
Attn: Jeffrey Fessler, Esq.
Email: JFessler@sheppardmullin.com |
||
Collateral Agent:
Philip A. Barach
Signature: ___________________
Name: Philip A. Barach
SCHEDULE 2
COMMERCIAL TORT CLAIMS
None
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ANNEX 1 TO SECURITY AGREEMENT
JOINDER AGREEMENT
This JOINDER AGREEMENT (this “Joinder Agreement”), dated as of [ ], is made by the undersigned in favor of the Secured Party under the Convertible Notes. Capitalized terms used herein and not otherwise defined herein have meanings ascribed to such terms in the Transaction Documents as such term is defined in that certain Securities Purchase Agreement, dated as of September 23, 2026, by and among Celularity Inc. and the Purchasers parties thereto from time to time (the “Purchase Agreement”).
By executing and delivering this Joinder Agreement, the undersigned hereby becomes a party to the Security Agreement (the “Security Agreement”) with the same force and effect as if originally named as a “Grantor” therein, as applicable. Without limiting the generality of the foregoing, as collateral security for the prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the Secured Obligations of the undersigned, hereby mortgages, pledges and hypothecates to the Secured Party, and grants to Secured Party, a lien on and security interest in, all of its right, title and interest in, to and under the Collateral of the undersigned and expressly assumes all obligations and liabilities of the parties thereunder.
By acknowledging and agreeing to this Joinder Agreement, the undersigned hereby agrees that this Joinder Agreement may be attached to the Security Agreement.
The undersigned hereby represents and warrants that each of the representations and warranties contained in the Transaction Documents applicable to it is true and correct in all material respects (without duplication of any materiality qualifier contained therein) on and as the date hereof as if made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties were true and correct in all material respects (without duplication of any materiality qualifier contained therein) as of such earlier date.
IN WITNESS WHEREOF, the undersigned has caused this Joinder Agreement to be duly executed and delivered as of the date first written above.
| [Name] | ||
| By | ||
| Name: | ||
| Title: | ||
Exhibit 10.3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this “Agreement”) is made and entered into as of September 23, 2026, between Celularity Inc., a Delaware corporation (the “Company”), and the one or more purchasers identified on the signature pages hereto and on the Schedule of Purchasers attached to the Purchase Agreement (each individually, a “Purchaser,” and collectively, the “Purchasers”).
WHEREAS, the Company will issue to the Holders (as defined below) up to $25,000,000 in aggregate principal amount of convertible notes (the “Notes”) of the Company pursuant to that certain Securities Purchase Agreement dated as of September 23, 2026, by and among the Company and the Purchasers party thereto (the “Purchase Agreement”); and
WHEREAS, the Company will issue to the Holders, pursuant to the Purchase Agreement, warrants (the “Warrants”) to purchase shares of the Company’s Class A Common Stock, par value $0.0001 per share (the “Common Stock”), in such amounts and with such exercise prices as are set forth in the Purchase Agreement and the applicable Warrants; and
WHEREAS, pursuant to the Purchase Agreement, the Company and the Purchasers desire to set forth the registration rights to be granted by the Company to the Holders.
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 agree as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:
“Advice” shall have the meaning set forth in Section 6(b).
“Effectiveness Date” means, with respect to the Initial Registration Statement required to be filed hereunder, the 90th calendar day following the date hereof (or, in the event of a “full review” by the Commission, the 120th calendar day following the date hereof) and with respect to any additional Registration Statements which may be required pursuant to Section 2(c) or Section 3(c), the 60th calendar day following the date on which an additional Registration Statement is required to be filed hereunder (or, in the event of a “full review” by the Commission, the 90th calendar day following the date such additional Registration Statement is required to be filed hereunder); provided, however, that in the event the Company is notified by the Commission that one or more of the above Registration Statements will not be reviewed or is no longer subject to further review and comments, the Effectiveness Date as to such Registration Statement shall be the fifth (5th) Trading Day following the date on which the Company is so notified if such date precedes the dates otherwise required above, provided, further, if such Effectiveness Date falls on a day that is not a Trading Day, then the Effectiveness Date shall be the next succeeding Trading Day.
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“Effectiveness Period” shall have the meaning set forth in Section 2(a).
“Filing Date” means, (a) with respect to the Initial Registration Statement required hereunder, the 45th calendar day following the date hereof, (b) with respect to any additional Registration Statement which may be required pursuant to Section 3(c), the 45th calendar day following the date the obligation to file an additional Registration Statement pursuant to Section 3(c) arose, and (c) with respect to any additional Registration Statements which may be required pursuant to Section 2(c), the earliest practical date on which the Company is permitted by SEC Guidance to file such additional Registration Statement related to the Registrable Securities.
“Holder” or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities. The initial Holders are the Purchasers.
“Indemnified Party” shall have the meaning set forth in Section 5(c).
“Indemnifying Party” shall have the meaning set forth in Section 5(c).
“Initial Registration Statement” means the initial Registration Statement filed pursuant to this Agreement.
“Losses” shall have the meaning set forth in Section 5(a).
“Plan of Distribution” shall have the meaning set forth in Section 2(a).
“Prospectus” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated by the Commission pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.
| -2- |
“Registrable Securities” means, as of any date of determination, (a) the Conversion Shares (assuming on such date the Notes are converted in full without regard to any conversion limitations therein), (b) the Warrant Shares issuable upon exercise of the Warrants (assuming on such date the Warrants are exercised in full without regard to any exercise limitations therein), (c) any additional shares of Common Stock issuable in connection with any anti-dilution provisions in the Notes and Warrants (without giving effect to any limitations on conversion and exercise set forth in the Notes and Warrants, respectively) and (d) any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing; provided, however, that any such Registrable Securities shall cease to be Registrable Securities (and the Company shall not be required to maintain the effectiveness of any, or file another, Registration Statement hereunder with respect thereto) for so long as (i) a Registration Statement with respect to the sale of such Registrable Securities is declared effective by the Commission under the Securities Act and such Registrable Securities have been disposed of by the Holder in accordance with such effective Registration Statement, (ii) such Registrable Securities have been previously sold in accordance with Rule 144, or (iii) such Registrable Securities become eligible for resale without volume or manner-of-sale restrictions and without current public information pursuant to Rule 144 as set forth in a written opinion letter to such effect, addressed, delivered and acceptable to the Transfer Agent and the affected Holders (assuming that such securities and any securities issuable upon exercise, conversion or exchange of which, or as a dividend upon which, such securities were issued or are issuable, were at no time held by any Affiliate of the Company), as reasonably determined by the Company, upon the advice of counsel to the Company. For the avoidance of doubt, Registrable Securities shall include the Conversion Shares and Warrant Shares issued or issuable upon the conversion or exercise, as applicable, of any Notes or Warrants issued in each of Tranche 1, Tranche 2 and Tranche 3 under the Purchase Agreement, subject to the terms of this Agreement.
“Registration Statement” means any registration statement required to be filed hereunder pursuant to Section 2(a) and any additional registration statements contemplated by Section 2(c) or Section 3(c), including (in each case) the Prospectus, amendments and supplements to any such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in any such registration statement.
“Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
| -3- |
“Selling Stockholder Questionnaire” shall have the meaning set forth in Section 3(a).
“SEC Guidance” means (i) any publicly-available written or oral guidance of the Commission staff, or any comments, requirements or requests of the Commission staff and (ii) the Securities Act.
2. Shelf Registration.
(a) On or prior to each Filing Date, the Company shall prepare and file with the Commission a Registration Statement covering the resale of all of the Registrable Securities that are not then registered on an effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415. Each Registration Statement filed hereunder shall be on Form S-1 or such other form available to register for resale the Registrable Securities as a secondary offering and shall contain substantially the “Plan of Distribution” attached hereto as Annex A and substantially the “Selling Stockholder” section attached hereto as Annex B; provided, however, that no Holder shall be required to be named as an “underwriter” without such Holder’s express prior written consent. Subject to the terms of this Agreement, the Company shall use its best efforts to cause a Registration Statement filed under this Agreement (including, without limitation, under Section 3(c)) to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event no later than the applicable Effectiveness Date, and shall use its best efforts to keep such Registration Statement continuously effective under the Securities Act until the date that all Registrable Securities covered by such Registration Statement (i) have been sold, thereunder or pursuant to Rule 144, or (ii) may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144 as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Transfer Agent and the affected Holders (the “Effectiveness Period”). The Company shall telephonically request effectiveness of a Registration Statement as of 5:00 p.m. Eastern Time on a Trading Day. The Company shall promptly notify the Holder by facsimile or e-mail as promptly as possible after, and in any event, no later than 5:00 p.m. New York City time on the next Trading Day following the date, any Registration Statement is declared effective and shall simultaneously provide the Holders by e-mail with copies of any related Prospectus to be used in connection with the sale or other disposition of the securities covered thereby.
(b) Notwithstanding the registration obligations set forth in Section 2(a), if the Commission informs the Company that the offering of some or all of the Registrable Securities in a Registration Statement (alone or together with previously or subsequently registered shares of Common Stock) is not eligible to be made on a delayed or continuous basis under the provisions of Rule 415 under the Securities Act of 1933, as amended, or requires one or more Holders to be named as an “underwriter,” the Company shall promptly inform the Holders thereof and use its best efforts to persuade the Commission that the offering contemplated by the 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 the Holder is not an “underwriter,” in accordance with the SEC Guidance, including, without limitation, Compliance and Disclosure Interpretation 612.09. If the Company is unsuccessful in such efforts, it agrees to use its reasonable best efforts to file amendments to the Registration Statement as required by the Commission, covering the maximum number of Registrable Securities permitted to be registered by the Commission, on Form S-1 or such other form available to register for resale the Registrable Securities as a secondary offering.
| -4- |
(c) Notwithstanding any other provision of this Agreement, if the Commission or any SEC Guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular Registration Statement as a secondary offering (and notwithstanding that the Company used reasonable efforts to advocate with the Commission for the registration of all or a greater portion of Registrable Securities), unless otherwise directed in writing by a Holder as to its Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement will be reduced as follows:
| a. | First, the Company shall reduce or eliminate any securities to be included other than Registrable Securities; and |
| b. | Second, the Company shall reduce Registrable Securities represented by Conversion Shares; and |
| c. | Third, the Company shall reduce Registrable Securities represented by Warrant Shares. |
Any reduction among Holders within each category of Registrable Securities shall be made pro rata based on the number of Registrable Securities requested to be registered by each Holder within such category, unless otherwise agreed in writing by the each affected Holder.
In the event of a cutback hereunder, the Company shall give the Holders at least five (5) Trading Days prior written notice along with the calculations as to such Holder’s allotment. In the event the Company amends a Registration Statement in accordance with the foregoing, the Company will use its best efforts to file with the Commission, as promptly as allowed by Commission or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements on Form S-1 or such other form available to register for resale those Registrable Securities that were not registered for resale on such Registration Statement, as amended.
| -5- |
(d) Notwithstanding anything to the contrary contained herein, in no event shall the Company be permitted to name any Holder or affiliate of a Holder as an underwriter without the prior written consent of such Holder.
(e) Notwithstanding anything to the contrary herein, the registration of Registrable Securities pursuant to this Agreement shall not require the Company to issue, or any Holder to acquire, any shares of Common Stock in violation of the Nasdaq limitations, beneficial ownership blocker, exchange cap or change-in-control blocker set forth in the Purchase Agreement, the Notes or the Warrants. The parties acknowledge that the number of Registrable Securities registered for resale may be calculated without regard to such limitations, but any actual issuance of Conversion Shares or Warrant Shares shall remain subject to the limitations set forth in the Purchase Agreement, the Notes and the Warrants.
3. Registration Procedures.
In connection with the Company’s registration obligations hereunder, the Company shall:
(a) Not less than five (5) Trading Days prior to the filing of each Registration Statement and not less than one (1) Trading Day prior to the filing of any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated or deemed to be incorporated therein by reference), the Company shall (i) furnish to each Holder copies of all such documents proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the review of such Holders, and (ii) cause its officers and directors, counsel and independent registered public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel to each Holder, to conduct a reasonable investigation within the meaning of the Securities Act. The Company shall not file a Registration Statement or any such Prospectus or any amendments or supplements thereto to which the Holders of a majority of the Registrable Securities shall reasonably object in good faith, provided that, the Company is notified of such objection in writing no later than five (5) Trading Days after the Holders have been so furnished copies of a Registration Statement or one (1) Trading Day after the Holders have been so furnished copies of any related Prospectus or amendments or supplements thereto. Each Holder agrees to furnish to the Company a completed questionnaire in the form attached to this Agreement as Annex C (a “Selling Stockholder Questionnaire”) on a date that is not less than five (5) Trading Days prior to the Filing Date or by the end of the second (2nd) Trading Day following the date on which such Holder receives draft materials in accordance with this Section.
| -6- |
(b) (i) Prepare and file with the Commission such amendments, including post-effective amendments, to a Registration Statement and the Prospectus used in connection therewith as may be necessary to keep a Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the Commission such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities, (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented or amended, to be filed pursuant to Rule 424, (iii) respond as promptly as reasonably possible to any comments received from the Commission with respect to a Registration Statement or any amendment thereto and provide as promptly as reasonably possible to the Holders true and complete copies of all correspondence from and to the Commission relating to a Registration Statement (provided that, the Company shall excise any information contained therein which would constitute material non-public information regarding the Company or any of its Subsidiaries), and (iv) comply in all material respects with the applicable provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by a Registration Statement during the applicable period in accordance (subject to the terms of this Agreement) with the intended methods of disposition by the Holders thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented.
(c) If during the Effectiveness Period, the number of Registrable Securities at any time exceeds 100% of the number of shares of Common Stock then registered in a Registration Statement, then the Company shall file, as soon as reasonably practicable, an additional Registration Statement covering the resale by the Holders of not less than the number of such Registrable Securities.
(d) Notify the Holders of Registrable Securities to be sold (which notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made) as promptly as reasonably possible (and, in the case of (i)(A) below, not less than one (1) Trading Day prior to such filing) and (if requested by any such Person) confirm such notice in writing no later than one (1) Trading Day following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to a Registration Statement is proposed to be filed, (B) when the Commission notifies the Company whether there will be a “review” of such Registration Statement and whenever the Commission comments in writing on such Registration Statement, and (C) with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional information, (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose, (v) of the occurrence of any event or passage of time that makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in a Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to a Registration Statement, Prospectus or other documents so that, in the case of a Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and (vi) of the occurrence or existence of any pending corporate development with respect to the Company that the Company believes may be material and that, in the determination of the Company, makes it not in the best interest of the Company to allow continued availability of a Registration Statement or Prospectus, provided, however, in no event shall any such notice contain any information which would constitute material, non-public information regarding the Company or any of its Subsidiaries.
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(e) Use its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order stopping or suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.
(f) Furnish to each Holder, without charge, at least one conformed copy of each such Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent requested by such Person, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission; provided, that any such item which is available on the EDGAR Next system (or successor thereto) need not be furnished in physical form.
(g) Subject to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto, except after the giving of any notice pursuant to Section 3(d).
(h) Prior to any resale of Registrable Securities by a Holder, or from time to time as requested by the Holder, use its reasonable best efforts to register or qualify or cooperate with the selling Holders in connection with the registration or qualification (or exemption from the Registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder reasonably requests in writing, to keep each registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by each Registration Statement, provided that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction.
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(i) If requested by a Holder, cooperate with such Holder to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holder may request.
(j) Upon the occurrence of any event contemplated by Section 3(d), as promptly as reasonably possible under the circumstances taking into account the Company’s good faith assessment of any adverse consequences to the Company and its shareholders of the premature disclosure of such event, prepare a supplement or amendment, including a post-effective amendment, to a Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither a Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Holders in accordance with clauses (iii) through (vi) of Section 3(d) above to suspend the use of any Prospectus until the requisite changes to such Prospectus have been made, then the Holders shall suspend use of such Prospectus. The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company shall be entitled to exercise its right under this Section 3(j) to suspend the availability of a Registration Statement and Prospectus for a period not to exceed 60 calendar days (which need not be consecutive days) in any 12-month period.
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(k) Otherwise use reasonable best efforts to comply with all applicable rules and regulations of the Commission under the Securities Act and the Exchange Act, including, without limitation, Rule 172 under the Securities Act, file any final Prospectus, including any supplement or amendment thereof, with the Commission pursuant to Rule 424 under the Securities Act, promptly inform the Holders in writing if, at any time during the Effectiveness Period, the Company does not satisfy the conditions specified in Rule 172 and, as a result thereof, the Holders are required to deliver a Prospectus in connection with any disposition of Registrable Securities and take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder.
(l) The Company may require each selling Holder to furnish to the Company a certified statement as to the number of shares of Common Stock beneficially owned by such Holder and, if required by the Commission, the natural persons thereof that have voting and dispositive control over the shares.
4. Registration Expenses. All fees and expenses incident to the performance of or compliance with, this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses of the Company’s counsel and independent registered public accountants) (A) with respect to filings made with the Commission, (B) with respect to filings required to be made with any Trading Market on which the Common Stock is then listed for trading, and (C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in writing (including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such insurance, (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement and (vii) reasonable fees and expenses of one counsel to the Holders (as selected by the Requisite Holders) and the Holders’ reasonable expenses in connection with the registration. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. In no event shall the Company be responsible for any broker or similar commissions of any Holder or, except to the extent provided for in the Transaction Documents, any legal fees or other costs of the Holders.
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5. Indemnification.
(a) Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, members, partners, agents, and 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 each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, members, managers, shareholders, partners, agents and 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 each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading or (2) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Agreement, except to the extent, but only to the extent, that (i) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement, such Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto for this purpose) or (ii) in the case of an occurrence of an event of the type specified in Section 3(d)(iii)-(vi), the use by such Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of the Advice contemplated in Section 6(d). The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified person and shall survive the transfer of any Registrable Securities by any of the Holders in accordance with Section 6(h).
(b) Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, to the extent arising out of or based solely upon: any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading (i) to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company expressly for inclusion in such Registration Statement or such Prospectus or (ii) to the extent, but only to the extent, that such information relates to such Holder’s information provided in the Selling Stockholder Questionnaire or the proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement (it being understood that the Holder has approved Annex A hereto for this purpose), such Prospectus or in any amendment or supplement thereto. In no event shall the liability of a selling Holder be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such Holder in connection with any claim relating to this Section 5 and the amount of any damages such Holder has otherwise been required to pay by reason of such untrue statement or omission) received by such Holder upon the sale of the Registrable Securities included in the Registration Statement giving rise to such indemnification obligation.
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(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof, provided that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have materially and adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses, (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding, or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and counsel to the Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of no more than one separate counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.
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Subject to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten (10) Trading Days of written notice thereof to the Indemnifying Party, provided that the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) not to be entitled to indemnification hereunder.
(d) Contribution. If the indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this Agreement, any reasonable attorneys’ or other fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.
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The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. In no event shall the contribution obligation of a Holder of Registrable Securities be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such Holder in connection with any claim relating to this Section 5 and the amount of any damages such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission) received by it upon the sale of the Registrable Securities giving rise to such contribution obligation.
The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.
6. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by a Holder of any of their respective obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement shall be entitled to specific performance of its rights under this Agreement. Each of the Company and each Holder agrees that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate.
(b) Discontinued Disposition. By its acquisition of Registrable Securities, each Holder agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(d)(iii) through (vi), such Holder will forthwith discontinue disposition of such Registrable Securities under a Registration Statement until it is advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed. The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable.
(c) Piggy-Back Registrations. If, at any time during the Effectiveness Period, there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the Company’s stock option or other employee benefit plans, then the Company shall deliver to each Holder a written notice of such determination and, if within five (5) days after the date of the delivery of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Holder requests to be registered; provided, however, that the Company shall not be required to register any Registrable Securities pursuant to this Section 6(e) that are eligible for resale pursuant to Rule 144 (without volume restrictions or current public information requirements) promulgated by the Commission pursuant to the Securities Act or that are the subject of a then effective Registration Statement that is available for resales or other dispositions by such Holder.
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(d) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Holders of [__]% or more of the then outstanding Registrable Securities (for purposes of clarification, this includes any Registrable Securities issuable upon exercise or conversion of any Security), provided that, if any amendment, modification or waiver disproportionately and adversely impacts a Holder (or group of Holders), the consent of such disproportionately impacted Holder (or group of Holders) shall be required. If a Registration Statement does not register all of the Registrable Securities pursuant to a waiver or amendment done in compliance with the previous sentence, then the number of Registrable Securities to be registered for each Holder shall be reduced pro rata among all Holders and each Holder shall have the right to designate which of its Registrable Securities shall be omitted from such Registration Statement. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of a Holder or some Holders and that does not directly or indirectly affect the rights of other Holders may be given only by such Holder or Holders of all of the Registrable Securities to which such waiver or consent relates; provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the first sentence of this Section 6(d). No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration also is offered to all of the parties to this Agreement.
(e) Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as set forth in the Purchase Agreement.
(f) Additional Holders; Successors and Assigns. Each Person that executes and delivers a joinder to the Purchase Agreement and as result obtains any Registrable Securities shall be entitled to the benefits of this Agreement by executing and delivering a joinder hereto in the Form of Annex D, upon which such Person shall be considered a “Holder” for all purposes hereunder. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. The Company may not assign (except by merger) its rights or obligations hereunder without the prior written consent of all of the Holders of the then outstanding Registrable Securities. Each Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under Section 5.5 of the Purchase Agreement.
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(g) No Inconsistent Agreements. Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. Except as set forth on Schedule 6(g), neither the Company nor any of its Subsidiaries has previously entered into any agreement granting any registration rights with respect to any of its securities to any Person that have not been satisfied in full.
(h) Execution and Counterparts. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.
(i) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined in accordance with the provisions of the Purchase Agreement.
(j) Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any other remedies provided by law.
(k) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
(l) Headings. The headings in this Agreement are for convenience only, do not constitute a part of the Agreement and shall not be deemed to limit or affect any of the provisions hereof.
********************
(Signature Pages Follow)
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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.
| CELULARITY INC. | ||
| By: | ||
| Name: | Robert J. Hariri, MD, PhD | |
| Title: | Chairman and Chief Executive Officer | |
[SIGNATURE PAGE OF HOLDERS FOLLOWS]
[SIGNATURE PAGE OF PURCHASER]
Name of Purchaser: Philip & Daniele Barach Family Trust
Signature of Authorized Signatory of Purchaser: __________________________
Name of Authorized Signatory: Philip A. Barach
Title of Authorized Signatory: Trustee
[SIGNATURE PAGES CONTINUE]
[Signature Page for Registration Rights Agreement]
[SIGNATURE PAGE OF PURCHASER]
Name of Purchaser:
Signature of Authorized Signatory of Purchaser: __________________________
Name of Authorized Signatory:
Title of Authorized Signatory: __________________________
[SIGNATURE PAGES CONTINUE]
[Signature Page for Registration Rights Agreement]
Annex A
Plan of Distribution
Each Selling Stockholder (the “Selling Stockholders”) of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on The Nasdaq Capital Market or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices. A Selling Stockholder may use any one or more of the following methods when selling securities:
| ● | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; | |
| ● | block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; | |
| ● | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; | |
| ● | an exchange distribution in accordance with the rules of the applicable exchange; | |
| ● | privately negotiated transactions; | |
| ● | settlement of short sales; | |
| ● | in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities at a stipulated price per security; | |
| ● | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; | |
| ● | a combination of any such methods of sale; or | |
| ● | any other method permitted pursuant to applicable law. |
The Selling Stockholders may also sell securities under Rule 144 or any other exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), if available, rather than under this prospectus.
The Selling Stockholders may, from time to time, pledge or grant a security interest in some or all of the securities owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the securities, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of Selling Stockholders to include the pledgee, transferee or other successors in interest as Selling Stockholders under this prospectus. The Selling Stockholders also may transfer the securities in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
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Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2121; and in the case of a principal transaction a markup or markdown in compliance with FINRA Rule 2121.
In connection with the sale of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling Stockholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The aggregate proceeds to the Selling Stockholders from the sale of the securities offered by them will be the purchase price of the securities less discounts or commissions, if any. Each of the Selling Stockholders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of securities to be made directly or through agents. We will not receive any of the proceeds from this offering, except that we may receive proceeds from any cash exercise of Warrants, if and when exercised.
The Selling Stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities.
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The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
We agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
To the extent required, the shares of our securities to be sold, the names of the Selling Stockholders, the respective purchase prices and public offering prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus.
In order to comply with the securities laws of some states, if applicable, the securities may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the securities may not be sold unless they have been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the securities for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the securities by the Selling Stockholders or any other person. We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
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Annex B
SELLING STOCKHOLDERS
The securities being offered by the Selling Stockholders are those issuable to the Selling Stockholders, upon conversion of the Notes and exercise of the Warrants. We are registering the securities in order to permit the Selling Stockholders to offer the shares for resale from time to time. Except for the ownership of the Notes and Warrants and the rights and relationships contemplated by the Purchase Agreement and related Transaction Documents, including any Board designation rights, the Selling Stockholders have not had any material relationship with us within the past three years, other than the issuance by the Company on December 19, 2025 of a $7,000,000 senior secured note, a $3,000,000 note convertible into 1,807,229 shares of Common Stock and warrants to purchase 3,707,658 shares of the Company’s Common Stock.
The table below lists the Selling Stockholders and other information regarding the beneficial ownership of the securities by each of the Selling Stockholders. The second column lists the number of securities beneficially owned by each Selling Stockholder, based on its ownership of the Notes and Warrants, as of ________, 202__, assuming conversion of the Notes and exercise of Warrants held by the Selling Stockholders on that date, without regard to any limitations on conversion or exercise, respectively.
The third column lists the securities being offered by this prospectus by the Selling Stockholders.
In accordance with the terms of a registration rights agreement with the Selling Stockholders, this prospectus generally covers the resale of the maximum number of securities issuable upon conversion of the Notes and exercise of the Warrants, determined as if the outstanding Notes Warrants were converted and exercised in full, respectively, as of the trading day immediately preceding the date this registration statement was initially filed with the SEC, subject to adjustment as provided in the registration rights agreement, without regard to any limitations on the conversion of the Notes and exercise of the Warrants. The fourth column assumes the sale of all of the shares offered by the Selling Stockholders pursuant to this prospectus.
Unless and until we have obtained any stockholder approval required under Nasdaq Listing Rule 5635, we may not issue shares of common stock upon conversion of the Notes, exercise of the Warrants or otherwise pursuant to the Purchase Agreement to the extent such issuance would equal or exceed 19.99% of the number of shares of common stock or voting power outstanding immediately prior to the execution of the Purchase Agreement, calculated in accordance with Nasdaq rules, or would otherwise result in a change of control under Nasdaq Listing Rule 5635. The number of shares in the second column does not reflect these limitations. The Selling Stockholders may sell all, some or none of their shares in this offering. See “Plan of Distribution.”
| Name of Selling Shareholder | Number of shares of Common Stock Owned Prior to Offering | Maximum Number of shares of Common Stock to be Sold Pursuant to this Prospectus | Number of shares of Common Stock Owned After Offering |
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Annex C
CELULARITY INC.
Selling Stockholder Notice and Questionnaire
The undersigned beneficial owner of common stock and shares of common stock issuable upon conversion of notes and exercise of warrants (the “Registrable Securities”) of Celularity Inc., a Delaware corporation (the “Company”), understands that the Company has filed or intends to file with the Securities and Exchange Commission (the “Commission”) a registration statement (the “Registration Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the Registrable Securities, in accordance with the terms of the Registration Rights Agreement (the “Registration Rights Agreement”) to which this document is annexed. A copy of the Registration Rights Agreement is available from the Company upon request at the address set forth below. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.
Certain legal consequences arise from being named as a selling stockholder in the Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling stockholder in the Registration Statement and the related prospectus.
NOTICE
The undersigned beneficial owner (the “Selling Stockholder”) of Registrable Securities hereby elects to include the Registrable Securities owned by it in the Registration Statement.
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The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate:
QUESTIONNAIRE
| 1. | Name. |
| (a) | Full Legal Name of Selling Stockholder |
| 2. | Address for Notices to Selling Stockholder: |
| Telephone: ______________________________________________________________________________________ |
| E-Mail: _________________________________________________________________________________________ |
| Contact Person: __________________________________________________________________________________ |
| 3. | Organizational Structure. Please indicate or (if applicable) describe how the Selling Stockholder is organized. |
| (a) | Is the Selling Stockholder a natural person (If “yes,” skip to question 4)? |
Yes ☐ No ☐
| (b) | Is the Selling Stockholder a reporting company under the Securities Exchange Act of 1934, as amended? |
Yes ☐ No ☐
| (c) | Is the Selling Stockholder a majority-owned subsidiary of a reporting company under the Exchange Act? |
Yes ☐ No ☐
| (d) | Is the Selling Stockholder a registered investment company under the Investment Company Act of 1940? |
Yes ☐ No ☐
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| (e) | Legal Description of Selling Stockholder: |
Please describe the type of legal entity that the Selling Stockholder is (e.g., corporation, partnership, limited liability company, trust, etc.);
| (f) | Please indicate whether the Selling Stockholder is controlled by another entity (such as a parent company) or is controlled by a natural person. |
Controlled by: Natural Person(s) ☐ Entity ☐
If you checked “Natural Person(s)”:
Please indicate the name of the natural person(s) who has voting or investment control over the shares held by the Selling Stockholder and the position of control that person(s) holds in or over the Selling Stockholder.
Name of natural person(s):_____________________________________
Controlling position in Selling Stockholder (e.g., managing member, manager, trustee, CEO, President, etc.): ______________________________________________________
If you checked “Entity”:
Please indicate the name and type of entity that controls the Selling Stockholder.
Name of controlling entity:
____________________________________
Type of legal entity (e.g., corporation, partnership, limited liability company, etc.): ______________________________________________
Is this entity controlled by another entity (such as a parent company) or is it controlled by a natural person?
Controlled by: Natural Person(s) ☐ Entity* ☐
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If you checked “Natural Person(s)”:
Name of natural person(s) who controls this entity and has voting or investment control over the shares held by the Selling Stockholder:
| _________________________________________________________________ |
Natural person’s position in this entity (e.g., managing member, manager, trustee, CEO, President, etc.)
| __________________________________________________________________ |
*If you answered “Entity” here, please repeat step (f) for each controlling entity moving up the corporate chain of control until you reach the level at which there is only a natural person or persons in control (e.g., Acme LLC is controlled by ABC Corp., its member, which is controlled by X shareholder, its controlling stockholder). List the name of the entities along that chain of control, the types of entity each is, the natural person(s) in control of the ultimately controlling entity, and his or her control position over that entity in the lines below:
| ____________________________________________________________________ | |
| 4. | Broker-Dealer Status: |
| (a) | Are you a broker-dealer? |
Yes ☐ No ☐
| (b) | If “yes” to Section 4(a), did you receive your Registrable Securities as compensation for investment banking services to the Company? |
Yes ☐ No ☐
| Note: | If “no” to Section 4(b), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement. |
| (c) | Are you an affiliate of a broker-dealer? |
Yes ☐ No ☐
| (d) | If you are an affiliate of a broker-dealer, do you certify that you purchased the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities? |
Yes ☐ No ☐
| Note: | If “no” to Section 4(d), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement. |
| 5. | Beneficial Ownership of Securities of the Company Owned by the Selling Stockholder. |
Except as set forth below in this Item 4, the undersigned is not the beneficial or registered owner of any securities of the Company other than the securities issuable pursuant to the Purchase Agreement.
| (a) | Type and Amount of other securities beneficially owned by the Selling Stockholder. This should include all securities held by the Selling Stockholder (no matter when such securities were acquired) including, but not limited to, common stock, preferred stock, convertible debt, warrants and options, as applicable, together with vesting schedules, conversion prices and exercise prices, if any. |
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| 6. | Legal Proceedings with the Company. Is the Company a party to any pending legal proceeding in which the Selling Stockholder is named as an adverse party? |
Yes ☐ No ☐
State any exceptions here:
7. Relationships with the Company:
Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.
State any exceptions here:
8. Agreements with Underwriters or Broker-Dealers:
Except as set forth below, the undersigned has not entered into any written or oral agreements, understandings or arrangements with any underwriter or broker- dealer regarding the sale of the Registrable Securities.
State any exceptions here:
The undersigned agrees to promptly notify the Company of any material inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Registration Statement remains effective; provided, that the undersigned shall not be required to notify the Company of any changes to the number of securities held or owned by the undersigned or its affiliates.
By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 8 and the inclusion of such information in the Registration Statement and the related prospectus and any amendments or supplements thereto. The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus and any amendments or supplements thereto.
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IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.
| Date: | ||||
| Beneficial Owner: | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
PLEASE EMAIL A .PDF COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO:
SHEPPARD MULLIN RICHTER & HAMPTON LLP
ATTENTION: JEFFREY FESSLER, ESQ.
EMAIL: JFESSLER@SHEPPARDMULLIN.COM
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Annex D
CELULARITY INC.
JOINDER TO REGISTRATION RIGHTS AGREEMENT
The undersigned hereby agrees to be legally bound by the Registration Rights Agreement dated as of August [•], 2026 (the “Agreement”) by and among Celularity Inc., a Delaware corporation (the “Company”) and certain stockholders of the Company party thereto. All capitalized terms used and not defined herein shall have the meanings ascribed to them in the Agreement.
Upon the signature of the undersigned, the undersigned shall be deemed to be a party to the Agreement and a Holder for all purposes under the Agreement.
| Date: | ||||
| [___________________] | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
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Exhibit 10.4
BOARD RIGHTS AGREEMENT
This Board Rights Agreement (this “Agreement”) is entered into as of September 23, 2026 (the “Effective Date”), by and between Celularity Inc., a Delaware corporation (the “Company”), and the Philip & Daniele Barach Family Trust, a trust formed under the laws of California (the “Trust”; the Company and the Trust are referred to herein individually as a “Party” and collectively as the “Parties”).
WITNESSETH:
WHEREAS, the Company, the Trust and the other investors party thereto (collectively, the “Other Investors”; the Trust and the Other Investors, collectively, the “Investors”) are parties to that certain Securities Purchase Agreement dated as of September 23, 2026, by and among the Company, the Trust and the Other Investors (as amended, supplemented or otherwise modified, the “Purchase Agreement”; capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Purchase Agreement), pursuant to which the Company may issue and sell senior secured convertible promissory Notes in an aggregate principal amount of up to $25,000,000, together with related Warrants; and
WHEREAS, in connection with the purchase of the Notes by the Investors and as a material inducement to such purchase, the Company has agreed that its Board will consist of five (5) directors comprised of persons designated pursuant to the terms hereof, and that the Company will prepare and file with the Securities and Exchange Commission a Schedule 14f-1 information statement (the “Schedule 14f-1 Information Statement”) and take the other actions required to effectuate such change in Board composition, in each case on the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties agree as follows:
1. Board Composition; Trust Directors
Effective upon the first issuance of Notes under the Purchase Agreement, and thereafter until the termination of this Agreement, the Company’s board of directors (the “Board”) shall consist of five (5) directors, comprised of: (i) Bob Hariri and Peter Diamandis (collectively, the “Incumbent Directors”); (ii) two (2) directors designated by the Trust (the “Trust Directors”); and (iii) one (1) director nominated by the Incumbent Directors and reasonably acceptable to the Trust Directors (the “Independent Director”). The initial Trust Director shall be Philip Barach, and the second Trust Director and the initial Independent Director shall be identified and appointed in accordance with Section 2. The Company shall take all necessary corporate action, subject to applicable law, Nasdaq rules and the Company’s certificate of incorporation and by-laws, to cause the Board to conform to the composition required by this Section 1.
2. Appointment; Nomination; Board Action
The Company shall take all necessary corporate action, subject to applicable law, Nasdaq rules and the Company’s certificate of incorporation and by-laws, to cause (i) the Trust Directors to be appointed to the Board as soon as practicable following the first issuance of Notes and in compliance with Rule 14f-1 under the Exchange Act and (ii) the Independent Director, nominated by the Incumbent Directors and reasonably acceptable to the Trust Directors, to be named and appointed to the Board as soon as practicable following the first issuance of Notes and in compliance with Rule 14f-1 under the Exchange Act, in each case no earlier than ten (10) days after the mailing of the Schedule 14f-1 Information Statement to stockholders and, with respect to the Independent Director, in no event later than thirty (30) days after the first issuance of Notes. For the avoidance of doubt, the appointment of the Trust Directors and the Independent Director shall not be a condition precedent to the closing of the purchase and sale of the Notes under the Purchase Agreement. Such actions may include increasing or decreasing the size of the Board, accepting resignations, filling vacancies and appointing the applicable designee or nominee to the Board.
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As soon as reasonably practicable after the date hereof, the Trust shall designate the second Trust Director, and the Company shall use its best efforts to present the identity of the proposed Independent Director to the Trust Directors then in office (or, if there are such Trust Directors in office yet, to the Trust) for approval.
Following the appointment of the Trust Directors and the Independent Director, the Company shall include each of the Trust Directors and the Independent Director in the Company’s slate of nominees for election to the Board at each applicable annual or special meeting of stockholders at which the applicable class of directors is up for election. The Company shall recommend that stockholders vote in favor of the election of each such nominee, solicit proxies in favor of their election in the same manner and to the same extent as the Company solicits proxies in favor of the Company’s other nominees, and otherwise support the election of each such nominee in a manner no less favorable than the Company supports its other nominees.
The Company shall not take any action to remove any Trust Director from the Board without Cause unless requested in writing by the Trust. The Company shall not take any action to remove the Independent Director from the Board without Cause unless requested in writing by the Incumbent Directors. “Cause” means (i) a final, non-appealable conviction of, or plea of guilty or nolo contendere to, a felony or crime involving fraud, dishonesty or moral turpitude, willful misconduct that is materially injurious to the Company, or (ii) a determination by the directors of the Company other than the applicable Trust Director or Independent Director (the “Disinterested Directors”), supported by an opinion of outside counsel, that such director is prohibited from serving as a director under applicable law or Nasdaq rules.
3. Schedule 14f-1 Filing
The Company shall prepare and file with the Securities and Exchange Commission, promptly following (or concurrently with) the first issuance of Notes, a Schedule 14f-1 Information Statement in compliance with Rule 14f-1 under the Exchange Act and Section 14(f) of the Exchange Act.
The Company shall mail or otherwise furnish the Schedule 14f-1 Information Statement to the Company’s stockholders of record promptly following its filing with the Securities and Exchange Commission.
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The Company shall use commercially reasonable efforts to take all actions necessary to effectuate the change in the composition of the Board as promptly as practicable and in compliance with Rule 14f-1 under the Exchange Act.
4. Interim Covenants
Until the Board contains all five (5) directors in the composition required by Section 1, including the Incumbent Directors, the Trust Directors and the Independent Director, the Company covenants that:
(i) The Company shall not use the proceeds from the issuance of the Notes for anything except: (a) payroll; (b) payments in the ordinary course to creditors not to exceed $100,000 to any one creditor; (c) specific payments listed on Schedule A attached to this Agreement; or (d) payments approved in advance in writing by the Trust; and
(ii) The Company shall not enter into any contract or agreement that would involve the potential expenditure of more than $100,000 without the prior written consent of the Trust.
The restrictions set forth in this Section 4 shall automatically terminate upon the appointment of all directors in compliance with the required Board composition set forth in Section 1.
5. Observer Rights.
For so long as this Agreement remains in effect, if and to the extent that any Trust Director is not a duly appointed or elected director of the Company, the Trust shall be entitled to designate at any time and from time to time one (1) non-voting observer reasonably acceptable to the Company (an “Observer”) to attend each and any meeting of the Board and any committee and subcommittee of the Board. The Company shall give to the Observer copies of all notices, minutes, consents and other materials and information given to the directors of the Company in connection with any such meeting at the same time that such notices, minutes, consents or other materials or information are given to such directors. A majority of the Board or committee or subcommittee, as applicable, shall have the right to exclude the Observer from portions of meetings of the Board or committee or subcommittee or omit to provide the Observer with certain information if such members of the Board in its good faith discretion, including without limitation, based on the advice of Company counsel, that such exclusion or omission may be necessary in order to (a) preserve the Company’s attorney-client privilege, (b) fulfill the Company’s obligations with respect to confidential or proprietary information of third parties or (c) to avoid a potential breach of the fiduciary obligations of the Board to the Company and/or its stockholders.
6. Reimbursement; Expenses; Compensation
Each Trust Director and the Independent Director shall be entitled to the same non-employee director compensation, including cash retainers, equity compensation and expense reimbursement, if any, as is provided to similarly situated non-employee directors of the Company pursuant to the Company’s non-employee director compensation policy as in effect from time to time, unless otherwise agreed in writing by the Company and the applicable Trust Director or Independent Director.
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7. Replacement; Vacancies; Qualifications
The Company shall be required to remove or replace any Trust Director at any time upon written notice by the Trust to the Company. In the event that any Trust Director ceases to serve as a director for any reason, including death, disability, resignation, removal, disqualification or failure to be elected, the applicable designating party shall have the right to designate a replacement Trust Director, and the Company shall take all necessary corporate action, subject to applicable law, Nasdaq rules and the Company’s certificate of incorporation and by-laws, to cause such replacement Trust Director to be appointed to the Board as promptly as practicable. In the event that the Independent Director ceases to serve as a director for any reason, the Incumbent Directors shall have the right to nominate a replacement Independent Director reasonably acceptable to the Trust Directors, and the Company shall take all necessary corporate action, subject to applicable law, Nasdaq rules and the Company’s certificate of incorporation and by-laws, to cause such replacement Independent Director to be appointed to the Board as promptly as practicable. Any replacement Trust Director shall be subject to the same qualification and approval standards set forth in Section 1, and any replacement Independent Director shall be subject to the same nomination and approval standards set forth in Section 1. If the Company does not approve a proposed replacement Trust Director in accordance with Section 1, the applicable designating party shall have the right to propose an alternative replacement Trust Director, and if the Trust Directors do not approve a proposed replacement Independent Director, the Incumbent Directors shall have the right to propose an alternative replacement Independent Director.
8. Term
This Agreement shall commence on the Effective Date and continue until the earliest to occur of: (a) the date on which no Notes remain outstanding or (b) the consummation of a Change of Control of the Company.
9. No Prohibition on Investor Activities
Nothing in this Agreement shall (a) limit any Investor’s or its affiliates’ ability to acquire, hold, vote, or dispose of securities of the Company, subject to applicable law; (b) prohibit any Investor from engaging in ordinary-course investment activities or engaging in communications with the Company’s officers and directors; or (c) require any Investor to vote or act in any particular manner with respect to the Company’s securities. Nothing in this Agreement shall restrict the rights of any Investor and its affiliates under the Purchase Agreement, the Notes, the Warrants or any other Transaction Document.
10. Remedies; Equitable Relief
The Parties acknowledge that a breach of Sections 2, 3, 4, 5 or 7 may cause irreparable harm to the Trust for which monetary damages would be an inadequate remedy. Accordingly, the Trust shall be entitled to seek equitable relief, including injunction and specific performance, in addition to any other remedies available at law or in equity, without the necessity of posting bond or the proof of actual damages.
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11. Miscellaneous
(a) Entire Agreement. This Agreement constitutes the entire understanding of the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous understandings, agreements, and representations, whether written or oral.
(b) Amendments; Waivers. No amendment, modification, or waiver of any provision of this Agreement shall be effective unless in writing and signed by the Company, with approval by a majority of the Disinterested Directors or a special committee of Disinterested Directors, and the Trust.
(c) Assignment. This Agreement and the rights and obligations hereunder may not be assigned by the Trust without the prior written consent of the Company and any purported or attempted assignment without such consent shall be void and of no force and effect; provided that the Trust may assign its rights hereunder to any permitted transferee of Notes, Conversion Shares, Warrants or Warrant Shares in accordance with the Purchase Agreement and the other Transaction Documents if such transferee agrees in writing to be bound by this Agreement. The Company may not assign this Agreement without the Trust’s prior written consent.
(d) Notices. All notices shall be in writing and delivered by hand, by nationally recognized overnight courier, or by email (with confirmation of transmission), to the addresses as a Party may designate in writing. Notices shall be deemed given when received.
(e) Governing Law; Jurisdiction; Jury Waiver. This Agreement shall be governed by and construed under the laws of the State of Delaware, without regard to conflicts of law principles. Each Party irrevocably submits to the exclusive jurisdiction of the state and federal courts located in New Castle County, Delaware for any dispute arising out of or relating to this Agreement and waives any objection to venue or forum. EACH PARTY HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY TO THE FULLEST EXTENT PERMITTED BY LAW.
(f) Severability. If any term of this Agreement is held invalid or unenforceable, such term shall be enforced to the maximum extent permissible and the remaining terms shall remain in full force and effect.
(g) Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together constitute one instrument. Signatures delivered by electronic transmission shall be deemed original signatures.
(h) No Third-Party Beneficiaries. This Agreement is solely for the benefit of the Parties and their permitted assigns and does not confer any rights upon any other person or entity.
(i) Interpretation. The headings are for convenience only and shall not affect interpretation. “Including” means “including without limitation.”
(j) Costs and Fees. Each Party shall bear its own costs and expenses in connection with the negotiation and execution of this Agreement.
(k) Independent Status. Nothing herein shall be construed to create a partnership, joint venture, or agency relationship between the Parties.
[signature page follows]
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IN WITNESS WHEREOF, the Parties have executed this Board Rights Agreement as of the Effective Date.
| CELULARITY INC. | ||
| By: | ||
| Name: | Robert J. Hariri, MD, PhD | |
| Title: | CEO | |
| TRUST | ||
| PHILIP & DANIELE BARACH FAMILY TRUST | ||
| By: | ||
| Name: | Philip A. Barach | |
| Title: | Trustee | |
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SCHEDULE A
Specific Payments
The following specific payments are approved for purposes of Section 4(i)(c):
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Exhibit 10.5
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT (the “Agreement”), dated as of September 23, 2026, by and among Celularity Inc., a Delaware corporation (the “Company”), the purchasers identified on the signature pages hereto (each, a “Purchaser” and collectively, the “Purchasers”), and Philip Barach, as collateral agent (the “Collateral Agent”).
WITNESSETH:
WHEREAS, the Company and the Purchasers have entered into that certain Securities Purchase Agreement, dated as of September 23, 2026 (as amended, restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”), pursuant to which the Company has agreed to issue and sell to the Purchasers Senior Secured Convertible Promissory Notes in an aggregate principal amount of up to $25,000,000 (each, a “Note” and collectively, the “Notes”);
WHEREAS, the obligations of the Company under the Notes are secured pursuant to that certain Security Agreement, dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Security Agreement”), by and among the Company, its applicable Subsidiaries and the Collateral Agent, as collateral agent for the benefit of the Purchasers;
WHEREAS, the Purchase Agreement provides that all Notes shall be pari passu in right of payment and in all other respects, and no Purchaser shall have any priority over any other Purchaser with respect to the Secured Obligations or any Collateral; and
WHEREAS, the Purchasers desire to set forth their agreement regarding the exercise of their respective rights as secured lenders, including with respect to the appointment of the Collateral Agent, the enforcement of remedies, and the sharing of payments and proceeds, in each case on the terms and conditions set forth herein,
NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE
I
DEFINITIONS AND CONSTRUCTION
Section 1.01. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:
“Agreement” means this Intercreditor Agreement, as it may be amended, restated, supplemented or otherwise modified from time to time.
“Collateral” has the meaning ascribed to such term in the Security Agreement.
| Page 1 |
“Collateral Agent” means Philip Barach, in his capacity as collateral agent under the Transaction Documents, and any successor Collateral Agent appointed pursuant to Section 4.07 of this Agreement.
“Company” has the meaning set forth in the preamble.
“Event of Default” has the meaning ascribed to such term in the Notes.
“Majority Directive” has the meaning ascribed to such term in the Security Agreement.
“Notes” has the meaning set forth in the recitals.
“Outstanding Principal Amount” means, with respect to any Purchaser or all the Purchasers, the aggregate outstanding principal amount of all Notes held by such Purchaser or all Purchasers, as the case may be, at the time of determination.
“Pro Rata Share” means, with respect to any Purchaser, a fraction (expressed as a percentage), the numerator of which is the Outstanding Principal Amount of such Purchaser and the denominator of which is the aggregate Outstanding Principal Amount of all Purchasers.
“Purchase Agreement” has the meaning set forth it the recitals.
“Purchaser” has the meaning set forth in the preamble, and any permitted assignee or transferee thereof that becomes a party to this Agreement in accordance with Section 8.07.
“Requisite Purchasers” means the Purchasers holding more than 50% of the Outstanding Principal Amount of all Notes outstanding at the time such calculation is made.
“Secured Obligations” has the meaning ascribed to such term in the Security Agreement.
“Security Agreement” has the meaning set forth in the recitals.
Section 1.02. Construction. Unless the context otherwise requires: (a) words in the singular include the plural and vice versa; (b) references to Articles, Sections and Exhibits are to articles, sections and exhibits of this Agreement; (c) the words “hereof,” “herein,” “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; (d) the word “including” means “including without limitation”; and (e) references to any agreement or instrument shall mean such agreement or instrument as amended, restated, supplemented or otherwise modified from time to time.
ARTICLE
II
PARI PASSU STATUS; PRO RATA SHARING
Section 2.01. Pari Passu Status. Each Purchaser acknowledges and agrees that: (a) all Notes rank equally and ratably without priority of one over the other in right of payment and in all other respects; (b) all Secured Obligations are secured equally and ratably by the Collateral, without priority of one Purchaser over any other; and (c) no Purchaser has, or shall be deemed to have, any priority, preference or seniority over any other Purchaser with respect to any payment, distribution, Collateral or exercise of rights under the Transaction Documents.
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Section 2.02. Pro Rata Sharing of Payments.
(a) All payments and distributions received by the Company or the Collateral Agent on account of the Secured Obligations (whether received in the ordinary course, upon acceleration, through enforcement of remedies, or otherwise) shall be applied and distributed among the Purchasers pro rata in accordance with their respective Pro Rata Shares.
(b) If any Purchaser shall receive any payment or distribution on account of the Secured Obligations in excess of such Purchaser’s Pro Rata Share of such payment or distribution (a “Disproportionate Payment”), whether through the exercise of any right of setoff, banker’s lien, counterclaim, or otherwise, such Purchaser shall: (i) promptly notify the other Purchasers and the Collateral Agent of such Disproportionate Payment; (ii) hold the amount of such excess in trust for the benefit of the other Purchasers; and (iii) promptly pay over such excess to the Collateral Agent for distribution among the Purchasers in accordance with their respective Pro Rata Shares.
(c) If any excess payment paid over pursuant to Section 2.02(b) is thereafter recovered from the Purchaser that received such payment, the Purchasers that received distributions of such excess from the Collateral Agent shall return their respective Pro Rata Shares of the amount so recovered.
Section 2.03. No Separate Collateral. No Purchaser shall accept or receive any lien, security interest, collateral or guarantee for the benefit of such Purchaser alone as security for the Secured Obligations. Any such lien, security interest, collateral or guarantee received in violation of this Section 2.03 shall be held in trust for the benefit of all Purchasers and shall be promptly delivered to the Collateral Agent to be held as Collateral for the benefit of all Purchasers in accordance with the Security Agreement.
ARTICLE
III
RESTRICTIONS ON ENFORCEMENT
Section 3.01. No Independent Action. No Purchaser shall, individually or acting together with fewer than the Requisite Purchasers:
(a) accelerate the maturity of any Note or declare any Event of Default under any Note;
(b) institute, join in, or commence any legal proceedings against the Company or any of its Subsidiaries with respect to the Secured Obligations, including any action to enforce any Note or any other Transaction Document;
(c) commence, or join with any other creditor in commencing, any insolvency, receivership, bankruptcy, reorganization, arrangement, adjustment, composition or similar proceeding against the Company or any of its Subsidiaries;
(d) direct the Collateral Agent to take any enforcement action under the Security Agreement or exercise any rights or remedies with respect to the Collateral;
(e) exercise any right of setoff, recoupment, banker’s lien or counterclaim against the Company with respect to the Secured Obligations; or
(f) take any other action to enforce or collect upon any of the Secured Obligations or to realize upon any Collateral.
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Section 3.02. Requisite Purchaser Direction Required. Any action described in Section 3.01 may only be taken upon the prior written consent or direction of the Requisite Purchasers, given in accordance with this Agreement. Any such direction to the Collateral Agent shall constitute a Majority Directive as defined in the Security Agreement.
Section 3.03. Standstill. Each Purchaser agrees that, upon the occurrence of an Event of Default, it shall not take any of the actions described in Section 3.01 for a period of ninety (90) days following written notice of such Event of Default to all Purchasers (the “Standstill Period”), unless the Requisite Purchasers have directed that such action be taken during such period. In the event the Requisite Purchasers are diligently and in good faith discussing the appropriate actions to take but have not come to a consensus on the substance of a Majority Directive by the end of such 90-day period, the Standstill Period will be automatically extended for an additional forty five (45) days to allow the Requisite Purchasers to deliver such Majority Directive,
Section 3.04. Cooperation. Each Purchaser shall cooperate in good faith with the other Purchasers and the Collateral Agent in connection with any enforcement action authorized by the Requisite Purchasers, including providing such consents, instructions and information as may be reasonably necessary to effect such enforcement action.
ARTICLE
IV
COLLATERAL AGENT
Section 4.01. Appointment and Acceptance of Authority. (a) Each Purchaser hereby appoints Philip Barach as Collateral Agent under the Security Agreement and hereby authorizes him, as the Collateral Agent, to take such actions on behalf of the Purchasers under the Security Agreement,this Agreement, and the other Transaction Documents and to exercise such powers as are delegated to the Collateral Agent by the terms thereof and hereof, together with such powers as are reasonably incidental thereto. The Collateral Agent shall act only upon the written direction of the Requisite Purchasers in a Majority Directive, except as otherwise expressly provided in the Security Agreement, this Agreement or any other Transaction Document. Each Purchaser hereby acknowledges that Philip Barach is a trustee of Philip & Daniele Barach Family Trust, which is a Purchaser under the Purchase Agreement.
(b) Philip Barach hereby accepts the appointment by the Purchasers as Collateral Agent and agrees to perform the Collateral Agent’s duties, obligations and responsibilities as set forth herein and the other Transaction Documents.
Section 4.02. Limitation of Liability. The Collateral Agent shall not be liable for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever suffered by any Purchaser resulting from any action taken or omitted to be taken by him under or in connection with this Agreement, the Security Agreement or any other Transaction Document, except for liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements caused directly by his own gross negligence or willful misconduct as finally determined by a court of competent jurisdiction. The Collateral Agent shall not be deemed to have knowledge of any Event of Default unless and until he has received written notice thereof from a Purchaser or the Company.
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Section 4.03. Reliance. The Collateral Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, posting or other distribution) believed by him in good faith to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Collateral Agent may also rely upon any statement made to him orally or by telephone and believed by him in good faith to have been made by the proper Person, and shall not incur any liability for relying thereon.
Section 4.04. Delegation. The Collateral Agent may perform any and all of hiss duties and exercise his rights and powers hereunder, under the Security Agreement or any other Transaction Document by or through any one or more sub-agents appointed by the Collateral Agent. The Collateral Agent and any such sub-agent may perform any and all of the Collateral Agent’s duties and exercise any and all of the Collateral Agent’s rights and powers by or through his or their respective agents and attorneys-in-fact. The provisions of this Article IV shall apply to any such sub-agent and to the agents and attorneys-in-fact of the Collateral Agent and any such sub-agent.
Section 4.05. Indemnification. Each Purchaser shall indemnify the Collateral Agent (to the extent not reimbursed by the Company and without limiting the obligation of the Company to do so), in each Purchaser’s Pro Rata Share, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time be imposed on, incurred by or asserted against the Collateral Agent in any way relating to or arising out of this Agreement, the Security Agreement, or any other Transaction Document, or any action taken or omitted by the Collateral Agent under or in connection with any of the foregoing; provided, however, that no Purchaser shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Collateral Agent’s own gross negligence or willful misconduct as finally determined by a court of competent jurisdiction.
Section 4.06. No Fiduciary Duty. The Collateral Agent shall not have any fiduciary relationship with or duty to any Purchaser by reason of this Agreement, the Security Agreement or any other Transaction Document.
Section 4.07. Resignation; Successor Collateral Agent.
(a) The Collateral Agent may resign at any time by giving at least thirty (30) days’ prior written notice thereof to the Purchasers and the Company. Upon receipt of any such notice of resignation, the Requisite Purchasers shall have the right to appoint a successor Collateral Agent. If no such successor shall have been so appointed by the Requisite Purchasers and shall have accepted such appointment within thirty (30) days after the retiring Collateral Agent gives notice of its resignation, then the retiring Collateral Agent may, on behalf of the Purchasers, appoint a successor Collateral Agent.
(b) Upon the acceptance of a successor’s appointment as Collateral Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Collateral Agent, and the retiring Collateral Agent shall be discharged from all of its duties and obligations hereunder and under the Security Agreement. After the retiring Collateral Agent’s resignation hereunder, the provisions of this Article IV shall continue in effect for the benefit of such retiring Collateral Agent with respect to any actions taken or omitted to be taken by it while acting as Collateral Agent.
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ARTICLE
V
APPLICATION OF PROCEEDS
Section 5.01. Waterfall. Upon the exercise of remedies under the Security Agreement following an Event of Default, all proceeds of Collateral received by the Collateral Agent shall be applied in the following order of priority:
(i) first, to the payment of all costs and expenses incurred by the Collateral Agent in connection with the administration of this Agreement,the Security Agreement and the other Transaction Documents, including reasonable fees and disbursements of counsel to the Collateral Agent;
(ii) second, to the payment of all costs and expenses of enforcement and collection under the Transaction Documents, including reasonable attorneys’ fees and expenses incurred by the Purchasers;
(iii) third, to the payment of all outstanding Secured Obligations owed to the Purchasers, applied pro rata among the Purchasers in accordance with their respective Pro Rata Shares; and
(iv) fourth, the balance, if any, to the Company or as otherwise required by applicable law.
Section 5.02. Insufficiency of Proceeds. If the proceeds of the Collateral are insufficient to pay in full all amounts described in clauses (i) through (iii) of Section 5.01, such proceeds shall be applied in accordance with the priorities set forth in Section 5.01, with any shortfall in any priority level borne by the Persons entitled to payment at such level pro rata in accordance with the amounts owed to each such Person.
ARTICLE
VI
VOTING AND CONSENT
Section 6.01. Requisite Purchaser Decisions. Unless a specific provision of this Agreement or any other Transaction Document expressly requires the consent or approval of all Purchasers or a different threshold, all decisions, consents, approvals, waivers and other actions to be taken by the Purchasers under or with respect to the Transaction Documents shall be taken upon the written consent or direction of the Requisite Purchasers.
Section 6.02. Manner of Voting. Any consent, approval, waiver or direction of the Requisite Purchasers shall be given by written notice delivered to the Collateral Agent and the Company. The Collateral Agent shall promptly notify all Purchasers of any written direction or consent received from the Requisite Purchasers.
Section 6.03. Binding Effect. Any action taken or consent given by the Requisite Purchasers in accordance with this Agreement shall be binding upon all Purchasers, whether or not such Purchaser has consented to or participated in such action or consent.
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ARTICLE
VII
AMENDMENTS AND WAIVERS
Section 7.01. Amendments.
(a) Subject to Section 7.01(b), any provision of this Agreement may be amended or modified only by an instrument in writing signed by the Company, the Collateral Agent and the Requisite Purchasers. Any amendment or modification effected in compliance with this Section 7.01(a) shall be binding upon each Purchaser, the Company and the Collateral Agent.
(b) Notwithstanding Section 7.01(a), no amendment, modification or waiver shall, without the prior written consent of each Purchaser directly and adversely affected thereby:
(i) modify the pari passu status of the Notes or the Secured Obligations set forth in Article II;
(ii) modify the pro rata sharing provisions set forth in Section 2.02;
(iii) change the percentage of the aggregate Outstanding Principal Amount of the Notes required to constitute the Requisite Purchasers;
(iv) modify any provision of this Agreement that expressly requires the consent of all Purchasers; or
(v) amend this Section 7.01(b).
Section 7.02. Waivers. No waiver of any provision of this Agreement or consent to any departure by any party therefrom shall be effective unless in writing signed by the party or parties granting such waiver, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No failure or delay by any party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
ARTICLE
VIII
REPRESENTATIONS AND WARRANTIES; COVENANTS
Section 8.01. Representations of Each Purchaser. Each Purchaser, severally and not jointly, represents and warrants to the other Purchasers and the Collateral Agent as of the date hereof that:
(a) such Purchaser is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization (or, in the case of an individual or trust, has full legal capacity);
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(b) such Purchaser has all necessary power and authority to execute, deliver and perform its obligations under this Agreement;
(c) this Agreement has been duly authorized, executed and delivered by such Purchaser and constitutes the legal, valid and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and by general equitable principles;
(d) the execution, delivery and performance by such Purchaser of this Agreement do not and will not conflict with or result in a violation of any law, rule, regulation, order, judgment or decree applicable to such Purchaser or any agreement or instrument to which such Purchaser is a party; and
(e) such Purchaser is the holder of one or more Notes issued pursuant to the Purchase Agreement.
Section 8.02. Purchaser Covenants. Each Purchaser covenants and agrees that: (a) it shall comply with all of its obligations under this Agreement, the Purchase Agreement, the Notes and the other Transaction Documents; (b) it shall not transfer or assign any Note or any interest therein except in compliance with the Purchase Agreement and Section 9.07 of this Agreement; and (c) it shall promptly notify the Collateral Agent and each other Purchaser of any Event of Default of which it becomes aware.
ARTICLE
IX
COMPANY ACKNOWLEDGMENT
Section 9.01. Company Acknowledgment and Agreement. The Company hereby acknowledges and agrees that:
(a) the Company has received a copy of this Agreement and understands and consents to the terms and conditions hereof;
(b) all Notes are pari passu in right of payment and in all other respects, and the Company shall not, nor shall it permit any of its Subsidiaries to, take any action that would be inconsistent with the pari passu status of the Notes;
(c) the Company shall make all payments and distributions on account of the Secured Obligations to the Collateral Agent (or as otherwise directed by the Requisite Purchasers) for distribution to the Purchasers in accordance with this Agreement, and the Company shall not make any payment or distribution directly to any individual Purchaser except as directed by the Requisite Purchasers or the Collateral Agent;
(d) the Company shall provide to each Purchaser and the Collateral Agent prompt written notice of any Event of Default under the Notes or any other Transaction Document;
(e) the Company shall not agree to any amendment, modification or waiver of any Transaction Document that would be inconsistent with the terms of this Agreement; and
(f) the Company acknowledges that the Collateral Agent is acting for the benefit of all Purchasers and the Company shall cooperate with the Collateral Agent in the performance of its duties hereunder, under the Security Agreement and any other Transaction Document.
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ARTICLE
X
MISCELLANEOUS
Section 10.01. Notices. All notices, requests, demands and other communications under this Agreement to the Purchasers shall be given in accordance with Section 5.1 of the Purchase Agreement to the addresses set forth therein (or such other address as any party may designate by written notice to the other parties in accordance with this Section 10.01). Notices to the Collateral Agent and/or the Company shall be sent to the address set forth below their respective signature lines
or to such other address as the Collateral Agent or the Company may designate in writing to the other parties hereto from time to time.
Section 10.02. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, (including, without limitation, Section 5-1401 of the New York General Obligaitons Law (“NY GOL”)), without regard to any other conflict of laws rules or principles.
Section 10.03. Submission to Jurisdiction. Pursuant to Section 5-1402 of the NY GOL, each of the parties hereto irrevocably submits to the nonexclusive jurisdiction of the state and federal courts sitting in the City, County and State of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, and each of the parties hereto irrevocably agrees that all claims in respect of such action or proceeding shall be heard and determined in such court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
Section 10.04. Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.04.
Section 10.05. Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby. The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provision with a valid provision that most closely approximates the intent and economic effect of the invalid, illegal or unenforceable provision.
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Section 10.06. Entire Agreement. This Agreement, together with the other Transaction Documents, constitutes the entire agreement among the parties hereto with respect to the subject matter hereof relating to the intercreditor arrangements among the Purchasers and supersedes all prior agreements and understandings, both written and oral, among the parties hereto with respect to such subject matter.
Section 10.07. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. No Purchaser may assign or transfer its rights or obligations under this Agreement except in connection with a transfer of Notes permitted under the Purchase Agreement, and any such assignee or transferee shall, as a condition to such transfer, execute and deliver to the Collateral Agent a joinder agreement in form and substance reasonably satisfactory to the Collateral Agent, pursuant to which such assignee or transferee agrees to be bound by the terms of this Agreement.
Section 10.08. No Third-Party Beneficiaries. Nothing in this Agreement, express or implied, is intended to or shall confer upon any Person (other than the parties hereto and their respective successors and permitted assigns, and the Collateral Agent as an express third-party beneficiary) any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement.
Section 10.09. Counterparts. This Agreement may be executed in any number of 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 counterpart of a signature page of this Agreement by facsimile or other electronic imaging means (including .pdf) shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 10.10. Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
Section 10.11. Termination. This Agreement shall terminate and be of no further force or effect upon the indefeasible payment in full of all Secured Obligations and the termination of all commitments of the Purchasers under the Purchase Agreement; provided, however, that the provisions of Article IV (Collateral Agent) shall survive such termination with respect to any actions taken or omitted to be taken by the Collateral Agent while this Agreement was in effect.
[Signature Pages Follow]
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SIGNATURE PAGE TO INTERCREDITOR AGREEMENT
| COMPANY: | ||
| CELULARITY INC. | ||
| By: | ||
| Name: | Robert J. Hariri, MD, PhD | |
| Title: | CEO | |
ADDRESS FOR NOTICES:
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SIGNATURE PAGE TO INTERCREDITOR AGREEMENT
| COLLATERAL AGENT: | ||
| Philip A. Barach | ||
| By: | ||
| Name: | Philip A. Barach | |
ADDRESS
FOR NOTICES:
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SIGNATURE PAGE TO INTERCREDITOR AGREEMENT
| PURCHASER: | ||
| PHILIP & DANIELE BARACH FAMILY TRUST | ||
| By: | ||
| Name: | Philip A. Barach | |
| Title: | Trustee | |
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SIGNATURE PAGE TO INTERCREDITOR AGREEMENT
| PURCHASER: | ||
| [PURCHASER NAME] | ||
| By: | ||
| Name: | ||
| Title: | ||
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Exhibit 10.6
SETTLEMENT, RELEASE AND TERMINATION AGREEMENT
This SETTLEMENT, RELEASE AND TERMINATION AGREEMENT (this “Agreement”) is entered into as of September 18, 2026 (the “Effective Date”), by and between Celularity Inc., a Delaware corporation (the “Company”), and Helena Global Investment Opportunities 1 Ltd, a Cayman Islands exempted company (“Helena”). The Company and Helena are each a “Party” and collectively the “Parties.”
RECITALS
WHEREAS, the Company and Helena are parties to, among other documents, (i) that certain Securities Purchase Agreement dated October 24, 2025, (ii) that certain Exchange Promissory Note issued by the Company to Helena (the “Exchange Note”), (iii) that certain Security Agreement dated October 24, 2025, as amended by Amendment No. 1 thereto (collectively, the “Security Agreement”), (iv) that certain Settlement Agreement dated May 21, 2026 (the “Prior Settlement Agreement”), (v) that certain Registration Rights Agreement dated October 24, 2025, and (vi) certain Common Stock Purchase Warrants issued by the Company to Helena, including the warrant exercised pursuant to the Exercise Notice defined below (the “Applicable Warrant” and, collectively with the foregoing documents, the “Existing Transaction Documents”);
WHEREAS, in connection with the Prior Settlement Agreement, Helena received an assignment of certain rights under that certain promissory note issued by NEXGEL, Inc. in the original principal amount of $2,500,000 (the “NEXGEL Note”);
WHEREAS, the Company failed to timely pay the installments due July 21, 2026 and August 21, 2026 under the Prior Settlement Agreement and subsequently paid $200,000 to Helena on August 25, 2026 (the “Settlement Payment Breach”);
WHEREAS, Helena delivered a notice of exercise dated August 27, 2026 under the Applicable Warrant (the “Exercise Notice”), and the Company was unable to timely deliver the shares issuable pursuant to the Exercise Notice without restrictive legends because the Company had not filed its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2026 and June 30, 2026 (the “Warrant Delivery Breach” and, together with the Settlement Payment Breach, the “Specified Breaches”);
WHEREAS, the Parties desire to resolve the Specified Breaches and all related claims, including disputes concerning amounts payable or issuable under the Exchange Note, liquidated damages under the Applicable Warrant, and the Security Agreement and related liens;
WHEREAS, the Parties have agreed that, at the Closing, the Company shall issue and deliver to Helena two separate tranches of Common Stock: (i) 700,000 Initial Shares, issued under the Exchange Note, which shall not be returnable, and (ii) 2,000,000 Additional Shares, issued as new settlement consideration under this Agreement, which shall be subject to the retention and return provisions of this Agreement;
WHEREAS, if the Company satisfies the Company Performance Conditions, Helena shall return the Additional Shares to the Company on November 16, 2026, except for the portion Helena is entitled to retain in satisfaction of the Make-Whole Obligation; if the Company does not satisfy those conditions, the Company shall forfeit its contractual right to the return of the Additional Shares and Helena shall be entitled to retain them as provided herein, in addition to and without credit against the Make-Whole Obligation;
WHEREAS, the Parties intend that the Initial Shares be issued upon conversion of existing obligations under the Exchange Note, without additional consideration paid by Helena for such conversion, and receive the benefit of any holding-period tacking permitted by applicable securities laws; and
WHEREAS, the Parties intend that the Exchange Note be permanently canceled, the Security Agreement and related liens be terminated, and the releases herein become effective at the Closing, without reinstatement or revival as a result of any subsequent breach or the retention or return of Additional Shares.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:
Article 1 DEFINITIONS
1.1 Defined Terms. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Existing Transaction Documents. In addition, the following terms shall have the respective meanings set forth below:
“Additional Shares” means the 2,000,000 shares of Common Stock issued and delivered to Helena at the Closing as the new settlement consideration under Section 2.1, subject to Article 4.
“Beneficial Ownership Limitation” has the meaning set forth in Section 4.5.
“Business Day” means any day other than a Saturday, Sunday or day on which commercial banks in New York, New York are authorized or required by law to close.
“Closing” means the consummation of the transactions under Article 2, including the simultaneous issuance and delivery of both the Initial Shares and Additional Shares.
“Closing Date” means the Effective Date or another date agreed by the Parties in writing, which shall precede the Reporting Deadline.
“Common Stock” means the Company’s Class A common stock, par value $0.0001 per share.
“Company Performance Conditions” means the conditions specified in Section 3.6 for determining whether the Company is entitled to the return of Additional Shares.
“Covered Shares” means, collectively, the Initial Shares, the Additional Shares, any Supplemental Shares and the Warrant Shares.
“Initial Shares” means the 700,000 shares of Common Stock issued and delivered to Helena at the Closing as the first conversion tranche under Section 2.1. Initial Shares are not Return Shares.
“Legend Removal Covenant” means the Company’s obligations under Section 3.2.
“Make-Whole Obligation” means the Company’s obligation under Section 4.2 to permit Helena to retain the applicable number of Additional Shares and, if required, timely issuance and delivery of the Supplemental Shares.
“Measurement Date” means November 16, 2026.
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“Measurement Price” means the official closing price of the Common Stock on The Nasdaq Capital Market on the Measurement Date, as reported by Nasdaq. If the Common Stock is not then listed on The Nasdaq Capital Market, the Measurement Price shall be the closing price on its principal trading market. If no closing price is reported for the Measurement Date, the most recent official closing price reported on or before that date shall apply.
“Partial NEXGEL Assignment” means an assignment by Helena to the Company of $1,250,000 in principal amount of the NEXGEL Note, together with the proportionate amount of accrued and future interest, fees, rights, remedies and proceeds attributable to that principal amount, substantially in the form attached as Exhibit B.
“Pre-Funded Warrant” has the meaning set forth in Section 4.5.
“Reporting Covenant” means the Company’s obligations under Section 3.1.
“Reporting Current” means that the Company is current in its reporting obligations under Section 13 of the Securities Exchange Act of 1934, as amended, having filed all periodic reports required to be filed by the Company during the preceding twelve (12) months (other than Current Reports on Form 8-K), as reflected on the SEC’s EDGAR system.
“Reporting Deadline” means 11:59 p.m., New York time, on October 20, 2026.
“Retained Additional Shares” means the Additional Shares Helena is entitled to retain under Section 4.1 or Section 4.2.
“Return Statement” has the meaning set forth in Section 4.4.
“Return Date” means November 16, 2026.
“Return Shares” means only the Additional Shares required to be returned under Article 4. Neither the Initial Shares nor the Warrant Shares shall constitute Return Shares.
“Supplemental Shares” has the meaning set forth in Section 4.2(c).
“Trading Day” means a day on which the principal market for the Common Stock is open for trading.
“Trading Limitation” means the limitation in Section 3.5.
“UCC-3 Termination Statements” means all financing statement amendments necessary to terminate the financing statements filed in favor of Helena in connection with the Security Agreement, substantially in the form attached as Exhibit A.
“Warrant Shares” means the shares issued or issuable pursuant to the Exercise Notice. Warrant Shares are separate from the Initial Shares and Additional Shares and are not returnable under this Agreement.
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Article 2 CLOSING TRANSACTIONS
2.1 Conversion of Exchange Note.
(a) Conversion. Notwithstanding Section 3.1 of the Exchange Note or any other provision establishing or adjusting its conversion price or conversion mechanics, the Parties amend the Exchange Note solely to authorize the conversion specified in subsection (b), which shall occur at the Closing, immediately before cancellation of the Exchange Note under Section 2.2.
(b) Initial Shares. Helena shall convert $1,197,000 of outstanding principal under the Exchange Note at a fixed conversion price of $1.71 per share into 700,000 Initial Shares. The Company shall cause its transfer agent to issue and deliver the Initial Shares to Helena in book-entry form at the Closing. Helena shall retain the Initial Shares unconditionally, subject to applicable securities laws and the Trading Limitation. The Initial Shares shall not be subject to any return, surrender or forfeiture obligation under this Agreement.
(c) Additional Shares. The Company shall issue 2,000,000 Additional Shares to Helena as new settlement consideration under this Agreement. The Company shall cause its transfer agent to issue and deliver all Additional Shares to Helena at the Closing in a separately identified book-entry position. The Additional Shares shall be issued under this Agreement, independently of the Exchange Note, and shall be subject to the contractual retention and return provisions of Article 4. No amount under the Exchange Note shall be converted or applied toward issuance of the Additional Shares.
(d) Conversion Notice. This Agreement constitutes Helena’s irrevocable conversion notice for the Initial Shares, effective at the Closing, and supersedes all prior conversion notices under the Exchange Note. No separate conversion notice shall be required.
(e) Conversion Consideration. The Initial Shares shall be issued solely upon conversion of the existing obligations under the Exchange Note, without payment of additional cash or delivery of other property by Helena for the conversion. No portion of the Initial Shares shall be allocated to payment of claims under the Applicable Warrant. The releases of those claims form part of the Parties’ mutual settlement undertakings under this Agreement.
(f) Holding Period and Legends. The Parties intend that the Initial Shares receive the benefit of any holding-period tacking available under Rule 144 with respect to the Exchange Note and any qualifying predecessor securities. The Parties shall reasonably cooperate in providing acquisition records, payment records, representations and customary legal opinions supporting that treatment. The holding period and resale eligibility of the Additional Shares shall be determined separately based on their issuance as new settlement consideration. This provision does not independently establish eligibility for tacking, legend removal or resale. Each tranche shall bear only the securities-law legends required by applicable law, together with any notation reasonably necessary to implement the contractual restrictions on Additional Shares.
2.2 Permanent Satisfaction and Cancellation of Exchange Note. Effective automatically upon issuance of the Initial Shares: (a) the Exchange Note and all indebtedness and other obligations evidenced by or arising under the Exchange Note shall be deemed irrevocably paid, satisfied, discharged and extinguished in full; (b) all principal, accrued interest, default interest, Mandatory Default Amounts, premiums, liquidated damages, fees, costs and other amounts that were or could have been asserted under the Exchange Note shall be canceled and forever discharged; (c) Helena shall have no further right to convert, enforce, transfer, assign or otherwise exercise any right under the Exchange Note; (d) the Exchange Note shall be deemed canceled and of no further force or effect, whether or not the original instrument is physically returned to the Company; and (e) Helena shall mark the original Exchange Note “CANCELED” and deliver it to the Company or, if the original cannot be located, deliver an affidavit of loss and cancellation reasonably acceptable to the Company. The satisfaction and cancellation of the Exchange Note under this Section are final and irrevocable and shall not be rescinded or reversed, and the Exchange Note shall not be reinstated or revived, as a result of any subsequent breach of this Agreement, return of shares under Section 2.8 or disposition of the Partial NEXGEL Assignment under Article 6. Helena’s conversion notice dated August 27, 2026 and any other outstanding conversion notice under the Exchange Note shall be deemed withdrawn and canceled at the Closing.
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2.3 Termination of Security Agreement and Release of Liens. Effective at the Closing and immediately upon issuance of the Initial Shares: (a) the Security Agreement shall terminate and be of no further force or effect; (b) all obligations secured by the Security Agreement shall be deemed indefeasibly satisfied and discharged, subject to the express preservation of obligations under this Agreement and any unexercised portion of the Applicable Warrant under Section 2.6, which shall be unsecured; (c) every security interest, lien, pledge, control right and other encumbrance granted to or held by Helena under the Security Agreement shall be irrevocably terminated and released; (d) Helena shall relinquish all possession or control of any Collateral, deposit account, securities account, instrument or other property of the Company held pursuant to the Security Agreement; and (e) Helena shall have no further rights or remedies as a secured party against the Company or any property of the Company under the Security Agreement. No obligation arising under this Agreement shall constitute an “Obligation” under the Security Agreement or be secured by any existing or future property of the Company unless the Parties enter into a separate written security agreement after the Effective Date. The termination of the Security Agreement and the release of all related liens are final and irrevocable and shall not be rescinded, reversed, reinstated or revived as a result of any subsequent breach of this Agreement or return of shares under Section 2.8. Any provision of the Security Agreement purporting to survive termination or provide for reinstatement shall have no further contractual effect between the Parties.
2.4 UCC-3 Termination. At the Closing, Helena shall deliver the completed UCC-3 Termination Statements, together with its written authorization to file them, and any other termination, release or control-termination document reasonably requested by the Company. Helena irrevocably authorizes the Company and its designees to file the UCC-3 Termination Statements immediately following issuance of the Initial Shares. The Company shall cause the UCC-3 Termination Statements to be filed promptly following issuance of the Initial Shares, without further notice to or consent from Helena, and shall provide Helena with evidence of filing. Helena shall, at the Company’s reasonable request and expense, execute and deliver any additional documents reasonably necessary to evidence the termination of the Security Agreement or release of Helena’s liens.
2.5 Waiver of Remaining Installment Payments. Effective upon issuance of the Initial Shares, Helena irrevocably waives the two (2) remaining $100,000 installment payments otherwise payable under Section 2.2 of the Prior Settlement Agreement and acknowledges that the Company shall have no further obligation to make such payments.
2.6 Settlement of Warrant Delivery Breach. Effective at the Closing, Helena irrevocably waives and releases all liquidated damages, including the asserted $10,000-per-day amounts, and all other damages, interest, penalties, fees and claims arising from the Warrant Delivery Breach, whether accrued before, on or after the Effective Date. No such amount shall continue to accrue after the Closing with respect to the Exercise Notice. The Company shall remain obligated to deliver the Warrant Shares without restrictive legends when the applicable requirements under Section 3.2 are satisfied. Any breach of that obligation shall be governed exclusively by this Agreement. The Warrant Shares shall not be returnable under this Agreement. Any unexercised portion of the Applicable Warrant shall remain outstanding in accordance with its terms, subject to the releases and modifications expressly set forth herein.
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2.7 Closing Deliverables.
(a) The Company shall deliver:
(i) confirmation from its transfer agent of issuance and delivery at the Closing of the 700,000 Initial Shares and the 2,000,000 Additional Shares in separate book-entry positions, together with a copy of the irrevocable transfer agent instructions substantially in the form attached as Exhibit C;
(ii) resolutions of the Company’s Board of Directors approving this Agreement and the transactions contemplated hereby; and
(iii) an executed counterpart of this Agreement.
(b) Helena shall deliver:
(i) the original Exchange Note marked “CANCELED,” or an affidavit of loss and cancellation;
(ii) the completed UCC-3 Termination Statements and written filing authorization;
(iii) any termination of control agreement or other lien-release document reasonably requested by the Company;
(iv) the executed Partial NEXGEL Assignment, to be held in escrow pursuant to Article 6;
(v) an executed counterpart of this Agreement; and
(vi) the personal guarantee executed by Jeremy Weech as required under Section 7.5.
2.8 Obligation to Return Shares. Until Additional Shares become Retained Additional Shares under Article 4, Helena shall maintain them in the separately identified account or book-entry position established at the Closing and shall not sell, transfer, pledge, lend, hypothecate, encumber or otherwise dispose of them without the Company’s prior written consent. Any approved transferee shall agree in writing to be bound by Articles 3, 4 and 8 as applicable to the transferred shares. No transfer shall relieve Helena or the guarantor of their obligations. These restrictions shall continue to apply to Return Shares until returned.
Article 3 REPORTING AND LEGEND REMOVAL
3.1 Reporting Covenant. The Company shall become Reporting Current no later than October 20, 2026, including by filing its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2026 and June 30, 2026 and all other periodic reports then required for the Company to be Reporting Current (the “Reporting Covenant”).
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3.2 Legend Removal Covenant. Promptly after the Company becomes Reporting Current and the applicable shares satisfy the holding-period and other requirements for resale under Rule 144, and in no event later than two Trading Days after satisfaction of those conditions and Helena’s delivery of the documents reasonably required under Section 3.4, the Company shall: (a) instruct its transfer agent to remove the restrictive legend from the Initial Shares and any Additional Shares then issued; (b) cause such shares to be credited to Helena’s designated brokerage account through the facilities of The Depository Trust Company, if eligible; and (c) deliver any customary issuer representation or instruction reasonably required by the transfer agent to effect such removal and transfer. The foregoing obligations, together with Section 3.3, constitute the “Legend Removal Covenant.” The eligibility determination and delivery period shall apply separately to the Initial Shares and Additional Shares, notwithstanding their issuance at the same Closing. Helena’s counsel may deliver a customary Rule 144 opinion with respect to the applicable shares when such shares are eligible for resale under Rule 144, and the Company shall reasonably cooperate with Helena and its counsel in connection with such opinion and the related legend-removal process. Removal of a securities-law legend shall not terminate the contractual transfer restrictions under Sections 2.8 and 3.4.
3.3 Delivery of Unlegended Warrant Shares. Upon satisfaction of the applicable conditions and within the delivery period specified in Section 3.2, the Company shall cause the Warrant Shares to be delivered without restrictive legends to Helena’s designated brokerage account, including by removing any restrictive legend from Warrant Shares previously issued. Sections 3.2 and 3.4 shall apply to the Warrant Shares for this purpose, and the Company’s obligations under this Section 3.3 shall form part of the Legend Removal Covenant.
3.4 Helena Deliverables for Legend Removal. Helena shall timely provide the Company and its transfer agent with: (a) a customary Rule 144 holder or seller representation letter, as applicable; (b) a Rule 144 opinion from Helena’s counsel, if reasonably required by the transfer agent, confirming that the applicable shares are eligible for resale under Rule 144; (c) reasonable evidence regarding Helena’s holding period and affiliate status; (d) appropriate broker and DTC delivery instructions; and (e) any other documentation reasonably and customarily required by the Company’s transfer agent or legal counsel. The Company shall not be responsible for a delay caused solely by Helena’s failure to timely provide the foregoing documents. No representation concerning a proposed sale shall be required to be made inconsistently with the transfer restrictions in this Agreement.
3.5 Trading Limitation. From the Closing, aggregate sales of Initial Shares and Warrant Shares by Helena and its permitted transferees, across all brokers and accounts, shall not exceed ten percent (10%) of the total consolidated trading volume of the Common Stock on any Trading Day, as reported by Bloomberg or another mutually acceptable reporting service, with no carryforward of unused capacity (the “Trading Limitation”). All sales shall comply with applicable securities laws, and Additional Shares may not be sold while subject to return. Helena shall require its brokers and permitted transferees to comply and provide trading confirmations upon the Company’s reasonable request. The Trading Limitation shall continue after the Return Date until all Initial Shares and Warrant Shares are sold in compliance herewith; purchasers in compliant open-market sales shall not be bound by it. The Trading Limitation shall terminate automatically upon the Company’s failure to satisfy any Company Performance Condition.
3.6 Company Performance Conditions. The “Company Performance Conditions” are each of the following: (a) the Company is Reporting Current on or before the Reporting Deadline; (b) the restrictive legends have been removed from the Initial Shares and the Warrant Shares and such shares credited to Helena’s designated brokerage account no later than two (2) Trading Days after the later of (i) the date on which the Company becomes Reporting Current and (ii) Helena’s delivery of the documents required under Section 3.4; and (c) any Supplemental Shares required under Section 4.2(c) have been issued and delivered by 6:00 p.m., New York time, on the Return Date. References in this Agreement to “Company Conditions” mean the Company Performance Conditions.
3.7
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Article 4 NOVEMBER 16 MAKE-WHOLE
4.1 Disposition of Additional Shares. If the Company satisfies the Company Performance Conditions, Helena shall retain only the Additional Shares determined under Section 4.2 and shall return all remaining Additional Shares to the Company in accordance with Section 4.4. If the Company fails to satisfy the Reporting Covenant by the Reporting Deadline, the Company’s right to the return of all Additional Shares shall terminate automatically upon expiration of that deadline, and Helena shall be entitled to retain all Additional Shares. If the Reporting Covenant is timely satisfied but the Company fails another Company Performance Condition, Helena shall be entitled to retain all Additional Shares immediately upon that failure. No later cure shall restore the Company’s return right without Helena’s written agreement. Forfeiture under this Article 4 means forfeiture of the Company’s contractual right to require return of Additional Shares already issued to Helena. It does not cancel those shares, require another issuance (other than Supplemental Shares under Section 4.2), or revive the Exchange Note.
4.2 Make-Whole Obligation.
(a) Trigger and Calculation. If the Measurement Price is below $1.71 and greater than zero, the number of Additional Shares required for the make-whole shall equal: $1,200,000 divided by the Measurement Price, minus 700,000, rounded up to the nearest whole share. If the Measurement Price is $1.71 or higher, no Additional Shares shall be retained for the make-whole.
(b) Retention of Delivered Shares. If the Company has satisfied the Company Performance Conditions, Helena shall retain the lesser of (i) the number calculated under subsection (a) and (ii) 2,000,000 Additional Shares. These shares shall come exclusively from the Additional Shares issued at the Closing. Their retention shall satisfy the corresponding share component of the Make-Whole Obligation without further issuance.
(c) Supplemental Shares. If the number of shares calculated under Section 4.2(a) exceeds 2,000,000 (or, where Section 4.2(e) applies, is greater than zero), the Company shall issue and deliver to Helena additional shares of Common Stock equal to that excess (or, where Section 4.2(e) applies, equal to that full number) (the “Supplemental Shares”), subject to Section 4.5, in book-entry form by 6:00 p.m., New York time, on the Return Date. The Supplemental Shares shall be issued in satisfaction of the remaining Make-Whole Obligation, shall not be subject to return, and shall be subject to the Legend Removal Covenant but not to the Trading Limitation. The 2,000,000-share limitation shall apply only to the Additional Shares delivered at Closing and shall not limit the Supplemental Shares. The Company shall obtain the corporate and Nasdaq approvals and maintain sufficient authorized shares necessary for lawful issuance; any issuance restriction shall not extinguish the obligation or permit the Company to substitute cash. Supplemental Shares shall be issued pursuant to this Agreement, and their issuance shall not revive the Exchange Note or any released obligation or lien.
(d) Valuation Convention. The calculation shall value all 700,000 Initial Shares at the Measurement Price, whether or not Helena previously sold any Initial Shares. Actual proceeds from sales of Initial Shares shall not increase or decrease the calculation. Warrant Shares, the NEXGEL Note and other consideration shall not be included.
(e) No Crediting Following Nonperformance. If Helena is entitled to retain all Additional Shares under Section 4.1, those shares are retained as forfeited settlement consideration and shall not be credited toward the Make-Whole Obligation. In that event Section 4.2(b) shall not apply, and the full number of shares calculated under Section 4.2(a) shall be satisfied through issuance and delivery of Supplemental Shares under Section 4.2(c).
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(f) Corporate Adjustments. Share numbers, per-share prices and thresholds under this Agreement shall be equitably adjusted for any stock split, reverse stock split, stock dividend, combination or similar recapitalization occurring after the Effective Date. The $1,200,000 aggregate make-whole target shall not change.
4.3 Delivery of Supplemental Shares. If Supplemental Shares are required under Section 4.2(c), the Company shall issue and deliver them by the time specified therein. The Supplemental Shares shall be issued in the same manner and with the same registration or legend status as the Initial Shares, to the extent permitted by applicable law, and shall be subject to Article 3.
4.4 Return of Additional Shares. If the Company has satisfied the Company Performance Conditions, Helena shall return the Return Shares to the Company as follows. By 10:00 a.m., New York time, on the first Business Day after the Return Date, the Company shall deliver to Helena a written statement setting forth the Measurement Price, the calculation under Section 4.2, the resulting number of Retained Additional Shares and Return Shares, and evidence of satisfaction of the Company Performance Conditions (the “Return Statement”). If Helena does not object in writing within three (3) Business Days after receipt, the Parties shall deliver joint instructions to the transfer agent to transfer the Return Shares to the Company within one (1) Business Day thereafter, and the transfer agent may also act on the Company’s instructions accompanied by the Return Statement and evidence of Helena’s non-objection. If Helena objects in good faith within that period, the disputed shares shall be held pending joint instructions and the undisputed Return Shares shall be transferred without delay. Return Shares remain subject to Section 2.8 until returned. Initial Shares, Warrant Shares, Supplemental Shares and Retained Additional Shares shall not be returned.
4.5 Beneficial Ownership Limitation. Notwithstanding anything in this Agreement to the contrary, the Company shall not issue or deliver, and Helena shall not have the right to receive, any shares of Common Stock under this Agreement to the extent that, after giving effect to such issuance, Helena, together with its affiliates and any other persons whose beneficial ownership of Common Stock would be aggregated with Helena’s for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, would beneficially own more than 9.99% of the shares of Common Stock outstanding immediately after giving effect to such issuance (the “Beneficial Ownership Limitation”). Beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Rule 13d-3 thereunder, and the Company may rely on Helena’s written determination of the number of shares of Common Stock beneficially owned by it. Any Supplemental Shares that cannot be issued to Helena by reason of the Beneficial Ownership Limitation shall instead be issued and delivered to Helena, at the same time as the other Supplemental Shares, in the form of a pre-funded warrant to purchase that number of shares of Common Stock at an exercise price of $0.0001 per share, substantially in the form attached as Exhibit E (the “Pre-Funded Warrant”), and delivery of the Pre-Funded Warrant shall satisfy the Company’s obligation under Section 4.2(c) with respect to those shares. The Beneficial Ownership Limitation shall not reduce the Make-Whole Obligation, the number of Supplemental Shares owed or the Additional Shares Helena is entitled to retain, and shall not excuse or extend any delivery obligation of the Company; failure to deliver the Pre-Funded Warrant when due shall constitute a failure to deliver Supplemental Shares for all purposes of this Agreement. Upon Helena’s written request, the Company shall confirm in writing the number of shares of Common Stock then outstanding within one (1) Trading Day.
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Article 5 RELEASES
5.1 Release by Helena. Effective upon issuance of the Initial Shares, Helena, on behalf of itself and its predecessors, successors, assigns, affiliates, officers, directors, employees, agents and representatives, to the extent it is authorized to act on their behalf, irrevocably releases and forever discharges the Company and its past and present subsidiaries, affiliates, officers, directors, employees, agents and representatives from every claim, demand, cause of action, liability, obligation, damage, fee, cost or remedy, whether known or unknown, fixed or contingent, matured or unmatured, arising out of or relating to: (a) the Exchange Note; (b) the Security Agreement; (c) the Prior Settlement Agreement and the Settlement Payment Breach; (d) any payment default, Triggering Event, Event of Default, conversion right, redemption right, Mandatory Default Amount, interest, default interest, premium, penalty, fee, liquidated damages or other agreed damages arising under an Existing Transaction Document on or before the Effective Date; (e) the Warrant Delivery Breach and all related liquidated or other damages, including any continuing accrual attributable to that breach after the Effective Date; and (f) the negotiation, execution, performance or alleged breach of any Existing Transaction Document on or before the Effective Date, including the Company’s failure to maintain current periodic reports or financial statements and its resulting inability to deliver the Warrant Shares without restrictive legends. This release does not release Helena’s express rights under this Agreement, including rights to retain Additional Shares and receive Supplemental Shares, rights under the portion of the NEXGEL Note retained by Helena, or rights under an unexercised portion of the Applicable Warrant expressly preserved herein.
5.2 Release by Company. Effective at the Closing, the Company, on behalf of itself and its predecessors, successors, assigns, subsidiaries, affiliates, officers, directors, employees, agents and representatives, to the extent authorized to act on their behalf, irrevocably releases and forever discharges Helena and its past and present affiliates, officers, directors, employees, agents and representatives from every claim, liability, demand, cause of action, obligation, damage, fee, cost or remedy, known or unknown, arising out of or relating to the Existing Transaction Documents or the Parties’ conduct in connection therewith on or before the Effective Date. This release does not release rights under this Agreement, the personal guarantee or the Partial NEXGEL Assignment.
5.3 No Additional Admission. Except for the factual acknowledgments expressly set forth herein concerning the Specified Breaches, this Agreement represents a compromise of disputed claims and shall not constitute an admission of liability, wrongdoing or the validity or amount of any claim by either Party.
Article 6 PARTIAL NEXGEL ASSIGNMENT AND ESCROW
6.1 Escrow Deposit. At the Closing, Helena shall execute the Partial NEXGEL Assignment and deposit it with [ESCROW AGENT] under escrow instructions reasonably acceptable to the Parties and consistent with this Article.
6.2 Release to Company. Subject to Section 6.4, the escrow agent shall release the Partial NEXGEL Assignment to the Company upon receipt of joint instructions or all of the following, on which the escrow agent may rely without further inquiry: (a) copies, as filed on EDGAR on or before the Reporting Deadline, of the periodic reports required for the Company to be Reporting Current; (b) written confirmation from the Company’s transfer agent (or Helena) that the legends were removed from the Initial Shares and Warrant Shares and any required Supplemental Shares were delivered, in each case on or before the Return Date; and (c) written confirmation from the Company’s transfer agent that Helena returned all Return Shares, or the Return Statement showing that no Return Shares were due because all Additional Shares were properly retained in satisfaction of the Make-Whole Obligation. Helena’s lawful retention of make-whole shares shall not prevent release to the Company.
6.3 Release to Helena. If the Company fails the Reporting Covenant by the Reporting Deadline or another Company Performance Condition, the Partial NEXGEL Assignment shall be returned to Helena and shall not become effective. The corresponding rights under the NEXGEL Note shall remain with Helena. A good-faith dispute concerning release shall be handled under the escrow instructions. No escrow notice, administrative period or dispute procedure shall extend the Reporting Deadline or change the substantive retention and return rights under Article 4.
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6.4 Helena Breach. If the Company has satisfied the Company Performance Conditions and Helena fails to return Return Shares within the period required by Section 4.4 and the cure period in Section 8.4, the Partial NEXGEL Assignment shall be released to the Company notwithstanding Helena’s breach or refusal to provide instructions. Helena shall not prevent an otherwise required release through its own nonperformance.
6.5 No Effect on Closing Transactions. Each Party shall promptly provide instructions and reasonably requested evidence needed to effect the required escrow disposition. No escrow disposition shall affect cancellation of the Exchange Note, termination of the Security Agreement, release of liens, completed share issuances, obligations concerning Supplemental Shares, or the releases under Article 5.
Article 7 REPRESENTATIONS AND COVENANTS
7.1 Mutual Representations. Each Party represents and warrants that: (a) it has full power and authority to execute, deliver and perform this Agreement; (b) this Agreement has been duly authorized and constitutes its legal, valid and binding obligation, subject to applicable bankruptcy, insolvency and similar laws and general principles of equity; (c) its execution and performance of this Agreement do not violate its organizational documents or any material agreement binding upon it; and (d) it has consulted with counsel of its choosing concerning this Agreement.
7.2 Company Representations. The Company represents and warrants that: (a) the Initial Shares, the Additional Shares, the Supplemental Shares and any Warrant Shares issued pursuant to this Agreement, when issued, will be duly authorized, validly issued, fully paid and nonassessable; (b) the Company has obtained, or before issuance will obtain, all corporate and Nasdaq approvals required for the applicable issuance; and (c) the Company’s transfer agent has been or will be duly instructed regarding the issuance and delivery of the applicable shares.
7.3 Helena Representations. Helena represents and warrants that: (a) Helena is the sole legal and beneficial owner of the Exchange Note and the claims released under Section 5.1; (b) Helena has not assigned or transferred any interest in the Exchange Note or such claims; (c) Helena has the full right and authority to cancel the Exchange Note, terminate the Security Agreement and release the related liens; (d) Helena is the legal owner of the interest in the NEXGEL Note covered by the Partial NEXGEL Assignment, free and clear of any lien, participation, transfer or encumbrance created by Helena; and (e) Helena is an “accredited investor” within the meaning of Rule 501(a) of Regulation D.
7.4 Public Disclosure. The Company may file this Agreement and the related transaction documents with the SEC and make any other disclosure required by applicable law or Nasdaq rules. The Company shall provide Helena a reasonable opportunity to review the initial Form 8-K disclosure before filing, to the extent reasonably practicable.
7.5 Personal Guarantee. At the Closing, Jeremy Weech, solely in his individual capacity, shall execute the personal guarantee attached as Exhibit D, guaranteeing Helena’s obligation to return Return Shares under Article 4 and the amounts payable by Helena under Sections 8.4(b) and 8.4(c) for such a failure, with related interest and enforcement expenses under Sections 8.7 and 8.8, and no other obligation of Helena. The guarantee shall apply only to shares actually required to be returned and related enforcement obligations. It shall not require return of Initial Shares, Supplemental Shares, Warrant Shares or Additional Shares Helena is entitled to retain. The guarantee shall be an unconditional guarantee of payment and performance of the guaranteed obligations, and not merely of collection. The Company shall not be required first to proceed against Helena or another person. The guarantee shall survive the Closing, cancellation of the Exchange Note and disposition of the Partial NEXGEL Assignment. The guarantee shall terminate automatically on the earlier of (i) the date the Company’s right to the return of Additional Shares terminates under Section 4.1 and (ii) the date all Return Shares have been returned and all amounts then payable under Section 8.4 have been paid. Recovery shall remain subject to the prohibition against duplication.
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Article 8 BREACH AND REMEDIES
8.1 No Rescission or Revival. No breach shall permit rescission or unwinding of the Closing, reinstatement of the Exchange Note or Security Agreement, revival of a released lien or claim, or refiling of a financing statement based on the Security Agreement. Remedies shall arise solely under this Agreement or the personal guarantee. Required return of Additional Shares is performance of this Agreement and does not constitute rescission.
8.2 Company Failure to Deliver Shares.
(a) Initial Shares. If the Company fails to deliver Initial Shares when due, Helena may seek delivery or cash damages equal to the undelivered number multiplied by the greater of $1.71 and the highest closing price of the Common Stock from the delivery deadline through payment.
(b) Additional Shares. If the Company fails to deliver Additional Shares when due, Helena may seek delivery and actual, direct damages from delay. If Helena becomes entitled under Article 4 to retain Additional Shares that remain undelivered, it may instead elect cash damages for those shares equal to their number multiplied by the greater of the Measurement Price and the highest closing price from the applicable delivery deadline through payment.
(c) Supplemental Shares. If the Company fails to deliver Supplemental Shares when due, Helena may seek specific performance and actual, direct damages from delay or elect cash damages equal to the undelivered number multiplied by the greater of the Measurement Price and the highest closing price from the applicable delivery deadline through payment. These remedies arise from breach and do not permit the Company to elect cash performance of the Make-Whole Obligation.
(d) Limitations. Helena may not recover both delivery and the full cash value of the same shares. Recovery shall account for applicable return obligations and value received under Article 4. Remedies for failure to deliver Warrant Shares without restrictive legends shall be governed by Section 8.3.
8.3 Company Performance Failure. Failure of a Company Performance Condition shall result in the retention rights under Article 4 and escrow disposition under Article 6. Helena may also seek specific performance and actual, direct damages for breach, subject to mitigation and Section 8.10. A breach of the Legend Removal Covenant concerning any Covered Shares remains actionable when due. No recovery shall revive warrant liquidated damages or another released claim.
8.4 Helena Failure to Return Shares. If Return Shares are due and Helena fails to perform its return obligations within the period required under Section 4.4, and such failure continues for three (3) Business Days after the Company’s written notice to Helena (excluding delay attributable to the transfer agent or the Company): (a) the Company may seek specific performance, including an order requiring Helena and any approved transferee to transfer Return Shares; (b) Helena shall pay liquidated damages equal to the greater of (i) $250,000 or (ii) 25% of the product of the number of Return Shares wrongfully withheld and the closing price of the Common Stock on the Return Date, provided that the amount shall not exceed the fair market value of those unreturned shares on that date; (c) the Company may recover documented, direct losses, costs and expenses caused by the failure to return, to the extent not duplicative of subsection (b); and (d) the Partial NEXGEL Assignment shall be released to the Company under Section 6.4. The Parties acknowledge that the liquidated damages are intended as a reasonable estimate of anticipated harm, including market exposure, replacement costs, transaction costs and enforcement expenses, and not as a penalty. The Company shall not recover both Return Shares and their full value or otherwise obtain duplicative recovery. A later return shall not eliminate liability for accrued, nonduplicative damages. Except as provided in Section 4.4 and this Section 8.4, no additional notice or cure period shall extend the return obligation.
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8.5 Personal Guarantee Enforcement. The Company may enforce the personal guarantee against Jeremy Weech for all amounts and obligations guaranteed thereunder, including the liquidated damages, direct losses and reasonable enforcement expenses payable under Section 8.4. The personal guarantee shall be cumulative with, and not in substitution for, the Company’s remedies against Helena, subject to the prohibition against duplicative recovery.
8.6 Helena Breach of Trading Limitation. For a breach of the Trading Limitation or restrictions on Additional Shares, the Company may seek temporary, preliminary and permanent injunctive relief and actual, direct damages. Helena acknowledges that monetary damages may be inadequate. An unauthorized disposition shall not reduce the number of shares Helena must return or relieve the guarantor of a guaranteed obligation.
8.7 Payment Default; Interest. An overdue cash amount payable as damages, reimbursement, enforcement expenses or otherwise under this Agreement shall bear interest from its due date until paid at the lesser of 12% per annum and the maximum lawful rate. This Section does not create a cash-payment alternative for the Make-Whole Obligation.
8.8 Enforcement Expenses. The prevailing Party in any action to enforce this Agreement shall be entitled to recover its reasonable and documented attorneys’ fees and other out-of-pocket enforcement expenses.
8.9 Limitation of Damages. Except for fraud, willful misconduct, breach of the Trading Limitation or Additional Share transfer restrictions, failure to return Return Shares, breach of release obligations or enforcement of the personal guarantee, neither Party shall be liable for punitive, exemplary, special or consequential damages. This limitation does not restrict damages expressly provided in Sections 8.2 and 8.4.
8.10 No Duplicative Recovery. Remedies are cumulative, but neither Party may recover twice for the same loss. Payments, shares delivered or returned, and other compensating value shall be appropriately credited when calculating damages. This provision does not reduce an express entitlement to retain shares or receive Supplemental Shares under Article 4 or alter the agreed disposition of the Partial NEXGEL Assignment.
Article 9MISCELLANEOUS
9.1 Superseding Agreement. This Agreement supersedes the Prior Settlement Agreement and prior settlement understandings concerning the matters addressed herein. It controls over any inconsistent Existing Transaction Document. No reservation, survival, non-waiver or reinstatement provision shall limit the express cancellations, releases or lien terminations herein.
9.2 No Security Interest. This Agreement creates no security interest, lien or pledge in favor of Helena in Company property. Helena’s rights against the Company hereunder are unsecured contractual rights.
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9.3 Further Assurances. Each Party shall execute customary documents and take reasonably necessary actions to effect the conversions, supplemental issuances, cancellations, lien releases, legend removal, retention and return of shares and escrow disposition contemplated herein.
9.4 Amendments and Waivers. An amendment or waiver must be in writing and signed by both Parties and, if it affects the personal guarantee, by the guarantor. Delay in exercising a right is not a waiver. No waiver of the Reporting Deadline or Return Date shall be implied.
9.5 Notices. Notices shall be in writing and delivered personally, by nationally recognized overnight courier or by email to the addresses below. Notices are effective upon receipt. An email received after 5:00 p.m., New York time, or on a day that is not a Business Day is deemed received the next Business Day, except that calculations, confirmations and instructions required on the Return Date shall be effective upon actual receipt that day. An automated delivery-failure notice means delivery has not occurred.
If to the Company:
Celularity Inc.
170 Park Avenue
Florham Park, New Jersey 07932
Attention: Chief Legal Officer
Email: kyle.fletcher@celularity.com
If to Helena:
Helena Global Investment Opportunities 1 Ltd
71 Fort Street, 3rd Floor
Grand Cayman, Cayman Islands KY1-1111
Attention: Jeremy Weech
Email: jeremy@helenapartners.com
If to Jeremy Weech individually:
At the address and email address set forth above for Helena, or such other address designated by written notice.
9.6 Assignment and Share Transfers. Neither Party may assign this Agreement without the other Party’s prior written consent. Sales of Covered Shares shall comply with the Trading Limitation and applicable securities laws. Bona fide open-market sales permitted under this Agreement require no further Company consent or assumption by market purchasers. Any other transfer of Covered Shares, other than a required return to the Company, requires the Company’s prior written consent and the transferee’s written agreement to the applicable trading, transfer and return obligations. Transfers of Additional Shares still subject to return must also comply with Section 2.8. No approved transfer releases Helena or the guarantor from an applicable obligation.
9.7 Governing Law; Jurisdiction. This Agreement shall be governed by New York law, without regard to conflict-of-laws principles. The Parties and the guarantor, as to obligations applicable to him, submit to the exclusive jurisdiction of state and federal courts located in the Borough of Manhattan, City of New York.
9.8 Jury Waiver. EACH PARTY AND THE GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE PERSONAL GUARANTEE.
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9.9 Severability. Invalidity of a provision shall not affect the remaining provisions. An invalid provision shall be modified to the minimum extent permitted by law to preserve its intended effect. Invalidity of a remedy shall not revive the Exchange Note, Security Agreement, released liens or released claims.
9.10 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts and by electronic signature, each deemed an original and together one instrument.
9.11 Construction. The Parties jointly negotiated this Agreement. No presumption shall apply based on authorship. Headings are for convenience.
9.12 Survival. The provisions governing conversions, supplemental issuances, cancellations, releases, retention and return, the Trading Limitation, escrow, remedies, the personal guarantee and miscellaneous terms, and obligations intended by their nature to continue, shall survive the Closing.
[Signature page follows]
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SIGNATURE PAGE TO SETTLEMENT AGREEMENT
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.
| CELULARITY, INC. | ||
| By: | ||
| Name: | Robert J. Hariri | |
| Title: | Chief Executive Officer | |
| HELENA GLOBAL INVESTMENT OPPORTUNITIES 1 LTD | ||
| By: | ||
| Name: | ||
| Title: | ||
ACKNOWLEDGED AND AGREED SOLELY WITH RESPECT TO SECTION 7.5, THE PERSONAL GUARANTEE AND THE PROVISIONS EXPRESSLY APPLICABLE TO THE GUARANTOR
JEREMY WEECH, INDIVIDUALLY
Signature: ______________________________
Name: Jeremy Weech
LIST OF EXHIBITS
Exhibit A — UCC-3 Termination Statements and Filing Authorization
Exhibit B — Partial Assignment of NEXGEL Note
Exhibit C — Irrevocable Issuance and Return Instructions
Exhibit D — Personal Guarantee
Exhibit E — Form of Pre-Funded Warrant
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