As filed
with the Securities and Exchange Commission on December 18, 2017
Registration
No. 333-221741
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1
t
o
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
MY
SIZE, INC.
(Exact name of
registrant as specified in its charter)
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Delaware
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2836
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51-0394367
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(State or other jurisdiction of
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(Primary Standard Industrial
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(I.R.S. Employer
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incorporation or organization)
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Classification Code Number)
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Identification Number)
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3 Arava St., pob 1026
Airport City, Israel 7010000
972-3-600-9030
(Address,
including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Corporation
Service Company
2711 Centerville
Road, Suite 400
Wilmington,
DE 19808
1-800-927-9800
(Name, address,
including zip code, and telephone number, including area code, of agent for service)
Copies to:
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Richard A. Friedman, Esq.
Andrea Cataneo, Esq.
Sheppard, Mullin, Richter & Hampton
LLP
30 Rockefeller Plaza
New York, New York 10112
Phone: (212) 653-8700
Fax: (212) 370-7889
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Michael A. Adelstein, Esq.
Jason P. Katz, Esq.
Kelley Drye & Warren LLP
101 Park Avenue
New York, New York 10178
Tel: (212) 808-7800
Fax: (212) 808-7897
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Approximate date of commencement of
proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.
If any of the securities
being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box: ☒
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities
Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration
statement for the same offering. ☐
If this Form is
a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is
a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer (Do not check if a smaller reporting company) ☐
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Smaller reporting company ☒
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Emerging growth company ☐
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If an emerging
growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ☐
CALCULATION OF REGISTRATION FEE
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Title of Each Class of Securities to
be Registered
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Proposed Maximum
Offering
Price per
Share (2)
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Amount of
Registration
Fee
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Common stock, $0.001 par value per share(1)(3)
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Pre-funded warrants to purchase shares of common stock and common stock issuable upon exercise
thereof(1)(3)
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Common warrants to purchase shares of common stock and common stock issuable upon exercise
thereof(1)(4)
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Total
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$
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3,000,000
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$
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373.50
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*
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(1)
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Pursuant to Rule 416, the securities being registered hereunder include such indeterminate number of additional securities as may be issuable to prevent dilution resulting from stock splits, stock dividends or similar transactions.
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(2)
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Estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(o) under the Securities Act.
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(3)
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The proposed maximum offering price of the common stock offered
hereunder will be reduced on a dollar-for-dollar basis based on the offering price of any pre-funded warrants offered and
sold, and as such the proposed aggregate maximum offering price of the common stock and pre-funded warrants (including the
common stock issuable upon exercise of the pre-funded warrants), if any, is $3,000,000.
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(4)
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No additional registration fee is payable
pursuant to Rule 457(g) under the Securities Act of 1933, as amended.
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* Previously paid.
The Registrant
hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), may determine.
The information in this preliminary
prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not
soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
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PRELIMINARY
PROSPECTUS
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SUBJECT
TO COMPLETION
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DATED DECEMBER
18, 2017
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My
Size, Inc.
$3,000,000
Shares of Common Stock
Pre-funded Warrants to Purchase Shares of
Common Stock
Common Warrants to Purchase Shares
of Common Stock
We are offering up to [●] shares
of our common stock together with [●] common warrants to purchase shares of our common stock (and the shares of common stock
that are issuable from time to time upon exercise of the common warrants). Each common warrant upon exercise at a price of [●]
will result in the issuance of one share of common stock to the holder of such common warrant. We are also offering to each purchaser
whose purchase of shares of common stock in this offering would otherwise result in the purchaser, together with its affiliates
and certain related parties, beneficially owning more than 4.99% of our outstanding common stock immediately following the consummation
of this offering, the opportunity to purchase, if the purchaser so chooses, pre-funded warrants, in lieu of shares of common stock
that would otherwise result in the purchaser’s beneficial ownership exceeding 4.99% of our outstanding common stock. Subject
to limited exceptions, a holder of pre-funded warrants will not have the right to exercise any portion of its pre-funded warrants
if the holder, together with its affiliates, would beneficially own in excess of 4.99% (or, at the election of the holder, 9.99%)
of the number of shares of common stock outstanding immediately after giving effect to such exercise. Each pre-funded warrant
will be exercisable for one share of our common stock. The purchase price of each pre-funded warrant will equal the price per
share at which the shares of common stock are being sold to the public in this offering, minus $0.001, and the exercise price
of each pre-funded warrant will be $0.001 per share. This offering also relates to the shares of common stock issuable upon exercise
of any pre-funded warrants sold in this offering. Each pre-funded warrant is being sold together with a common warrant with the
same terms as the common warrant described above. For each pre-funded warrant we sell, the number of shares of common stock we
are offering will be decreased on a one-for-one basis. Because a common warrant is being sold together in this offering with each
share of common stock and, in the alternative, each pre-funded warrant to purchase one share of common stock, the number of common
warrants sold in this offering will not change as a result of a change in the mix of the shares of our common stock and pre-funded
warrants sold. The common warrants will be exercisable immediately and will expire five years from the date of issuance. The shares
of common stock and pre-funded warrants, if any, can each be purchased only with the accompanying common warrants, but will be
issued separately, and will be immediately separable upon issuance.
Our common stock is listed on The
NASDAQ Capital Market under the symbol “MYSZ” and on the Tel Aviv Stock Exchange (“TASE”) under the symbol
“MYSZ”. The closing price of our common stock on December 15, 2017, as reported by The NASDAQ Capital Market, was
$0.83 per share. There is no established public trading market for the pre-funded warrants or common warrants, and we do not expect
a market to develop. In addition, we do not intend to apply for a listing of the pre-funded warrants or common warrants on any
national securities exchange. Without an active trading market, the liquidity of the pre-funded warrants or common warrants will
be limited.
Investing in our securities involves
risks. See the section entitled “
Risk Factors
” beginning on page 12 of this prospectus and in the documents
incorporated by reference herein for a discussion of information that should be considered in connection with an investment in
our securities.
We have engaged Roth Capital Partners,
LLC as our exclusive placement agent in connection with this offering. The placement agent is not purchasing the securities offered
by us and is not required to sell any specific number or dollar amount of securities but will assist us in this offering on a
commercially reasonable “best efforts” basis. See “Plan of Distribution” beginning on Page 32 of this
prospectus for more information regarding these arrangements. There is no minimum purchase requirement for this offering. We have
agreed to pay the placement agent the placement agent fee set forth in the table below, which assumes that we sell all of the
securities we are offering.
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Per Share and Accompanying Common Warrant
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Per Pre-Funded Warrant and Accompanying Common Warrant
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Total (1)
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Public offering price(2)
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$
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$
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$
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Placement agent fees
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$
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$
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$
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Proceeds, before expenses, to us
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$
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$
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$
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(1)
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Assumes no sale of pre-funded warrants.
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(2)
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In addition, we have agreed to reimburse the placement agent for certain expenses. See “Plan
of Distribution” beginning on page 32 of this prospectus for additional information.
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All share
numbers included in this prospectus are included on a pre-reverse stock split basis without taking into account a reverse stock
split of the Company’s issued and outstanding common stock, which reverse stock split shall occur as such time as the Board,
in its sole discretion determines, if at all. The reverse stock split shall occur no sooner than 20 days after the mailing of
the Company’s information statement pursuant to Rule 14c-2 under the Exchange Act, which we plan to mail on or around December
29, 2017 as discussed on page 9 of this prospectus.
We may amend or supplement this
prospectus from time to time by filing amendments or supplements as required. You should read the entire prospectus and any amendments
or supplements carefully before you make your investment decision.
We expect to deliver the shares
of common stock and common warrants and any pre-funded warrants to purchasers on or about ,
2017, subject to the satisfaction of certain conditions.
Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal offense.
Roth
Capital Partners
The date of this prospectus is ,
2017
TABLE OF CONTENTS
You should rely only on the information contained in this prospectus. We have not, and the placement agent has not, authorized
anyone to provide you with any information other than that contained or incorporated by reference in this prospectus or in any
applicable prospectus supplement or free writing prospectus prepared by or on behalf of us to which we have referred you. We are
offering to sell, and seeking offers to buy, the securities covered hereby only in jurisdictions where offers and sales are permitted.
You should not assume that the information contained in this prospectus or any prospectus supplement or free writing prospectus
is accurate as of any date other than the date on the front cover of those documents, or that the information contained in any
document incorporated by reference is accurate as of any date other than the date of the document incorporated by reference, regardless
of the time of delivery of this prospectus or any sale of a security. Our business, financial condition, results of operations
and prospects may have changed since those dates. We are not, and the placement agent is not, making an offer of these securities
in any jurisdiction where the offer is not permitted.
We
further note that the representations, warranties and covenants made by us in any agreement that is incorporated by reference or
filed as an exhibit to the registration statement of which this prospectus is a part were made solely for the benefit of the parties
to such agreement, including, in some cases, for the purpose of allocating risk among the parties to such agreements, and should
not be deemed to be a representation, warranty or covenant to you. Moreover, such representations, warranties or covenants were
accurate only as of the date when made. Accordingly, such representations, warranties and covenants should not be relied on as
accurately representing the current state of our affairs.
Information contained
in, and that can be accessed through, our web site
www.MySizeID.com
shall not be deemed to be part of this prospectus or
incorporated herein by reference and should not be relied upon by any prospective investors for the purposes of determining whether
to purchase the securities offered hereunder.
Notice
to Non-U.S. Investors: We have not, and the placement agent has not, taken any action that would permit this offering or possession
or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States.
Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions
relating to, the offering of the securities covered hereby the distribution of this prospectus outside the United States.
These
securities are not being offered in Israel. This offering or this prospectus are not, and under no circumstances are to be construed
as, an advertisement or a public offering of securities in Israel. Any public offer or sale of securities in Israel may be made
only in accordance with the Israeli Securities Law 5728-1968 (the “Israeli Securities Law”) (which requires, among
other things, the filing of a prospectus in Israel or an exemption therefrom).
This document does not constitute a prospectus
under the Israeli Securities Law and has not been filed with or approved by the Israel Securities Authority.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and
the documents incorporated by reference herein contain, in addition to historical information, certain forward-looking statements.
within the meaning of Section 27A of the Securities Act or 1933, as amended (the “Securities Act”), and Section 21E
of the Securities Exchange Act of 1934, as amended, that include information relating to future events, future financial performance,
strategies, expectations, competitive environment, regulation and availability of resources. Such forward-looking statements include
those that express plans, anticipation, intent, contingency, goals, targets or future development and/or otherwise are not statements
of historical fact. These forward-looking statements are based on our current expectations and projections about future events
and they are subject to risks and uncertainties known and unknown that could cause actual results and developments to differ materially
from those expressed or implied in such statements.
In some cases, you can
identify forward-looking statements by terminology, such as “expects,” “anticipates,” “intends,”
“estimates,” “plans,” “believes,” “seeks,” “may,” “should”,
“could” or the negative of such terms or other similar expressions. Accordingly, these statements involve estimates,
assumptions and uncertainties that could cause actual results to differ materially from those expressed in them. Any forward-looking
statements are qualified in their entirety by reference to the factors discussed throughout this prospectus or incorporated herein
by reference.
You should read this
prospectus and the documents we have incorporated by reference or filed as exhibits to the registration statement, of which this
prospectus is part, completely and with the understanding that our actual future results may be materially different from what
we expect. You should not assume that the information contained in this prospectus or any prospectus supplement or free writing
prospectus is accurate as of any date other than the date on the front cover of those documents, or that the information contained
in any document incorporated by reference is accurate as of any date other than the date of the document incorporated by reference,
regardless of the time of delivery of this prospectus or any sale of a security.
Risks,
uncertainties and other factors that may cause our actual results, performance or achievements to be different from those
expressed or implied in our written or oral forward-looking statements may be found in this prospectus under the heading
“Risk Factors” and in our Annual Report on Form 10-K for the year ended December 31, 2016 under the headings
“Risk Factors” and “Business,” as updated in our Quarterly Report(s) on Form 10-Q.
Forward-looking
statements speak only as of the date they are made. You should not put undue reliance on any forward-looking statements. We
assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in
other factors affecting forward-looking information, except to the extent required by applicable securities laws. If we do
update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect
to those or other forward-looking statements.
New factors emerge from
time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact
of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements. We qualify all of the information presented in this prospectus
and incorporated herein by reference, and particularly our forward-looking statements, by these cautionary statements.
PROSPECTUS SUMMARY
The following
summary highlights certain of the information contained elsewhere in or incorporated by reference into this prospectus. Because
this is only a summary, however, it does not contain all the information you should consider before investing in our common stock
and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information included elsewhere
in or incorporated by reference into this prospectus. Before you make an investment decision, you should read this entire prospectus
carefully, including the risks of investing in our securities discussed under the section of this prospectus entitled “Risk
Factors” and similar headings in the other documents that are incorporated by reference into this prospectus. You should also
carefully read the information incorporated by reference into this prospectus, including our financial statements, and the exhibits
to the registration statement of which this prospectus is a part.
Unless the
context otherwise requires, references to “we,” “our,” “us,” “My Size” or the “Company”
in this prospectus mean My Size, Inc. on a consolidated basis with its wholly-owned subsidiary, My Size (Israel) 2014 Ltd., as
applicable.
OUR BUSINESS
Overview
The Company is a technology
company whose strategy is based on the development of applications that can be utilized to accurately take measurements of a variety
of items via a smartphone. By downloading the application to a smartphone, the user is then able to run the smartphone over the
surface of an item the user wishes to measure. The information is then automatically sent to a cloud-based server where the dimensions
are calculated through the Company’s proprietary algorithms, and the accurate measurements (+ or - 2 centimeters) are then
sent back to the users smartphone. We believe that the commercial applications for this technology are significant in many areas.
Currently, we are focusing
on the following market segments:
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E-commerce apparel industry – our main target-market;
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Do it yourself (“DIY”) uses; and
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Usage as a tape measure.
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While we are currently
devoting much of our focus on the applications for the apparel business, management believes that all of the above mentioned applications
will be useful to users, retailers and vendors alike.
The Market - The Apparel Industry
The growth in
online apparel shopping has been positive and negative for retailers. The positive: what was an approximately $72.13 billion
apparel and accessories market in 2016 is projected to increase to approximately $116.3 billion U.S. dollars by 2021
(https://www.statista.com/statistics/278890/us-apparel-and-accessories-retail-e-commerce-revenue). The negative: although
online apparel shopping is growing quickly, customer returns are also growing quickly due to a bad fit.
For apparel
retailers, both in retail and online, customer returns are a necessary pain point, backed by flexible return policies and in
some instances, free return shipping. However, online retailers have higher operating costs as at least 30% of all
products ordered online are returned, compared to 8.89% from retail stores, according to recent data
(http://www.business2community.com/infographics/e-commerce-product-return-statistics-trends-infographic-01505394#Js0FFKfd6xZEorqz.97).
The U.S. Census Bureau estimated that total e-commerce sales for 2016 were $394.9 billion, an increase of 15.1% from
2015. According to Euromonitor International, most online apparel retailers have average return rates of 15-20%, of
which around 80% are fit-based. According to the National Retail Federation, when translating these figures into hard
currency, in the United States, online consumers returned approximately $260 billion in merchandise to retailers in 2015, or
8% of all purchases.
MySizeID
We are currently in
development of an application (“MySizeID”) which assists the consumer to accurately take the measurements of his or
her own body using a smartphone in order to fit clothing in the best way possible without the need to try the clothes on. The purpose
of our application is to simplify the process of clothing acquisition through the internet and to significantly reduce the rate
of returns of ill-fitting clothing which are acquired through the internet.
The application is the
result of a research and development effort that combines:
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Anthropometric research – analyses of information pertaining to body measurements derived from a survey and the subsequent determination of correlations between body parts;
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Body measurement algorithm research – an algorithm created by the Company to measure body parts; and
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Retailers size chart analyses – adopting a deep understanding of the size charts of retailers and the corresponding “body to garment size.”
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MySizeID will operate
based on the use of existing sensors in smart phones which enable, through a specific purpose application, the measurement of the
body of consumers independently by moving the cellular phone along his or her body. The measurements will then be saved on the
Company’s cloud database, enabling the user to search for clothes in various retailer websites without worrying about size.
When a search is made, the retailer will connect to the Company’s cloud database and then provide results based on the user’s
measurements and other parameters as he or she may have defined. This data will also be saved for use when a customer enters a
brick and mortar store to help serve the customer more efficiently and to provide a better shopping experience.
As soon as the item
is found and the acquisition is completed, the retailer will be charged a certain percentage of the acquisition price. The rate
to be charged by My Size for the acquisition has not yet been fixed, and will be determined following negotiations with fashion
companies, in a more advanced stage of the development
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How MySizeID Can be Utilized by the
Apparel Industry
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MySizeID: This application will allow consumers to create a secure, online profile of their personal measurements, which can then be utilized with partnered online retailers to insure that no matter the manufacturer or size chart, they will get the right fit. The MySizeID application will utilize a patent-pending measurement technology that does not rely on user photographs or any additional hardware; all a user needs to do is scan their body with their smartphone and the app records their measurements.
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In Store Shopping Tool: The Company is developing technology which
will permit users of MySizeID to allow brick and mortar merchants to access their profile
to receive more personalized attention. This anticipated concierge like service will enable
a salesperson to better serve customers by accessing the user’s size and style preferences
to make the in-store shopping experience more pleasant, time efficient and satisfactory.
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3.
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Cross
Site Search Feature: The Company is developing the MySizeID profile which will enable users
to search for a specific product or item across multiple online retailers, but, unlike most
shopping comparison shopping tools, MySizeID will deliver results that fit each individual
user’s measurements. The Company will develop this feature so that it can be customized
for personalized filters that go beyond sizing and measurements, and can also include a user’s
favorite colors, brands, styles and more.
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The application is being
designed to use a person’s body measurements to help determine correct apparel sizes when shopping on-line. To begin, the
app will measure the hip breadth, and uses statistical, mathematical algorithms to recommend the most appropriate size trousers.
True Size
In November 2016, the
Company introduced a new product called TrueSize.
TrueSize is a customizable,
white-label, mobile application that empowers retailers to improve the online shopping experience of their customers by perfectly
matching their true measurements with the retailer’s offerings. The level of accuracy and ease of use integrated into the
retailer’s website ensures that the customers will select the right size apparel every time, and we believe this will significantly
reduce the amount of returns.
How Does TrueSize Work?
TrueSize has two components:
a white label application and a small application located on each page of the retailer’s website. First, the customer downloads
the TrueSize app, branded to a specific retailer’s website, and signs in, using the same credentials used for the online
store. The application will then guide the customer through the process.
Using the TrueSize app,
the customer next takes accurate measurements of an item of clothing from their wardrobe by placing the smartphone first on one
end of the item and then on the other end. The app. will then prompt the user to take several different measurements to get a complete
reading. The information pertaining to each item is then saved, but can be updated at any time. Measurements are next stored in
the cloud and a recommended size for the user is calculated. The user may continue shopping directly from the app by clicking the
“Go Shopping” button, which will direct them to the retailer’s mobile website.
The chart below illustrates
how consumers can interact with the prompts from the TrueSize application.
Shopping with TrueSize
A “TrueSize”
widget in the form of a button is located in proximity to the size selection feature on each product page of the retailer’s
website. If the customer has signed in to the website and has already downloaded the TrueSize app and taken measurements, a recommended
size will automatically appear in the widget. Users then have the option to manually update their size parameters – height,
weight, and an item’s parameters – at any time by simply clicking on the widget. If the customer has not yet signed
into the website, a prompt will appear requesting the customer to do so.
TRUCCO – RealSize
RealSize
is a white label measurement application developed based on the Company’s TrueSize technology.
The first customer
to use the TrueSize technology is IN SITU S.A., the owner of the rights to the fashion brand-name TRUCCO.
TRUCCO
is a women’s clothing brand and has over 240 points of sale in more than 20 countries all over the world including, but not
limited to, Andorra, Chile, China, Costa Rica, Czech Republic, Dominican Republic, France, Guatemala, Israel, Kuwait, Libya, Malaysia,
Mexico, Panama, Paraguay, Peru, Portugal, Qatar, Russia, Singapore, Slovakia, Spain, Taiwan and Thailand.
The Market - Courier Services
When an individual wishes
to ship boxes from place to place, they often call a courier service and request a pick up. The individual is then usually asked
about the dimensions of the package to be shipped. Unfortunately, the response given to the courier can be rather vague (big, medium,
small, etc.). This is often the cause of much confusion between the shipper and the courier. This confusion can lead to the courier
sending out the wrong vehicle for the pick-up and/or a large price differential than what was originally quoted by the courier
causing customer dissatisfaction.
How My Size Can be Utilized for Courier
Services
My Size operates based
on the use of existing sensors in smart phones which enable, through a specific purpose application, measurement of the dimensions
of packages by moving the cellular phone along packages (length, height and width) to be sent via courier. The measurements are
then be saved on the Company’s cloud database and shared with the courier. This allows for:
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Courier services to provide accurate pricing to their consumers with little to no confusion; and
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Courier services can send the proper sized vehicle to pick up package(s).
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Accordingly to Market
Realist, the courier service market in the United States alone had revenues of over $90 billion in 2014. Accordingly, the Company
views this as an excellent opportunity to create value in the courier market.
Agreement with Katz Delivery Services,
LTD
On November 20, 2015,
My Size entered into an agreement (the “Katz Agreement”) with Katz Deliveries, LTD (“Katz”), one of the
largest courier services in Israel. Katz delivers approximately five million parcels per year, the most in Israel. Katz has more
than 250 vehicles. Pursuant to the Katz Agreement, the parties have agreed to mutually work together to develop and integrate My
Size technology with the technology of Katz to accurately monitor the volume of all parcels delivered to it for shipment by its
clients. The goal is for Katz to use our technology to help with planning its distribution lines, thus reducing operational costs
by adjusting the distribution vehicles to the volume of the shipments. My Size expects to generate revenues from this endeavor
by the second half of 2018, but is still in negotiations with Katz regarding the terms of the Katz Agreement.
SizeUp
My Size is working on
additional consumer applications. One of these applications is in the category of DIY. In this application, users will be able
to visualize how an object or a piece of furniture will fit in an existing room in their home or office. As many people have difficulty
with spatial recognition, the Company hopes this will help alleviate the problem.
In the third quarter
of 2015, My Size launched the SizeUp application, a smart tape measure for the business to consumer market. SizeUp is a project
that My Size has already completed and launched. This application allows users to utilize their smartphone as a tape measurer.
The application provides measurements with an accuracy plus or minus 2 centimeters. In the first quarter of 2016, a second version
of SizeUp for the iOS operating system was released. This release included the ability to measure both horizontal and vertical
measurements. In January 2017, a third version of SizeUp for the iOS operating system was released. This release included an innovative
air measurement algorithm which allows the user to measure over the air without the need to slide the phone over the surface during
the measurement. Through November 2017, there have been over 530,000 downloads of the SizeUp app.
The first version
of the SizeUp app for Android was released in March 2016 and included vertical measurement. An update to the app was released
in June, 2017 which update includes a one-time calibration process for ensuring high accuracy. Currently both versions of the
SizeUp app (for Android and iOS) are available for free for the first 30 days, where after a user will be required to pay a
one-time fee of $1.99 to continue using the application.
To
date, the Company has accumulated immaterial revenues from the mentioned fee.
Research and Development
The Company has incurred
research and development expenses of $727,000 in 2016 and $301,000 in 2015, and $624,000 in the nine month period ended September
30, 2017, relating to the development of its applications and technologies.
Income Sources - Projected Income
The Company’s
business model currently contemplates five methods of producing revenue through its products:
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1.
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Fees - The Company intends to charge sellers a fee for every garment and clothing item purchased using its services, which fees are currently anticipated to be in the range of 1% to 3% of royalties on product sales, depending on volume, resulting from usage of the MySizeID platform.
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2.
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Advertisements - the Company may generate revenue by using specialized ads using its database to identify the user’s exact needs.
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3.
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“Offline Shopping” - the Company may offer its services for clothing and fashion stores, for real-time use by their customers. The service may allow the store to immediately offer the customer a fitting garment suitable for his or her size.
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4.
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Pay Per API call – every time a user is looking onto an item in the retailers website and clicks the “what’s my size” button to find out his size the retailer will be charged a fixed amount based on the SDK pricing matrix.
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5.
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SizeUp – SizeUp is the first B2C app that MySize has released in the Apple App Store and on Google Play. The Company charges a one-time fee of $1.99 for every download of the app from either store.
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Competition
Management of the Company
believes that its technology and applications are a win-win solution for consumers, retailers, couriers and individuals. The Company’s
technology is protected by three issued patents, one in each of Russia, Japan and the U.S., one patent-pending submission and an
additional patent application which is in process. My Size’s products are designed to allow users to measure themselves simply
by sliding a smartphone over their body, and the measurements are recorded by the My Size application.
Unlike other products
claiming similar capabilities, there is no need for additional accessories (no webcam, photos, measuring tape, etc.). Users of
the My Size apps will have their information protected and a unique identification number is provided that matches personal sizes
with retailer size charts. When consumers get the right size products, there are fewer returns of such products involved.
My Size’s advantage
lies in its easy to use application in recording body measurements. Using special algorithmic equations, the software is able to
determine which sizes will best fit the customer. The collection of this data, and tracking shoppers’ preferences, allows
for a unique shopping experience both online and in brick and mortar stores where the technology can instantly match clothes the
customer likes in sizes that will fit them.
However, My Size does
face competition in helping retailers increase conversation rate and reduce shipping costs.
Competitive Landscape
The following chart lists some but not all of our competitors:
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Name
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Technology
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User Action
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Product / Service
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True Fit
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Algorithm driven engine matches manufacturer specs and data points with customer profile
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Answer questions to create profile
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Based on statistics; doesn’t reflect real measurement
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Fits.me
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Software solution based on a personal avatar; Algorithm driven engine matches manufacturer specs and data points with customer profile
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Answer questions to create profile
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Virtual fitting room size
Recommendations based on statistics
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Virtusize
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Compares a reference item the silhouette of the garment they are looking to buy
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Reference items: a previous purchase or a favorite item. Measure it manually and enter results to the app
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Garment-to-garment comparison with tape measure (manually)
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EasyMeasure
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Uses camera and motion sensors
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User needs to photograph according to the instructions and conditions of the app. (i.e certain lighting conditions)
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Allows the user to measure large objects and from far
away (i.e. a building). Low accuracy requires optimal lighting conditions
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Only on iOS platform
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●
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Very intuitive
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AR MeasureKit
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AR kit and motion sensors
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Allows the user to measure objects from a distance with the camera
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Requires bright light, and a contrast between the object
and the background
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●
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When measuring small objects it can be difficult to
“mark” them
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Only on iOS platform
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Smart Measure
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Camera and motion sensors
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Allows the user to measure objects from a distance
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●
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Easy to use
Requires the user to know the height of the device
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●
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Requires optimal lighting conditions
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●
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Only on Android platform
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Some of our competitors
have significantly greater financial, marketing, personnel and other resources than we do, and many of our competitors are well
established in markets in which we have existing retailers or intend to locate new retailers. We may also need to evolve our concepts
in order to compete with popular new retail formats or concepts that develop from time to time, and we cannot offer any assurance
that we will be successful in doing so or that modifications to our concepts will not reduce our profitability.
Legal Proceedings
On May 3, 2017,
Lightcom (Israel) Ltd., an Israeli company, alleging that it is a shareholder of the Company, filed a motion with the Tel Aviv
District Court (Financial Division) to approve an action against the Company and the Company’s officers and directors, as
a shareholders’ class action. The complaint alleges, inter alia, that the Company’s report dated April 19, 2017 regarding
its engagement with the Israeli Post was false and misleading, and that as a result thereof financial damages have been incurred
by two purported classes of shareholders: (i) any shareholder who sold Company’s shares as of April 20, 2017 and until April
27, 2017, with respect to damage directly caused by such sale and (ii) any shareholder which held shares on April 20, 2017 and
subsequent to April 27, 2017 with respect to damage caused by permanent adverse effect to the shares’ value. The alleged
financial damage caused to members of both classes is estimated at NIS 18.8 million. The Company reviewed the Motion initially
with its legal counsel and retained an expert to review and analyze the allegations and data upon which the motion is based. The
Company’s management, after considering the conclusions of a report issued by a third party expert and an opinion of U.S.
legal counsel, is of the opinion that the chances that the class motion will be denied exceed the risk that it will be approved
In the event that the class motion will be approved, the complaint will become a class action which will be heard by the court
on its merits. Should this occur, the Company will respond to the class motion in the time frame ordered by the court. On November
15, 2017 the Company filed its response to the class motion and a motion to dismiss the class motion. On November 15, 2017, the
Court ordered the respondent (the original plaintiff) to respond to the motion to dismiss within 30 days, which response was filed by the respondent on November 29, 2017. A hearing on the foregoing matter is scheduled
to be held on January 3, 2018. As of the date of this
filing, the motion to dismiss is still pending.
On September
9, 2015, fourteen shareholders filed a complaint against the Company and its CEO Mr. Ronen Luzon, alleging that in accordance
with agreements signed between plaintiffs and the Company, the plaintiffs are entitled to register their shares for sale with
the stock market, while the Company allegedly breached its obligation and refrained from doing its duty to register the
plaintiffs’ shares. On November 5, 2015, the Company filed its defense and a counter claim against the plaintiffs and
against two additional defendants (who are not plaintiffs) Mr. Asher Shmuelevitch and Mr. Eitan Nahum. In its counter claim,
the Company alleged that the agreements by force of which the counter defendants hold their shares are defunct, based on
fraud, as the counter defendants never paid and never intended to pay the agreed consideration for their shares. The Company
further alleged that Mr. Shmuelevitch used his position as a director and controlling stockholder of the Company to knowingly
cause the Company to enter such defunct agreements. On September 5, 2017, the court rendered a judgment pursuant to which the
complaint against the Company was accepted, the complaint against Mr. Ronen Luzon was rejected and the Company’s
counter-claim was rejected. The judgment included: (1) a declaratory remedy, under which the Company breached its contractual
undertakings toward the plaintiffs, to list their shares both on TASE and on NASDAQ; (2) an order that the Company take any
and all actions required for the listing of the plaintiffs shares, including instructing the Company’s transfer agent
to remove the legend or any other restriction from the plaintiffs stock certificate and to issue them with new stock
certificates free and clear from any restriction; (3) an order that the registration company of Bank Hapoalim electronically
list all of the plaintiffs’ shares detailed in the complaint on the electronic trading system; and (4) an order that
the Company pay the plaintiffs costs in the amount of NIS 70,000. On October 3, 2017, the Company appealed the judgment with
the Supreme Court of Israel, and simultaneously, filed with the Supreme Court a Motion for Stay of Execution of the
judgement, pending the outcome of the appeal. On November 8, 2017, the Supreme Court upheld the Motion to Stay and ordered
that the execution of the judgment will be stayed pending the outcome of the appeal, provided that the Company deposit in the
Supreme Court’s treasury an autonomous Israeli CPI linked bank guarantee in an amount of NIS 1,700,000, to cover the
respondents’ potential damages should the appeal be ultimately denied. The Company did not deposit the bank
guarantee in the amount of NIS 1,700,000 and will instead register the shares held by the plaintiffs on TASE and on NASDAQ
and will issue such shares free of any restrictive legends. In the event that the Company is successful in its appeal, the
Company may seek relief from the shareholders which have sold their shares either in private or public sales in the amount of
the proceeds from such sales. Although the Company has appealed such matter, there can be no assurance that the appeal will
result in a judgment favorable to the Company. If the judgment rendered on appeal is not favorable to the Company, the
Company may be ordered to pay the respondents legal costs in connection with the appeal. On November 16, 2017, the Company
deposited NIS 45,000 with the Supreme Court to cover respondents’ potential legal costs if the appeal is
ultimately denied.
The Company received legal advice
from its counsel that the burden of proof that the judgment is wrong and should be reversed lies with the appellant. Consequently,
the Company believes that it is more likely than not that the appeal will be denied rather than being accepted. In the event that
the appeal is denied, no direct financial liability will be imposed on the Company (other than legal costs which the court may
order the losing side to pay).
It should be
noted that the plaintiffs may file a complaint against the Company seeking reimbursement of economic loss or damages due to the
fact that their shares remained restricted, in breach of the Company’s contractual undertakings. A formal demand has not
yet been filed, but in their response to the Company’s motion to stay the judgment, the plaintiffs argued, that they suffered
economic loss in the sum of NIS 12,100,000. As of the date of this filing no formal request or complaint were filed; however,
we are unable to assess the financial risk inherent in such a claim since, among other things, the estimate of alleged damage
is dependent upon the actual revenues to be received by the plaintiffs from the future sale of the shares, the method of calculating
the damage and data relating to the Company's share price and trading volume of stock. Needless to say, that in the event that
the Company is successful in its appeal, there will be no grounds to such reimbursement.
On December 27,
2015, a legal complaint was filed against the Company. The defendants named in the complaint are the Company, the members of the
Board of Directors of the Company, Mrs. Shoshana Zigdon, a shareholder and related party in the Company, as well as two additional
defendants who are not shareholders of the Company. The plaintiff alleges that the Company violated its obligation to register
his shares (the “Original Shares”) for trade with the TASE causing damage in total amount of NIS 2,622,500. The plaintiff
seeks relief against the defendants through financial compensation in the sum of the aforementioned alleged damage; additional
compensation in the sum of NIS 400,000 for mental anguish; and if and to the extent that until such time as the plaintiff may
be able to sell its shares on TASE ("the Exercise Date"), the price of a Company share will be in excess of NIS 20.98
("the Base Price"), an additional amount equal to the difference between the Base Price and the highest price of a Company
share between the time the claim was submitted and the Exercise Date for each share held by the plaintiff. The plaintiff has also
requested costs of trial and attorney's fees. Following the recommendation of the court, on March 20, 2016, the plaintiff filed
a notice of deletion of certain defendants including board and management members, excluding the chairman of the Board and the
CEO of the Company from the statement of claim. Pursuant to the Israeli court's recommendation, the case was referred to mediation
and the Company and the plaintiff entered into a settlement agreement (the "Settlement") dated June 20, 2017. Pursuant
to the Settlement, (i) the Company shall pay the plaintiff the sum of NIS325,000 (the "Down Payment") within 30 days
from the date of the Settlement, (ii) the Company is obligated to register the Original Shares within a specified time frame and
(ii) the Company will issue, within 60 days, 80,358 additional shares of common stock (the “New Shares”) to the plaintiff
which shares shall be registered, deposited in escrow and sold for the benefit of the plaintiff. Such New Shares shall be sold
at a maximum aggregate price of NIS10,000 or an amount constituting no more than 2% of the average volume of trades within the
last 90 days, according to the higher amount, in one single trading day. To the extent the Company does not issue the unrestricted
New Shares within 60 days, the plaintiff has a right, at his exclusive discretion, to resume the legal proceedings pursuant to
the complaint, provided that the Down Payment is deposited by him in an escrow account, pending the court's final adjudication
of the complaint. Additionally, the Settlement provides that to the extent the aggregate proceeds from the sale of the Original
Shares and the New Shares is less than NIS1,600,000, the Company will either complement the difference in cash or shall issue
to the plaintiff additional shares of common stock in lieu thereof, at the Company's sole discretion. If the Company does not
comply with the terms of the Settlement, plaintiff may resume the legal proceedings which could result in substantial costs, diversion
of management’s attention and diversion of the Company’s resources.
Employees and Independent Contractors
We currently have 12
employees and 7 independent contractors.
Company Information
The Company was incorporated
in the State of Delaware and commenced operations in September 1999 under the name Topspin Medical, Inc. In December 2013, the
Company changed its name to Knowledgetree Ventures Inc. Subsequently, in February 2014, the Company changed its name to My Size,
Inc. Our principal executive offices are located at 3 Arava St., pob 1026, Airport City, Israel 7010000, and our telephone number
is +972-3-600-9030. Our website address is www.MySizeID.com. The information on our website is not part of this prospectus.
We have included our website address as a factual reference and do not intend it to be an active link to our website.
Background
The Company (under the
name Topspin Medical, Inc.) was a privately held company that was engaged, through 2012, in research and development of a medical
magnetic resonance imaging (“MRI”) technology for interventional cardiology and in the development of MRI technology
for use in the diagnosis and treatment of prostate cancer.
On September 1, 2005,
the Company issued securities to the public in Israel according to a prospectus and became publicly traded on the Tel Aviv Stock
Exchange (“TASE”). In 2007, and until August 2012, the Company registered some of its securities with the U.S. Securities
and Exchange Commission (“SEC”).
In January 2012, after
having received the approval at the general meeting of shareholders of the Company, the Company consummated a transaction whereby
it acquired Metamorefix Ltd. (“Metamorefix”). Pursuant to such transaction, Metamorefix became wholly-owned by the
Company. Metamorefix was incorporated in 2007, and was engaged in the development of innovative solutions for the rehabilitation
of tissues, particularly skin tissues.
On August 21, 2012,
the Company’s board of directors (the “Board”) approved the suspension of the Company’s reporting obligations
under Section 13(a) and 15(d) of the Securities Exchange Act of 1934 (the “De-Registration”). The Company thereafter
filed a Form 15 with the SEC on September 5, 2012 to effect the De-Registration. Upon the filing of the Form 15, the Company’s
obligation to file periodic and current reports with the SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q and Current Reports on form 8-K, was immediately suspended.
By the end of 2012,
in view of the Company’s cash flow, the Company ceased its above operations and shortly thereafter the Company’s employees
were laid off. In January 2013, the Company sold its entire ownership interest in Metamorefix.
Change in Control Transaction
In September 2013, Ronen
Luzon, the Company’s current Chief Executive Officer, purchased control of the Company from Mr. Asher Shmuelevitch (the “Transaction”).
Mr. Luzon purchased 1,755,950 shares of common stock from Mr. Shmuelevitch, which shares represented approximately 40% of the issued
and outstanding capital stock of the Company at such time, and thus Mr. Luzon became a controlling shareholder of the Company.
Within the framework
of the Transaction, Mr. Luzon reached a settlement with the Company’s creditors pursuant to which the main creditor, Mr.
Asher Shmuelevitch, was paid a total sum of New Israeli Shekel (“NIS”) 0.5 million (approximately $140,000) in consideration
for a full and final waiver of any and all his claims that he may have relating to any monetary indebtedness of the Company to
the creditors.
As
a result of the various investment rounds in the Company, Mr. Luzon’s beneficial ownership in the Company has been diluted
and currently represent approximately 11% of the issued and outstanding shares of common stock of the Company on a fully diluted
basis.
In
December 2013, the Company changed its name to Knowledgetree Ventures Inc. Thereafter, in January, 2014, the Board approved a
transaction with Shoshana Zigdon, a related party, with respect to a technology venture through a new subsidiary, as discussed
in the Shoshana Zigdon Agreement below (see “February 2014 Purchase Agreement”). Subsequently, on February 16, 2014,
the Company changed its name to My Size, Inc.
February 2014 Purchase Agreement
In
February 2014, the Company entered into a Purchase Agreement (the “Purchase Agreement’) with Shoshana Zigdon (“Seller”),
with respect to the acquisition of certain rights in a venture for the accumulation of physical data of human beings by portable
electronic devices (including smart phones, tablets and other portable devices) for the purpose of locating, based on the accumulated
data, articles of clothing in internet apparel stores, which will fit the person whose measurements were so accumulated (the “Venture”).
Prior to entering into the Purchase Agreement, in January 2014, the Purchase Agreement was approved by shareholders of the Company
as the Seller was also a beneficial owner of over 20% of the outstanding capital of the Company.
Pursuant
to the Purchase Agreement, the Company purchased the all of Seller’s rights, title and interest in and to the Venture, including,
but not limited to, the method (the “Method”) and the certain patent application that had been filed by Seller (PCT/IL2013/050056)
(the “Patent”, and collectively with the Method, the “Assets”).
In
consideration for the sale of the Assets, the Company agreed to pay to Seller, 18% of the Company’s operating profit, directly
or indirectly connected with the Venture and/or the Method and/or the commercialization of the Patent together with value-added
tax (“VAT”) in accordance with the law (the “Consideration”) for a period of seven years from the end
of the development period of the Venture. The parties further agreed that Seller’s right to receive the Consideration will
apply even in the event the Patent is revoked/rejected/expires and/or the non-receipt of the Patent for any reason. Down payments
on account of the Consideration are to be paid to the Seller quarterly, within 14 days from the approval of the reviewed financial
reports of the Company, with the exception of the fourth quarter which will be paid after the approval of the audited financial
reports of the Company. Payment will be made against a duly issued tax invoice as prescribed by law.
The
Agreement may be terminated by either party in the event of a breach of the obligations of the other party and the failure to
cure a default within a specified period of time. The Agreement further provides that Seller is entitled to repurchase the Assets
from the Company upon the occurrence of one or more of the following events: (a) if an application for liquidation of the Company
and/or an application for appointment of a receiver for the Company and/or for a significant part of its assets has been filed,
and/or an attachment has been imposed on a significant part of the Company’s assets, and the application or attachment –
as the case may be – has not been not canceled within 60 days from the date on which they are filed; or (b) if upon the
date that is seven years from the date of execution of the Agreement, the amount of Company’s income, directly and/or indirectly
accumulated from the Venture and/or the Method and/or the commercialization of the Patent is less than NIS 3.6 million (approximately
$1 million) (a “Repurchase Event”).
If
a Repurchase Event occurs, Seller shall have a 90 day right, subject to delivery of written notice to the Company of Seller’s
intention to exercise such right, to repurchase the Assets from the Company. The repurchase price will be based upon a market
price to be determined by an external and independent valuer, who shall be chosen by agreement by the parties, and the Audit Committee
shall conduct the negotiations on behalf of the Company to determine the identity of the valuer. In the absence of agreement on
the identity of the valuer, the valuer shall be appointed by the President of the Institute of Certified Public Accountants in
Israel. If one of the parties appeals against the valuation, with the Company’s decision to appeal being made by the Audit
Committee of the Company, the parties shall approach another agreed valuer from one of the four large accounting firms in Israel
(and in the absence of agreement he shall be chosen by the President of the Institute of Certified Public Accountants) and an
average shall be taken of the two valuations which are received. The parties shall bear the valuers’ fees and all the expenses
of the valuation in equal shares. Unless Seller gives the Company written notice of the retraction of Seller’s intention
to repurchase the Assets, the Seller shall be obligated to repurchase the Assets within 60 days from the date of receipt of the
valuation. Seller shall have the right to retract its intention to repurchase the Assets, provided Seller gives written notice
to the Company within 30 days of receiving the valuation and subject to Seller refunding the Company the expenses borne by the
Company in respect of the valuation (provided that the Company gives Seller details of the expenses borne by it).
In
addition to the foregoing, the Agreement provides that all developments, improvements knowledge and know-how developed and/or
accumulated by the Company after the execution of the Agreement will be owned by the Company. Further, the Seller agreed not to
compete, directly or indirectly, with the Company in any matter relating to the Assets and/or the Venture and/or the Method for
a period of seven years from the end of the development period of the Venture.
On
July 25, 2016, the Company’s common stock began publicly trading on the NASDAQ Capital Market under the symbol “MYSZ”.
Anticipated
Reverse Stock Split and Other Corporate Actions Approved by Stockholders
On November 8,
2017 and December 14, 2017, the stockholders holding a majority of the voting capital of the Company’s issued and outstanding
common stock and the Board approved (i) a reverse stock split of the Company’s issued and outstanding common stock in a
ratio to be determined by the Board which ratio shall not be less than 1-for-2 nor more than 1-for-10, with the exact ratio to
be set at a whole number within this range as determined by the Board (ii) an amendment to the Company’s 2017 Consultant
Equity Incentive Plan to increase the number of shares of common stock reserved for issuance thereunder from 3,000,000 to 4,500,000
shares and (iii) an amendment to the Certificate of Incorporation to increase the number of authorized shares of common stock
from 50,000,000 to 100,000,000 shares (which will not be affected by the aforementioned reverse stock split).
On December 18,
2017, the Company filed a preliminary information statement with the SEC in connection with the aforementioned approvals. Pursuant
to Rule 14c-2 under the Exchange Act, 20 days after the mailing of such information statement to stockholders of the Company,
which the Company expects will be mailed on or about December 29, 2017, the Company shall file an amendment to its Certificate
of Incorporation to effectuate the reverse stock split, at such ratio as determined by the Board, as well as the increase in authorized
shares of common stock. The amendment to increase the number of shares of common stock reserved for issuance under the 2017 Consultant
Equity Incentive Plan shall become effective on the 20
th
day after the mailing of the information statement to stockholders
of the Company without further action by the Company.
The Offering
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Common stock offered by us in this offering
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[●] shares
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Pre-funded warrants offered by us in this offering
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We are also offering to each purchaser whose purchase of shares of common stock in this offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% of our outstanding common stock immediately following the consummation of this offering, the opportunity to purchase, if the purchaser so chooses, pre-funded warrants, in lieu of shares of common stock that would otherwise result in the purchaser’s beneficial ownership exceeding 4.99% of our outstanding common stock. Subject to limited exceptions, a holder of pre-funded warrants will not have the right to exercise any portion of its pre-funded warrants if the holder, together with its affiliates, would beneficially own in excess of 4.99% (or, at the election of the holder, 9.99%) of the number of shares of common stock outstanding immediately after giving effect to such exercise. Each pre-funded warrant will be exercisable for one share of our common stock. The purchase price of each pre-funded warrant will equal the price per share at which the shares of common stock are being sold to the public in this offering, minus $0.001, and the exercise price of each pre-funded warrant will be $0.001 per share. This offering also relates to the shares of common stock issuable upon exercise of any pre-funded warrants sold in this offering. For each pre-funded warrant we sell, the number of shares of common stock we are offering will be decreased on a one-for-one basis. Because a common warrant to purchase [●] shares of our common stock is being sold together in this offering with each share of common stock and, in the alternative, each pre-funded warrant to purchase one share of common stock, the number of common warrants sold in this offering will not change as a result of a change in the mix of the shares of our common stock and pre-funded warrants sold.
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Common warrants offered by us in this offering
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Common warrants to purchase an aggregate of [●] shares of our common stock. Each share of our common stock is being sold together with a common warrant to purchase [●] share of our common stock. Each common warrant will have an exercise price of $[●] per share (subject to appropriate adjustment in the event of recapitalization events, stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events), will be immediately exercisable and will expire on the fifth anniversary of the original issuance date. No fractional shares of common stock will be issued in connection with the exercise of a common warrant. In lieu of fractional shares, we will round up to the next whole share. This prospectus also relates to the offering of the shares of common stock issuable upon exercise of the common warrants.
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Common
stock to be outstanding after this offering
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[●]
shares (assuming no sale of any pre-funded warrants and assuming none of the common warrants issued in this offering are
exercised). The number of shares outstanding after this offering is on a pre-reverse stock split basis without taking
into account a reverse stock split of the Company’s issued and outstanding common stock in a ratio to be determined
by the Board which ratio shall be not less than 1-for-2 and no more than 1-for-10. If the reverse stock split ratio is
1-for-2, then after this offering
[●] shares will be
outstanding (assuming no sale of any pre-funded warrants and assuming none of the common warrants issued in this offering
are exercised). If the reverse stock split ratio is 1-for-10, then after this offering [●] shares will be
outstanding (assuming no sale of any pre-funded warrants and assuming none of the common warrants issued in this offering
are exercised). The reverse stock split is scheduled to as such time as the Board, in its sole discretion determines, if at
all; provided, however, such reverse stock split shall occur no sooner than 20 days after the mailing of the
Company’s information statement pursuant to Rule 14c-2 under the Exchange Act, which the Company plans to mail on
or around December 29, 2017, as discussed on page 9 of this prospectus.
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Use
of proceeds
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We
estimate that the net proceeds to us from this offering will be approximately $[●] million if we sell all of the securities
we are offering, based upon the assumed public offering price of $[●] per share or pre-funded warrant, after deducting
placement agent fees and estimated offering expenses payable by us and assuming no exercise of the common or pre-funded warrants.
We intend to use the net proceeds from the sale of the securities for working capital, repayment of trade payables, general
corporate purposes, the repayment of $666,666 million in promissory notes sold in our October 2017 private placement of securities,
and $60,000 in fees payable to the placement agent in connection with such October 2017 private placement. See “Use
of Proceeds” on page 24 for additional information.
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Risk factors
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You
should carefully read and consider the information set forth under “Risk Factors” on page 12 of this prospectus
and the documents incorporated by reference herein before deciding to invest in our securities.
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Lock-up
agreements
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We have agreed, subject to certain exceptions, for a
period of 15 business days after the closing of this offering, not to offer, sell,
contract to sell, pledge, grant any option to purchase, make any short sale or
otherwise dispose of directly or indirectly any shares of our common stock or any
securities convertible into or exchangeable for shares of our common stock either
owned as of the date hereof or thereafter acquired without the prior written
consent of the placement agent. In
addition, our executive officers, directors, and a stockholder holding over 5% of our common
stock have agreed, subject to certain exceptions, for a period of 180 days after
the date of this prospectus, not to
offer, sell, contract to sell, pledge, grant any
option to purchase, make any short sale or otherwise dispose of directly or indirectly
any shares of our common stock or any securities convertible into or exchangeable for
shares of our common stock either owned as of the date hereof or thereafter acquired
without the prior written consent of the placement agent. For more information, see “Plan
of Distribution” on page 32 of this prospectus.
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Leak-out agreements
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Until the earlier of (i) January __,
2018 and (ii) the
fifth consecutive trading day
during which the VWAP (as defined in the warrants) for each such trading day during such period is equal to or exceeds $[____]
per share, each investor either alone or together with its affiliates, in this offering will be limited to selling no more
than [___ ]% of the daily trading volume of the common stock on such trading day, including shares of common stock or shares
of common stock underlying any convertible securities (including any shares of common stock acquirable upon exercise of purchased
pre-funded warrants or common warrants).
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NASDAQ Capital Market common stock symbol
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MYSZ
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TASE symbol
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MYSZ
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Listing of Pre-Funded Warrants and Common Warrants
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We do not intend to list the pre-funded warrants or the common warrants on any securities exchange or nationally recognized trading system.
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The number of shares
of common stock to be outstanding immediately after this offering is based on 18,406,245 shares of common stock outstanding as
of December 12, 2017 and excludes:
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925,500
1
shares
of common stock issuable upon exercise of outstanding options as of December 12, 2017
under our 2017 Equity Incentive Plan at a price of $1.21;
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2,190,000
2
shares
of common stock issuable upon exercise of outstanding options as of December 12, 2017
under our 2017 Consultant Equity Incentive Plan at prices ranging from $1.50 to $5.09
3
;
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888,888
4
shares
of common stock issuable upon the exercise of warrants outstanding as of December 12,
2017 at a of $0.75 per share; and
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1,591,717 shares of common
stock issuable upon the exercise of warrants outstanding as of December 12, 2017 at prices
ranging from $0.04 to $5.09
5
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All share
numbers included in this prospectus are included on a pre-reverse stock split basis without taking into account a reverse stock
split of the Company’s issued and outstanding common stock, which reverse stock split shall occur as such time as the Board,
in its sole discretion determines, if at all. The reverse stock split shall occur no sooner than 20 days after the mailing of
the Company’s information statement pursuant to Rule 14c-2 under the Exchange Act, which the Company plans to mail on or
around December 29, 2017 as discussed on page 9 of this prospectus.
1
The outstanding options are subject to approval by TASE.
2
Excludes options to purchase 1,230,000 shares of common stock, of which 1,000,000 are exercisable at $1.00 per share and 230,000
are exercisable at $2.50 per share. Of such options, 390,000 are subject to TASE approval and the balance, or 840,000 are subject
to TASE approval and an increase in the common stock reserve pursuant to the Company’s 2017 Consultant Equity Incentive Plan.
Excludes an aggregate of 150,000 shares issuable upon exercise of options by three consultants which options are exercisable at
$2.00 per share. The issuance of the foregoing options is subject to approval by TASE and an increase in the common stock reserve
pursuant to the Company’s 2017 Consultant Equity Incentive Plan.
3
Based upon a conversion price of NIS 3.539 as of December 12, 2017.
4
The outstanding warrants are subject to approval by TASE.
5
Based upon a conversion price of NIS 3.539 as of December 12, 2017.
RISK FACTORS
An
investment in our securities involves a high degree of risk. This prospectus contains a discussion of the risks applicable to an
investment in our securities. Prior to making a decision about investing in our securities, you should carefully consider the specific
factors discussed under the heading “Risk Factors” in this prospectus, together with all of the other information contained
or incorporated by reference in any prospectus supplement or appearing or incorporated by reference in this prospectus. You should
also consider the risks, uncertainties and assumptions discussed under Item 1A, “Risk Factors,” in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2016 and any updates described in our Quarterly Reports on Form 10-Q,
all of which are incorporated herein by reference, and may be amended, supplemented or superseded from time to time by other reports
we file with the SEC in the. The risks and uncertainties we have described are not the only ones we face. Additional risks and
uncertainties not presently known to us or that we currently deem immaterial may also affect our operations. The occurrence of
any of these known or unknown risks might cause you to lose all or part of your investment in the offered securities.
Risks Related to Our Company and
Our Business
We may never successfully develop any
products or generate revenues.
We are a pre-revenue stage company with
research, development, marketing and general and administrative expenses. We may be unable to successfully develop or market any
of our current or proposed products or technologies, those products or technologies may not generate any revenues, and any revenues
generated may not be sufficient for us to become profitable or thereafter maintain profitability. We have only generated very minimal
revenues to date.
We have historically incurred significant
losses and there can be no assurance when, or if, we will achieve or maintain profitability.
During the twelve months
ended December 31, 2016, the Company realized a net loss of $4,334,000 compared with a net loss of $3,437,000 for the year ended
December 31, 2015. Our net loss from continuing operations for the nine months ended September 30, 2017 was $3,519,000. Because
of the numerous risks and uncertainties associated with the development of the Company’s products and business, we are unable
to predict the extent of any future losses or when we will become profitable, if at all. Expected future operating losses will
have an adverse effect on our cash resources, stockholders’ equity and working capital. Our failure to become and remain
profitable could depress the value of our stock and impair our ability to raise capital, expand our business, maintain our development
efforts, diversify our portfolio of staffing companies, or continue our operations. A decline in our value could also cause you
to lose all or part of your investment in our Company.
Based on the projected
cash flows and the cash balances as of the date of
t
his prospectus, our management is of the opinion that without further
fund raising we will not have sufficient resources to enable the Company to continue its operating activities, including the development
and marketing of our products, for a period of at least 12 months from the date of filing of
t
his prospectus. As a result,
there is substantial doubt about our ability to continue as a going concern.
Management’s plans
include the continued commercialization of our products and securing sufficient financing through the sale of additional equity
securities, debt or capital inflows from strategic partnerships. There can be no assurances, however, that we will be successful
in obtaining the level of financing needed for our operations. If we are unsuccessful in commercializing our products and securing
sufficient financing, we may need cease operations.
We will need to raise additional capital
to meet our business requirements in the future, which is likely to be challenging, could be highly dilutive and may cause the
market price of our common stock to decline.
In order to meet our
business objectives, we will need to raise additional capital, which may not be available on reasonable terms or at all. Additional
capital would be used to accomplish the following:
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finance our current operating expenses;
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pursue growth opportunities;
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hire and retain qualified management and key employees;
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respond to competitive pressures;
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comply with regulatory requirements; and
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maintain compliance with applicable laws.
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To the extent that we
raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities could result
in substantial dilution for our current stockholders. The terms of any securities issued by us in future capital transactions may
be more favorable to new investors, and may include preferences, superior voting rights and the issuance of warrants or other derivative
securities, which may have a further dilutive effect on the holders of any of our securities then-outstanding. We may issue additional
shares of our common stock or securities convertible into or exchangeable or exercisable for our common stock in connection with
hiring or retaining personnel, option or warrant exercises, future acquisitions or future placements of our securities for capital-raising
or other business purposes. The issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance,
may cause the market price of our common stock to decline and existing stockholders may not agree with our financing plans or the
terms of such financings.
In addition, we may
incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees, accounting fees, securities
law compliance fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses
in connection with certain securities we issue, such as convertible notes and warrants, which may adversely impact our financial
condition.
Furthermore, any additional
debt or equity financing that we may need may not be available on terms favorable to us, or at all. If we are unable to obtain
such additional financing on a timely basis, we may have to curtail our development activities and growth plans and/or be forced
to sell assets, perhaps on unfavorable terms, which would have a material adverse effect on our business, financial condition and
results of operations.
The success of our business is highly
dependent on being able to predict which applications and technologies will be successful, and on the market acceptance and timely
release of those applications and technologies. If we do not accurately predict which applications and technologies will be successful,
our financial performance will be materially adversely affected.
We expect to derive
most of our revenue by charging fees in connection with the usage of our applications and technologies. We must make product development
decisions and commit significant resources well in advance of the anticipated introduction of new applications and technologies.
The release of our applications and technologies may be delayed, may not succeed or may have a shorter life cycle than anticipated.
If the applications are not released when anticipated or do not attain wide market acceptance, our revenue growth may never materialize,
we may be unable to fully recover the resources we have committed, and our financial performance will be harmed.
We are substantially dependent on assets
we purchased from an affiliated party, and if we lose the rights to such assets or the assets are repurchased for any reason, our
ability to develop existing and new applications based upon these assets would be harmed, and our business, financial condition
and results of operations would be materially and adversely affected.
In February 2014, we
entered into the Purchase Agreement with Shoshana Zigdon pursuant to which we acquired certain rights in a venture for the accumulation
of physical data of human beings by portable electronic devices (including smart phones, tablets and other portable devices) for
the purpose of locating, based on the accumulated data, articles of clothing in internet apparel stores, which will fit the person
whose measurements were so accumulated. In addition, pursuant to the Purchase Agreement, we acquired the right, title and interest
to the method and the certain patent application that had been filed by Shoshana Zigdon (PCT/IL2013/050056). Our business is substantially
dependent upon the assets we acquired pursuant to the Purchase Agreement. Therefore, our ability to develop and commercialize our
applications depends upon the effectiveness and continuation of the Purchase Agreement. If we lose the right to the Method or Patent
application described above, our ability to develop existing and new applications would be harmed.
In consideration for
the sale of the Method and Patent application, we agreed to pay to Shoshana Zigdon, 18% of the Company’s operating profit,
directly or indirectly connected with the Venture and/or the Method and/or the commercialization of the Patent together with value-added
tax in accordance with the law for a period of seven years from the end of the development period of the Venture. Shoshana Zigdon’s
right to receive such consideration will apply even in the event the Patent is revoked/rejected/expires and/or the non-receipt
of the Patent for any reason.
The Purchase Agreement may be terminated
by either party in the event of a breach of the obligations of the other party and the failure to cure the default within a specified
period of time. Further, Shoshana Zigdon has the right to repurchase the Method and Patent application from us upon the occurrence
of one or more of the following events: (a) if an application for liquidation of the Company and/or an application for appointment
of a receiver for the Company and/or for a significant part of its assets has been filed, and/or an attachment has been imposed
on a significant part of the Company’s assets, and the application or attachment – as the case may be – has not
been not canceled within 60 days from the date on which they are filed; or (b) if upon the date that is seven years from the date
of execution of the Purchase Agreement, the amount of Company’s income, directly and/or indirectly accumulated from the Venture
and/or the method and/or the commercialization of the Patent is less than NIS 3.6 million (approximately $1 million). If Shoshana
Zigdon repurchases the Method and Patent application, our ability to develop our proposed products would be significantly harmed.
Furthermore, we may lose the ability to commercialize any products that we have already developed.
Changes in economic conditions could
materially affect our business, financial condition and results of operations.
Because our target customers
are retailers, we, together with the rest of the retail industry, will depend upon consumer discretionary spending once we develop
our proposed products. Increases in unemployment rates, reductions in home values, increases in home foreclosures, investment losses,
personal bankruptcies and reductions in access to credit and reduced consumer confidence, may impact consumers’ ability and
willingness to spend discretionary dollars. In addition, volatile economic conditions may repress consumer confidence and discretionary
spending. Any of the foregoing may have an adverse effect on our business, financial condition and results of operations.
Damage to our reputation or lack of
acceptance of our brand in existing and new markets could negatively impact our business, financial condition and results of operations.
We intend to build a strong reputation
for the quality of our technology, and we must protect and grow the value of our brand to be successful. Any incident that erodes
consumer affinity for our brand could significantly reduce our brand value and damage our business. If guests perceive or experience
a reduction in quality, or in any way believe we fail to deliver a consistently positive experience, our brand value could suffer
and our business may be adversely affected.
In addition, our ability to successfully
develop new retailers in new markets may be adversely affected by a lack of awareness or acceptance of our brand in these new markets.
To the extent that we are unable to foster name recognition and affinity for our brand in new markets, our growth may be significantly
delayed or impaired.
As a result, adverse
economic conditions in any of these areas could have a material adverse effect on our overall results of operations. In recent
years, certain of these markets have been more negatively impacted by the housing decline, high unemployment rates and the overall
economic crisis than other geographic areas. In addition, given our geographic concentration, negative publicity regarding any
of our retailers in these areas could have a material adverse effect on our business and operations, as could other regional occurrences
such as local strikes, terrorist attacks, increases in energy prices, adverse weather conditions, hurricanes, droughts or other
natural or man-made disasters.
In particular, adverse
weather conditions can impact guest traffic at our retailers, and, in more severe cases, cause temporary retail closures, sometimes
for prolonged periods. Our business is subject to seasonal fluctuations, with retail sales typically higher during certain months,
such as December. Adverse weather conditions during our most favorable months or periods may exacerbate the effect of adverse weather
on guest traffic and may cause fluctuations in our operating results from quarter-to-quarter within a fiscal year.
Technology changes rapidly in our business,
and if we fail to anticipate new technologies, the quality, timeliness and competitiveness of our products will suffer.
Rapid technology changes
require us to anticipate which technologies and/or distribution platforms our products must take advantage of in order to make
them competitive in the market at the time they are released. Therefore, we usually start our product development with a range
of technical development goals that we hope to be able to achieve. We may not be able to achieve these goals, or our competition
may be able to achieve them more quickly than we can. In either case, our products may be technologically inferior to competitive
products, or less appealing to consumers, or both. If we cannot achieve our technology goals within the original development schedule
of our products, then we may delay products until these technology goals can be achieved, which may delay or reduce revenue and
increase our development expenses.
We rely upon third parties to provide
distribution for our applications, and disruption in these services could harm our business.
We currently utilize,
and plan on continuing to utilize over the current fiscal year, third-party networking providers and distribution through companies
including, but not limited to, Apple and Google to distribute our technologies. If disruptions or capacity constraints occur, the
Company may have no means of replacing these services, on a timely basis or at all. This could cause a material adverse condition
for our operations and financial earnings.
We rely on third-party hosting and cloud
computing providers to operate certain aspects of our business. Any failure, disruption or significant interruption in our network
or hosting and cloud services could adversely impact our operations and harm our business.
Our technology infrastructure
is critical to the performance of our mobile applications and customer satisfaction. Our mobile applications run on a complex distributed
system, or what is commonly known as cloud computing. We own, operate and maintain elements of this system, but significant elements
of this system are operated by third-parties that we do not control and which would require significant time to replace. We expect
this dependence on third-parties to continue. In particular, a significant portion, if not almost all data storage, data processing
and other computing services and systems is hosted by cloud computing providers. Any disruptions, outages and other performance
problems relating to such services, including infrastructure changes, human or software errors and capacity constraints, could
adversely impact our business, financial condition or results of operations.
We could be harmed by improper disclosure
or loss of sensitive or confidential company, employee, associate or customer data, including personal data.
In connection with the
operation of our business, we plan to store, process and transmit data, including personal and payment information, about our employees,
customers, associates and candidates, a portion of which is confidential and/or personally sensitive. Unauthorized disclosure or
loss of sensitive or confidential data may occur through a variety of methods. These include, but are not limited to, systems failure,
employee negligence, fraud or misappropriation, or unauthorized access to or through our information systems, whether by our employees
or third parties, including a cyberattack by computer programmers, hackers, members of organized crime and/or state-sponsored organizations,
who may develop and deploy viruses, worms or other malicious software programs.
Such disclosure, loss
or breach could harm our reputation and subject us to government sanctions and liability under our contracts and laws that protect
sensitive or personal data and confidential information, resulting in increased costs or loss of revenues. It is possible that
security controls over sensitive or confidential data and other practices we and our third-party vendors follow may not prevent
the improper access to, disclosure of, or loss of such information. The potential risk of security breaches and cyberattacks may
increase as we introduce new services and offerings, such as mobile technology. Further, data privacy is subject to frequently
changing rules and regulations, which sometimes conflict among the various jurisdictions in which we provide services. Any failure
or perceived failure to successfully manage the collection, use, disclosure, or security of personal information or other privacy
related matters, or any failure to comply with changing regulatory requirements in this area, could result in legal liability or
impairment to our reputation in the marketplace.
We might not be able to successfully
market our products.
We expend significant
resources in our marketing efforts, using a variety of media, including social media venues such as Facebook and LinkedIn. In addition,
we use targeted marketing on certain websites and have engaged two sales people in Europe and three sales people in the U.S. to
market our products. We expect to continue to conduct brand awareness programs and guest initiatives to attract potential users.
These initiatives may not be successful, resulting in expenses incurred without the benefit of substantial revenues. Additionally,
some of our competitors have greater financial resources, which enable them to purchase significantly more advertising than we
are able to purchase. Should our competitors increase spending on advertising and promotions or our advertising funds decrease
for any reason, or should our advertising and promotions be less effective than our competitors, there could be a material adverse
effect on our results of operations and financial condition.
Our business operations and future development
could be significantly disrupted if we lose key members of our management team.
The success of our business
continues to depend to a significant degree upon the continued contributions of our senior officers and key employees, both individually
and as a group. Our future performance will be substantially dependent in particular on our ability to retain and motivate our
Chief Executive Officer, and certain of our other senior executive officers. We currently do not have an employment agreement in
place with these officers. The loss of the services of our Chief Executive Officer, senior officers or other key employees could
have a material adverse effect on our business and plans for future development. We have no reason to believe that we will lose
the services of any of these individuals in the foreseeable future; however, we currently have no effective replacement for any
of these individuals due to their experience, reputation in the industry and special role in our operations. We also do not maintain
any key man life insurance policies for any of our employees.
Our growth may strain our infrastructure
and resources, which could slow our development of new retailers and adversely affect our ability to manage our existing retailers.
Our future growth may strain our retail
management systems and resources, financial controls and information systems. Those demands on our infrastructure and resources
may also adversely affect our ability to manage our existing retailers. If we fail to continue to improve our infrastructure or
to manage other factors necessary for us to meet our expansion objectives, our operating results could be materially and adversely
affected. Likewise, if sales decline, we may be unable to reduce our infrastructure quickly enough to prevent sales deleveraging,
which would adversely affect our profitability.
Our business operations are conducted
in multiple languages and could be disrupted due to miscommunications or translation errors.
The success of
our business continues to depend on our marketing efforts in the United States, Europe and Israel, each of which is conducted
in the local language. Miscommunications or inaccurate foreign language translations could have a material adverse effect on our
business operations and financial conditions. Additionally, contracts, communications and complex technical information must be
accurately translated into foreign languages.
We do not maintain theft or casualty
insurance and only maintain modest liability and property insurance coverage and therefore could incur losses as a result of an
uninsured loss.
We do not maintain
theft or casualty insurance and only maintain modest liability and property insurance coverage. We cannot provide any assurance
that we will not incur uninsured liabilities and losses as a result of the conduct of our business. Any such uninsured loss or
liability could have a material adverse effect on our results of operations.
We may not be able to adequately
protect our intellectual property, which, in turn, could harm the value of our brands and adversely affect our business.
Our ability to
implement our business plan successfully depends in part on our ability to build brand recognition using our trademarks, service
marks and other proprietary intellectual property, including our names and logos. We plan to register a number of our trademarks;
however, no assurance can be given that our trademark applications will be approved. We have been issued three patents, one of
each in of Russia, Japan and the U.S., have one patent-pending submission and an additional patent application which is in process.
No assurance can be given that our patent-pending submission or the additional patent application which is in process will be
approved. If our patent-pending submission or the additional patent application which is in process are not approved, our ability
to expand or develop our business may be negatively affected.
Third parties may
also oppose our trademark or patent applications, or otherwise challenge our use of the trademarks or patents. In the event that
our trademarks or patents are successfully challenged, we could be forced to rebrand our goods and services or redesign our technology,
which could result in loss of brand recognition, and could require us to devote resources to advertising and marketing new brands
and products.
If our efforts
to register, maintain and protect our intellectual property are inadequate, or if any third party misappropriates, dilutes or
infringes on our intellectual property, the value of our brands may be harmed, which could have a material adverse effect on our
business and might prevent our brands from achieving or maintaining market acceptance. We may also face the risk of claims that
we have infringed third parties’ intellectual property rights. If third parties claim that we infringe upon their intellectual
property rights, our operating profits could be adversely affected. Any claims of intellectual property infringement, even those
without merit, could be expensive and time consuming to defend, require us to rebrand our services, if feasible, divert management’s
attention and resources or require us to enter into royalty or licensing agreements in order to obtain the right to use a third
party’s intellectual property.
Any royalty or
licensing agreements, if required, may not be available to us on acceptable terms or at all. A successful claim of infringement
against us could result in our being required to pay significant damages, enter into costly license or royalty agreements, or
stop the sale of certain products or services, any of which could have a negative impact on our operating profits and harm our
future prospects.
Information technology system failures
or breaches of our network security could interrupt our operations and adversely affect our business.
We will rely on
our computer systems and network infrastructure across our operations. Our operations depend upon our ability to protect our computer
equipment and systems against damage from physical theft, fire, power loss, telecommunications failure or other catastrophic events,
as well as from internal and external security breaches, viruses, worms and other disruptive problems. Any damage or failure of
our computer systems or network infrastructure that causes an interruption in our operations could have a material adverse effect
on our business and subject us to litigation or actions by regulatory authorities. Although we employ both internal resources
and external consultants to conduct auditing and testing for weaknesses in our systems, controls, firewalls and encryption and
intend to maintain and upgrade our security technology and operational procedures to prevent such damage, breaches or other disruptive
problems, there can be no assurance that these security measures will be successful.
We will continue to incur costs
and be subject to various obligations as a result of being a public company, listed in the United States and in Israel.
We will continue
to incur significant legal, accounting and other expenses as a result of being a public company, listed in the United States and
in Israel. Although we will incur costs each year associated with being a publicly-traded company, it is possible that our actual
costs of being a publicly-traded company will vary from year to year and may be different than our estimates. In estimating these
costs, we take into account expenses related to insurance, legal, accounting and compliance activities.
Furthermore, the
need to maintain the corporate infrastructure demanded of a public company may divert management’s attention from implementing
our growth strategy, which could prevent us from improving our business, results of operations and financial condition. We have
made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems
to meet our reporting obligations as a U.S. publicly traded company. However, the measures we take may not be sufficient to satisfy
our obligations as a publicly traded company.
We may require additional capital
to finance our operations in the future, but that capital may not be available when it is needed and could be dilutive to existing
stockholders.
We may require
additional capital for future operations. We plan to finance anticipated ongoing expenses and capital requirements with funds
generated from the following sources:
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available cash and cash investments; and
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capital raised through debt and equity offerings.
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Current conditions in
the capital markets are such that traditional sources of capital may not be available to us when needed or may be available only
on unfavorable terms. Our ability to raise additional capital, if needed, will depend on conditions in the capital markets, economic
conditions and a number of other factors, many of which are outside our control, and on our financial performance. Accordingly,
we cannot assure you that we will be able to successfully raise additional capital at all or on terms that are acceptable to us.
If we cannot raise additional capital when needed, it may have a material adverse effect on our liquidity, financial condition,
results of operations and prospects. Further, if we raise capital by issuing stock, the holdings of our existing stockholders will
be diluted.
If we raise capital
by issuing debt securities, such debt securities would rank senior to our common stock upon our bankruptcy or liquidation. In addition,
we may raise capital by issuing equity securities that may be senior to our common stock for the purposes of dividend and liquidating
distributions, which may adversely affect the market price of our common stock. Finally, upon bankruptcy or liquidation, holders
of our debt securities and lenders with respect to other borrowings will receive a distribution of our available assets prior to
the holders of our common stock. Additional equity offerings may dilute the holdings of our existing stockholders or reduce the
market price of our common stock, or both.
Our business is dependent upon continued
market acceptance by consumers.
We are substantially
dependent on continued market acceptance of our products by customers, and such customers are dependent upon regulatory and legislative
forces. We cannot predict the future growth rate and size of this market. If we do not gain market acceptance of our applications,
our business may be materially affected.
If we are able to expand our operations,
we may be unable to successfully manage our future growth.
Since inception, we
have been planning for the expansion of our brand. Any such growth could place increased strain on our management, operational,
financial and other resources, and we will need to train, motivate, and manage employees, as well as attract management, sales,
finance and accounting, international, technical, and other professionals. Any failure to expand these areas and implement appropriate
procedures and controls in an efficient manner and at a pace consistent with our business objectives could have a material adverse
effect on our business and results of operations.
Any future or current litigation could
have a material adverse impact on our results of operations, financial condition and liquidity.
From time to time
we may be subject to litigation, including, among others, potential stockholder derivative actions. Risks associated with
legal liability are difficult to assess and quantify, and their existence and magnitude can remain unknown for significant
periods of time. To date we have obtained directors and officers liability (“D&O”) insurance to cover some of
the risk exposure for our directors and officers
.
Such insurance generally pays the expenses (including amounts paid
to plaintiffs, fines, and expenses including attorneys’ fees) of officers and directors who are the subject of a
lawsuit as a result of their service to the Company. There can be no assurance that we will be able to continue to maintain
this insurance at reasonable rates or at all, or in amounts adequate to cover such expenses should such a lawsuit occur.
While neither Delaware law nor our Amended and Restated Certificate of Incorporation (“Certificate of
Incorporation”) or Amended and Restated Bylaws (“Bylaws”) require us to indemnify or advance expenses to
our officers and directors involved in such a legal action, we expect that we would do so to the extent permitted by Delaware
law. Without D&O insurance, the amounts we would pay to indemnify our officers and directors should they be subject to
legal action based on their service to the Company could have a material adverse effect on our financial condition, results
of operations and liquidity.
Such lawsuits, and any related
publicity, may result in substantial costs and, among other things, divert the attention of management and our employees. An
unfavorable outcome in any claim or proceeding against us could have a material adverse impact on our financial position and
results of operations for the period in which the unfavorable outcome occurs, and potentially in future periods. Further, any
settlement announced by us may expose us to further claims against us by third parties seeking monetary or other damages
which, even if unsuccessful, would divert management attention from the business and cause us to incur costs,
possibly material, to defend such matters, which could have a material adverse impact on our financial position. See
“Legal Proceedings” on page 6
for more information regarding the Company’s involvement in ongoing
litigation matters.
Our prior operating results may
not be indicative of our future results.
You should not
consider prior operating results to be indicative of our future operating results. The timing and amount of future revenues will
depend almost entirely on our ability to engage new retailers while maintaining a relationship with our existing retailers. Our
future operating results will depend upon many other factors, including, but not limited to:
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the level of product and price competition;
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our success in expanding our business network and managing our growth;
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the ability to hire qualified employees; and
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the timing of such hiring and our ability to control costs.
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Federal,
state and local or Israeli tax rules may adversely impact our results of operations and financial position.
We are subject to federal, state and local taxes in the U.S., as well as
local taxes in Israel in respect to our operations in Israel. Although we believe our tax estimates are reasonable, if the
Internal Revenue Service or other taxing authority disagrees with the positions we have taken on our tax returns, we
could face additional tax liability, including interest and penalties. If material, payment of such additional amounts upon
final adjudication of any disputes could have a material impact on our results of operations and financial position. In addition,
complying with new tax rules, laws or regulations could impact our financial condition, and increases to federal or state
statutory tax rates and other changes in tax laws, rules or regulations may increase our effective tax rate. Any
increase in our effective tax rate could have a material impact on our financial results.
Our management controls a large
block of our common stock that will allow them to control us.
As of the date
of this prospectus, members of our management team beneficially own approximately 12.53% of our outstanding common stock. In addition,
two stockholders own approximately 26.83% of our outstanding common stock. As such, management and the two stockholders of the
Company own approximately, in the aggregate, 39.36% of our voting power. As a result, management and the two stockholders may
have the ability to control substantially all matters submitted to our stockholders for approval including:
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election of our board of directors;
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removal of any of our directors;
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amendment of our Certificate of Incorporation or Bylaws; and
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adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination involving us.
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In addition, management’s
and the two stockholders’ stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting
to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over
our stock price. Any additional investors will own a minority percentage of our common stock and will have minority voting rights.
The auditors of our 2015 financial
statements may discontinue their business.
We have been
advised by the auditors for our 2015 financial statements that they plan to discontinue their business of providing financial
and accounting services. Following any such discontinuance of their practice, it may be difficult, if not impossible, to obtain
consents for the inclusion of their financial statements in our filings. Should we not be able to obtain their consents, there
could be a delay in our ability to enter into future financing transactions prior to the filing of our 2017 financial statements
in our Annual Report on Form 10-K in 2018 unless our 2015 financial statements have been re-audited by another independent accounting
firm in accordance with the applicable rules and regulations of the Securities and Exchange Commission. We intend to work with
the auditors for our 2016 financial statements for the audit of our 2017 financial statements, and we believe that we will be
able to timely complete and file such financial statements and remain current in our financial and other reporting obligations
with the Securities and Exchange Commission.
Risks
Related to our Operations in Israel
The
Company has facilities located in Israel, and therefore, political conditions in Israel may affect the Company’s operations
and results.
The
Company has facilities located in Israel. Accordingly, political, economic and military conditions in Israel will directly or
indirectly affect the Company’s operations and results. Since the establishment of the State of Israel, a number of armed
conflicts have taken place between Israel and its Arab neighbors. An ongoing state of hostility, varying in degree and intensity
has led to security and economic problems for Israel. For a number of years there have been continuing hostilities between Israel
and the Palestinians. This includes hostilities with the Islamic movement Hamas in the Gaza Strip, which have adversely affected
the peace process and at times resulted in armed conflicts. Such hostilities have negatively influenced Israel’s economy
as well as impaired Israel’s relationships with several other countries. Israel also faces threats from Hezbollah militants
in Lebanon, from ISIS and rebel forces in Syria, from the government of Iran and other potential threats from additional countries
in the region. Moreover, some of Israel’s neighboring countries have recently undergone or are undergoing significant political
changes. These political, economic and military conditions in Israel could have a material adverse effect on the Company’s
business, financial condition, results of operations and future growth.
Israel’s
economy may become unstable.
From
time to time, Israel’s economy may experience inflation or deflation, low foreign exchange reserves, fluctuations in world
commodity prices, military conflicts and civil unrest. For these and other reasons, the government of Israel has intervened in
the economy employing fiscal and monetary policies, import duties, foreign currency restrictions, controls of wages, prices and
foreign currency exchange rates and regulations regarding the lending limits of Israeli banks to companies considered to be in
an affiliated group. The Israeli government has periodically changed its policies in these areas. Reoccurrence of previous destabilizing
factors could make it more difficult for the Company to operate its business and could adversely affect its business.
Some
of the Company’s employees and officers are obligated to perform military reserve duty in Israel.
Generally,
Israeli adult male citizens and permanent residents are obligated to perform annual military reserve duty up to a specified age.
They also may be called to active duty at any time under emergency circumstances, which could have a disruptive impact on the
Company’s workforce
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It
may be difficult to enforce a non-Israeli judgment against the Company or its officers and directors.
The
operating subsidiary of the Company is incorporated in Israel. All of the Company’s executive officers and directors are
not residents of the United States, and a substantial portion of the Company’s assets and the assets of its executive officers
and directors are located outside the United States. Therefore, a judgment obtained against the Company, or any of these persons,
including a judgment based on the civil liability provisions of the U.S. federal securities laws, may not be collectible in the
United States and may not necessarily be enforced by an Israeli court. It also may be difficult to affect service of process on
these persons in the United States or to assert U.S. securities law claims in original actions instituted in Israel. Additionally,
it may be difficult for an investor, or any other person or entity, to initiate an action with respect to U.S. securities laws
in Israel. Israeli courts may refuse to hear a claim based on an alleged violation of U.S. securities laws reasoning that Israel
is not the most appropriate forum in which to bring such a claim. In addition, even if an Israeli court agrees to hear a claim,
it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content
of applicable U.S. law often involves the testimony of expert witnesses, which can be a time consuming and costly process. Certain
matters of procedure will also be governed by Israeli law. There is little binding case law in Israel that addresses the matters
described above. As a result of the difficulty associated with enforcing a judgment against the Company in Israel, it may be impossible
to collect any damages awarded by either a U.S. or foreign court.
Our
international operations could expose us to additional risks, including exchange rate fluctuations, legal regulations and political
or economic instability that could harm our business and operating results.
Our
international operations expose us to the following risks which may have a material adverse effect on our business and operating
results:
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devaluations
and fluctuations in currency exchange rates including fluctuations between the U.S. dollar
and the NIS;
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costs
of compliance with local laws, including labor laws and intellectual property laws;
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compliance
with domestic and foreign government policies, including compliance with Israeli
securities laws and TASE;
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changes
in trade regulations and procedures affecting approval, production, pricing, marketing,
reimbursement for and access to, our products;
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compliance
with applicable foreign anti-corruption laws, anti-trust/competition laws, anti-Boycott
Israel law and anti-money laundering laws; and
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economic
and geopolitical developments and conditions, including ongoing instability in global
economies and financial markets, international hostilities, acts of terrorism and governmental
reactions, inflation, and military and political alliances.
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Risks Related to the Common Stock
A more active, liquid trading market
for our common stock may not develop, and the price of our common stock may fluctuate significantly.
Although our common
stock is listed on the NASDAQ Capital Market, it has only been traded on the NASDAQ Capital Market since July 25, 2016. There has
been relatively limited trading volume in the market for our common stock, and a more active, liquid public trading market may
not develop or may not be sustained. Limited liquidity in the trading market for our common stock may adversely affect a stockholder’s
ability to sell its shares of common stock at the time it wishes to sell them or at a price that it considers acceptable. If a
more active, liquid public trading market does not develop, we may be limited in our ability to raise capital by selling shares
of common stock and our ability to acquire other companies or assets by using shares of our common stock as consideration. In addition,
if there is a thin trading market or “float” for our stock, the market price for our common stock may fluctuate significantly
more than the stock market as a whole. Without a large float, our common stock would be less liquid than the stock of companies
with broader public ownership and, as a result, the trading prices of our common stock may be more volatile and it would be harder
for you to liquidate any investment in our common stock. Furthermore, the stock market is subject to significant price and volume
fluctuations, and the price of our common stock could fluctuate widely in response to several factors, including:
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our quarterly or annual operating results;
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changes in our earnings estimates;
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investment recommendations by securities analysts following our business or our industry;
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additions or departures of key personnel;
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changes in the business, earnings estimates or market perceptions of our competitors;
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our failure to achieve operating results consistent with securities analysts’ projections;
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changes in industry, general market or economic conditions; and
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announcements of legislative or regulatory changes.
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The stock market has
experienced extreme price and volume fluctuations in recent years that have significantly affected the quoted prices of the securities
of many companies, including companies in the staffing industry. The changes often appear to occur without regard to specific operating
performance. The price of our common stock could fluctuate based upon factors that have little or nothing to do with us and these
fluctuations could materially reduce our stock price.
Sales by our stockholders of a substantial
number of shares of our common stock in the public market could adversely affect the market price of our common stock.
A substantial portion
of our total outstanding shares of common stock may be sold into the market at any time. Most of these shares are held by three
stockholders, one of which is also an executive officer of the Company. Although we believe that such executive officer has no
current intention to sell a significant number of shares of our stock, we cannot provide any such assurance. In addition, we cannot
provide assurance that the other two large stockholders of the Company have no current intention to sell a significant number of
shares of our stock. If any of the three stockholders which hold most of our shares were to decide to sell large amounts of stock
over a short period of time (presuming such sales were permitted) such sales could cause the market price of our common stock to
drop significantly, even if our business is doing well.
Further, the market
price of our common stock could decline as a result of the perception that such sales could occur. These sales, or the possibility
that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and price
that we deem appropriate.
Our securities are traded on more than
one market which may result in price variations
.
Our securities
have been trading on the NASDAQ Capital Market since July 2016 and on TASE since September 2005. Trading in our securities on
such exchanges occurs in different currencies (U.S. dollars on NASDAQ and NIS on the TASE), and at different times (due to
different time zones, trading days and public holidays in the United States and Israel). The trading prices of our securities
on the two exchanges may differ due to the foregoing and other factors. Any decrease in the price of our shares on the TASE
could cause a decrease in the trading price of our shares on NASDAQ and vice versa.
We are a smaller reporting company and,
as a result of the reduced disclosure and governance requirements applicable to such companies, our common stock may be less attractive
to investors.
We are a smaller reporting
company, (i.e. a company with “public float” held by non-affiliates with a market value of less than $75 million) and
we are eligible to take advantage of certain exemptions from various reporting requirements applicable to other public companies.
We have elected to adopt these reduced disclosure requirements. We cannot predict if investors will find our common stock less
attractive as a result of our taking advantage of these exemptions. If some investors find our common stock less attractive as
a result of our choices, there may be a less active trading market for our common stock and our stock price may be more volatile.
We do not expect to pay any cash dividends
in the foreseeable future.
We have never declared or paid cash dividends
on our common stock. We intend to retain our future earnings, if any, in order to reinvest in the development and growth of our
business and, therefore, do not intend to pay dividends on our common stock for the foreseeable future. Any future determination
to pay dividends will be at the discretion of our Board and will depend on our financial condition, results of operations, capital
requirements, and such other factors as our Board deems relevant. Accordingly, you may need to sell your shares of our common stock
to realize a return on your investment, and you may not be able to sell your shares at or above the price you paid for them.
We can sell additional shares of common
stock without consulting stockholders and without offering shares to existing stockholders, which would result in dilution of stockholders’
interests in the Company and could depress our stock price.
Our Certificate
of Incorporation currently authorizes 50,000,000 shares of common stock, of which 18,406,245 are currently outstanding, and our
Board is authorized to issue additional shares of our common stock. In addition, the Company intends to file an amendment to its
Certificate of Incorporation to increase the number of authorized shares of common stock to 100,000,000, as set forth in the preliminary
information statement that the Company filed with the SEC on December 18, 2017. We intend to file such amendment with the Delaware
Secretary of State 20 days after the mailing of our information statement pursuant to Rule 14c-2 under the Exchange Act. The number
of authorized shares of common stock will not be reduced in connection with the reverse stock split which was also included in
such information statement, as discussed on page 9 of this prospectus.
Although our Board intends to utilize its reasonable business judgment to fulfill its fiduciary obligations
to our then existing stockholders in connection with any future issuance of our capital stock, the future issuance of additional
shares of our capital stock would cause immediate, and potentially substantial, dilution to our existing stockholders, which could
also have a material effect on the market value of the shares.
Further, our shares
do not have preemptive rights, which means we can sell shares of our capital stock to other persons without offering purchasers
in this offering the right to purchase their proportionate share of such offered shares. Therefore, any additional sales of stock
by us could dilute your ownership interest in our Company.
Our quarterly operating results may
fluctuate significantly.
We expect our operating
results to be subject to quarterly fluctuations. Our net loss and other operating results will be affected by numerous factors,
including:
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variations in the level of expenses related to our development programs;
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any intellectual property infringement lawsuit in which we may become involved;
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regulatory developments affecting our products; and
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our execution of any collaborative, licensing or similar arrangements, and the timing of payments under these arrangements.
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If our quarterly operating
results fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially.
Furthermore, any quarterly fluctuations in our operating results may, in turn, cause the price of our common stock to fluctuate
substantially.
If we fail to comply with the rules under
the Sarbanes-Oxley Act of 2002 related to accounting controls and procedures, or if we discover material weaknesses and deficiencies
in our internal control and accounting procedures, our stock price could decline significantly and raising capital could be more
difficult.
If we fail to comply
with the rules under the Sarbanes-Oxley Act of 2002 related to disclosure controls and procedures, or, if we discover material
weaknesses and other deficiencies in our internal control and accounting procedures, our stock price could decline significantly
and raising capital could be more difficult. Section 404 of the Sarbanes-Oxley Act requires annual management assessments
of the effectiveness of our internal control over financial reporting and a report by our independent auditors addressing these
assessments. If material weaknesses or significant deficiencies are discovered or if we otherwise fail to achieve and maintain
the adequacy of our internal control, we may not be able to ensure that we can conclude on an ongoing basis that we have effective
internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal
controls are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud. If we
cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could
lose confidence in our reported financial information, and the trading price of our common stock could drop significantly.
Our Certificate of Incorporation, Bylaws
and Delaware law may have anti-takeover effects that could discourage, delay or prevent a change in control, which may cause our
stock price to decline.
Our Certificate of Incorporation,
Bylaws and Delaware law could make it more difficult for a third party to acquire us, even if closing such a transaction would
be beneficial to our stockholders. Provisions of our Certificate of Incorporation, Bylaws and Delaware law also could have the
effect of discouraging potential acquisition proposals or making a tender offer or delaying or preventing a change in control,
including changes a stockholder might consider favorable. Such provisions may also prevent or frustrate attempts by our stockholders
to replace or remove our management. In particular, the Certificate of Incorporation, Bylaws and Delaware law, as applicable, among
other things:
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provide the Board with the ability to alter the Bylaws without stockholder approval;
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place limitations on the removal of directors; and
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provide that vacancies on the board of directors may be filled by a majority of directors in office, although less than a quorum.
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We are subject to Section 203
of the Delaware General Corporation Law which, subject to certain exceptions, prohibits “business combinations” between
a publicly-held Delaware corporation and an “interested stockholder,” which is generally defined as a stockholder who
becomes a beneficial owner of 15% or more of a Delaware corporation’s voting stock for a three-year period following the
date that such stockholder became an interested stockholder. These provisions are expected to discourage certain types of coercive
takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of us to first negotiate with
our Board. These provisions may delay or prevent someone from acquiring or merging with us, which may cause the market price of
our common stock and the value of our securities to decline. In addition, rules applicable to TASE listed companies also limit
the terms permitted with respect to a new class of shares and prohibit any such new class of shares from having superior voting
rights to the rights of the class of shares listed on TASE.
If we fail
to comply with the continued listing requirements of the NASDAQ Capital Market, our common stock may be delisted and the price
of our common stock and our ability to access the capital markets could be negatively impacted.
On
June 5, 2017, we received a written notice (the “June Notice”) from the NASDAQ Stock Market LLC (“NASDAQ”)
that we were not in compliance with NASDAQ Listing Rule
5550(b)(2), as we did not maintain
a minimum market value of listed securities of $35 million for the preceding 30
consecutive business days.
In
accordance with NASDAQ Listing Rule 5810(c)(3)(C), we had a period of
180 calendar days, or until December 4, 2017 to regain
compliance with the
market value of listed securities requirement. On December 5, 2017,
we received a second written notice from NASDAQ which indicated that because we did not
regain compliance with the
market
value of listed securities requirement by December 4, 2017, our securities would be delisted from NASDAQ on December 14, 2017
unless we request an appeal of such determination on or prior to such date. In accordance with NASDAQ Rules and procedures, on
December 12, 2017, we requested an appeal before the NASDAQ Hearings Panel of the determination to delist our securities from
The NASDAQ Capital Market. A hearing on this matter is currently scheduled to be held on January 25, 2018. The appeal has the
effect of staying the delisting of our securities pending a final written decisions by the NASDAQ Hearings Panel. Although
we have requested an appeal before the Nasdaq Hearings Panel, no assurance can be given that we will be successful in our appeal.
In
addition, on September 26, 2017, we received a written notice (the “September Notice”) from NASDAQ that we were not
in compliance with NASDAQ Listing Rule 5550(a)(2), as the minimum bid price of our common stock has been below $1.00 per
share for 30 consecutive business days. In accordance with NASDAQ Listing Rule 5810(c)(3)(A), we have a period of 180 calendar
days, or until March 26, 2018, to regain compliance with the minimum bid price requirement. To regain compliance, the closing
bid price of our common stock must meet or exceed $1.00 per share for at least 10 consecutive business days during this 180 calendar
day period. In the event we do not regain compliance by March 26, 2018, we may be eligible for an additional 180 calendar
day grace period if we meet the continued listing standards, with the exception of bid price, for the NASDAQ Capital Market, and
we provide written notice to NASDAQ of our intention to cure the deficiency during the second compliance period. Although we intend
to effect a reverse stock split of our issued and outstanding common stock in a ratio to be determined by the Board, which ratio
shall be not less than 1-for-2 and no more than 1-for-10, 20 days after the mailing of our information statement to our stockholders
pursuant to Rule 14c-2 under the Exchange Act, there can be no assurance that such reverse stock split will enable the Company
to regain compliance with NASDAQ minimum bid price requirement.
If
our appeal with respect to our compliance with the market value of listed securities is not successful and/or we fail to regain
compliance with the minimum bid price within the allotted compliance period(s), including any extensions that may be granted
by NASDAQ or fail to comply with or other requirements for continued listing, our common stock may be delisted and the price of
our common stock and our ability to access the capital markets could be negatively impacted. A delisting of our common stock from
the NASDAQ Capital Market could materially reduce the liquidity of our common stock and result in a corresponding material reduction
in the price of our common stock. In addition, delisting could harm our ability to raise capital through alternative financing
sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, employees and fewer
business development opportunities.
Our total market capitalization
immediately after the proposed reverse stock split may be lower than immediately before the proposed reverse stock split.
The market price
per share of our common stock after the proposed reverse stock split may not increase in proportion to the reduction in the number
of shares of common stock outstanding before the reverse stock split, if and when such reverse stock split is effected. Accordingly,
the total market capitalization of our common stock (the aggregate value of all of our common stock at the then existing market
price) after the proposed reverse stock split may be lower than the total market capitalization before the proposed reverse stock
split. There are numerous factors and contingencies that could affect our stock price following a proposed reverse stock split,
including, but not limited to, the status of the market for our stock at the time, our reported results of operations in future
periods, and general economic, market and industry conditions, and the market price of our common stock may not be sustainable
at the bid price following such reverse stock split.
The exercise of outstanding warrants
and stock options will have a dilutive effect on the percentage ownership of our capital stock by existing stockholders.
As
of September 30, 2017, we had outstanding warrants to acquire 2,480,605 shares of our common stock and stock options to purchase
3,115,500 shares of our common stock (not including options to purchase an aggregate of 1,380,000 shares of common stock which
are subject to approval by TASE and an increase in the common stock reserve pursuant to the Company’s 2017 Consultant Equity
Incentive Plan), in addition to the common warrants and pre-funded warrants that we are offering hereunder. The expiration of the
term of such options and warrants range from December 2017 to July 2022. If a significant number of such warrants and stock options
are exercised by the holders, the percentage of our common stock owned by our existing stockholders will be diluted.
Risks Related to this Offering
Management will have broad discretion
as to the use of the net proceeds from this offering, and we may not use the proceeds effectively.
Our
management will have broad discretion as to the application of the net proceeds and could use them for purposes other than those
contemplated at the time of this offering. Our stockholders may not agree with the manner in which our management chooses to allocate
and spend the net proceeds. Moreover, our management may use the net proceeds for corporate purposes that may not increase our
results of operations or the market value of our common stock. Our failure to apply these funds effectively could have a material
adverse effect on our business, delay the development of our products and cause the price of our common stock to decline.
You may incur substantial dilution as
a result of this offering and future equity issuance.
Based on our capitalization as of September
30, 2017, purchasers of our securities in this offering will incur immediate dilution. See “Dilution” on page 25 for
a more detailed discussion of the dilution you will incur in this offering.
In addition to this
offering, subject to market conditions and other factors, we may pursue additional financings in the future, as we continue to
build and expand our business. In future years, we will likely need to raise additional capital to finance our operations. Accordingly,
we may conduct future offerings of equity or debt securities. The exercise of outstanding options and warrants and future equity
issuances will result in dilution to investors. In addition, the market price of our common stock could fall as a result of resales
of any of these shares of common stock due to an increased number of shares of common stock available for sale in the market.
The common warrants and pre-funded warrants
may not have any value.
The common warrants
are exercisable at a price of $[ ] and the pre-funded warrants are exercisable at a price of $0.001. In the event that our common
stock price does not exceed the foregoing exercise prices during the period when such warrants are exercisable, such warrants may
not have any value.
There is no
public market for the common warrants or pre-funded warrants to purchase shares of our common stock being offered by us in
this offering.
There
is no established public trading market for the common warrants and the pre-funded warrants being offered in this offering, and
we do not expect a market to develop. In addition, we do not intend to apply to list the common warrants or pre-funded warrants
on any national securities exchange or other nationally recognized trading system, including The NASDAQ Capital Market. Without
an active market, the liquidity of the common warrants and pre-funded warrants will be limited.
The common
warrants and pre-funded warrants are speculative in nature.
The
common warrants and pre-funded warrants do not confer any rights of common stock ownership on their holders, such as voting rights
or the right to receive dividends, but rather merely represent the right to acquire shares of common stock at a fixed price, and
in the case of common warrants, for a limited period of time. Specifically, commencing on the date of issuance, holders of the
common warrants may exercise their right to acquire the common stock and pay an exercise price of $[ ] per share, subject to certain
adjustments, prior to five years from the date of issuance, after which date any unexercised common warrants will expire and have
no further value. Moreover, following this offering, the market value of the common warrants and pre-funded warrants, if any, is
uncertain and there can be no assurance that the market value of the common warrants or pre-funded warrants will equal or exceed
their imputed offering price. The common warrants and pre-funded warrants will not be listed or quoted for trading on any market
or exchange. There can be no assurance that the market price of the common stock will ever equal or exceed the exercise price of
the common warrants or pre-funded warrants, and consequently, whether it will ever be profitable for holders of the common warrants
or pre-funded warrants to exercise such warrants.
We will need to record additional
debt on our balance sheet.
Part of the proceeds
of this offering will be used to repay $666,666 in principal amount of promissory notes that we sold to various institutional
investors in our October 2017 private placement of securities. After such repayment, the aggregate outstanding principal amounts
of the promissory notes sold in our October 2017 private placement of securities will be $666,667 which will be reflected on our
2017 year-end financial statements. The promissory notes were initially due and payable upon the earlier of (a) the closing of
this offering or (b) February 28, 2018. We have received a waiver from all of the holders of the promissory notes such that
the aggregate outstanding principal amounts of the promissory notes, or $666,667 shall be due upon the earlier of (x) the closing
of our next offering or (y) March 31, 2018. If our next offering does not close by March 31, 2018, we do not expect that we will
have sufficient assets to repay such notes and that there will be an event of default thereunder. If there is an event of default,
the notes will accrue interest at the rate of 10% per annum. The additional debt could also reduce funds available for working
capital and other corporate purposes and make it more difficult for us to find and secure alternative sources of capital to finance
our operations.
The securities
offered pursuant to this offering will be subject to TASE approval.
New
issuances of securities by the Company must be approved by TASE prior to issuance. Accordingly, the securities offered hereby are
subject to TASE approval. In the event that the Company does not receive TASE approval for the issuance of the securities offered
hereby, the Company may not issue such securities.
In making your
investment decision, you should not rely on press releases issued by the Company. You should rely only on statements made in this
prospectus in determining whether to purchase our securities.
On November 30,
2017 and December 8, 2017, the Company issued press releases regarding its upcoming participation in the international CES tradeshow
in Las Vegas in January 2018, and its intended release of new technology developments at such tradeshow. The Company issued such
communication to provide information to customers and interested parties that may be attending the international CES tradeshow
regarding a new business development in reliance upon existing securities laws and guidance governing such communications.
The Company has
in the past, and may continue to issue press releases in the ordinary course, such as the press release described above, or receive,
media coverage, including coverage that is not directly attributable to statements made by our officers and employees. The information
in such press releases or coverage should not be considered by prospective investors in making an investment decisions relating
to purchasing securities in this offering. Rather, prospective investors should carefully evaluate all of the information in this
prospectus, and are cautioned to consider the risks and uncertainties disclosed in this Risk Factors section and elsewhere in
this prospectus.
USE OF
PROCEEDS
We estimate that
the net proceeds to us from this offering will be approximately $[●] million if we sell all of the securities we are offering,
based upon the assumed public offering price of $[●] per share of common stock and $[●] per pre-funded warrant, after
deducting placement agent fees and estimated offering expenses payable by us. If we sell 75%, 50% or 25% of the maximum amount
offered, our net proceeds would be approximately $[●], $[●] or $[●], respectively, after deducting placement
agent fees and estimated offering expenses payable by us.
We will receive additional proceeds from the exercise
of the prepaid warrants and common warrants issuable in connection with this offering only if such prepaid and common warrants
are exercised at their exercise prices of $0.001 and $[●], respectively, and the holders of such warrants pay the exercise
price in cash upon such exercise and do not utilize the cashless exercise provision of with respect to the common warrants. Such
proceeds with respect to the common warrants could not exceed $[●].
We will use the proceeds
of the offering to repay $666,666 in principal amount of promissory notes that we sold to various institutional investors
in our October 2017 private placement of securities. Such notes were issued at a 10% original issue discount, with no ordinary
interest, and were initially due on the earlier of February 28, 2019 or the completion of an equity offering of our securities
(of which this offering qualifies). We have received a waiver from all of the holders of the promissory notes such that the aggregate
outstanding principal amounts of the promissory notes, or $666,667 shall be due upon the earlier of the closing of our next offering
or March 31, 2018.
We will also pay the
placement agent an additional $120,000 in fees for its services as the sole placement agent in connection with such October 2017
private placement, of which $60,000 will become due and payable upon the closing of this offering and $60,000 will become due
and payable upon the closing of our next offering in accordance with our agreement with the placement agent. Even if we raise
less than the maximum amount offered, we will still use the proceeds to repay $666,666 in principal amount of promissory
notes and $60,000 in fees payable to the placement agent. See “Plan of Distribution” on page 32.
We intend to use net
proceeds from this offering (after the repayment of the aforementioned promissory notes and related fees to the placement agent)
for working capital, repayment of trade payables and general corporate purposes. We have not yet determined the amount of net proceeds
to be used specifically for any particular purpose or the timing of these expenditures. Accordingly, our management will have significant
discretion and flexibility in applying the net proceeds from the sale of these securities. See “Risk Factors” for a
discussion of certain risks that may affect our intended use of the net proceeds from this offering.
Our expected use of
net proceeds from this offering represents our current intentions based upon our present plans and business condition. As of the
date of this prospectus, we cannot currently allocate specific percentages of the net proceeds that we may use for the purposes
specified above, and we cannot predict with certainty all of the particular uses for the net proceeds to be received upon the completion
of this offering, or the amounts that we will actually spend on the uses set forth above. The amounts and timing of our actual
use of the net proceeds will vary depending on numerous factors, including our ability to obtain additional financing. We may find
it necessary or advisable to use the net proceeds for other purposes, and our management will have broad discretion in the application
of the net proceeds, and investors will be relying on our judgment regarding the application of the net proceeds from this offering.
Pending the use of the
net proceeds from this offering, we intend to invest the net proceeds in investment-grade, interest-bearing instruments.
DILUTION
If
you purchase our securities in this offering, you will experience dilution in the net tangible book value per share of the common
stock and/or pre-funded warrants you purchase to the extent of the difference between the combined public offering price per share
and related warrant and the net tangible book value per share of our common stock immediately after this offering. The net tangible
book value of our common stock on September 30, 2017, was approximately $(492,000), or approximately $(0.027) per share. Net tangible
book value per share is equal to the amount of our total tangible assets, less total liabilities, divided by the aggregate number
of shares of our common stock outstanding.
After
giving effect to the assumed sale by us of [ ] shares of common stock and/or pre-funded warrants, and common warrants to purchase
up to [ ] shares of common stock in this offering at an assumed combined public offering price of $[ ] per share and
related warrants, or $[ ] per pre-funded warrant and related warrants, assuming no value is attributed to the warrants, and
such warrants are accounted for and classified as equity, and after deducting the placement agent fees and estimated offering expenses
payable by us, our as adjusted net tangible book value as of September 30, 2017, would have been approximately $[ ], or approximately
$[ ] per share. This represents an immediate increase in net tangible book value of approximately $[ ] per share to existing
stockholders and an immediate dilution of approximately $[ ] per share to new investors purchasing shares of our common stock
and warrants in this offering. The following table illustrates this per share dilution, assuming no sale of pre-funded warrants:
|
Assumed combined public offering price per share
and related warrants
|
|
|
|
|
|
$
|
|
|
|
Pro forma net tangible book value per share as of September 30, 2017
|
|
$
|
|
|
|
|
|
|
|
Increase in net tangible book value per share attributable to
this offering
|
|
|
|
|
|
|
|
|
|
As adjusted net tangible book value per share after this offering
|
|
|
|
|
|
|
|
|
|
Dilution in as adjusted net tangible book value per share to
new investors
|
|
|
|
|
|
$
|
|
|
The
following tables illustrate the per share dilution, after giving effect to the assumed sale by us of 75%, 50% and 25% of the maximum
offering amount, assuming no sale of pre-funded warrants.
75%
of maximum offering amount
:
|
Assumed combined
public offering price per share and related warrants
|
|
|
|
|
|
$
|
|
|
|
Pro forma net tangible book
value per share as of September 30, 2017
|
|
$
|
|
|
|
|
|
|
|
Increase in net tangible book
value per share attributable to this offering
|
|
|
|
|
|
|
|
|
|
As adjusted net tangible book
value per share after this offering
|
|
|
|
|
|
|
|
|
|
Dilution in as adjusted net
tangible book value per share to new investors
|
|
|
|
|
|
$
|
|
|
50%
of maximum offering amount
:
|
Assumed combined
public offering price per share and related warrants
|
|
|
|
|
|
$
|
|
|
|
Pro forma net tangible book
value per share as of September 30, 2017
|
|
$
|
|
|
|
|
|
|
|
Increase in net tangible book
value per share attributable to this offering
|
|
|
|
|
|
|
|
|
|
As adjusted net tangible book
value per share after this offering
|
|
|
|
|
|
|
|
|
|
Dilution in as adjusted net
tangible book value per share to new investors
|
|
|
|
|
|
$
|
|
|
25%
of maximum offering amount
:
|
Assumed combined
public offering price per share and related warrants
|
|
|
|
|
|
$
|
|
|
|
Pro forma net tangible book
value per share as of September 30, 2017
|
|
$
|
|
|
|
|
|
|
|
Increase in net tangible book
value per share attributable to this offering
|
|
|
|
|
|
|
|
|
|
As adjusted net tangible book
value per share after this offering
|
|
|
|
|
|
|
|
|
|
Dilution in as adjusted net
tangible book value per share to new investors
|
|
|
|
|
|
$
|
|
|
The
foregoing tables do not take into account further dilution to new investors that could occur upon the exercise of the warrants
offered hereby or outstanding options and warrants having a per share exercise price less than the public offering price per share
in this offering.
To the extent that outstanding options or warrants are exercised,
or restricted stock units vest and settle, investors purchasing our common stock will experience further dilution.
In addition,
we may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient
funds for our current or future operating plans. To the extent that additional capital is raised through the sale of equity or
convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.
The
table and discussion above are based on
18,406,245 shares outstanding
as of September 30, 2017 and excludes as of that date:
|
|
●
|
925,500
6
shares of common stock issuable upon exercise of outstanding options as of September
30, 2017 under our 2017 Equity Incentive Plan at a price of $1.21;
|
|
|
●
|
2,190,000
7
shares of common stock issuable upon exercise of outstanding options as of September
30, 2017 under our 2017 Consultant Equity Incentive Plan at prices ranging from $1.50
to $5.10
8
; and
|
|
|
●
|
1,591,717
shares of common stock issuable upon the exercise of warrants outstanding as of September
30, 2017 at prices ranging from $0.04 to $5.10
9
.
|
All share numbers included
in this prospectus are included on a pre-reverse stock split basis without taking into account a reverse stock split of the Company’s
issued and outstanding common stock, which reverse stock split shall occur as such time as the Board, in its sole discretion determines,
if at all. The reverse stock split shall occur no sooner than 20 days after the mailing of the Company’s information statement
pursuant to Rule 14c-2 under the Exchange Act, which the Company plans to mail on or around December 29, 2017 as discussed on
page 9 of this prospectus.
|
6
|
The outstanding options are subject to approval by TASE.
|
|
7
|
Excludes options to purchase 1,230,000 shares of common stock, of which 1,000,000 are exercisable at $1.00 per share and 230,000
are exercisable at $2.50 per share. Of such options, 390,000 are subject to TASE approval and the balance, or 840,000 are subject
to TASE approval and an increase in the common stock reserve pursuant to the Company’s 2017 Consultant Equity Incentive
Plan.
|
|
8
|
Based upon a conversion price of NIS 3.529 as of September 30, 2017.
|
|
9
|
Based upon a conversion price of NIS 3.529 as of September 30, 2017.
|
SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information regarding beneficial ownership of shares of our common stock as of December 12,
2017 by (i) each person known to beneficially own more than 5% of our outstanding common stock, (ii) each of our
directors, (iii) each of our named executive officers and (iv) all of our directors and executive officers as a group.
Except as otherwise indicated, the persons named in the table below have sole voting and investment power with respect to all
shares beneficially owned, subject to community property laws, where applicable.
|
Beneficial
Owner(1)
|
|
Shares
of Common
Stock Beneficially
Owned
|
|
|
Percentage(2)
|
|
|
Shoshana
Zigdon
|
|
|
3,500,000
|
|
|
|
19.02
|
%
|
|
Israel
Levi
|
|
|
1,437,850
|
|
|
|
7.81
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Named
executive officers and directors:
|
|
|
|
|
|
|
|
|
|
Eliyahu
Walles
|
|
|
300,000
|
(3)
|
|
|
1.60
|
%
|
|
Ronen
Luzon
|
|
|
2,055,950
|
(4)
|
|
|
11
|
%
|
|
Or
Kles
|
|
|
28,333
|
(5)
|
|
|
*
|
|
|
Billy
Pardo
|
|
|
2,055,950
|
(6)
|
|
|
11
|
%
|
|
Arik
Kaufman
|
|
|
0
|
(7)
|
|
|
0
|
|
|
Oren
Elmaliah
|
|
|
0
|
(8)
|
|
|
0
|
|
|
Oron
Branitzky
|
|
|
0
|
(9)
|
|
|
0
|
|
|
All
Executive Officers and Directors as a Group ( persons)
|
|
|
2,384,283
|
|
|
|
12.53
|
%
|
|
* less than 1%
|
|
|
|
|
(1)
|
The address of each person is c/o My Size, Inc., 3 Arava St., pob 1026, Airport City, Israel 7010000 unless otherwise indicated herein.
|
|
(2)
|
The calculation in this column is based upon 18,406,245
shares of common stock outstanding on December 12, 2017. Beneficial ownership is determined in accordance with the rules of
the SEC and generally includes voting or investment power with respect to the subject securities. Shares of common stock that
are currently exercisable or exercisable within 60 days of December 12, 2017 are deemed to be beneficially owned
by the person holding such securities for the purpose of computing the percentage beneficial ownership of such person, but
are not treated as outstanding for the purpose of computing the percentage beneficial ownership of any other person. All share
numbers included in this prospectus are included on a pre-reverse stock split basis without taking into account a reverse
stock split of the Company’s issued and outstanding common stock, which reverse stock split shall occur as such time as the Board, in its sole discretion determines, if at
all. The reverse stock split shall occur no sooner than 20 days after the mailing of the
Company’s information statement pursuant to Rule 14c-2 under the Exchange Act, which we plan to mail on or around December
29, 2017 as discussed on page 9 of this prospectus. If the reverse stock split ratio is 1-for-2, then upon effectiveness
of such reverse stock split, 9,197,408 shares will be issued and outstanding. If the reverse stock split ratio is 1-for-5,
then upon effectiveness of such reverse stock split, 3,678,963 shares will be issued and outstanding. If the reverse stock
split ratio is 1-for-10, then upon effectiveness of such reverse stock split, 1,839,482 shares will be issued and outstanding.
|
|
(3)
|
Includes options to purchase up to 300,000 shares of the Company’s common stock which
vest in full on January 24, 2018.
|
|
|
|
|
(4)
|
Includes
(i) 1,755,950 shares of common stock, (ii) options to purchase up to 150,000 shares of the
Company’s common stock which vest in full on January 24, 2018 and (iii) options to purchase
up to 150,000 shares of the Company’s common stock which vest in full on January 24,
2018 which are held by Billy Pardo, Ronen Luzon’s spouse. Mr. Luzon may be deemed to
beneficially hold the securities of the Company held by Mrs. Pardo.
|
|
|
|
|
(5)
|
Includes an option to purchase 28,333 shares of the Company’s common stock. Excludes (i) an option to purchase up to 28,333 shares of the Company’s common stock which vest in full on May 1, 2018 and (ii) an option to purchase up to 28,334 shares of the Company’s common stock which vest in full on May 1, 2019.
|
|
|
|
|
(6)
|
Includes (i) options to purchase up to 150,000 shares of the Company’s
common stock which vest in full on January 24, 2018, (ii) 1,755,950 shares of common stock
which are held by Ronen Luzon, Billy Pardo’s spouse and (iii) options to purchase up
to 150,000 shares of the Company’s common stock which vest in full on January 24, 2018
which are held by Ronen Luzon, Billy Pardo’s spouse. Mrs. Pardo may be deemed to beneficially
hold the securities of the Company held by Mr. Luzon.
|
|
|
|
|
(7)
|
Excludes options to purchase up to 10,000 shares of the Company’s common stock which vest in full on July 24, 2018.
|
|
|
|
|
(8)
|
Excludes options to purchase up to 10,000 shares of the Company’s common stock which vest in full on July 24, 2018.
|
|
|
|
|
(9)
|
Excludes options to purchase up to 10,000 shares of the Company’s common stock which vest in full on July 24, 2018.
|
DESCRIPTION
OF SECURITIES
Description of Capital Stock
The following description
of our common stock summarizes the material terms and provisions of the common stock that we may issue in connection with this
offering. It may not contain all the information that is important to you. For the complete terms of our common stock, please refer
to our Certificate of Incorporation, as amended and our amended and restated bylaws, which are filed as exhibits to the registration
statement which includes this prospectus. The Delaware General Corporation Law (“DGCL”) may also affect the terms of
these securities.
Common Stock
On
March 22, 2017, we filed an amended and restated certificate of incorporation with the Secretary of State of the State of Delaware.
Pursuant to our amended and restated certificate of incorporation we are authorized to issue 50,000,000 shares of common stock,
par value $0.001 per share. On December 18, 2017, we filed a preliminary information statement with the SEC in accordance with
which, among other things, we intend to file an amendment to our Certificate of Incorporation to increase our authorized common
stock to 100,000,000 shares from 50,000,000 shares. We intend to file such amendment with the Delaware Secretary of State 20 days
after the mailing of our information statement pursuant to Rule 14c-2 under the Exchange Act. The number of authorized shares
of common stock will not be reduced in connection with the reverse stock split which was also included in such information statement,
as discussed on page 9 of this prospectus.
The
following is qualified in its entirety by reference to our certificate of incorporation, as amended, and our bylaws, and by the
provisions of applicable law. A copy of our amended and restated certificate of incorporation was filed as Exhibit 3.1 to our
Current Report on Form 8-K filed on March 23, 2017, which is incorporated herein by reference. A copy of our bylaws were filed
as Exhibit 3.2 to our Annual Report on Form 10-K filed on March 4, 2016, which is incorporated herein by reference.
Holders
of our common stock are entitled to one vote for each share on all matters submitted to a vote of stockholders, and do not have
cumulative voting rights. Generally, in matters other than the election of directors, the affirmative vote of a majority of the
votes cast authorizes such an action, except where Delaware General Corporation Law prescribes a different percentage of votes
or a different exercise of voting power. For the election of directors, directors are elected by a plurality of the votes of the
shares present in person or represented by proxy and entitled to vote. Holders of our common stock are entitled to receive, as,
when and if declared by our Board of directors from time to time, such dividends and other distributions in cash, stock or property
from our assets or funds legally available for such purposes.
Except as set forth herein, no preemptive,
conversion, or other subscription rights apply to our common stock. All outstanding shares of our common stock are fully paid and
non-assessable. In the event of our liquidation, dissolution or winding up, holders of our common stock are entitled to share ratably
in the assets available for distribution.
October 2017
Private Placement
On October 26, 2017,
the Company entered into a securities purchase agreement to sell original issue discount non-convertible notes in the aggregate
principal amount of approximately $1.33 million and warrants to purchase up to 888,888 shares of the Company’s common stock
to certain accredited investors for gross proceeds of $1.2 million. Pursuant to the October 2017 securities purchase agreement,
the Company agreed to provide the investors in such financing participation rights in any Subsequent Placements (as defined hereafter).
Specifically, until the eighteen month anniversary of the closing date of the transaction, neither the Company nor any of
its subsidiaries may issue, offer, sell, grant any option or right to purchase, or otherwise dispose of (or announce any issuance,
offer, sale, grant of any option or right to purchase or other disposition of) any equity security or any equity-linked or related
security (including, without limitation, any “equity security” (as that term is defined under Rule 405 promulgated
under the Securities Act), any convertible securities, any debt or any purchase rights) (any such issuance, offer, sale, grant,
disposition or announcement is referred to as a “Subsequent Placement”) unless the Company first offers to issue and
sell to or exchange with the investors in the October financing such investors’ pro rata portion of 35% of the securities
being offered, provided that the number of securities being offered which the investors shall have the right to subscribe for shall
be based on each investor’s pro rata portion of the aggregate original principal amount of the notes purchased pursuant to
the October financing.
Listing
Our
common stock is listed on The NASDAQ Capital Market under the symbol “MYSZ”.
Transfer Agent
and Registrar
The
transfer agent and registrar for our common stock is VStock Transfer. Its address is 18 Lafayette Pl, Woodmere, NY 11598.
Pre-Funded Warrants
The following summary of certain terms
and provisions of pre-funded warrants that are being offered hereby is not complete and is subject to, and qualified in its entirety
by, the provisions of the pre-funded warrant, the form of which is filed as an exhibit to the registration statement of which this
prospectus forms a part. Prospective investors should carefully review the terms and provisions of the form of pre-funded warrant
for a complete description of the terms and conditions of the pre-funded warrants.
Duration and
Exercise Price.
Each pre-funded warrant offered hereby will have an initial exercise price per share equal to $[ ]
(which includes a nominal value of $0.001 per share of common stock issuable upon exercise of the pre-funded warrant (the “Pre-Funded
Warrant Prepayment”) to be paid on or prior to the issuance date of the pre-funded warrant). The Pre-Funded Warrant Prepayment
is nonrefundable, whether or not the pre-funded warrant is exercised in full. The pre-funded warrants will be immediately exercisable
and may be exercised at any time until the pre-funded warrants are exercised in full. The exercise price and number of shares
of common stock issuable upon exercise is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations
or similar events affecting our common stock and the exercise price. The pre-funded warrants will be issued separately from the
accompanying common warrants, and may be transferred separately immediately thereafter.
Exercisability.
The
pre-funded warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed
exercise notice accompanied by payment in full for the number of shares of our common stock purchased upon such exercise. A holder
(together with its affiliates) may not exercise any portion of the pre-funded warrant to the extent that the holder would own more
than 4.99 % of the outstanding common stock immediately after exercise, except that upon at least 61 days’ prior notice from
the holder to us, the holder may increase the amount of ownership of outstanding stock after exercising the holder’s pre-funded
warrants up to 9.99% of the number of shares of our common stock outstanding immediately after giving effect to the exercise, as
such percentage ownership is determined in accordance with the terms of the pre-funded warrants. Purchasers of pre-funded warrants
in this offering may also elect prior to the issuance of the pre-funded warrants to have the initial exercise limitation set at
9.99% of our outstanding common stock. No fractional shares of common stock will be issued in connection with the exercise of a
pre-funded warrant. In lieu of fractional shares, we will either pay the holder an amount in cash equal to the fractional amount
multiplied by the exercise price or round up to the next whole share.
Transferability.
Subject to applicable laws, a pre-funded warrant may be transferred at the option of the holder upon surrender of the pre-funded
warrant to us together with the appropriate instruments of transfer.
Exchange Listing.
We do not intend to list the pre-funded warrants on any securities exchange or nationally recognized trading system.
Right as a Stockholder.
Except as otherwise provided in the pre-funded warrants or by virtue of such holder’s ownership of shares of our common stock,
the holders of the pre-funded warrants do not have the rights or privileges of holders of our common stock, including any voting
rights, until they exercise their pre-funded warrants.
Common Warrants
The following summary of certain terms
and provisions of common warrants that are being offered hereby is not complete and is subject to, and qualified in its entirety
by, the provisions of the common warrants, the form of which is filed as an exhibit to the registration statement of which this
prospectus forms a part. Prospective investors should carefully review the terms and provisions of the form of common warrant for
a complete description of the terms and conditions of the common warrants.
Form.
There is
no agent for the common warrants or pre-funded warrants. The common warrants and pre-funded warrants will be issued as individual
warrant agreements to the investors. The material terms and provisions of the common warrants and pre-funded warrants offered hereby
are summarized below.
On or prior to the
issuance date of the common warrant, the holder thereof shall pay a nominal value of $0.001 per share of common stock issuable
upon exercise of the warrant (the “Common Warrant Nominal Per Share Amount”, or the “Common Warrant Prepayment”).
The Common Warrant Prepayment is nonrefundable, whether or not the common warrant is exercised in full. Upon exercise of the common
warrant, the holder thereof shall pay an exercise price equal to $[●] per share (less the Common Warrant Prepayment Nominal
Per Share Amount”). The common warrants shall be exercisable at any time for up to five years after the date of the closing
of this offering. The holder of a common warrant will not be deemed a holder of our underlying common stock until the common warrant
is exercised, except as set forth in the common warrant.
Duration
. The
common warrants will be immediately exercisable and will expire on the fifth anniversary of the original issuance date. The exercise
price and number of shares of common stock issuable upon exercise is subject to appropriate adjustment in the event of stock dividends,
stock splits, reorganizations or similar events affecting our common stock and the exercise price. The common warrants will be
issued separately from the common stock, and may be transferred separately immediately thereafter. A common warrant to purchase
[●] share of our common stock will be issued for every one share of common stock or pre-funded warrant purchased in this
offering.
Exercisability
. The
common warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed exercise
notice accompanied by payment in full for the number of shares of our common stock purchased upon such exercise (except in the
case of a cashless exercise as discussed below). A holder (together with its affiliates) may not exercise any portion of the common
warrant to the extent that the holder would own more than 4.99% of the outstanding common stock immediately after exercise, except
that upon at least 61 days’ prior notice from the holder to us, the holder may increase the amount of ownership of outstanding
stock after exercising the holder’s common warrants up to 9.99% of the number of shares of our common stock outstanding immediately
after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the common warrants.
No fractional shares of common stock will be issued in connection with the exercise of a common warrant. In lieu of fractional
shares, we will either pay the holder an amount in cash equal to the fractional amount multiplied by the exercise price or round
up to the next whole share.
Cashless Exercise
. If,
at the time a holder exercises its common warrants, a registration statement registering the issuance of the shares of common stock
underlying the common warrants under the Securities Act is not then effective or available and an exemption from registration under
the Securities Act is not available for the issuance of such shares, then in lieu of making the cash payment otherwise contemplated
to be made to us upon such exercise in payment of the aggregate exercise price, the holder may elect instead to receive upon such
exercise (either in whole or in part) the net number of shares of common stock determined according to a formula set forth in the
common warrants.
Transferability
. Subject
to applicable laws, a common warrant may be transferred at the option of the holder upon surrender of the common warrant to us
together with the appropriate instruments of transfer.
Exchange Listing
. We
do not intend to list the common warrants on any securities exchange or nationally recognized trading system.
Right as a Stockholder
. Except
as otherwise provided in the common warrants or by virtue of such holder’s ownership of shares of our common stock, the holders
of the common warrants do not have the rights or privileges of holders of our common stock, including any voting rights, until
they exercise their common warrants.
Certain Effects of Authorized but Unissued Stock
We have shares of common stock available
for future issuance without stockholder approval. We may issue the shares of authorized capital stock for a variety of corporate
purposes, including future public or private offerings to raise additional capital or to facilitate corporate acquisitions or for
payment as a dividend on our capital stock.
Anti-Takeover Effects of Provisions of Delaware Law
We are subject to the
provisions of Section 203 of the DGCL, or Section 203. Under Section 203, we would generally be prohibited from engaging in any
business combination with any interested stockholder for a period of three years following the time that this stockholder became
an interested stockholder unless:
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prior to this time, our Board approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;
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upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding shares owned by persons who are directors and also officers, and by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
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at or subsequent to such time, the business combination is approved by our Board and authorized at a special or annual stockholders meeting, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder.
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Under Section 203, a “business combination”
includes:
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any merger or consolidation involving the corporation and the interested stockholder;
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any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;
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any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder, subject to limited exceptions;
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any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or
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the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.
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In general, Section
203 defines an interested stockholder as an entity or person beneficially owning 15% or more of the outstanding voting stock of
the corporation and any entity or person affiliated with or controlling or controlled by such entity or person.
Limitation of Liability and Indemnification
Section 145 of the Delaware
General Corporation Law provides that a corporation may indemnify directors and officers as well as other employees and individuals
against expenses including attorneys’ fees, judgments, fines and amounts paid in settlement in connection with various actions,
suits or proceedings, whether civil, criminal, administrative or investigative other than an action by or in the right of the corporation,
a derivative action, if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding, if they had no reasonable cause to believe their conduct
was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses
including attorneys’ fees incurred in connection with the defense or settlement of such actions, and the statute requires
court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation.
The statute provides that it is not exclusive of other indemnification that may be granted by a corporation’s certificate of incorporation,
bylaws, agreement, a vote of stockholders or disinterested directors or otherwise.
Our Certificate of Incorporation
and By-Laws provide that we will indemnify and hold harmless, to the fullest extent permitted by Section 145 of the Delaware General
Corporation Law, as amended from time to time, each person that such section grants us the power to indemnify.
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to our directors and officers pursuant to the foregoing provisions,
or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable.
PLAN OF DISTRIBUTION
Roth Capital Partners,
LLC, which we refer to as the placement agent, has agreed to act as the exclusive placement agent in connection with this offering
subject to the terms and conditions of a placement agency agreement, dated , 2017. The placement agent may engage selected dealers
to assist in the placement of the shares of our common stock and warrants offered pursuant to this prospectus. The placement agent
is not purchasing or selling any shares of our common stock or warrants offered by this prospectus, nor is it required to arrange
the purchase or sale of any specific number or dollar amount of the shares of our common stock or warrants, but has agreed to use
its commercially reasonable “best efforts” to arrange for the sale of all of the shares of our common stock and warrants
offered hereby.
We will enter into purchase
agreements directly with investors in connection with this offering and we may not sell the entire amount of shares and warrants
offered pursuant to this prospectus. The public offering price set forth on the cover page of this prospectus has been determined
based upon arm’s-length negotiations between the purchasers and us.
Placement Agent’s Fees and Expenses
We have agreed to
pay the placement agent an aggregate cash placement fee equal to 7% of the gross proceeds from the sale of the shares and warrants
in this offering.
The following table
shows the per share or pre-funded warrant, and total cash placement agent’s fees we will pay to the placement agent in connection
with the sale of the shares of our common stock and warrants offered pursuant to this prospectus, assuming the purchase of all
of the shares and warrants offered hereby:
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Per Share or Pre-Funded Warrant
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$
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Total
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$
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Because there is
no minimum offering amount required as a condition to closing in this offering, the actual total placement agent fees, if any,
are not presently determinable and may be substantially less than the maximum amount set forth above. We have also agreed to reimburse
the placement agent for certain of its out-of-pocket expenses in an aggregate amount not to exceed $90,000.
We have also agreed
to grant the placement agent a right of first refusal, for 12 months from the date of the placement agency agreement, to act as
lead book-running manager for any underwritten public offering, exclusive placement agent or financial advisor in connection with
any private offering of securities, and as financial advisor in connection with a sale or similar transaction involving the Company.
Any such engagement would be pursuant to a separate agreement that provides for customary fees and other terms and conditions
agreed upon between the Company and the placement agent. Such right of first refusal shall not survive if the placement agency
agreement is terminated for cause by the Company in accordance with FINRA Rule 5110(f)(2)(D)(ii).
Our obligation to issue
and sell the shares and warrants offered hereby to the purchasers is subject to the conditions set forth in the purchase agreements,
which may be waived by us at our discretion. A purchaser’s obligation to purchase the shares and warrants offered hereby
is subject to the conditions set forth in his or her purchase agreement as well, which may also be waived.
In addition, at
the closing of the offering, we will pay the placement agent a fee of $60,000 in connection with our private placement
of non-convertible notes and warrants that closed on October 30, 2017, for which it also served as the placement agent.
An aggregate of $120,000 of placement agent fees are payable in connection with the October 2017 private placement. Under the
terms of our October 2, 2017 engagement letter with the placement agent, such fees were due and payable upon the earlier of
(a) the February 28, 2018 maturity date of the notes, and (b) the first offering of our equity securities or any
equity-linked or related securities with aggregate gross proceeds of at least $1 million. However, in the placement agency
agreement for this offering, we agreed that $60,000 of the fees from our October 2017 private placement shall become due and
payable at the closing of this offering, and the balance of such fee, or $60,000, will become due and payable upon the
closing of our next public or private offering of securities.
Pursuant to the terms
of our October 2, 2017 engagement letter with the placement agent, if we decide to make an offering of our equity, equity-linked
or debt securities at any time until the six-month anniversary of the October 2017 private placement (or April 30, 2018), we granted
the placement agent the right to act as the exclusive placement agent or lead book-running manager, as applicable, for such offering
under a separate agreement containing terms and conditions customary for the placement agent and mutually agreed upon by us and
the placement agent.
We currently anticipate
that the sale of the shares and warrants offered by this prospectus will be completed on or about , 2017. We estimate the total
offering expenses of this offering that will be payable by us, excluding the placement agent’s fees, will be approximately
$ , which includes legal and printing costs, various other fees and reimbursement of the placements agent’s expenses. At
the closing, The Depository Trust Company will credit the shares of common stock to the respective accounts of the purchasers.
We will mail the warrants directly to the investors at the respective addresses set forth in their purchase agreements with us.
Indemnification
We have agreed to indemnify
the placement agent against liabilities under the Securities Act of 1933, as amended. We have also agreed to contribute to payments
the placement agent may be required to make in respect of such liabilities.
Lock-up Agreements
We have agreed,
subject to certain exceptions, for a period of 15 business days after the closing of this offering, not to offer, sell,
contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of, directly or indirectly
any shares of our common stock or any securities convertible into or exchangeable for shares of our common stock either owned
as of the date hereof or thereafter acquired without the prior written consent of the placement agent. In addition, our
executive officers, directors and Shoshana Zigdon, who beneficially owns approximately 19.02% of our common stock
immediately prior to this offering have agreed subject to certain exceptions, for a period of 180 days after the date of
this prospectus, not to offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or
otherwise dispose of, directly or indirectly any shares of our common stock or any securities convertible into or
exchangeable for shares of our common stock either owned as of the date hereof or thereafter acquired without the prior
written consent of the placement agent. The placement agent may, in its sole discretion and at any time or from time to time
before the termination of the lock-up period, without notice, release all or any portion of the securities subject to lock-up
agreements.
Leak-out Agreements
Until the earlier
of (i) January __, 2018 and (ii) the
fifth consecutive
trading day during which the VWAP (as defined in the warrants) for each such trading day during such period is equal to or exceeds
$[____] per share, each investor either alone or together with its affiliates, in this offering will be limited to selling no
more than [ ]% of the daily trading volume of the common stock on such trading day, including shares of common stock or shares
of common stock underlying any convertible securities (including any shares of common stock acquirable upon exercise of purchased
pre-funded warrants or common warrants).
Electronic Distribution
This prospectus may
be made available in electronic format on websites or through other online services maintained by the placement agent, or by an
affiliate. Other than this prospectus in electronic format, the information on the placement agent’s website and any information
contained in any other website maintained by the placement agent is not part of this prospectus or the registration statement of
which this prospectus forms a part, has not been approved and/or endorsed by us or the placement agent, and should not be relied
upon by investors.
The foregoing does not
purport to be a complete statement of the terms and conditions of the placement agency agreement and purchase agreements. A copy
of the placement agency agreement and the form of purchase agreement with the purchasers are included as exhibits to the registration
statement of which this prospectus forms a part. See “Where You Can Find Additional Information” on page 34.
Regulation M Restrictions
The placement agent
may be deemed to be an underwriter within the meaning of Section 2(a)(11) of the Securities Act, and any commissions received by
it and any profit realized on the resale of the shares and warrants sold by it while acting as a principal might be deemed to be
underwriting discounts or commissions under the Securities Act. As an underwriter, the placement agent would be required to comply
with the requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
including, without limitation, Rule 10b-5 and Regulation M under the Exchange Act. These rules and regulations may limit the timing
of purchases and sales of shares of our common stock and warrants by the placement agent acting as a principal. Under these rules
and regulations, the placement agent:
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must not engage in any stabilization activity in connection with our securities; and
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must not bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities, other than as permitted under the Exchange Act, until it has completed its participation in the distribution.
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Passive Market Making
In connection with this
offering, the placement agent may engage in passive market making transactions in our common stock on The NASDAQ Capital Market
in accordance with Rule 103 of Regulation M promulgated under the Exchange Act during a period before the commencement of offers
or sales of the shares of common stock and warrants and extending through the completion of the distribution. A passive market
maker must display its bid at a price not in excess of the highest independent bid of that security. However, if all independent
bids are lowered below the passive market maker’s bid, that bid must then be lowered when specified purchase limits are exceeded.
Other
From time
to time, the placement agent and its affiliates have provided, and may in the future provide, various investment
banking, financial advisory and other services to us and our affiliates for which services they have received, and may in the
future receive, customary fees. In the course of their businesses, the placement agent and its affiliates may actively trade
our securities or loans for their own account or for the accounts of customers, and, accordingly, the placement agent and
its affiliates may at any time hold long or short positions in such securities or loans. Except for services provided
in connection with this offering, and except as set forth in this paragraph, the placement agent has not provided any
investment banking or other financial services during the 180-day period preceding the date of this prospectus supplement and
we do not expect to retain the placement agent to perform any investment banking or other financial services for at least 90
days after the date of this prospectus supplement. As disclosed above, the placement agent acted as the sole placement agent
in the private placement of our non-convertible notes and warrants which closed on October 30, 2017, with an aggregate
purchase price for such securities of $1,200,000 (excluding the proceeds, if any, from the exercise of the warrants issued in
such offering). As discussed above, a placement agent fee of $120,000 became payable as a result of such offering, $60,000 of
which will be paid at the closing of this offering on or around
, 2017 and the balance of such fee, or $60,000, will
become due and payable upon the closing of our next public or private offering of securities. In addition, we reimbursed the
placement agent for $25,000 of legal expenses at the closing of the October 2017 private placement. Furthermore, under the
terms of the October 2, 2017 engagement letter, if we decide to make an offering of our equity, equity-linked or debt
securities at any time until the six-month anniversary of the October 2017 private placement (or April 30, 2018), we have
granted the placement agent the right to act as the exclusive placement agent or lead book-running manager, as applicable,
for such offering under a separate agreement containing terms and conditions customary for the placement agent and mutually
agreed upon by us and the placement agent.
Listing of Common Stock
Our common stock is listed on The NASDAQ
Capital Market under the symbol “MYSZ”.
LEGAL MATTERS
The validity of the
shares of common stock offered hereby will be passed upon for us by Sheppard, Mullin, Richter & Hampton LLP, New York, New
York. Certain legal matters with respect to this offering will be passed upon for the placement agent by Kelley Drye & Warren
LLP, New York, New York.
EXPERTS
The consolidated financial
statements of My Size, Inc. as of and for the year ended December 31, 2016 have been incorporated by reference herein and in the
registration statement in reliance upon the report of Somekh Chaikin, independent registered public accounting firm, incorporated
by reference herein, and upon the authority of said firm as experts in accounting and auditing.
The consolidated financial
statements of My Size, Inc. as of and for the year ended December 31, 2015 have been incorporated by reference herein and in the
registration statement in reliance upon the report of Weinberg & Baer LLC, independent registered public accounting firm, incorporated
by reference herein, and upon the authority of said firm as experts in accounting and auditing.
Where
You Can Find More Information
We have filed a registration
statement on Form S-1 with the SEC covering the securities we are offering by this prospectus. This prospectus does not include
all of the information contained in the registration statement. You should refer to the registration statement and its exhibits
for additional information. Whenever we make reference in this prospectus to any of our contracts, agreements or other documents,
the references are not necessarily complete and you should refer to the exhibits filed as part of the registration statement for
copies of the actual contract, agreement or another document.
We file annual, quarterly
and other periodic reports, proxy statements and other information with the Securities and Exchange Commission. You can read our
Securities and Exchange Commission filings, including this registration statement, over the Internet at the Securities and Exchange
Commission’s website at www.sec.gov. You may also read and copy any document we file with the Securities and Exchange Commission
at its public reference facilities at 100 F Street NE, Washington, D.C. 20549. You may also obtain copies of these documents at
prescribed rates by writing to the Public Reference Section of the Securities and Exchange Commission at 100 F Street NE, Washington,
D.C. 20549. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the operation of the
public reference facilities.
Our Internet address
is www.MySizeID.com. There we make available free of charge, on or through the investor relations section of our website, annual
reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed pursuant
to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with
the Securities and Exchange Commission. The information found on our website is not part of this prospectus and investors should
not rely on any such information in deciding whether to invest.
Incorporation
of Certain Information by Reference
The SEC allows us to
“incorporate by reference” information into this prospectus. This means that we can disclose important information
to you by referring you to another document filed separately with the SEC. The information that we incorporate by reference is
considered to be part of this prospectus. Because we are incorporating by reference our future filings with the SEC, this prospectus
is continually updated and those future filings may modify or supersede some or all of the information included or incorporated
in this prospectus. This means that you must look at all of the SEC filings that we incorporate by reference to determine if any
of the statements in this prospectus or in any document previously incorporated by reference have been modified or superseded.
This prospectus incorporates by reference the documents listed below and any future filings we will make with the SEC under Sections
13(a), 13(c) 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (i) after the date
of the initial registration statement and prior to effectiveness of the registration statement, and (ii) on or after the date of
this prospectus until the earlier of the date on which all of the securities registered hereunder have been sold or the registration
statement of which this prospectus is a part has been withdrawn:
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our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the SEC
on April 14, 2017;
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our Quarterly Report on Form 10-Q for the three months ended March 31, 2017, June 30, 2017, and
September 30, 2017 filed with the SEC on May 16, 2017, August 18, 2017, and November 13, 2017, respectively;
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our Current Reports on Form
8-K or 8-K/A filed with the SEC on January 4, 2017, February 10, 2017, February 17, 2017,
February 22, 2017, February 24, 2017, February 28, 2017, March 23, 2017, April 21, 2017,
May 4, 2017, May 11, 2017, May 16, 2017, June 9, 2017, June 23, 2017, June 30, 2017,
August 22, 2017, August 31, 2017, September 11, 2017, September 27, 2017, October 2,
2017, October 27, 2017, December 6, 2017, December 11, 2017 and December 12, 2017;
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our definitive proxy statement on Schedule 14A relating to our 2017 annual meeting of stockholders
filed on March 2, 2017;
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our information statement on Schedule 14C filed on
December 18, 2017; and
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the description of our common stock, which is contained in the registration statement on Form 8-A
filed with the SEC on June 14, 2016 (File No. 001-37370).
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Notwithstanding the
foregoing, information furnished under Items 2.02 and 7.01 of any Current Report on Form 8-K, including the related exhibits, is
not incorporated by reference in this prospectus.
The information about us contained in this prospectus should
be read together with the information in the documents incorporated by reference. You may request a copy of any or all of these
filings, at no cost, by writing or telephoning us at: Or Kles, Chief Financial Officer, 3 Arava St. pob 1026, Airport City, Israel
701000, telephone number 972-3-600-9030.
MY SIZE,
INC.
$3,000,000
Shares of Common Stock
Pre-funded Warrants to Purchase Shares
of Common Stock
Common Warrants to Purchase Shares of
Common Stock
PROSPECTUS
Roth
Capital Partners
, 2017
PART II-INFORMATION
NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance
And Distribution
The
following table sets forth the fees and expenses, other than placement agent fees and expenses, payable in connection with the
registration of the common stock hereunder. All amounts are estimates except the SEC registration fee and the FINRA filing fee.
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Item
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Amount to be
paid
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SEC
registration fee
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$
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373.50
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Printing
expenses
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20,000
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FINRA Filing
fee
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1,700
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Legal fees
and expenses
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200,000
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Accounting
fees and expenses
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12,000
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Transfer
Agent fees and expenses
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1,500
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Miscellaneous
expenses
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10,000.50
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Total
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$
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245,574
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Item 14. Indemnification of Directors and Officers.
Section 145 (“Section 145”)
of the DGCL permits indemnification of directors, officers, agents and controlling persons of a corporation under certain conditions
and subject to certain limitations. Section 145 empowers a corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative
or investigative, by reason of the fact that he or she is or was a director, officer or agent of the corporation or another enterprise
if serving at the request of the corporation. Depending on the character of the proceeding, a corporation may indemnify against
expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in
connection with such action, suit or proceeding if the person indemnified acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his or her conduct was unlawful. In the case of an action by or in the right of the corporation,
no indemnification may be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was
brought shall determine that despite the adjudication of liability such person is fairly and reasonably entitled to indemnity for
such expenses which the court shall deem proper. Section 145 further provides that to the extent a present or former director
or officer of a corporation has been successful in the defense of any action, suit or proceeding referred to above or in the defense
of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually
and reasonably incurred by such person in connection therewith. The foregoing is only a summary of the described sections of the
Delaware General Corporation Law and is qualified in its entirety by reference to such sections.
The Company’s
Certificate of Incorporation and Bylaws provide that it shall indemnify each of its officers and directors to the fullest extent
permitted by Section 145.
The Company’s
Certificate of Incorporation provides that no current or former director of the Company shall be personally liable to it or its
stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability
or limitation thereof is not permitted under the DGCL as the same exists or may hereafter be amended.
In addition to the foregoing,
the Company maintains directors and officers liability insurance to cover risk exposure for its directors and officers
.
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to My Size’s directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, My Size has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.
Item 15. Recent Sales of
Unregistered Securities.
The Company has sold
the securities described below within the past three years which were not registered under the Securities Act. Unless otherwise
indicated, all of the sales listed below were made pursuant to an exemption from registration afforded by Section 4(a)(2) of the
Securities Act and Regulation D thereunder.
From January to February
2016, the Company issued convertible debt in the form of notes which were convertible into an aggregate of 985,712 shares of the
Company’s common stock and warrants to purchase up to 985,712 shares of the Company’s common stock for gross proceeds
in the amount of $3,450,000. The issuance of the securities was deemed to be exempt
from
the registration requirements of the Securities Act by virtue of Regulation S as a transaction by an issuer outside of the United
States.
From
March to May 2016, the
Company issued convertible debt in the form of notes which were convertible into an aggregate of
301,427 shares of the Company’s common stock and warrants to purchase up to 301,427 shares of the Company’s common
stock for gross proceeds in the amount of $1,055,000. The issuance of the securities was deemed to be exempt
from
the registration requirements of the Securities Act by virtue of Regulation S as a transaction by an issuer outside of the United
States.
On June 10, 2016, the
Company issued 1,528,687 shares of common stock in exchange for $5,350,000 of convertible loans, in accordance with a convertible
loan agreement.
On July 14, 2016, the Company converted
$8,405,000 of the Company’s convertible debt in the form of notes into an aggregate of 2,401,523 shares of the Company’s common
stock at a price of $3.50 per share.
On September 7, 2016, the Company issued
an aggregate of 562,998 shares of common stock, and two-year options to purchase up to 562,998 shares of common stock with an exercise
price of NIS 18 per share upon the conversion of an aggregate of $1,970,500 of convertible loans. On July 14, 2016, the Company’s
board of directors resolved to act according to the provisions of the convertible loan agreements which were signed by the Company
and to carry out an automatic conversion of the loans into Company shares subject to its receipt of the consideration and the approvals
required by law. The Company issued the shares for the convertible loans the allotment of which had been approved by the stock
exchange and the consideration for which had been received. As of December 31, 2016, the Company issued 2,091,566 shares for convertible
loans received by it in the sum of $7,320.
On February 13, 2017, the Company entered
into a securities purchase agreement with an accredited investor. On February 22, 2017, the Company and the investor consummated
the transactions contemplated by the securities purchase agreement pursuant to which the investor acquired from the Company 200,000
shares of the Company’s common stock and warrants to purchase up to 250,000 shares of the Company’s common stock for
$200,000.
On August 16, 2017,
the Company entered into a securities purchase agreement with two investors pursuant to which the Company sold an aggregate of
250,000 shares of common stock at a purchase price of $1.00 per share.
On August 16, 2017,
the Company entered into a securities purchase agreement with an investor pursuant to which the investor will purchase 530,000
shares of the Company’s common stock at $1.00 per share in separate installments. The investor has issued a guarantee note
issued by Trade Bancorp in the amount of $530,000 in favor of the Company. In the event that the investor does not fulfil its obligation
to purchase 530,000 shares of the Company’s common stock pursuant to the securities purchase agreement, the Company may call
the guarantee note; provided, however, the guarantee note expires on November 13, 2017.
On October 26, 2017,
the Company entered into a securities purchase agreement to sell original issue discount non-convertible notes in the aggregate
principal amount of approximately $1.33 million and warrants to purchase up to 888,888 shares of the Company’s common stock
to certain accredited investors for gross proceeds of $1.2 million.
Item 16. Exhibits and Financial
Statement Schedules.
(a) The
exhibits listed under the caption “Exhibit Index” following the signature page are filed herewith or incorporated by
reference herein.
(b) Financial
Statement Schedules
No financial statement
schedules are provided because the information required to be set forth therein is not applicable or is shown in the consolidated
financial statements or notes thereto.
Item 17. Undertakings
.
(a) The undersigned Registrant hereby undertakes:
(1) to file, during any period in which
offers or sales are being made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) to reflect in the prospectus any facts
or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation
of Registration Fee” table in the effective Registration Statement; and
(iii) to include any material information
with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such
information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i),
(a)(1)(ii) and (a)(1)(iii) do not apply if the information required to be included in a post-effective amendment by those paragraphs
is contained in reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of
the Exchange Act that are incorporated by reference in the Registration Statement.
(2) that, for the purpose of determining
any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) to remove from registration by means
of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining
liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned
Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this Registration Statement,
regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such
purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will
be considered to offer or sell such securities to such purchaser:
(i) any preliminary prospectus or prospectus
of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) any free writing prospectus relating
to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant;
(iii) the portion of any other free writing
prospectus relating to the offering containing material information about the undersigned Registrant or its securities provided
by or on behalf of the undersigned registrant; and
(iv) any other communication that is an
offer in the offering made by the undersigned registrant to the purchaser.
(b) The undersigned Registrant hereby undertakes
that, for purposes of determining any liability under the Securities Act, each filing of the Registrant’s annual report pursuant
to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to
the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification
is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes that:
(1) for purposes of determining any liability
under the Securities Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under
the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective.
(2) for the purpose of determining any
liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the
requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for fling on Form S-1 and has duly caused this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Airport City, State of Israel, on December 18, 2017.
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My Size, Inc.
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By:
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/s/ Ronen Luzon
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Ronen Luzon
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Its:
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Chief Executive Officer
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(Principal Executive Officer)
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By:
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/s/ Or Kles
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Or Kles
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Its:
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Chief Financial Officer
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(Principal Financial and Accounting Officer)
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Pursuant to the requirements
of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and
on the dates indicated.
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/s/ Ronen Luzon
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December 18, 2017
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Ronen Luzon
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Chief Executive Officer and Director
(Principal Executive Officer)
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/s/ Or Kles
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December 18, 2017
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Chief Financial Officer
(Principal Financial and Accounting Officer)
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*
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December 18, 2017
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Eli Walles
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Chairman
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*
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December 18, 2017
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Arik Kaufman
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Director
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*
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December 18, 2017
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Oren Elmaliah
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Director
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*
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December 18, 2017
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Oron Branitzky
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Director
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By:
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/s/
Ronen Luzon
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Ronen Luzon, Attorney-In-Fact
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EXHIBIT INDEX
(b) Exhibits
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Exhibit
Number
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Description
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1.1*
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Form of Placement Agency Agreement by and between My Size, Inc. and Roth Capital Partners, LLC
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3.1
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Amended
and Restated Certificate of Incorporation of My Size, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s
Current Form on Form 8-K filed on March 23, 2017)
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3.2
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By-Laws
of My Size, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K filed
on March 4, 2016)
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4.1
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Specimen
Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form
S-3/A filed on November 14, 2016)
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4.2*
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Form
of Pre-Funded Warrant
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4.3*
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Form of Common Warrant
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5.1*
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Opinion of Sheppard Mullin Richter & Hampton LLP
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10.1
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My
Size, Inc. 2017 Equity Incentive Plan (incorporated by reference as an exhibit to the Company’s Definitive Proxy Statement
on Schedule DEF 14A filed on March 2, 2017)
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10.2
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My
Size, Inc. 2017 Consultant Equity Incentive Plan (incorporated by reference as an exhibit to the Company’s Definitive
Proxy Statement on Schedule DEF 14A filed on March 2, 2017)
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10.3
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Form
of Securities Purchase Agreement (incorporated by reference as Exhibit 99.1 to the Company’s Registration Statement
on Form S-3 filed on September 20, 2016)
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10.4
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Form
of Note (incorporated by reference as Exhibit 99.2 to the Company’s Registration Statement on Form S-3 filed on September
20, 2016)
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10.5
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Form
of Warrant (incorporated by reference as Exhibit 99.3 to the Company’s Registration Statement on Form S-3 filed on September
20, 2016)
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10.6
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Cooperation
Agreement between My Size and In Situ S.A. dated as of November 7, 2014 (incorporated by reference to Exhibit 10.1 to the
Company’s Annual Report on Form 10-K filed on March 4, 2017)
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10.7
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Purchase
Agreement between My Size, Inc. and Shoshana Zigdon dated as of February 16, 2014 (incorporated by reference to Exhibit 10.2
to the Company’s Annual Report on Form 10-K filed on March 4, 2017)
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Exhibit
Number
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Description
|
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10.8
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Contract
for Services Regarding the Preparation of Public Funding Applications between My Size, Inc. and PNO Polska Sp. z o.o. dated
as of February 1, 2017 (incorporated by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-K filed
on April 14, 2017)
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10.9
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Form
of Securities Purchase Agreement dated February 13, 2017 (incorporated by reference to Exhibit 10.1 to the Company’s
Registration Statement on Form S-3 filed on March 3, 2017)
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10.10
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Warrant
issued to Longside Ventures LLC dated February 22, 2017 (incorporated by reference to Exhibit 4.2 to the Company’s Registration
Statement on Form S-3 filed on March 3, 2017)
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10.11
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Technology
and License Agreement dated as of March 4, 2016 between My Size, Inc. and LSY International, Inc. (incorporated by reference
to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 7, 2016).
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10.12
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Form
of Securities Purchase Agreement dated August 16, 2017 (incorporated by reference to Exhibit 10.1 to the Company’s Current
Report on Form 8-K filed on August 22, 2017)
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10.13
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Form
of Securities Purchase Agreement dated August 16, 2017 (incorporated by reference to Exhibit 10.2 to the Company’s Current
Report on Form 8-K filed on August 22, 2017)
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10.14
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Form
of Securities Purchase Agreement dated October 26, 2017 (incorporated by reference to Exhibit 10.1 to the Company’s
Current Report on Form 8-K filed on October 27, 2017)
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10.15
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Form
of Note issued October 30, 2017 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K
filed on October 27, 2017)
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10.16
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Form
of Warrant issued October 30, 2017 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form
8-K filed on October 27, 2017)
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10.17*
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Form of Waiver to Notes issued October 30, 2017
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10.18*
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Form of Securities Purchase Agreement
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10.19*
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Form of Leak-Out
Agreement
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21.1**
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List
of Subsidiaries
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23.1*
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Consent of Weinberg & Baer LLC
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23.2*
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Consent of Somekh Chaikin
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23.3*
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Consent of Sheppard Mullin Richter & Hampton LLP (included as part of Exhibit 5.1)
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24.1**
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Power
of Attorney.
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* filed herewith.
** previously
filed.
Exhibit 1.1
PLACEMENT AGENCY AGREEMENT
December __, 2017
Roth Capital Partners, LLC
888 San Clemente Drive
Newport Beach, CA 92660
Ladies and Gentlemen:
Subject to the terms
and conditions herein (this “
Agreement
”), My Size, Inc., a Delaware corporation (the “
Company
”),
hereby agrees to sell registered securities of the Company, consisting of up to _________ shares (the “
Shares
”)
of the Company’s common stock, $0.001 par value per share (the “
Common Stock
”) and/or pre-funded warrants
to purchase Common Stock, with an exercise price of $0.001 per share (the “
Pre-Funded Warrants
”, as exercised,
the “
Pre-Funded Warrant Shares
”), and common stock purchase warrants to purchase up to an aggregate of ___________
shares of Common Stock with an exercise price of $_____ per share (the “
Common Warrants
”, as exercised, the
“
Common Warrant Shares
”) directly to various investors (each, an “
Investor
” and, collectively,
the “
Investors
”) through Roth Capital Partners, LLC, as placement agent (the “
Placement Agent
”).
The Pre-Funded Warrants and the Common Warrants are collectively referred to herein as the “
Warrants
”, the Pre-Funded
Warrant Shares and the Common Warrant Shares are collectively referred to herein as the “
Warrant Shares
”, the
Warrants and the Shares are collectively referred to herein as the “
Primary Securities
” and the Primary Securities,
together with the Warrant Shares, are collectively referred to herein as the “
Securities
”. For each Pre-Funded
Warrant Share issuable upon exercise of a Pre-Funded Warrant sold (without regard to any limitation on exercise set forth therein),
the number Shares will be decreased on a one-for-one basis. The documents executed and delivered by the Company and the Investors
in connection with the Offering (as defined below), including, without limitation, a securities purchase agreement (the “
Purchase
Agreement
”), the Common Warrants, and the Pre-Funded Warrants shall be collectively referred to herein as the “
Transaction
Documents
.” The purchase price to the Investors for each Share and accompanying ___ of a Common Warrant is $____, and
for each Pre-Funded Warrant and accompanying ___ of a Common Warrant is $_____. As required by the rules and regulations of the
Tel Aviv Stock Exchange, the nominal value of $0.001 for each Warrant Share issuable upon exercise of the Warrants (without regard
to any limitation on exercise set forth therein) shall be prepaid to the Company at the Closing (as defined below) as part of the
purchase price described in the immediately preceding sentence. The Placement Agent may retain other brokers or dealers to act
as sub-agents or selected-dealers on its behalf in connection with the Offering.
The Company hereby
confirms its agreement with the Placement Agent as follows:
Section 1. Agreement
to Act as Placement Agent
.
(a) On the
basis of the representations, warranties and agreements of the Company herein contained, and subject to all the terms and conditions
of this Agreement, the Placement Agent shall be the exclusive Placement Agent in connection with the offering and sale by the Company
of the Securities pursuant to the Company’s registration statement on Form S-1 (File No. 333-221741) (as amended from time
to time and including the exhibits thereto at any given time, the “
Registration Statement
”), with the terms
of such offering (the “
Offering
”) to be subject to market conditions and negotiations between the Company, the
Placement Agent and the prospective Investors. The Placement Agent will act on a reasonable best efforts basis and the Company
agrees and acknowledges that there is no guarantee of the successful placement of the Securities, or any portion thereof, in the
prospective Offering. Under no circumstances will the Placement Agent or any of its “Affiliates” (as defined below)
be obligated to underwrite or purchase any of the Securities for its own account or otherwise provide any financing. The Placement
Agent shall act solely as the Company’s agent and not as principal. The Placement Agent shall have no authority to bind the
Company with respect to any prospective offer to purchase Securities and the Company shall have the sole right to accept offers
to purchase Securities and may reject any such offer, in whole or in part. Subject to the terms and conditions hereof, payment
of the purchase price for, and delivery of, the Securities shall be made at one or more closings (each a “
Closing
”
and the date on which each Closing occurs, a “
Closing Date
”). As compensation for services rendered, on each
Closing Date, the Company shall pay to the Placement Agent the fees and expenses set forth below:
(i)
A
cash fee equal to 7% of the gross proceeds received by the Company from the sale of the Securities at the Closing.
(ii)
The
Company also agrees to reimburse Placement Agent’s expenses (with supporting invoices/receipts) up to a maximum of $90,000,
payable immediately upon a Closing of the Offering.
(b)
In addition to the foregoing fees and expenses, the Company acknowledges that at the first Closing, the Company shall pay
the Placement Agent an additional $60,000, representing fees earned by the Placement Agent for serving as placement agent to
the Company in the private placement of the Company’s securities pursuant to its securities purchase agreement
dated October 26, 2017 (the “
October 2017 Placement
”). The balance of the fees payable to the Placement
Agent pursuant to the October 2017 Placement, or $60,000, shall be payable upon the closing of the Company’s next
public or private offering of securities, including, without limitation, any Future Offering (as defined below).
(c) The term
of the Placement Agent’s exclusive engagement will be until the completion of the Offering. The Placement Agent shall be
entitled to collect all fees under this Agreement earned through termination. In addition to the foregoing, the Company hereby
grants to the Placement Agent the exclusive right (such right, the “
Right of First Refusal
”), for the twelve
(12) month period commencing on the date hereof, to provide investment banking services to the Company on an exclusive basis in
all matters involving the Company’s equity securities or other instruments that may at any time be convertible into, exchangeable
for, or otherwise entitle the holder thereof to receive, directly or indirectly, equity securities of the Company, for which investment
banking services are sought by the Company (a “
Future Offering
”). In connection with the Right of First Refusal,
investment banking services shall include, without limitation, (i) acting as lead, book-running manager for any underwritten public
offering; (ii) acting as exclusive placement agent or financial advisor in connection with any private offering of securities of
the Company; and (iii) acting as financial advisor in connection with any sale or other transfer by the Company, directly or indirectly,
of a majority or controlling portion of its capital stock or assets to another entity, any purchase or other transfer by another
entity, directly or indirectly, of a majority or controlling portion of the capital stock or assets of the Company, and any merger
or consolidation of the Company with another entity. At any time during such period that the Company contemplates conducting a
Future Offering, the Company shall deliver to the Placement Agent a written notice (the “
Notice
”) stating its
intention to conduct the Future Offering, the material terms and conditions thereof, including the amount to be raised and the
type of security to be issued and the compensation requested by the competing broker-dealer firm if any, and an offer to the Placement
Agent to manage the Future Offering pursuant to this Right of First Refusal. At any time within 30 days after receipt of the Notice,
the Placement Agent may, by giving written notice to the Company, elect to exercise this Right of First Refusal. The failure of
the Placement Agent to exercise this Right of First Refusal within such 30 day period will be deemed a rejection of the offer solely
with respect to the applicable Future Offering. Any decision by the Placement Agent to act in any such capacity shall be contained
in separate agreements, which agreements would contain, among other matters, provisions for customary fees for transactions of
similar size and nature, as may be mutually agreed upon, and indemnification of the Placement Agent and its Affiliates and shall
be subject to general market conditions. If the Placement Agent declines to exercise the Right of First Refusal (which it may do
in its sole and absolute discretion), the Company shall have the right to retain any other person or persons to provide such services
on terms and conditions which are not materially more favorable to such other person or persons than the terms declined by the
Placement Agent.
(d) Nothing
in this Agreement shall be construed to limit the ability of the Placement Agent or its Affiliates to pursue, investigate, analyze,
invest in, or engage in investment banking, financial advisory or any other business relationship with Persons (as defined below)
other than the Company. As used herein (i) “Persons” means an individual or corporation, partnership, trust, incorporated
or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision
thereof) or other entity of any kind and (ii) “Affiliate” means any Person that, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed
under Rule 405 under the Securities Act of 1933, as amended (the “
Securities Act
”).
Section 2. Representations,
Warranties and Covenants of the Company
. The Company hereby represents, warrants and covenants to the Placement Agent as of
the date hereof, and as of each Closing Date, as follows:
(a)
Securities
Law Filings
. The Company has filed with the Securities and Exchange Commission (the “
Commission
”) the Registration
Statement under the Securities Act, which was originally filed on November 24, 2017, as amended on December __, 2017, for the registration
under the Securities Act of the Securities, and was declared effective by the Commission on December __, 2017. Following the effectiveness
of the Registration Statement and the determination of pricing among the Company and the prospective Investors introduced to the
Company by Placement Agent, the Company will file with the Commission pursuant to Rules 430A and 424(b) under the Securities Act,
and the rules and regulations (the “
Rules and Regulations
”) of the Commission promulgated thereunder, a final
prospectus relating to the placement of the Securities, their respective pricings and the plan of distribution thereof and will
advise the Placement Agent of all further information (financial and other) with respect to the Company required to be set forth
therein. Such prospectus in the form in which it appears in the Registration Statement is hereinafter called the “
Preliminary
Prospectus
”; and the amended or supplemented form of prospectus, in the form in which it will be filed with the Commission
pursuant to Rules 430A and/or 424(b) is hereinafter called the “
Final Prospectus
”; and the Preliminary Prospectus
and Final Prospectus are collectively, the “
Prospectus
”. Any reference in this Agreement to the Registration
Statement, the Preliminary Prospectus or the Final Prospectus shall be deemed to refer to and include the documents incorporated
by reference therein (the “
Incorporated Documents
”), if any, which were or are filed under the Securities Exchange
Act of 1934, as amended (the “
Exchange Act
”), at any given time, as the case may be; and any reference in this
Agreement to the terms “amend,” “amendment” or “supplement” with respect to the Registration
Statement, the Preliminary Prospectus or the Final Prospectus shall be deemed to refer to and include the filing of any document
under the Exchange Act after the date of this Agreement, or the issue date of the Preliminary Prospectus or the Final Prospectus,
as the case may be, deemed to be incorporated therein by reference. All references in this Agreement to financial statements and
schedules and other information which is “contained,” “included,” “described,” “referenced,”
“set forth” or “stated” in the Registration Statement, the Preliminary Prospectus or the Final Prospectus
(and all other references of like import) shall be deemed to mean and include all such financial statements and schedules and other
information which is or is deemed to be incorporated by reference in the Registration Statement, the Preliminary Prospectus or
the Final Prospectus, as the case may be. The Company has not received any notice that the Commission has issued or intends to
issue a stop order suspending the effectiveness of the Registration Statement, the Preliminary Prospectus or the Final Prospectus
or intends to commence a proceeding for any such purpose.
(b)
Assurances
.
The Registration Statement, as amended, (and any further documents to be filed with the Commission) contains all exhibits and schedules
as required by the Securities Act. Each of the Registration Statement and any post-effective amendment thereto, at the time it
became effective, complied in all material respects with the Securities Act and the applicable Rules and Regulations and did not
contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading. The Registration Statement and the Final Prospectus, each as of its respective date,
comply or will comply in all material respects with the Securities Act and the applicable Rules and Regulations. Each of the Registration
Statement and the Final Prospectus, as amended or supplemented, did not and will not contain as of the date thereof any untrue
statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Incorporated Documents, when they were filed with the Commission,
conformed in all material respects to the requirements of the Exchange Act and the applicable rules and regulations promulgated
thereunder, and none of such documents, when they were filed with the Commission, contained any untrue statement of a material
fact or omitted to state a material fact necessary to make the statements therein (with respect to Incorporated Documents incorporated
by reference in the Final Prospectus), in light of the circumstances under which they were made not misleading. No post-effective
amendment to the Registration Statement reflecting any facts or events arising after the date thereof which represent, individually
or in the aggregate, a fundamental change in the information set forth therein is required to be filed with the Commission. There
are no documents required to be filed with the Commission in connection with the transaction contemplated hereby that (x) have
not been filed as required pursuant to the Securities Act or (y) will not be filed within the requisite time period. There are
no contracts or other documents required to be described in the Prospectus, or to be filed as exhibits or schedules to the Registration
Statement, which have not been described or filed as required.
(c)
Offering
Materials
. Neither the Company nor any of its directors and officers has distributed and none of them will distribute, prior
to each Closing Date, any offering material in connection with the offering and sale of the Securities other than the Preliminary
Prospectus, the Final Prospectus, the Registration Statement, copies of the documents incorporated by reference therein and any
other materials permitted by the Securities Act.
(d)
Subsidiaries
.
All of the direct and indirect subsidiaries of the Company (the “
Subsidiaries
”) are set forth in the Incorporated
Documents. The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free
and clear of any liens, charges, security interests, encumbrances, rights of first refusal, preemptive rights or other restrictions
(collectively, “
Liens
”), and all of the issued and outstanding shares of capital stock of each Subsidiary are
validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.
(e)
Organization
and Qualification
. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power
and authority to own and use its properties and assets and to carry on its business as currently conducted, and as described in
the Registration Statement and Prospectus. Neither the Company nor any Subsidiary is in violation nor default of any of the provisions
of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company
and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in
each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result
in a Material Adverse Effect (as defined below), and no an action, claim, suit, investigation or proceeding (including, without
limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened (“
Proceeding
”)
has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power
and authority or qualification. As used in this Agreement, “
Material Adverse Effect
” means any material adverse
effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise)
or prospects of the Company or any Subsidiary, individually or taken as a whole, (ii) the transactions contemplated hereby or in
any of the other Transaction Documents or any other agreements or instruments to be entered into in connection herewith or therewith,
or the legality, validity or enforceability of any such agreement, or (iii) the authority or ability of the Company or any of its
Subsidiaries to perform any of their respective obligations under this Agreement or any of the Transaction Documents.
(f)
Authorization;
Enforcement
. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated
by this Agreement, the Transaction Documents, and the Prospectus and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of each of this Agreement and the Transaction Documents by the Company and the consummation by it of
the transactions contemplated hereby and thereby and under the Prospectus have been duly authorized by all necessary action on
the part of the Company and no further action is required by the Company, the Company’s Board of Directors (the “
Board
of Directors
”) or the Company’s stockholders in connection therewith other than in connection with the Required
Approvals (as defined below). This Agreement has been duly executed by the Company and, when delivered in accordance with the terms
hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its
terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law.
(g)
No
Conflicts
. The execution, delivery and performance by the Company of this Agreement, the Transaction Documents, and the transactions
contemplated pursuant to the Prospectus, the issuance and sale of the Securities and the consummation by it of the transactions
contemplated hereby and thereby to which it is a party do not and will not (i) conflict with or violate any provision of the Company’s
or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii)
conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result
in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights
of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company
or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii)
subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal
and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected;
except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material
Adverse Effect.
(h)
Filings,
Consents and Approvals
. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company of this Agreement and the transactions contemplated
pursuant to the Transaction Documents and the Prospectus, other than: (i) the filing with the Commission of the Final Prospectus,
(ii) application(s) to The NASDAQ Capital Market (the “
Trading Market
”) for the listing of the Shares and the
Warrant Shares for trading thereon in the time and manner required thereby, and (iii) such consents, approvals, authorizations,
registrations or qualifications as may be required under state or foreign securities or “blue sky” laws and the rules
of the Financial Industry Regulatory Authority, Inc. (“
FINRA
”) (collectively, the “
Required Approvals
”).
All Required Approvals have been or will be obtained or effected on or prior to the Closing Date, and the Company is not aware
of any facts or circumstances which might prevent the Company from obtaining and Required Approvals.
(i)
Issuance
of the Securities; Registration
. The Primary Securities are duly authorized and, when issued and paid for in accordance with
the Prospectus, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company.
The Warrant Shares, when issued in accordance with the terms of the Warrants will be validly issued, fully paid and nonassessable,
free and clear of all Liens imposed by the Company. The Company has reserved from its duly authorized capital stock the maximum
number of shares of Common Stock issuable pursuant to the Final Prospectus, including the Shares and the Warrant Shares.
(j)
Capitalization
.
The capitalization of the Company, including the authorized and outstanding securities, including any securities exercising or
convertible into shares of Common Stock, is as set forth in the Prospectus. The Company has not issued any capital stock or other
securities since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee
stock options under the Company’s stock option plans, the issuance of shares of Common Stock and options to purchase shares
of Common Stock to employees and consultants pursuant to the Company’s employee stock purchase plans, pursuant to the conversion
and/or exercise of 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
(“
Common Stock Equivalents
”) outstanding as of the date of the most recently filed periodic report under the
Exchange Act, and in connection with the October 2017 Placement. Other than the investors in the October 2017 Placement, no Person
has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions
contemplated by this Agreement, the Transaction Documents and the Prospectus. Except as a result of the purchase and sale of the
Securities, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any
right to subscribe for or acquire, any shares of Common Stock of the capital stock of any Subsidiary, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common
Stock or Common Stock Equivalents or capital stock of any Subsidiary. The issuance and sale of the Securities will not obligate
the Company or any Subsidiary to issue shares of Common Stock or other securities to any Person (other than the Investors) and,
other than securities sold in the October 2017 Placement, will not result in a right of any holder of Company securities to adjust
the exercise, conversion, exchange or reset price under any of such securities. There are no outstanding securities or instruments
of the Company of any Subsidiary that contain any redemption or similar provisions, and there are no contracts, commitments, understandings
or arrangements by which the Company or any Subsidiary is or may become bound to redeem a security of the Company or such Subsidiary.
The Company does not have any stock appreciation rights of “phantom stock” plans or agreements or any similar plan
or agreement. All of the outstanding shares of capital stock of the Company are duly authorized. All of the outstanding shares
of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal
and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights
to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors or others
is required for the issuance and sale of the Securities. There are no stockholders agreements, voting agreements or other similar
agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company,
between or among any of the Company’s stockholders. The SEC Reports (as defined below) contain correct and complete copies
of the Company’s certificate of incorporation, as amended and as in effect on the date hereof, and the Company’s bylaws,
as amended and as in effect on the date hereof, and the terms of all Common Stock Equivalents, and the material rights of the holders
thereof in respect thereto.
(k)
SEC
Reports; Financial Statements
. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof (the foregoing materials, including the exhibits thereto and documents incorporated
by reference therein, together with the Registration Statement and the Prospectus, being collectively referred to herein as the
“
SEC Reports
”) on a timely basis or has received a valid extension of such time of filing and has filed any
such SEC Reports prior to the expiration of any such extension. The Company has delivered or has made available to the Placement
Agent true, correct and complete copies of each of the SEC Reports not available on the EDGAR system. As of their respective dates,
the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable,
and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading. The financial statements of the Company included in the SEC Reports (including, without limitation,
any notes or any letter of the independent accountants of the Company with respect thereto) (the “
Financial Statements
”)
comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing. The Financial Statements have been prepared in accordance with United States generally
accepted accounting principles applied on a consistent basis during the periods involved (“
GAAP
”), except as
may be otherwise specified in such Financial Statements and except that unaudited Financial Statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries
as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments. The reserves, if any, established by the Company or the
lack of reserves, if applicable, are reasonable based upon facts and circumstances known by the Company on the date hereof and
there are no loss contingencies that are required to be accrued by the Statement of Financial Accounting Standard No. 5 of the
Financial Accounting Standards Board which are not provided for by the Company in its Financial Statements or otherwise. The Company
is not currently contemplating to amend or restate any of the Financial Statements, nor is the Company currently aware of facts
or circumstances which would require the Company to amend or restate any of the Financial Statements, in each case, in order for
any of the Financial Statements to be in compliance with GAAP and the rules and regulations of the Commission. The Company has
not been informed by its independent accountants that they recommend that the Company amend or restate any of the Financial Statements
or that there is any need for the Company to amend or restate any of the Financial Statements.
(l)
Material
Changes; Undisclosed Events, Liabilities or Developments
. Since the date of the latest audited Financial Statements included
within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof, (i) there has
been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect,
(ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the
Financial Statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method
of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders
or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not
issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans. The
Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance
of the Securities contemplated by the Transaction Documents and Prospectus or disclosed in the Prospectus, no event, liability,
fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to
the Company or its Subsidiaries or their respective businesses, prospects, properties, operations, assets or financial condition,
including any transaction, arrangement, or other relationship between the Company or any of its Subsidiaries and an unconsolidated
or other off balance sheet entity that would be required to be disclosed by the Company under applicable securities laws at the
time this representation is made or deemed made that has not been publicly disclosed at least 1 trading day of the Common Stock
on the Trading Market prior to the date that this representation is made.
(m)
Litigation
.
There is no action, suit, inquiry, arbitration, notice of violation, proceeding or investigation pending or, to the knowledge of
the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any
court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively,
an “
Action
”) which (i) adversely affects or challenges the legality, validity or enforceability of any of this
Agreement, the Transaction Documents and the transactions contemplated pursuant to the Prospectus or the Securities or (ii) could,
if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. No director, officer
or employee of the Company or any of its Subsidiaries has willfully violated 18 U.S.C. §1519 or engaged in spoliation in reasonable
anticipation of litigation. 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 Commission
or any other U.S. or foreign securities regulator involving the Company or any current or former director or officer of the Company.
The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by
the Company or any Subsidiary under the Exchange Act or the Securities Act. After reasonable inquiry of its employees, the Company
is not aware of any fact which might result in or form the basis for any such Action, suit, arbitration, investigation, inquiry
or other proceeding. Neither the Company nor any of its Subsidiaries is subject to any order, writ, judgment, injunction, decree,
determination or award of any governmental agency or regulatory authority.
(n)
Labor
Relations
. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees
of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’
employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither
the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. No executive officer of the Company or any Subsidiary, to the knowledge
of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure
or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant
in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance
with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(o)
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, its certificate
of incorporation, bylaws or other governing documents, or 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 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 taxes, environmental protection, occupational health and safety, product quality and
safety and employment and labor matters, except in each case (under this clause (iii)) as could not have or reasonably be expected
to result in a Material Adverse Effect. Except as set forth in the SEC Reports, without limiting the generality of the foregoing,
the Company is not in violation of any of the rules, regulations or requirements of the Trading Market and has no knowledge of
any facts or circumstances that could reasonably lead to delisting or suspension of the Common Stock by the Trading Market in the
foreseeable future. Except as set forth in the SEC Reports, during the two years prior to the date hereof, (i) the Common Stock
has been listed or designated for quotation on the Trading Market, (ii) trading in the Common Stock has not been suspended by the
Commission or the Trading Market and (iii) the Company has received no communication, written or oral, from the Commission or the
Trading Market regarding the suspension or delisting of the Common Stock from the Trading Market. There is no agreement, commitment,
judgment, injunction, order or decree binding upon the Company or any of its Subsidiaries or to which the Company or any of its
Subsidiaries is a party which has or would reasonably be expected to have the effect of prohibiting or materially impairing any
business practice of the Company or any of its Subsidiaries, any acquisition of property by the Company or any of its Subsidiaries
or the conduct of business by the Company or any of its Subsidiaries as currently conducted other than such effects, individually
or in the aggregate, which have not had and would not reasonably be expected to have a Material Adverse Effect on the Company or
any of its Subsidiaries.
(p)
Environmental
Laws
. The Company and its Subsidiaries (i) are in compliance with all federal, state, local and foreign laws relating to pollution
or protection of human health or the environment (including ambient air, surface water, groundwater, land surface or subsurface
strata), including laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants,
or toxic or hazardous substances or wastes (collectively, “
Hazardous Materials
”) into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands, or demand letters, injunctions, judgments, licenses, notices or notice
letters, orders, permits, plans or regulations, issued, entered, promulgated or approved thereunder (“
Environmental Laws
”);
(ii) have received all permits licenses or other approvals required of them under applicable Environmental Laws to conduct their
respective businesses; and (iii) are in compliance with all terms and conditions of any such permit, license or approval where
in each clause (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate,
a Material Adverse Effect.
(q)
Regulatory
Permits
. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports,
except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“
Material
Permits
”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation
or modification of any Material Permit, or any notice of adverse finding, warning letter, or other correspondence or notice from
any governmental authority alleging or asserting noncompliance with any Material Permits.
(r)
Title
to Assets
. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them
and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries,
in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and Liens for the payment
of federal, state or other taxes, for which appropriate reserves have been made therefor 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 are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in
compliance. All tangible personal property owned by the Company and its Subsidiaries is structurally sound, are in good operating
condition and repair, are adequate for the uses to which they are being put, are not in need of maintenance or repairs except for
ordinary, routine maintenance and repairs and are sufficient for the conduct of the Company’s and/or its Subsidiaries’
businesses (as applicable) in the manner as conducted prior to the Closing.
(s)
Patents
and Trademarks
. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property
rights and similar rights (collectively, the “
Intellectual Property Rights
”) necessary or material to conduct
their respective businesses as now conducted and presently proposed to be conducted. None of, and neither the Company nor any Subsidiary
has received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated or been abandoned,
or is expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement. Neither the Company
nor any Subsidiary has received, since the date of the latest audited Financial Statements included within the SEC Reports, a notice
(written or otherwise) of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon
the rights of any Person, except as would not have a Material Adverse Effect. To the knowledge of the Company, all such Intellectual
Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights.
The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all
of their intellectual properties.
(t)
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. 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.
(u)
Transactions
With Affiliates and Employees
. Except as set forth in the SEC Reports, none of the officers or directors of the Company or
any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party
to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or
personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case
in excess of $120,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan
of the Company.
(v)
D&O
Questionnaires
. To the Company’s knowledge, all information contained in the questionnaires (the “
Questionnaires
”)
completed by each of the Company’s directors and officers immediately prior to the offering and sale of Securities, as supplemented
by all information concerning the Company’s directors, officers and principal shareholders as described in the Registration
Statement and Prospectus as well as in the Lock-Up Agreements (as defined below), provided to the Placement Agent, is true and
correct in all material respects and the Company has not become aware of any information which would cause the information disclosed
in the Questionnaires to become inaccurate or incorrect in any material respect.
(w)
Sarbanes-Oxley;
Internal Accounting Controls
. The Company and the Subsidiaries are in compliance with any and all applicable requirements of
the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder or implementing the provisions thereof (the
“
Sarbanes-Oxley Act
”), and any and all applicable rules and regulations promulgated by the Commission thereunder
that are effective as of the date hereof and as of the Closing Date. The Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) 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, processed, summarized and reported, within the time periods specified in the Commission’s
rules and forms. The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls
and procedures of the Company and the Subsidiaries as of the end of the period covered by the Company’s most recently filed
periodic report under the Exchange Act (such date, the “
Evaluation Date
”). The Company presented in its most
recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have
been no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) of the Company and
its Subsidiaries that have materially affected, or is reasonably likely to materially affect, the internal control over financial
reporting of the Company and its Subsidiaries.
(x)
Board
of Directors
. The qualifications of the persons serving as members of the Board of Directors and the overall composition of
the Board of Directors comply with the Exchange Act and the Sarbanes-Oxley Act and the listing rules of Trading Market. At least
one member of the Audit Committee of the Board of Directors qualifies as an “audit committee financial expert,” as
such term is defined under Regulation S-K and the listing rules of the Trading Market. In addition, at least a majority of the
persons serving on the Board of Directors qualify as “independent,” as defined under the listing rules of the Trading
Market.
(y)
Certain
Fees
. Except as set forth in the Prospectus, no brokerage or finder’s fees or commissions are or will be payable by the
Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect
to the transactions contemplated by this Agreement, the Transaction Documents and the Prospectus. The Investors 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 this Agreement, the Transaction Documents and
the Prospectus.
(z)
Investment
Company
. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will
not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as
amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject
to registration under the Investment Company Act of 1940, as amended.
(aa)
Registration
Rights
. No Person has any right to cause the Company or any Subsidiary to effect the registration under the Securities Act
of any securities of the Company or any Subsidiary.
(bb)
Listing
and Maintenance Requirements
. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration
of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating
such registration. Except as disclosed in the SEC Reports, the Company has not, in the 12 months preceding the date hereof, received
notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not
in compliance with the listing or maintenance requirements of such Trading Market. Except as disclosed in the SEC Reports, the
Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such
listing and maintenance requirements. The Common Stock is currently eligible for electronic transfer through the Depository Trust
Company or another established clearing corporation and the Company is current in payment of the fees to the Depository Trust Company
(or such other established clearing corporation) in connection with such electronic transfer.
(cc)
Application
of Takeover Protections
. The Company and the Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become applicable to the Investors as a result of the Investors and
the Company fulfilling their obligations or exercising their rights under this Agreement and the Transaction Documents and the
transactions contemplated pursuant to the Prospectus, including without limitation as a result of the Company’s issuance
of the Securities and the Investors’ ownership of the Securities.
(dd)
Disclosure
.
Except with respect to the material terms and conditions of the transactions contemplated by this Agreement, the Transaction Documents
and the Prospectus, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Investors
or their agents or counsel with any information that it believes constitutes or might constitute material, non-public information
which is not otherwise disclosed in the Registration Statement and Prospectus. The Company understands and confirms that the Investors
will rely on the foregoing representation in effecting transactions in securities of the Company. All of the disclosure furnished
by or on behalf of the Company to the Investors regarding the Company and, its Subsidiaries, their respective businesses and the
transactions contemplated hereby and in the Transaction Documents, including the Disclosure Schedules to this Agreement, is true
and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order
to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases
disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made and when made, not misleading.
(ee)
No
Integrated Offering
. 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 to be integrated with prior offerings by the Company for purposes of any applicable shareholder approval provisions
of any Trading Market on which any of the securities of the Company are listed or designated.
(ff)
Solvency
.
Based on the consolidated financial condition of the Company as of each Closing Date, after giving effect to the receipt by the
Company of the proceeds from the sale of the Securities hereunder, (i) the fair saleable value of the Company’s assets exceeds
the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry
on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular
capital requirements of the business conducted by the Company, consolidated and projected capital requirements and capital availability
thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate
all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in
respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability
to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).
The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year from each Closing Date. The SEC Reports sets forth
as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, including any 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 or have any commitments. For
purposes of this Agreement: (x) “
Indebtedness
” of any Person means, without duplication (A) all indebtedness
for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including,
without limitation, “capital leases” in accordance with GAAP) (other than trade payables entered into in the ordinary
course of business consistent with past practice), (C) all reimbursement or payment obligations with respect to letters of credit,
surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including
obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created
or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect
to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or
bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations
under any leasing or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby,
is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in any property
or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property
has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (A) through (G) above; and (y) “
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. Neither the Company nor any Subsidiary is in violation under the terms of, or in
default with respect to any Indebtedness.
(gg)
Tax
Status
. The Company and its Subsidiaries (i) has made or filed all United States federal, state and local income and all foreign
income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all
taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns,
reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes
for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know
of no basis for any such claim. The provisions for taxes payable, if any, shown on the Financial Statements are sufficient for
all accrued and unpaid taxes, whether or not disputed, and for all periods to and including the dates of such consolidated Financial
Statements. No issues have been raised (and are currently pending) by any taxing authority in connection with any of the returns
or taxes asserted as due from the Company or its Subsidiaries, and no waivers of statutes of limitation with respect to the returns
or collection of taxes have been given by or requested from the Company or its Subsidiaries. The Company is not operated in such
a manner as to qualify as a passive foreign investment company, as defined in Section 1297 of the Internal Revenue Code of 1986,
as amended (the “
Code
”). The net operating loss carryforwards (“
NOLs
”) for United States
federal income tax purposes of the consolidated group of which the Company is the common parent, if any, shall not be adversely
affected by the transactions contemplated hereby. The transactions contemplated hereby do not constitute an “ownership change”
within the meaning of Section 382 of the Code, thereby preserving the Company’s ability to utilize such NOLs.
(hh)
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.
(ii)
Accountants
.
The Company’s accounting firms are set forth in the Registration Statement and the Prospectus. To the knowledge and belief
of the Company, (i) such accounting firms are registered public accounting firm as required by the Exchange Act and (ii) Somekh
Chaikin shall express its opinion with respect to the Financial Statements to be included in the Company’s Annual Report
for the fiscal year ending December 31, 2017.
(jj)
Regulation
M Compliance
. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate
the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases
of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any
other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Placement Agent in
connection with the placement of the Securities.
(kk)
Transfer
Taxes
. On the Closing Date, all stock transfer or other taxes (other than income or similar taxes) which are required to be
paid in connection with the issuance, sale and transfer of the Securities to be sold to each Investor 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.
(ll)
Office
of Foreign Assets Control
. Neither the Company nor any Subsidiary, to the Company’s knowledge, any director, officer,
agent, employee or Affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office
of Foreign Assets Control of the U.S. Treasury Department.
(mm)
U.S.
Real Property Holding Corporation
. The Company is not and has never been a U.S. real property holding corporation within the
meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Investor’s
request.
(nn)
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 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.
(oo)
Illegal
or Unauthorized Payments; Political Contributions
. Neither the Company nor any of its Subsidiaries nor, to the best of the
Company’s knowledge (after reasonable inquiry of its officers and directors), any of the officers, directors, employees,
agents or other representatives of the Company or any of its Subsidiaries or any other business entity or enterprise with which
the Company or any Subsidiary is or has been affiliated or associated, has, directly or indirectly, made or authorized any payment,
contribution or gift of money, property, or services, whether or not in contravention of applicable law, (i) as a kickback or bribe
to any Person or (ii) to any political organization, or the holder of or any aspirant to any elective or appointive public office
except for personal political contributions not involving the direct or indirect use of funds of the Company or any of its Subsidiaries.
(pp)
Money
Laundering
. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with
applicable financial record-keeping and reporting requirements of the USA Patriot Act of 2001, the Currency and Foreign Transactions
Reporting Act of 1970, as amended, and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including,
without limitation, the laws, regulations and Executive Orders and sanctions programs administered by the U.S. Office of Foreign
Assets Control, including, but not limited, to (i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property
and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001));
and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter V (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 with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
(qq)
Stock
Option Plans
. Each stock option granted by the Company was granted (i) in accordance with the terms of the applicable
stock option plan of the Company 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 the
Company’s stock option plan has been backdated. The Company has not knowingly granted, and there is no and has been no
policy or practice of the Company 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.
(rr)
No
Disagreements with Accountants and Lawyers
. There are no material 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. In addition, on
or prior to the date hereof, the Company had discussions with its accountants about its Financial Statements previously filed
with the Commission. Based on those discussions, the Company has no reason to believe that it will need to restate any such
Financial Statements or any part thereof.
(ss)
Certificates
.
Any certificate signed by an officer of the Company and delivered to the Placement Agent or to counsel for
the Placement Agent shall be deemed to be a representation and warranty by the Company to the Placement Agent as to
the matters set forth therein.
(tt)
Reliance
.
The Company acknowledges that the Placement Agent will rely upon the accuracy and truthfulness of the foregoing representations
and warranties and hereby consents to such reliance.
(uu)
FINRA
Affiliations
. There are no affiliations with any FINRA member firm among the Company’s officers, directors or, to the
knowledge of the Company, any five percent (5%) or greater stockholder of the Company.
Section 3. Delivery
and Payment
. Each Closing shall occur at the offices of Kelley Drye & Warren LLP, 101 Park Avenue, 27
th
Floor,
New York, New York 10178 (or at such other place as shall be agreed upon by the Placement Agent and the Company) (“
Placement
Agent Counsel
”). Subject to the terms and conditions hereof, at each Closing payment of the purchase price for the Securities
sold on such Closing Date shall be made by Federal Funds wire transfer, against delivery of such Securities, and such Securities
shall be registered in such name or names and shall be in such denominations, as the Placement Agent may request. Deliveries of
the documents with respect to the purchase of the Securities, if any, shall be made at the offices of Placement Agent Counsel.
All actions taken at a Closing shall be deemed to have occurred simultaneously.
Section 4. Covenants
and Agreements of the Company
. The Company further covenants and agrees with the Placement Agent as follows:
(a)
Registration
Statement Matters
. The Company will advise the Placement Agent promptly after it receives notice thereof of the time when any
amendment to the Registration Statement has been filed or becomes effective or any supplement to any Prospectus has been filed
and will furnish the Placement Agent with copies thereof. The Company will file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 14 or 15(d) of the Exchange
Act subsequent to the date of any Prospectus and for so long as the delivery of a prospectus is required in connection with the
Offering. The Company will advise the Placement Agent, promptly after it receives notice thereof (i) of any receipt of comments
of, or any request by the Commission to amend the Registration Statement or to amend or supplement any Prospectus or for additional
information, and (ii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement
or any post-effective amendment thereto or any order directed at any Incorporated Document, if any, or any amendment or supplement
thereto or any order preventing or suspending the use of any Prospectus or any amendment or supplement thereto or any post-effective
amendment to the Registration Statement, of the suspension of the qualification of the Securities for offering or sale in any jurisdiction,
of the institution or threatened institution of any Proceeding for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or a Prospectus or for additional information. The Company shall use its
best efforts to prevent the issuance of any such stop order or prevention or suspension of such use. If the Commission shall
enter any such stop order or order or notice of prevention or suspension at any time, the Company will use its best efforts to
obtain the lifting of such order at the earliest possible moment, or will file a new registration statement and use its best efforts
to have such new registration statement declared effective as soon as practicable. Additionally, the Company agrees that
it shall comply with the provisions of Rules 424(b), 430A, 430B and 430C, as applicable, under the Securities Act, including
with respect to the timely filing of documents thereunder, and will use its reasonable efforts to confirm that any filings made
by the Company under such Rule 424(b) are received in a timely manner by the Commission.
(b)
Blue
Sky Compliance
. The Company will cooperate with the Placement Agent and the Investors in endeavoring to qualify the Securities
for sale under the securities laws of such jurisdictions (United States and foreign) as the Placement Agent or the Investors may
reasonably request and will make such applications, file such documents, and furnish such information as may be reasonably required
for that purpose, provided the Company shall not be required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction where it is not now so qualified or required to file such a consent, and provided further
that the Company shall not be required to produce any new disclosure document other than a Final Prospectus. The Company will,
from time to time, prepare and file such statements, reports and other documents as are or may be required to continue such qualifications
in effect for so long a period as the Placement Agent may reasonably request for distribution of the Securities. The Company will
advise the Placement Agent promptly of the suspension of the qualification or registration of (or any such exemption relating to)
the Securities for offering, sale or trading in any jurisdiction or any initiation or threat of any Proceeding for any such purpose,
and in the event of the issuance of any order suspending such qualification, registration or exemption, the Company shall use its
best efforts to obtain the withdrawal thereof at the earliest possible moment.
(c)
Amendments
and Supplements to the Prospectus and Other Matters
. The Company will comply with the Securities Act and the Exchange Act,
and the rules and regulations of the Commission thereunder, so as to permit the completion of the distribution of the Securities
as contemplated in this Agreement, the Transaction Documents, the Incorporated Documents and any Prospectus. If during the period
in which a prospectus is required by law to be delivered in connection with the distribution of Securities contemplated by the
Transaction Documents or the Prospectus (the “
Prospectus Delivery Period
”), any event shall occur as a result
of which, in the judgment of the Company or in the opinion of the Placement Agent or counsel for the Placement Agent, it becomes
necessary to amend or supplement the Incorporated Documents or any Prospectus in order to make the statements therein, in the light
of the circumstances under which they were made, as the case may be, not misleading, or if it is necessary at any time to amend
or supplement the Incorporated Documents or any Prospectus or to file under the Exchange Act any Incorporated Document to comply
with any law, the Company will promptly prepare and file with the Commission, and furnish at its own expense to the Placement Agent
and to dealers, an appropriate amendment to the Registration Statement or supplement to the Registration Statement, the Incorporated
Documents or any Prospectus that is necessary in order to make the statements in the Incorporated Documents and any Prospectus
as so amended or supplemented, in the light of the circumstances under which they were made, as the case may be, not misleading,
or so that the Registration Statement, the Incorporated Documents or any Prospectus, as so amended or supplemented, will comply
with law. Before amending the Registration Statement or supplementing the Incorporated Documents or any Prospectus in connection
with the Offering, the Company will furnish the Placement Agent with a copy of such proposed amendment or supplement and will not
file any such amendment or supplement to which the Placement Agent reasonably objects.
(d)
Copies
of any Amendments and Supplements to a Prospectus
. The Company will furnish the Placement Agent, without charge, during the
period beginning on the date hereof and ending on the later of the last Closing Date of the Offering, as many copies of the Incorporated
Documents and any Prospectus and Free Writing Prospectus (as defined below), and any amendments and supplements thereto (including
any Incorporated Documents, if any) as the Placement Agent may reasonably request.
(e)
Free
Writing Prospectus
. The Company covenants that it will not, unless it obtains the prior written consent of the Placement Agent,
make any offer relating to the Securities that would constitute a “free writing prospectus” (as defined in Rule 405
of the Securities Act) required to be filed by the Company with the Commission or retained by the Company under Rule 433 of the
Securities Act (a “
Free Writing Prospectus
”). In the event that the Placement Agent expressly consents in writing
to any Free Writing Prospectus (a “
Permitted Free Writing Prospectus
”), the Company covenants that it shall
comply with the requirements of Rule 164 and 433 of the Securities Act applicable to such Permitted Free Writing Prospectus, including
in respect of timely filing with the Commission, legending and record keeping. If at any time during the Prospectus Delivery Period
there occurred or occurs an event or development the result of which a Free Writing Prospectus conflicted or would conflict with
the information contained in the Registration Statement or any Prospectus or included or would include, when taken together with
the Final Prospectus and Incorporated Documents, an untrue statement of a material fact or omitted or would omit to state a material
fact necessary in order to make the statements therein, in the light of the circumstances prevailing at that subsequent time, not
misleading, the Company will promptly notify the Placement Agent and will promptly amend or supplement, at its own expense, such
Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.
(f)
Lock-Up
.
The Company hereby agrees that, without the prior written consent of the Placement Agent, it will not, during the period from the
date hereof until fifteen (15) Business Days after the initial Closing Date (the “
Lock-Up Period
”), (i) offer,
pledge, issue, sell, contract to sell, purchase, contract to purchase, lend, or otherwise transfer or dispose of, directly or indirectly,
any shares of Common Stock or any Common Stock Equivalents; or (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described
in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise; or (iii)
file any registration statement with the Commission relating to the offering of any shares of Common Stock or any Common Stock
Equivalents (other than a registration statement for Common Stock and/or Common Stock Equivalents of the Company that will not
be declared effective by the Commission prior to the expiration of the Lock-Up Period (each, a “
Subsequent Offering Registration
Statement
”, and any such offering pursuant thereto, each, a “
Subsequent Offering
”)). The restrictions
contained in the preceding sentence shall not apply to (1) the Securities to be sold hereunder, (2) the issuance of Common Stock
upon the exercise of options or warrants or the conversion or exercise of Common Stock Equivalents disclosed as outstanding in
the Registration Statement (excluding exhibits thereto) or Prospectus, (3) the issuance of employee stock options not exercisable
during the Lock-Up Period and the grant of restricted stock awards or restricted stock units or shares of Common Stock pursuant
to equity incentive plans described in the Registration Statement (excluding exhibits thereto) or the Final Prospectus or (4) any
Subsequent Offering of shares of Common Stock and/or Common Stock Equivalents that is consummated pursuant to a Subsequent Offering
Registration Statement after the expiration of the Lock-Up Period. The Company agrees not to accelerate the vesting of any option
or warrant or the lapse of any repurchase right prior to the expiration of the Lock-Up Period except with respect to any employees,
officers or directors of the Company that have executed a Lock-Up Agreement. As used herein “
Business Day
” means
any day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by
law to remain closed.
(g)
Transfer
Agent
. The Company will maintain, at its expense, a registrar and transfer agent for the Common Stock.
(h)
Trading
Market
. The Company shall use its reasonable best efforts to obtain approval to include the Shares and the Warrant Shares on
the Trading Market.
(i)
Earnings
Statement
. As soon as practicable and in accordance with applicable requirements under the Securities Act, but in any event
not later than 18 months after the last Closing Date, the Company will make generally available to its security holders and to
the Placement Agent an earnings statement, covering a period of at least 12 consecutive months beginning after the last Closing
Date, that satisfies the provisions of Section 11(a) and Rule 158 under the Securities Act.
(j)
Use
of Proceeds
. The Company shall apply the net proceeds from the sale of the Securities to be sold by it hereunder for the purposes
set forth in the Registration Statement and the Final Prospectus under the heading “Use of Proceeds”.
(k)
Periodic
Reporting Obligations
. During the Prospectus Delivery Period, the Company will duly file, on a timely basis, with the Commission
and the Trading Market all reports and documents required to be filed under the Exchange Act within the time periods and in the
manner required by the Exchange Act.
(l)
Reverse
Stock Split
. As soon as practicable after the date hereof, the Company shall effect the reverse split of its Common
Stock, as contemplated in the Company’s Preliminary Information Statement on Schedule 14C filed with the Commission on
December 18, 2017 (the “
Reverse Stock Split
”), including complying with any mailing and delivery
requirements under the Exchange Act and filing an amendment to the Company’s certificate of incorporation in connection
therewith, and shall provide prompt written notice to the Placement Agent thereof.
(m)
Additional
Documents
.
The Company will enter into any subscription, purchase or other customary agreements as the Placement Agent
or the Investors deem necessary or appropriate to consummate the Offering, all of which will be in form and substance reasonably
acceptable to the Placement Agent and the Investors. The Company agrees that the Placement Agent may rely upon, and each is a third-party
beneficiary of, the representations and warranties, and applicable covenants, set forth in the Transaction Documents and any other
such purchase, subscription or other agreement with Investors in the Offering.
(n)
No
Manipulation of Price
.
The Company will not take, directly or indirectly, any action designed to cause or result
in, or that has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any
securities of the Company.
(o)
Acknowledgment
.
The Company acknowledges that any advice given by the Placement Agent to the Company is solely for the benefit and use of the Board
of Directors of the Company and may not be used, reproduced, disseminated, quoted or referred to, without the Placement Agent’s
prior written consent.
Section 5. Conditions
of the Obligations of the Placement Agent
. The obligations of the Placement Agent hereunder shall be subject to the accuracy
of the representations and warranties on the part of the Company set forth in Section 2 hereof as well as any representations of
the Company in the Transaction Documents, in each case as of the date hereof and as of each Closing Date as though then made, to
the timely performance by each of the Company of its covenants and other obligations hereunder and under the Transaction Documents
on and as of such dates, and to each of the following additional conditions:
(a)
Accountants’
Comfort Letter
. On the date hereof, the Placement Agent shall have received, and the Company shall have caused to be delivered
to the Placement Agent, a letter from Somekh Chaikin (the independent registered public accounting firm of the Company), addressed
to the Placement Agent, dated as of the date hereof, in form and substance satisfactory to the Placement Agent. The letter shall
not disclose any change in the condition (financial or other), earnings, operations, business or prospects of the Company from
that set forth in the Incorporated Documents or the applicable Prospectus, which, in the Placement Agent’s sole judgment,
is material and adverse and that makes it, in the Placement Agent’s sole judgment, impracticable or inadvisable to proceed
with the Offering of the Securities as contemplated by such Prospectus.
(b)
Transaction
Documents
. The Company and each Subsidiary (as the case may be) shall have duly executed and delivered to the Investors each
of the Transaction Documents to which it is a party, including the Purchase Agreement and the applicable number of Pre-Funded Warrants
and Common Warrants issuable to each Investor pursuant to the terms thereunder.
(c)
Compliance
with Registration Requirements; No Stop Order; No Objection from the FINRA.
The Final Prospectus (in accordance with Rule 424(b))
and any Permitted Free Writing Prospectus, if any, shall have been duly filed with the Commission, as appropriate; no stop order
suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no Proceeding for that
purpose shall have been initiated or threatened by the Commission; no order preventing or suspending the use of any Prospectus
or Permitted Free Writing Prospectus shall have been issued and no proceeding for that purpose shall have been initiated or threatened
by the Commission; no order having the effect of ceasing or suspending the distribution of the Securities or any other securities
of the Company shall have been issued by any securities commission, securities regulatory authority or stock exchange and no proceedings
for that purpose shall have been instituted or shall be pending or, to the knowledge of the Company, contemplated by any securities
commission, securities regulatory authority or stock exchange; all requests for additional information on the part of the Commission
shall have been complied with; and FINRA shall have raised no objection to the fairness and reasonableness of the placement terms
and arrangements.
(d)
Corporate
Proceedings
. All corporate proceedings and other legal matters in connection with this Agreement, the Registration Statement
and each Prospectus, and the registration, sale and delivery of the Securities, shall have been completed or resolved in a manner
reasonably satisfactory to the Placement Agent’s counsel, and such counsel shall have been furnished with such papers and
information as it may reasonably have requested to enable such counsel to pass upon the matters referred to in this Section 5.
(e)
No
Material Adverse Effect
. Subsequent to the execution and delivery of this Agreement and prior to each Closing Date, in the
Placement Agent’s sole judgment after consultation with the Company, there shall not have occurred any Material Adverse Effect.
(f)
No
Materially Misleading Fact
. The Placement Agent shall not have reasonably determined, and advised the Company, that the Registration
Statement, any Prospectus, or any amendment thereof or supplement thereto, or any Free Writing Prospectus, contains an untrue statement
of fact which, in the reasonable opinion of the Placement Agent, is material, or omits to state a fact which, in the reasonable
opinion of the Placement Agent, is material and is required to be stated therein or necessary to make the statements therein not
misleading.
(g)
Opinion
of Counsel
. The Placement Agent shall have received on each Closing Date the favorable opinion of Sheppard, Mullin, Richter
& Hampton LLP US legal counsel to the Company, dated as of such Closing Date, including, without limitation, a negative assurance
letter addressed to the Placement Agent, and in form and substance satisfactory to the Placement Agent. On or before each Closing
Date there shall have been furnished to the Placement Agent the negative assurance letter of Placement Agent Counsel, dated the
Closing Date and addressed to the Placement Agent, in form and substance reasonably satisfactory to Placement Agent.
(h)
Good
Standing
. The Placement Agent shall have received a certificate evidencing the formation and good standing of the Company from
the Secretary of State of Delaware as of a date within ten (10) days of each Closing Date.
(i)
Certified
Charter
. The Placement Agent shall have received a certified copy of the Certificate of Incorporation of the Company as certified
by the Delaware Secretary of State within ten (10) days of each Closing Date.
(j)
Secretary’s
Certificate
. The Placement Agent shall have received on each Closing Date a certificate of the Company, dated as of such Closing
Date, signed by the Secretary of the Company or such other officer of the Company serving in such capacity, as to (i) the resolutions
of the Board of Directors approving the Offering and issuance and pricing of the Securities, in a form reasonable acceptable to
the Placement Agent, (ii) the incumbency of the officers of the Company executing this Agreement and the Transaction Documents,
(iii) the Certificate of Incorporation of the Company, and (iv) the Bylaws of the Company, each as in effect at the Closing.
(k)
Officers’
Certificate
. The Placement Agent shall have received on each Closing Date a certificate of the Company, dated as of such Closing
Date, signed by the Chief Executive Officer and Chief Financial Officer of the Company, to the effect that, and the Placement Agent
shall be satisfied that, the signers of such certificate have reviewed the Registration Statement, the Incorporated Documents,
the Prospectus, and this Agreement and to the further effect that:
(i)
The
representations and warranties of the Company in this Agreement and in the Transaction Documents are true and correct, as if made
on and as of such Closing Date, and the Company has complied with all the agreements and satisfied all the conditions on its part
to be performed or satisfied at or prior to such Closing Date;
(ii)
No
stop order suspending the effectiveness of the Registration Statement or the use of the Prospectus has been issued and no proceedings
for that purpose have been instituted or are pending or, to the Company’s knowledge, threatened under the Securities Act;
no order having the effect of ceasing or suspending the distribution of the Securities or any other securities of the Company has
been issued by any securities commission, securities regulatory authority or stock exchange in the United States and no proceedings
for that purpose have been instituted or are pending or, to the knowledge of the Company, contemplated by any securities commission,
securities regulatory authority or stock exchange in the United States;
(iii)
When
the Registration Statement became effective, at the time of sale, and at all times subsequent thereto up to the delivery of such
certificate, the Registration Statement and the Incorporated Documents, if any, when such documents became effective or were filed
with the Commission, contained all material information required to be included therein by the Securities Act and the Exchange
Act and the applicable rules and regulations of the Commission thereunder, as the case may be, and in all material respects conformed
to the requirements of the Securities Act and the Exchange Act and the applicable rules and regulations of the Commission thereunder,
as the case may be, and the Registration Statement and the Incorporated Documents, if any, did not and do not include any untrue
statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading (provided, however, that the preceding representations
and warranties contained in this paragraph (iii) shall not apply to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by the Placement Agent expressly for use therein) and, since the effective
date of the Registration Statement, there has occurred no event required by the Securities Act and the rules and regulations of
the Commission thereunder to be set forth in the Incorporated Documents which has not been so set forth; and
(iv)
Subsequent
to the respective dates as of which information is given in the Registration Statement, the Incorporated Documents and any Prospectus,
there has not been: (a) any Material Adverse Effect; (b) any transaction that is material to the Company and the Subsidiaries taken
as a whole, except transactions entered into in the ordinary course of business; (c) any obligation, direct or contingent, that
is material to the Company and the Subsidiaries taken as a whole, incurred by the Company or any Subsidiary, except obligations
incurred in the ordinary course of business; (d) any material change in the capital stock (except changes thereto resulting from
the exercise of outstanding stock options or warrants) or outstanding indebtedness of the Company or any Subsidiary; (e) any dividend
or distribution of any kind declared, paid or made on the capital stock of the Company; or (f) any loss or damage (whether or not
insured) to the property of the Company or any Subsidiary which has been sustained or will have been sustained which has a Material
Adverse Effect.
(l)
Outstanding
Shares
. The Placement Agent shall have received a letter from the Company’s transfer agent certifying the number of shares
of Common Stock outstanding on the trading day immediately prior to each Closing Date.
(m)
Bring-down
Comfort Letter
.
On each Closing Date, the Placement Agent shall have received from Somekh Chaikin a letter
dated as of such Closing Date, in form and substance satisfactory to the Placement Agent, to the effect that they reaffirm
the statements made in the letter furnished pursuant to subsection (a) of this Section 5, except that the specified
date referred to therein for the carrying out of procedures shall be no more than three Business Days prior to such Closing
Date.
(n)
Stock
Exchange Listing
. The Common Stock shall be registered under the Exchange Act and shall be listed on the Trading Market, and
the Company shall not have taken any action designed to terminate, or likely to have the effect of terminating, the registration
of the Common Stock under the Exchange Act or delisting or suspending from trading the Common Stock from the Trading Market, nor,
except as disclosed in the SEC Reports as of the date hereof, shall the Company have received any information suggesting that the
Commission or the Trading Market is contemplating terminating such registration or listing. The Shares and the Warrant Shares shall
be approved for listing on the Trading Market, subject to official notice of issuance.
(o)
Lock-Ups
.
On or before the date hereof, the Placement Agent shall have received duly executed lock-up agreement, substantially in the form
of
Exhibit A
hereto (each a “
Lock-Up Agreement
”), from each of the parties specified in
Schedule 1
.
(p)
Transfer
Agent Issuance Instructions
. The Company shall have issued irrevocable instructions to its transfer agent with respect to the
issuance of the Shares to the Investors on such Closing Date, in a form reasonable acceptable to the Placement Agent, in accordance
with the terms of the Purchase Agreement.
(q)
Transfer
Agent Lock-Up Instructions
. On or before the first Closing Date, the Company shall have issued irrevocable instructions to
its transfer agent, in a form reasonable acceptable to the Placement Agent, to stop transfer of any shares of equity securities
of the Company in accordance with the various Lock-Up Agreements.
(r)
Additional
Documents
. On or before each Closing Date, the Placement Agent and counsel for the Placement Agent shall have received such
information and documents as they may reasonably require for the purposes of enabling them to pass upon the issuance and sale of
the Securities as contemplated herein and in the Transaction Documents, or in order to evidence the accuracy of any of the representations
and warranties, or the satisfaction of any of the conditions or agreements, herein contained, including, without limitation, any
and all Required Approvals.
Section 6. Payment
of Expenses
. The Company agrees to pay all costs, fees and expenses incurred by the Company in connection with the performance
of its obligations hereunder and in connection with the transactions contemplated hereby and in the Transaction Documents, including,
without limitation: (i) all expenses incident to the issuance, delivery and qualification of the Securities (including all printing
and engraving costs); (ii) all fees and expenses of the registrar and transfer agent of the Common Stock; (iii) all necessary issue,
transfer and other stamp taxes in connection with the issuance and sale of the Securities; (iv) all fees and expenses of the
Company’s counsel, independent public or certified public accountants and other advisors; (v) all costs and expenses incurred
in connection with the preparation, printing, filing, shipping and distribution of the Registration Statement (including financial
statements, exhibits, schedules, consents and certificates of experts), the Preliminary Prospectus and Final Prospectus, and all
amendments and supplements thereto, and this Agreement; (vi) all filing fees, reasonable attorneys’ fees and expenses incurred
by the Company or the Placement Agent in connection with qualifying or registering (or obtaining exemptions from the qualification
or registration of) all or any part of the Securities for offer and sale under the state securities or blue sky laws or the securities
laws of any other country, and, if requested by the Placement Agent, preparing and printing a “Blue Sky Survey,” an
“International Blue Sky Survey” or other memorandum, and any supplements thereto, advising the Placement Agent of such
qualifications, registrations and exemptions; (vii) the filing fees incident to the review and approval by FINRA of the Placement
Agent’s participation in the offering and distribution of the Securities; (viii) the fees and expenses associated with including
the Shares and the Warrant Shares on the Trading Market; (ix) all costs and expenses incident to the travel and accommodation of
the Company’s and the Placement Agent’s employees on the “roadshow,” if any; (x) all fees and expenses
in connection with the Reverse Stock Split; and (xi) all other fees, costs and expenses referred to in Part II of the Registration
Statement.
Section 7. Indemnification
and Contribution
.
(a) The Company
agrees to indemnify and hold harmless the Placement Agent, its Affiliates and each person controlling the Placement Agent (within
the meaning of Section 15 of the Securities Act), and the directors, officers, agents and employees of the Placement Agent, its
Affiliates and each such controlling person (the Placement Agent, and each such entity or person, an “
Indemnified Person
”)
from and against any losses, claims, damages, judgments, assessments, costs and other liabilities (collectively, the “
Liabilities
”),
and shall reimburse each Indemnified Person for all fees and expenses (including the reasonable fees and expenses of one counsel
for all Indemnified Persons, except as otherwise expressly provided herein) (collectively, the “
Expenses
”) as
they are incurred by an Indemnified Person in investigating, preparing, pursuing or defending any Actions, whether or not any Indemnified
Person is a party thereto, (i) caused by, or arising out of or in connection with, any untrue statement or alleged untrue statement
of a material fact contained in any Incorporated Document or by any omission or alleged omission to state therein a material fact
necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (other than
untrue statements or alleged untrue statements in, or omissions or alleged omissions from, information relating to an Indemnified
Person furnished in writing by or on behalf of such Indemnified Person expressly for use in the Incorporated Documents) or (ii)
otherwise arising out of or in connection with advice or services rendered or to be rendered by any Indemnified Person pursuant
to this Agreement and the Transaction Documents, the transactions contemplated thereby or any Indemnified Person’s actions
or inactions in connection with any such advice, services or transactions;
provided, however
, that, in the case of clause
(ii) only, the Company shall not be responsible for any Liabilities or Expenses of any Indemnified Person that are finally judicially
determined to have resulted solely from such Indemnified Person’s (x) gross negligence or willful misconduct in connection
with any of the advice, actions, inactions or services referred to above or (y) use of any offering materials or information concerning
the Company in connection with the offer or sale of the Securities in the Offering which were not authorized for such use by the
Company and which use constitutes gross negligence or willful misconduct. The Company also agrees to reimburse each Indemnified
Person for all Expenses as they are incurred in connection with enforcing such Indemnified Person’s rights under this Agreement.
(b) Upon
receipt by an Indemnified Person of actual notice of an Action against such Indemnified Person with respect to which indemnity
may be sought under this Agreement, such Indemnified Person shall promptly notify the Company in writing; provided that failure
by any Indemnified Person so to notify the Company shall not relieve the Company from any liability which the Company may have
on account of this indemnity or otherwise to such Indemnified Person, except to the extent the Company shall have been prejudiced
by such failure. The Company shall, if requested by the Placement Agent, assume the defense of any such Action including the employment
of counsel reasonably satisfactory to the Placement Agent, which counsel may also be counsel to the Company. Any Indemnified Person
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 Indemnified Person unless: (i) the Company has failed promptly to assume the defense
and employ counsel or (ii) the named parties to any such Action (including any impeded parties) include such Indemnified Person
and the Company, and such Indemnified Person shall have been advised in the reasonable opinion of counsel that there is an actual
conflict of interest that prevents the counsel selected by the Company from representing both the Company (or another client of
such counsel) and any Indemnified Person; provided that the Company shall not in such event be responsible hereunder for the fees
and expenses of more than one firm of separate counsel for all Indemnified Persons in connection with any Action or related Actions,
in addition to any local counsel. The Company shall not be liable for any settlement of any Action effected without its written
consent (which shall not be unreasonably withheld). In addition, the Company shall not, without the prior written consent of the
Placement Agent (which shall not be unreasonably withheld), settle, compromise or consent to the entry of any judgment in or otherwise
seek to terminate any pending or threatened Action in respect of which indemnification or contribution may be sought hereunder
(whether or not such Indemnified Person is a party thereto) unless such settlement, compromise, consent or termination includes
an unconditional release of each Indemnified Person from all Liabilities arising out of such Action for which indemnification or
contribution may be sought hereunder. The indemnification required hereby shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as such expense, loss, damage or liability is incurred and is due and payable.
(c) In the
event that the foregoing indemnity is unavailable to an Indemnified Person other than in accordance with this Agreement, the Company
shall contribute to the Liabilities and Expenses paid or payable by such Indemnified Person in such proportion as is appropriate
to reflect (i) the relative benefits to the Company, on the one hand, and to the Placement Agent and any other Indemnified Person,
on the other hand, of the matters contemplated by this Agreement and the Transaction Documents, or (ii) if the allocation provided
by the immediately preceding clause is not permitted by applicable law, not only such relative benefits but also the relative fault
of the Company, on the one hand, and the Placement Agent and any other Indemnified Person, on the other hand, in connection with
the matters as to which such Liabilities or Expenses relate, as well as any other relevant equitable considerations; provided that
in no event shall the Company contribute less than the amount necessary to ensure that all Indemnified Persons, in the aggregate,
are not liable for any Liabilities and Expenses in excess of the amount of fees actually received by the Placement Agent pursuant
to this Agreement. For purposes of this paragraph, the relative benefits to the Company, on the one hand, and to the Placement
Agent on the other hand, of the matters contemplated by this Agreement and in the Transaction Documents shall be deemed to be in
the same proportion as (a) the total value paid or contemplated to be paid to or received or contemplated to be received by the
Company in the transaction or transactions that are within the scope of this Agreement and the Transaction Documents, whether or
not any such transaction is consummated, bears to (b) the fees paid to the Placement Agent under this Agreement. Notwithstanding
the above, no person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act, as amended,
shall be entitled to contribution from a party who was not guilty of fraudulent misrepresentation.
(d) The Company
also agrees that no Indemnified Person shall have any liability (whether direct or indirect, in contract or tort or otherwise)
to the Company for or in connection with advice or services rendered or to be rendered by any Indemnified Person pursuant to this
Agreement and the Transaction Documents, the transactions contemplated thereby or any Indemnified Person’s actions or inactions
in connection with any such advice, services or transactions except for Liabilities (and related Expenses) of the Company that
are finally judicially determined to have resulted solely from such Indemnified Person’s gross negligence or willful misconduct
in connection with any such advice, actions, inactions or services.
(e) The reimbursement,
indemnity and contribution obligations of the Company set forth herein shall apply to any modification of this Agreement and shall
remain in full force and effect regardless of any termination of, or the completion of any Indemnified Person’s services
under or in connection with, this Agreement.
Section 8. Representations
and Indemnities to Survive Delivery
. The respective indemnities, agreements, representations, warranties and other statements
of the Company or any person controlling the Company, of its officers, and of the Placement Agent set forth in or made pursuant
to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Placement Agent,
the Company, or any of its or their partners, officers or directors or any controlling person, as the case may be, and will survive
delivery of and payment for the Securities sold hereunder and any termination of this Agreement. A successor to a Placement Agent,
or to the Company, its directors or officers or any person controlling the Company, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Agreement.
Section 9. Termination
of this Agreement.
(a) The Placement Agent
shall have the right to terminate this Agreement by giving notice to the Company as hereinafter specified at any time at or prior
to the Closing Date, if in the discretion of the Placement Agent, (i) there has occurred any material adverse change in the securities
markets or any event, act or occurrence that has materially disrupted, or in the opinion of the Placement Agent, will in the future
materially disrupt, the securities markets or there shall be such a material adverse change in general financial, political or
economic conditions or the effect of international conditions on the financial markets in the United States is such as to make
it, in the judgment of the Placement Agent, inadvisable or impracticable to market the Securities or enforce contracts for the
sale of the Securities, (ii) trading in the Common Stock shall have been suspended by the Commission or the Trading Market, or
trading in securities generally on the Nasdaq Stock Market, the NYSE or the NYSE MKT shall have been suspended, (iii) minimum or
maximum prices for trading shall have been fixed, or maximum ranges for prices for securities shall have been required, on the
Nasdaq Stock Market, the NYSE or NYSE MKT, by such exchange or by order of the Commission or any other governmental authority having
jurisdiction, (iv) a banking moratorium shall have been declared by federal or state authorities, (v) there shall have occurred
any attack on, outbreak or escalation of hostilities or act of terrorism involving the United States, any declaration by the United
States of a national emergency or war, any substantial change or development involving a prospective substantial change in United
States or international political, financial or economic conditions or any other calamity or crisis, (vi) the Company suffers any
loss by strike, fire, flood, earthquake, accident or other calamity, whether or not covered by insurance, (vii) the Company is
in material breach of any of its representations, warranties or covenants under this Agreement, including if any condition specified
in Section 5 is not satisfied when and as required to be satisfied, or (viii) in the judgment of the Placement Agent, there has
been, since the time of execution of this Agreement or since the respective dates as of which information is given in the Registration
Statement or the Prospectus, any material adverse change in the assets, properties, condition, financial or otherwise, or in the
results of operations, business affairs or business prospects of the Company and its Subsidiaries considered as a whole, whether
or not arising in the ordinary course of business. If the Placement Agent elects to terminate this Agreement as provided in this
Section, the Company shall be notified promptly by the Placement Agent by telephone, confirmed by letter.
(b) Notwithstanding
anything to the contrary contained herein, the provisions concerning confidentiality, indemnification and contribution contained
herein and the Company’s obligations contained in the indemnification provisions, including any obligations under Section
6 (Payment of Expenses), Section 7 (Indemnification and Contribution) and Section 8 (Representations and Indemnities to Survive
Delivery), will survive any expiration or termination of this Agreement, and the Company’s obligation to pay fees actually
earned and payable and to reimburse expenses actually incurred and reimbursable pursuant to Section 1 hereof and which are permitted
to be reimbursed under FINRA Rule 5110(f)(2)(D), will survive any expiration or termination of this Agreement. The termination
of this Agreement shall not affect the fees payable to the Placement Agent in connection with the October 2017 Placement.
(c) The terms of the
Right of First Refusal shall survive the termination of this Agreement unless this Agreement is terminated by the Company for cause
in compliance with FINRA Rule 5110(f)(2)(D)(ii), which includes the Placement Agent’s material failure to provide the services
contemplated in this Agreement, and the Company’s exercise of this right for termination for cause eliminates any obligations
with respect to the Right of First Refusal.
Section 10. Notices
.
All communications hereunder shall be in writing and shall be mailed, hand delivered or telecopied and confirmed to the parties
hereto as follows:
If to the Placement Agent, to the address
set forth above, attention: Jared Schramm, Facsimile: (949) 720-7215
With a copy to:
Kelley Drye & Warren LLP
101 Park Avenue, 27
th
Floor
New York, New York 10178
Facsimile: (212) 808-7897
Attention: Michael A. Adelstein
If to the Company:
My Size, Inc.
3 Arava St., pob 1026
Airport City, Israel 7010000
Facsimile: _______________
Attention: _______________
With a copy to:
Sheppard, Mullin, Richter & Hampton
LLP
30 Rockefeller Plaza
New York, New York 10112
Facsimile: (212) 370-7889
Attention: Richard A. Friedman
Any party hereto may
change the address for receipt of communications by giving written notice to the others.
Section 11. Successors
.
This Agreement will inure to the benefit of and be binding upon the parties hereto, and to the benefit of the employees, officers
and directors and controlling persons referred to in Section 7 hereof, and to their respective successors, and personal representative,
and no other person will have any right or obligation hereunder.
Section 12. Partial
Unenforceability
. The invalidity or unenforceability of any section, paragraph or provision of this Agreement shall not affect
the validity or enforceability of any other section, paragraph or provision hereof. If any section, paragraph or provision of this
Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and
only such minor changes) as are necessary to make it valid and enforceable.
Section 13. Governing
Law Provisions
. This Agreement shall be deemed to have been made and delivered in New York City and both this Agreement and
the transactions contemplated hereby shall be governed as to validity, interpretation, construction, effect and in all other respects
by the internal laws of the State of New York, without regard to the conflict of laws principles thereof. Each of the Placement
Agent and the Company: (i) agrees that any legal suit, action or proceeding arising out of or relating to this Agreement and/or
the transactions contemplated hereby shall be instituted exclusively in New York Supreme Court, County of New York, or in the United
States District Court for the Southern District of New York, (ii) waives any objection which it may have or hereafter to the venue
of any such suit, action or proceeding, and (iii) irrevocably consents to the jurisdiction of the New York Supreme Court, County
of New York, and the United States District Court for the Southern District of New York in any such suit, action or proceeding.
Each of the Placement Agent and the Company further agrees to accept and acknowledge service of any and all process which may be
served in any such suit, action or proceeding in the New York Supreme Court, County of New York, or in the United States District
Court for the Southern District of New York and agrees that service of process upon the Company mailed by certified mail to the
Company’s address shall be deemed in every respect effective service of process upon the Company, in any such suit, action
or proceeding, and service of process upon the Placement Agent mailed by certified mail to the Placement Agent’s address
shall be deemed in every respect effective service process upon the Placement Agent, in any such suit, action or proceeding. Notwithstanding
any provision of this Agreement to the contrary, the Company agrees that neither the Placement Agent nor its Affiliates, and the
respective officers, directors, employees, agents and representatives of the Placement Agent, its Affiliates and each other person,
if any, controlling the Placement Agent or any of its Affiliates, shall have any liability (whether direct or indirect, in contract
or tort or otherwise) to the Company for or in connection with the engagement and transaction described herein except for any such
liability for losses, claims, damages or liabilities incurred by us that are finally judicially determined to have resulted from
the bad faith or gross negligence of such individuals or entities. If either party shall commence an action or proceeding to enforce
any provision of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party
for its reasonable attorney’s fees and other costs and expenses incurred with the investigation, preparation and prosecution
of such action or proceeding.
Section 14. Absence
of Fiduciary Relationship.
The Company acknowledges and agrees that: (a) the Placement Agent has been retained solely to act
as the placement agent in connection with the sale of the Securities and that no fiduciary, advisory or agency relationship between
the Company and the Placement Agent has been created in respect of any of the transactions contemplated by this Agreement, irrespective
of whether the Placement Agent has advised or is advising the Company on other matters; (b) the price and other terms of the Securities
set forth in this Agreement, the Final Prospectus, and the Transaction Documents were established by the Placement Agent and the
Investors following discussions and arm’s-length negotiations and the Company is capable of evaluating and understanding
and understands and accepts the terms, risks and conditions of the transactions contemplated by this Agreement; (c) it has been
advised that the Placement Agent and its Affiliates are engaged in a broad range of transactions that may involve interests that
differ from those of the Company and that the Placement Agent does not have any obligation to disclose such interest and transactions
to the Company by virtue of any fiduciary, advisory or agency relationship; and (d) it has been advised that the Placement Agent
is acting, in respect of the transactions contemplated by this Agreement, solely for the benefit of the Placement Agent, and not
on behalf of the Company.
Section 15. General
Provisions
. This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior written
or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof. This
Agreement may be executed in two or more counterparts, each one of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Agreement may not be amended or modified unless in writing by all of the
parties hereto, and no condition herein (express or implied) may be waived unless waived in writing by each party whom the condition
is meant to benefit. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (regardless of whether similar), nor shall any such waiver be deemed or constitute a continuing waiver unless
otherwise expressly provided. Section headings herein are for the convenience of the parties only and shall not affect the construction
or interpretation of this Agreement.
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If the foregoing is
in accordance with your understanding of our agreement, please sign below whereupon this instrument, along with all counterparts
hereof, shall become a binding agreement in accordance with its terms.
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Very truly yours,
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MY SIZE, INC.
,
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a Delaware corporation
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By:
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Name:
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Title:
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The foregoing Placement
Agency Agreement is hereby confirmed and accepted as of the date first above written.
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ROTH CAPITAL PARTNERS, LLC
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By:
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Name:
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Title:
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EXHIBIT A
Form of Lock-Up Agreement
December __, 2017
Roth Capital Partners, LLC
888 San Clemente Drive
Newport Beach, CA 92660
Ladies and Gentlemen:
The undersigned understands
that you, as Placement Agent, has entered into, or proposes to enter into the Placement Agency Agreement (the “
Placement
Agency Agreement
”) with My Size, Inc., a Delaware corporation (the “
Company
”), providing for the offering
(the “
Offering
”) of shares (the “
Shares
”) of common stock, par value $0.001 per share (the
“
Common Stock
”), of the Company, as well as pre-funded warrants to purchase Common Stock (the “
Pre-Funded
Warrants
”) and common warrants to purchase Common Stock (the “
Common Warrants
”, and together with
the Pre-Funded Warrants and the Shares, the “
Securities
”). Capitalized terms used herein and not otherwise defined
shall have the meanings set forth in the Placement Agency Agreement.
In consideration of
the foregoing, and in order to induce you to participate the Offering, and for other good and valuable consideration receipt of
which is hereby acknowledged, the undersigned hereby agrees that, without the prior written consent of the Placement Agent (which
consent may be withheld in its sole discretion), the undersigned will not, during the period (the “
Lock-Up Period
”)
beginning on the date hereof and ending on the date 180 days after the date of the final prospectus to be used in confirming the
sale of the Securities (the “
Final Prospectus
”), (1) offer, pledge, announce the intention to sell, sell, contract
to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly, or file (or participate in the filing of) a registration
statement with the Securities and Exchange Commission in respect of, any shares of Common Stock or any securities convertible into
or exercisable or exchangeable for shares of Common Stock (including without limitation, shares of Common Stock which may be deemed
to be beneficially owned by the undersigned in accordance with the rules and regulations of the Securities and Exchange Commission
and securities which may be issued upon exercise of a stock option or warrant), (2) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of ownership of the shares of, whether any such transaction described
in clause (1) or (2) above is to be settled by delivery of shares of Common Stock or such other securities, in cash or otherwise,
(3) make any demand for or exercise any right with respect to, the registration of any shares of Common Stock or any security convertible
into or exercisable or exchangeable for shares of Common Stock, or (4) publicly announce an intention to effect any transaction
specific in clause (1), (2) or (3) above.
Notwithstanding the
foregoing, the restrictions set forth in clause (1) and (2) above shall not apply to (a) transfers (i) as a bona fide gift or gifts,
provided that the donee or donees thereof agree to be bound in writing by the restrictions set forth herein, (ii) to any trust
for the direct or indirect benefit of the undersigned or the immediate family of the undersigned, provided that the trustee of
the trust agrees to be bound in writing by the restrictions set forth herein, and provided further that any such transfer shall
not involve a disposition for value, or (iii) with your prior written consent, (b) the acquisition or exercise of any stock option
issued pursuant to the Company’s existing stock option plan, including any exercise effected by the delivery of shares of
Common Stock of the Company held by the undersigned, (c) the purchase or sale of the Company’s securities pursuant to a plan,
contract or instruction that satisfies all of the requirements of Rule 10b5-1(c)(1)(i)(B) that was in effect prior to the date
hereof, and (d) the sale of shares to the Company for purposes of satisfying the undersigned’s tax obligations upon vesting
of awards issued under the Company’s incentive plans. For purposes of this Lock-Up Agreement, “immediate family”
shall mean any relationship by blood, marriage or adoption, not more remote than first cousin.
The foregoing restrictions
are expressly agreed to preclude the undersigned from engaging in any hedging or other transaction which is designed to or reasonably
expected to lead to or result in a sale or disposition of shares of Common Stock even if such securities would be disposed of by
someone other than the undersigned. Such prohibited hedging or other transactions would include without limitation any short sale
or any purchase, sale or grant of any right (including without limitation any put option or put equivalent position or call option
or call equivalent position) with respect to any of the shares of Common Stock or with respect to any security that includes, relates
to, or derives any significant part of its value from such shares.
The undersigned hereby
represents and warrants that the undersigned has full power and authority to enter into this Lock-Up Agreement. All authority herein
conferred or agreed to be conferred and any obligations of the undersigned shall be binding upon the successors, assigns, heirs
or personal representatives of the undersigned.
The undersigned also
agrees and consents to the entry of stop transfer instructions with the Company’s transfer agent and registrar or depositary
against the transfer of the undersigned’s shares of Common Stock except in compliance with the foregoing restrictions.
The undersigned understands
that, if the Placement Agency Agreement does not become effective, or if the Placement Agency Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to payment for and delivery of the Shares to be sold
thereunder, or if the Closing Date has not occurred on or before January 15, 2018, the undersigned shall be released from all obligations
under this Lock-Up Agreement.
This Lock-Up Agreement
shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws
principles thereof.
SCHEDULE I
List of officers, directors and stockholders executing lock-up
agreements:
1. Shoshana Zigdon
2. Eliyahu Walles
3. Ronen Luzon
4. Or Kles
5. Billy Pardo
6. Arik Kaufman
7. Oren Elmaliah
8. Oron Branitzky
Exhibit 4.2
[FORM OF PREPAID
WARRANT]
THE
NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF
PURSUANT TO SECTION
1(a)
OF THIS WARRANT.
My Size, Inc.
Warrant To Purchase Common
Stock
Warrant No.:
Date of Issuance: [ ], 2017 (“
Issuance
Date
”)
My Size, Inc., a
Delaware corporation (the “
Company
”), hereby certifies that, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged,
[BUYER]
, the registered holder
hereof or its permitted assigns (the “
Holder
”), is entitled, subject to the terms set forth below, to purchase
from the Company, at the Exercise Price (as defined below) then in effect, upon exercise of this Warrant to Purchase Common Stock
(including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, the “
Warrant
”),
at any time or times on or after the Issuance Date, but not after 11:59 p.m., New York time, on the Expiration Date (as defined
below), _________________
[1]
(subject
to adjustment as provided herein) fully paid and non-assessable shares of Common Stock (as defined below) (the “
Warrant
Shares
”, and such number of Warrant Shares, the “
Warrant Number
”). Except as otherwise defined herein,
capitalized terms in this Warrant shall have the meanings set forth in Section 17. This Warrant is one of the Warrants to
Purchase Common Stock (the “
Registered Warrants
”) issued pursuant to (i) Section 1 of that certain Securities
Purchase Agreement, dated as of December __, 2017 (the “
Subscription Date
”), by and among the Company and the
investors (the “
Buyers
”) referred to therein, as amended from time to time (the “
Securities Purchase
Agreement
”) and (ii) the Company’s Registration Statement on Form S-3 (File number 333- ) (the “
Registration
Statement
”).
PREPAYMENT
OF SUBSTANTIALLY ALL OF AGGREGATE EXERCISE PRICE (INCLUDING NOMINAL VALUE)
.
Notwithstanding anything herein to the contrary,
the Company hereby acknowledges receipt of $[ ]
[2]
of the Exercise Price per Warrant Share, including the nominal value of $0.001 per Warrant Share (the “
Prepayment
”),
from the initial holder of this Warrant as of the initial Issuance Date, which was pre-funded to the Company on or prior to the
initial Issuance Date, and further acknowledges that only $0.001 per Warrant Share of the Exercise Price remains unpaid as of the
initial Issuance Date (as adjusted for stock splits, stock dividends, recapitalizations and similar events, the “
Remaining
Per Share Amount
”). Consequently, upon each exercise of this Warrant, only the applicable Remaining Per Share Amount
of the applicable Aggregate Exercise Price (as defined below) of this Warrant shall be the remaining unpaid amount that must be
satisfied by the Holder (whether in cash or by a Cashless Exercise (as defined below)) to effect an exercise of this Warrant. For
the avoidance of doubt, (a) after giving effect to the Prepayment, other than the applicable Remaining Per Share Amount, no additional
consideration shall be due and payable hereunder to effect any exercise of this Warrant and (b) the Prepayment is nonrefundable,
whether or not this Warrant is exercisable in full.
[1] [ ]% Warrant coverage
[2]
Insert the difference of (x)
the price of one share of Common Stock less (y) $0.001.
1.
EXERCISE OF WARRANT.
(a)
Mechanics of Exercise
. Subject to the terms and conditions hereof (including, without limitation, the limitations
set forth in Section 1(f)), this Warrant may be exercised by the Holder on any day on or after the Issuance Date (an “
Exercise
Date
”), in whole or in part, by delivery (whether via facsimile or otherwise) of a written notice, in the form attached
hereto as
Exhibit A
(the “
Exercise Notice
”), of the Holder’s election to exercise this
Warrant. Within one (1) Trading Day following an exercise of this Warrant as aforesaid, the Holder shall deliver payment to the
Company of an amount equal to the Exercise Price in effect on the date of such exercise multiplied by the number of Warrant Shares
as to which this Warrant was so exercised (the “
Aggregate Exercise Price
”) in cash or via wire transfer of
immediately available funds if the Holder did not notify the Company in such Exercise Notice that such exercise was made pursuant
to a Cashless Exercise (as defined in Section 1(d)). The Holder shall not be required to deliver the original of this Warrant
in order to effect an exercise hereunder. Execution and delivery of an Exercise Notice with respect to less than all of the Warrant
Shares shall have the same effect as cancellation of the original of this Warrant and issuance of a new Warrant evidencing the
right to purchase the remaining number of Warrant Shares. Execution and delivery of an Exercise Notice for all of the then-remaining
Warrant Shares shall have the same effect as cancellation of the original of this Warrant after delivery of the Warrant Shares
in accordance with the terms hereof. On or before the first (1
st
) Trading Day following the date on which the Company
has received an Exercise Notice, the Company shall transmit by facsimile or electronic mail an acknowledgment of confirmation
of receipt of such Exercise Notice, in the form attached hereto as
Exhibit B
, to the Holder and the Company’s
transfer agent (the “
Transfer Agent
”), which confirmation shall constitute an instruction to the Transfer Agent
to process such Exercise Notice in accordance with the terms herein. On or before the second (2nd) Trading Day following the date
on which the Company has received such Exercise Notice (or such earlier date as required pursuant to the 1934 Act or other applicable
law, rule or regulation for the settlement of a trade of such Warrant Shares initiated on the applicable Exercise Date), the Company
shall (X) provided that the Transfer Agent is participating in The Depository Trust Company (“
DTC
”) Fast Automated
Securities Transfer Program, upon the request of the Holder, credit such aggregate number of shares of Common Stock to which the
Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its
Deposit/Withdrawal at Custodian system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program, upon the request of the Holder, issue and deliver (via reputable overnight courier) to the address as specified
in the Exercise Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common
Stock to which the Holder shall be entitled pursuant to such exercise. Upon delivery of an Exercise Notice, the Holder shall be
deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant
has been exercised, irrespective of the date such Warrant Shares are credited to the Holder’s DTC account or the date of
delivery of the certificates evidencing such Warrant Shares (as the case may be). If this Warrant is submitted in connection with
any exercise pursuant to this Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise
is greater than the number of Warrant Shares being acquired upon an exercise and upon surrender of this Warrant to the Company
by the Holder, then, at the request of the Holder, the Company shall as soon as practicable and in no event later than two (2)
Business Days after any exercise and at its own expense, issue and deliver to the Holder (or its designee) a new Warrant (in accordance
with Section 7(d)) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such
exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised. No fractional
shares of Common Stock are to be issued upon the exercise of this Warrant, but rather the number of shares of Common Stock to
be issued shall be rounded up to the nearest whole number. The Company shall pay any and all transfer, stamp, issuance and similar
taxes, costs and expenses (including, without limitation, fees and expenses of the Transfer Agent) that may be payable with respect
to the issuance and delivery of Warrant Shares upon exercise of this Warrant. Notwithstanding the foregoing, except in the case
where an exercise of this Warrant is validly made pursuant to a Cashless Exercise, the Company’s failure to deliver Warrant
Shares to the Holder on or prior to the later of (i) two (2) Trading Days after receipt of the applicable Exercise Notice (or
such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade
of such Warrant Shares initiated on the applicable Exercise Date) and (ii) one (1) Trading Day after the Company’s receipt
of the Aggregate Exercise Price (or valid notice of a Cashless Exercise) (such later date, the “
Share Delivery Date
”)
shall not be deemed to be a breach of this Warrant. From the Issuance Date through and including the Expiration Date, the Company
shall maintain a transfer agent that participates in the DTC’s Fast Automated Securities Transfer Program.
(b)
Exercise Price
. For purposes of this Warrant, “
Exercise Price
” means $0.001, subject to adjustment
as provided herein.
(c)
Company’s Failure to Timely Deliver Securities
. If the Company shall fail, for any reason or for no reason,
on or prior to the Share Delivery Date, either (I) if the Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program, to issue and deliver to the Holder (or its designee) a certificate for the number of Warrant Shares to which
the Holder is entitled and register such Warrant Shares on the Company’s share register or, if the Transfer Agent is participating
in the DTC Fast Automated Securities Transfer Program, to credit the balance account of the Holder or the Holder’s designee
with DTC for such number of Warrant Shares to which the Holder is entitled upon the Holder’s exercise of this Warrant (as
the case may be) or (II) if the Registration Statement (or prospectus contained therein) covering the issuance of the Warrant Shares
that are the subject of the Exercise Notice (the “
Unavailable Warrant Shares
”) is not available for the issuance
of such Unavailable Warrant Shares and the Company fails to promptly (x) so notify the Holder and (y) deliver the Warrant Shares
electronically without any restrictive legend by crediting such aggregate number of Warrant Shares to which the Holder is entitled
pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal
At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter referred as a “
Notice
Failure
” and together with the event described in clause (I) above, a “
Delivery Failure
”), then, in
addition to all other remedies available to the Holder, (X) the Company shall pay in cash to the Holder on each day after the Share
Delivery Date and during such Delivery Failure an amount equal to 2% of the product of (A) the sum of the number of shares of Common
Stock not issued to the Holder on or prior to the Share Delivery Date and to which the Holder is entitled, multiplied by (B) any
trading price of the Common Stock selected by the Holder in writing as in effect at any time during the period beginning on the
applicable Exercise Date and ending on the applicable Share Delivery Date, and (Y) the Holder, upon written notice to the Company,
may void its Exercise Notice with respect to, and retain or have returned, as the case may be, any portion of this Warrant that
has not been exercised pursuant to such Exercise Notice; provided that the voiding of an Exercise Notice shall not affect the Company’s
obligations to make any payments which have accrued prior to the date of such notice pursuant to this Section 1(c) or otherwise.
In addition to the foregoing, if on or prior to the Share Delivery Date either (I) the Transfer Agent is not participating in the
DTC Fast Automated Securities Transfer Program, the Company shall fail to issue and deliver to the Holder (or its designee) a certificate
and register such shares of Common Stock on the Company’s share register or, if the Transfer Agent is participating in the
DTC Fast Automated Securities Transfer Program, the Transfer Agent shall fail to credit the balance account of the Holder or the
Holder’s designee with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s
exercise hereunder or pursuant to the Company’s obligation pursuant to clause (ii) below or (II) a Notice Failure occurs,
and if on or after such Share Delivery Date the Holder purchases (in an open market transaction or otherwise) shares of Common
Stock corresponding to all or any portion of the number of shares of Common Stock issuable upon such exercise that the Holder is
entitled to receive from the Company and has not received from the Company in connection with such Delivery Failure or Notice Failure,
as applicable (a “
Buy-In
”), then, in addition to all other remedies available to the Holder, the Company shall,
within two (2) Business Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the
Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions and other out-of-pocket expenses,
if any) for the shares of Common Stock so purchased (including, without limitation, by any other Person in respect, or on behalf,
of the Holder) (the “
Buy-In Price
”), at which point the Company’s obligation to so issue and deliver such
certificate (and to issue such shares of Common Stock) or credit the balance account of such Holder or such Holder’s designee,
as applicable, with DTC for the number of Warrant Shares to which the Holder is entitled upon the Holder’s exercise hereunder
(as the case may be) (and to issue such Warrant Shares) shall terminate, or (ii) promptly honor its obligation to so issue and
deliver to the Holder a certificate or certificates representing such Warrant Shares or credit the balance account of such Holder
or such Holder’s designee, as applicable, with DTC for the number of Warrant Shares to which the Holder is entitled upon
the Holder’s exercise hereunder (as the case may be) and pay cash to the Holder in an amount equal to the excess (if any)
of the Buy-In Price over the product of (A) such number of Warrant Shares multiplied by (B) the lowest Closing Sale Price of the
Common Stock on any Trading Day during the period commencing on the date of the applicable Exercise Notice and ending on the date
of such issuance and payment under this clause (ii) (the “
Buy-In Payment Amount
”). Nothing shall limit the Holder’s
right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares
of Common Stock (or to electronically deliver such shares of Common Stock) upon the exercise of this Warrant as required pursuant
to the terms hereof. While this Warrant is outstanding, the Company shall cause its transfer agent to participate in the DTC Fast
Automated Securities Transfer Program. In addition to the foregoing rights, (i) if the Company fails to deliver the applicable
number of Warrant Shares upon an exercise pursuant to Section 1 by the applicable Share Delivery Date, then the Holder shall have
the right to rescind such exercise in whole or in part and retain and/or have the Company return, as the case may be, any portion
of this Warrant that has not been exercised pursuant to such Exercise Notice; provided that the rescission of an exercise shall
not affect the Company’s obligation to make any payments that have accrued prior to the date of such notice pursuant to this
Section 1(c) or otherwise, and (ii) if a registration statement (which may be the Registration Statement) covering the issuance
or resale of the Warrant Shares that are subject to an Exercise Notice is not available for the issuance or resale, as applicable,
of such Warrant Shares and the Holder has submitted an Exercise Notice prior to receiving notice of the non-availability of such
registration statement and the Company has not already delivered the Warrant Shares underlying such Exercise Notice electronically
without any restrictive legend by crediting such aggregate number of Warrant Shares to which the Holder is entitled pursuant to
such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit / Withdrawal At Custodian
system, the Holder shall have the option, by delivery of notice to the Company, to (x) rescind such Exercise Notice in whole or
in part and retain or have returned, as the case may be, any portion of this Warrant that has not been exercised pursuant to such
Exercise Notice; provided that the rescission of an Exercise Notice shall not affect the Company’s obligation to make any
payments that have accrued prior to the date of such notice pursuant to this Section 1(c) or otherwise, and/or (y) switch some
or all of such Exercise Notice from a cash exercise to a Cashless Exercise.
(d)
Cashless Exercise
. Notwithstanding anything contained herein to the contrary (other than Section 1(f) below),
if at the time of exercise hereof the Registration Statement is not effective (or the prospectus contained therein is not available
for use) for the issuance of all of the Warrant Shares, then the Holder may, in its sole discretion, exercise this Warrant in whole
or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment
of the Aggregate Exercise Price, elect instead to receive upon such exercise the “Net Number” of Warrant Shares determined
according to the following formula (a “
Cashless Exercise
”):
Net Number =
(A x B) - (A x C)
D
For purposes of
the foregoing formula:
A= the total number of shares with
respect to which this Warrant is then being exercised.
B = the greater of (A) the Spot
Price and (B) the quotient of (x) the sum of the VWAP of the Common Stock of each of the twenty (20) Trading Days ending at the
close of business on the Principal Market immediately prior to the time of exercise as set forth in the applicable Exercise Notice,
divided by (y) twenty (20).
C = Remaining
Per Share Amount.
D = the Spot Price.
For purposes of Rule
144(d) promulgated under the 1933 Act, as in effect on the Subscription Date, it is intended that the Warrant Shares issued in
a Cashless Exercise shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be
deemed to have commenced, on the date this Warrant was originally issued pursuant to the Securities Purchase Agreement.
(e)
Disputes
. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of
the number of Warrant Shares to be issued pursuant to the terms hereof, the Company shall promptly issue to the Holder the number
of Warrant Shares that are not disputed and resolve such dispute in accordance with Section 13.
(f)
Limitations on Exercises
. The Company shall not effect the exercise of any portion of this Warrant, and the Holder
shall not have the right to exercise any portion of this Warrant, pursuant to the terms and conditions of this Warrant and any
such exercise shall be null and void and treated as if never made, to the extent that after giving effect to such exercise, the
Holder together with the other Attribution Parties collectively would beneficially own in excess of 4.99% (the “
Maximum
Percentage
”) of the shares of Common Stock outstanding immediately after giving effect to such exercise. For purposes
of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by the Holder and the other Attribution
Parties shall include the number of shares of Common Stock held by the Holder and all other Attribution Parties plus the number
of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being
made, but shall exclude shares of Common Stock which would be issuable upon (A) exercise of the remaining, unexercised portion
of this Warrant beneficially owned by the Holder or any of the other Attribution Parties and (B) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Company (including, without limitation, any convertible notes
or convertible preferred stock or warrants, including other Registered Warrants) beneficially owned by the Holder or any other
Attribution Party subject to a limitation on conversion or exercise analogous to the limitation contained in this Section 1(f).
For purposes of this Section 1(f), beneficial ownership shall be calculated in accordance with Section 13(d) of the 1934 Act. For
purposes of determining the number of outstanding shares of Common Stock the Holder may acquire upon the exercise of this Warrant
without exceeding the Maximum Percentage, the Holder may rely on the number of outstanding shares of Common Stock as reflected
in (x) the Company’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or
other public filing with the SEC, as the case may be, (y) a more recent public announcement by the Company or (z) any other written
notice by the Company or the Transfer Agent, if any, setting forth the number of shares of Common Stock outstanding (the “
Reported
Outstanding Share Number
”). If the Company receives an Exercise Notice from the Holder at a time when the actual number
of outstanding shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall (i) notify the Holder
in writing of the number of shares of Common Stock then outstanding and, to the extent that such Exercise Notice would otherwise
cause the Holder’s beneficial ownership, as determined pursuant to this Section 1(f), to exceed the Maximum Percentage, the
Holder must notify the Company of a reduced number of Warrant Shares to be acquired pursuant to such Exercise Notice (the number
of shares by which such purchase is reduced, the “
Reduction Shares
”) and (ii) as soon as reasonably practicable,
the Company shall return to the Holder any exercise price paid by the Holder for the Reduction Shares. For any reason at any time,
upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing or
by electronic mail to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including
this Warrant, by the Holder and any other Attribution Party since the date as of which the Reported Outstanding Share Number was
reported. In the event that the issuance of shares of Common Stock to the Holder upon exercise of this Warrant results in the Holder
and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number
of outstanding shares of Common Stock (as determined under Section 13(d) of the 1934 Act), the number of shares so issued by which
the Holder’s and the other Attribution Parties’ aggregate beneficial ownership exceeds the Maximum Percentage (the
“
Excess Shares
”) shall be deemed null and void and shall be cancelled ab initio, and the Holder shall not have
the power to vote or to transfer the Excess Shares. As soon as reasonably practicable after the issuance of the Excess Shares has
been deemed null and void, the Company shall return to the Holder the exercise price paid by the Holder for the Excess Shares.
Upon delivery of a written notice to the Company, the Holder may from time to time increase (with such increase not effective until
the sixty-first (61
st
) day after delivery of such notice) or decrease the Maximum Percentage to any other percentage
not in excess of 9.99% as specified in such notice; provided that (i) any such increase in the Maximum Percentage will not be effective
until the sixty-first (61
st
) day after such notice is delivered to the Company and (ii) any such increase or decrease
will apply only to the Holder and the other Attribution Parties and not to any other holder of Registered Warrants that is not
an Attribution Party of the Holder. For purposes of clarity, the shares of Common Stock issuable pursuant to the terms of this
Warrant in excess of the Maximum Percentage shall not be deemed to be beneficially owned by the Holder for any purpose including
for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to exercise this Warrant pursuant to this
paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination
of exercisability. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity
with the terms of this Section 1(f) to the extent necessary to correct this paragraph or any portion of this paragraph which may
be defective or inconsistent with the intended beneficial ownership limitation contained in this Section 1(f) or to make changes
or supplements necessary or desirable to properly give effect to such limitation. The limitation contained in this paragraph may
not be waived and shall apply to a successor holder of this Warrant.
(g)
Reservation of Shares
.
(i)
Required Reserve Amount
. So long as this Warrant remains outstanding, the Company shall at all times keep reserved
for issuance under this Warrant a number of shares of Common Stock at least equal to 100% of the maximum number of shares of Common
Stock as shall be necessary to satisfy the Company’s obligation to issue shares of Common Stock under the Registered Warrants
then outstanding (without regard to any limitations on exercise) (the “
Required Reserve Amount
”); provided that
at no time shall the number of shares of Common Stock reserved pursuant to this Section 1(g)(i) be reduced other than proportionally
in connection with any exercise or redemption of Registered Warrants or such other event covered by Section 2(a) below. The Required
Reserve Amount (including, without limitation, each increase in the number of shares so reserved) shall be allocated pro rata among
the holders of the Registered Warrants based on number of shares of Common Stock issuable upon exercise of Registered Warrants
held by each holder on the Closing Date (as defined in the Securities Purchase Agreement) (without regard to any limitations on
exercise) or increase in the number of reserved shares, as the case may be (the “
Authorized Share Allocation
”).
In the event that a holder shall sell or otherwise transfer any of such holder’s Registered Warrants, each transferee shall
be allocated a pro rata portion of such holder’s Authorized Share Allocation. Any shares of Common Stock reserved and allocated
to any Person which ceases to hold any Registered Warrants shall be allocated to the remaining holders of Registered Warrants,
pro rata based on the number of shares of Common Stock issuable upon exercise of the Registered Warrants then held by such holders
(without regard to any limitations on exercise).
(ii)
Insufficient Authorized Shares
. If, notwithstanding Section 1(g)(i) above, and not in limitation thereof, at any
time while any of the Registered Warrants remain outstanding, the Company does not have a sufficient number of authorized and
unreserved shares of Common Stock to satisfy its obligation to reserve the Required Reserve Amount (an “
Authorized Share
Failure
”), then the Company shall immediately take all action necessary to increase the Company’s authorized shares
of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for all the Registered Warrants
then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence
of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure,
the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common
Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best
efforts to solicit its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its board
of directors to recommend to the stockholders that they approve such proposal. In the event that the Company is prohibited from
issuing shares of Common Stock upon an exercise of this Warrant due to the failure by the Company to have sufficient shares of
Common Stock available out of the authorized but unissued shares of Common Stock (such unavailable number of shares of Common
Stock, the “
Authorization Failure Shares
”), in lieu of delivering such Authorization Failure Shares to the
Holder, the Company shall pay cash in exchange for the cancellation of such portion of this Warrant exercisable into such Authorization
Failure Shares at a price equal to the sum of (i) the product of (x) such number of Authorization Failure Shares and (y) the greatest
Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date the Holder delivers the applicable
Exercise Notice with respect to such Authorization Failure Shares to the Company and ending on the date of such issuance and payment
under this Section 1(g); and (ii) to the extent the Holder purchases (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by the Holder of Authorization Failure Shares, any Buy-In Payment Amount, brokerage
commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection therewith. Nothing contained in this
Section 1(g)(ii) shall limit any obligations of the Company under any provision of the Securities Purchase Agreement.
2.
ADJUSTMENT
OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES
. So long as the Warrant remains outstanding, the Exercise Price and number of
Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 2.
(a)
Stock Dividends and Splits
. Without limiting any provision of Section 2(b), Section 3 or Section 4, if
the Company, at any time on or after the Subscription Date, (i) pays a stock dividend on one or more classes of its then outstanding
shares of Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock,
(ii) subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its then outstanding
shares of Common Stock into a larger number of shares or (iii) combines (by combination, reverse stock split or otherwise) one
or more classes of its then outstanding shares of Common Stock into a smaller number of shares, then in each such case the Exercise
Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately
before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such
event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for
the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii)
or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination. If any
event requiring an adjustment under this paragraph occurs during the period that an Exercise Price is calculated hereunder, then
the calculation of such Exercise Price shall be adjusted appropriately to reflect such event.
(b)
Intentionally Omitted.
(c)
Number of Warrant Shares
. Simultaneously with any adjustment to the Exercise Price pursuant to Section 2(a),
the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately,
so that after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be
the same as the aggregate Exercise Price in effect immediately prior to such adjustment (without regard to any limitations on exercise
contained herein).
(d)
Intentionally Omitted.
(e)
Intentionally Omitted.
(f)
Calculations
. All calculations under this Section 2 shall be made by rounding to the nearest cent or the nearest
1/100
th
of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issuance
or sale of Common Stock.
(g)
Intentionally Omitted.
3.
RIGHTS UPON DISTRIBUTION OF ASSETS
. In addition to any adjustments pursuant to Section 2 above, if the Company shall
declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common
Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities,
property, options, evidence of indebtedness or any other assets by way of a dividend, spin off, reclassification, corporate rearrangement,
scheme of arrangement or other similar transaction) (a “
Distribution
”), at any time after the issuance of this
Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the
Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise
of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant, including without limitation,
the Maximum Percentage) immediately before the date on which a record is taken for such Distribution, or, if no such record is
taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution
(provided, however, that to the extent that the Holder’s right to participate in any such Distribution would result in the
Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate
in such Distribution to the extent of the Maximum Percentage (and shall not be entitled to beneficial ownership of such shares
of Common Stock as a result of such Distribution (and beneficial ownership) to the extent of any such excess) and the portion
of such Distribution shall be held in abeyance for the benefit of the Holder until such time or times, if ever, as its right thereto
would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the
Holder shall be granted such Distribution (and any Distributions declared or made on such initial Distribution or on any subsequent
Distribution held similarly in abeyance) to the same extent as if there had been no such limitation).
4.
PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS
.
(a)
Purchase Rights
. In addition to any adjustments pursuant to Section 2 above, if at any time the Company grants,
issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata
to the record holders of any class of Common Stock (the “
Purchase Rights
”), then the Holder will be entitled
to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired
if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to
any limitations or restrictions on exercise of this Warrant, including without limitation, the Maximum Percentage) immediately
before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken,
the date as of which the record holders of shares of Common Stock are to be determined for the grant, issuance or sale of such
Purchase Rights (
provided
,
however
, that to the extent that the Holder’s right to participate in any such Purchase
Right would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not
be entitled to participate in such Purchase Right to the extent of the Maximum Percentage (and shall not be entitled to beneficial
ownership of such shares of Common Stock as a result of such Purchase Right (and beneficial ownership) to the extent of any such
excess) and such Purchase Right to such extent shall be held in abeyance for the benefit of the Holder for a period of up to six
(6) months, until such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution Parties
exceeding the Maximum Percentage, at which time or times the Holder shall be granted such right (and any Purchase Right granted,
issued or sold on such initial Purchase Right or on any subsequent Purchase Right held similarly in abeyance) to the same extent
as if there had been no such limitation).
(b)
Fundamental Transactions
. The Company shall not enter into or be party to a Fundamental Transaction unless (i)
the Successor Entity assumes in writing all of the obligations of the Company under this Warrant and the other Transaction Documents
(as defined in the Securities Purchase Agreement) in accordance with the provisions of this Section 4(b) pursuant to written
agreements in form and substance satisfactory to the Holder and approved by the Holder prior to such Fundamental Transaction, including
agreements to deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Warrant, including, without limitation, which is exercisable for a corresponding
number of shares of capital stock equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant
(without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise
price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of
the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such adjustments
to the number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this
Warrant immediately prior to the consummation of such Fundamental Transaction) and (ii) the Successor Entity (including its
Parent Entity) is a publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible Market. Upon
the consummation of each Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and
after the date of the applicable Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring
to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company
and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect
as if such Successor Entity had been named as the Company herein. Upon consummation of each Fundamental Transaction, the Successor
Entity shall deliver to the Holder confirmation that there shall be issued upon exercise of this Warrant at any time after the
consummation of the applicable Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets
or other property (except such items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable
thereafter)) issuable upon the exercise of this Warrant prior to the applicable Fundamental Transaction, such shares of publicly
traded common stock (or its equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been
entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant been exercised immediately prior
to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this Warrant), as adjusted in accordance
with the provisions of this Warrant. Notwithstanding the foregoing, and without limiting Section 1(f) hereof, the Holder may elect,
at its sole option, by delivery of written notice to the Company to waive this Section 4(b) to permit the Fundamental Transaction
without the assumption of this Warrant. In addition to and not in substitution for any other rights hereunder, prior to the consummation
of each Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive stock, securities,
cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) (the “
Corporate
Event Consideration
”) with respect to or in exchange for shares of Common Stock (a “
Corporate Event
”),
the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon an exercise
of this Warrant at any time after the consummation of the applicable Fundamental Transaction but prior to the Expiration Date,
in lieu of the shares of the Common Stock or Corporate Event Consideration (except such items still issuable under Sections 3
and 4(a) above, which shall continue to be receivable thereafter) issuable upon the exercise of the Warrant prior to such Fundamental
Transaction, such Corporate Event Consideration which the Holder would have been entitled to receive upon the happening of the
applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction
(without regard to any limitations on the exercise of this Warrant). Provision made pursuant to the preceding sentence shall be
in a form and substance reasonably satisfactory to the Holder.
(c)
Intentionally Omitted.
(d)
Application
. The provisions of this Section 4 shall apply similarly and equally to successive Fundamental Transactions
and Corporate Events and shall be applied as if this Warrant (and any such subsequent warrants) were fully exercisable and without
regard to any limitations on the exercise of this Warrant (provided that the Holder shall continue to be entitled to the benefit
of the Maximum Percentage, applied however with respect to shares of capital stock registered under the 1934 Act and thereafter
receivable upon exercise of this Warrant (or any such other warrant)).
5.
NONCIRCUMVENTION
. The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of
Incorporation (as defined in the Securities Purchase Agreement), Bylaws (as defined in the Securities Purchase Agreement) or through
any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issuance 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, and will
at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect the rights
of the Holder. Without limiting the generality of the foregoing, the Company (a) shall not increase the par value of any shares
of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, and (b) shall take all such
actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable
shares of Common Stock upon the exercise of this Warrant. Notwithstanding anything herein to the contrary, if after the sixty (60)
calendar day anniversary of the Issuance Date, the Holder is not permitted to exercise this Warrant in full for any reason (other
than pursuant to restrictions set forth in Section 1(f) hereof), the Company shall use its best efforts to promptly remedy such
failure, including, without limitation, obtaining such consents or approvals as necessary to permit such exercise into shares of
Common Stock.
6.
WARRANT HOLDER NOT DEEMED A STOCKHOLDER
. Except as otherwise specifically provided herein, the Holder, solely in its capacity
as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the
Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in its capacity
as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent
to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance
or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the
Holder of the Warrant Shares which it is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained
in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this
Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors
of the Company. Notwithstanding this Section 6, the Company shall provide the Holder with copies of the same notices and other
information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.
7.
REISSUANCE
OF WARRANTS
.
(a)
Transfer of Warrant
. If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company,
whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)),
registered as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the
Holder and, if less than the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in
accordance with Section 7(d)) to the Holder representing the right to purchase the number of Warrant Shares not being transferred.
(b)
Lost, Stolen or Mutilated Warrant
. Upon receipt by the Company of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of this Warrant (as to which a written certification and the indemnification contemplated
below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this
Warrant, the Company shall execute and deliver to the Holder a new Warrant (in accordance with Section 7(d)) representing
the right to purchase the Warrant Shares then underlying this Warrant.
(c)
Exchangeable for Multiple Warrants
. This Warrant is exchangeable, upon the surrender hereof by the Holder at the
principal office of the Company, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate
the right to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right
to purchase such portion of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however,
no warrants for fractional shares of Common Stock shall be given.
(d)
Issuance of New Warrants
. Whenever the Company is required to issue a new Warrant pursuant to the terms of this
Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such
new Warrant, the right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued
pursuant to Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder which, when added to the number of
shares of Common Stock underlying the other new Warrants issued in connection with such issuance, does not exceed the number of
Warrant Shares then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant
which is the same as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.
8.
NOTICES
. Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall
be given in accordance with Section 9(f) of the Securities Purchase Agreement. The Company shall provide the Holder with prompt
written notice of all actions taken pursuant to this Warrant (other than the issuance of shares of Common Stock upon exercise in
accordance with the terms hereof), including in reasonable detail a description of such action and the reason therefor. Without
limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately upon each adjustment
of the Exercise Price and the number of Warrant Shares, setting forth in reasonable detail, and certifying, the calculation of
such adjustment(s), (ii) at least fifteen (15) days prior to the date on which the Company closes its books or takes a record (A)
with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any grants, issuances or sales
of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property to holders of shares
of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation,
provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being
provided to the Holder, and (iii) at least ten (10) Trading Days prior to the consummation of any Fundamental Transaction. To the
extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any
of its Subsidiaries (as defined in the Securities Purchase Agreement), the Company shall simultaneously file such notice with the
SEC (as defined in the Securities Purchase Agreement) pursuant to a Current Report on Form 8-K. If the Company or any of its Subsidiaries
provides material non-public information to the Holder that is not simultaneously filed in a Current Report on Form 8-K and the
Holder has not agreed to receive such material non-public information, the Company hereby covenants and agrees that the Holder
shall not have any duty of confidentiality to the Company, any of its Subsidiaries or any of their respective officers, directors,
employees, affiliates or agents with respect to, or a duty to any of the foregoing not to trade on the basis of, such material
non-public information. It is expressly understood and agreed that the time of execution specified by the Holder in each Exercise
Notice shall be definitive and may not be disputed or challenged by the Company.
9.
AMENDMENT AND WAIVER
. Except as otherwise provided herein, the provisions of this Warrant (other than Section 1(f))
may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed
by it, only if the Company has obtained the written consent of the Holder. No waiver shall be effective unless it is in writing
and signed by an authorized representative of the waiving party.
10.
SEVERABILITY
. If any provision of this Warrant is prohibited by law or otherwise determined to be invalid or unenforceable
by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this Warrant so long as this Warrant as so modified continues
to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations
or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the
parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s)
with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
11.
GOVERNING
LAW
. This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably
waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy
thereof to the Company at the address set forth in Section 9(f) of the Securities Purchase Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof. The Company hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction
of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action
or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other
legal action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize
on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder.
THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.
12.
CONSTRUCTION; HEADINGS
. This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be
construed against any Person as the drafter hereof. The headings of this Warrant are for convenience of reference and shall not
form part of, or affect the interpretation of, this Warrant. Terms used in this Warrant but defined in the other Transaction Documents
shall have the meanings ascribed to such terms on the Closing Date (as defined in the Securities Purchase Agreement) in such other
Transaction Documents unless otherwise consented to in writing by the Holder.
13.
DISPUTE RESOLUTION
.
(a)
Submission to Dispute Resolution
.
(i)
In the case of a dispute relating to the Exercise Price, the Closing Sale Price, the Bid Price or fair market value or the
arithmetic calculation of the number of Warrant Shares (as the case may be) (including, without limitation, a dispute relating
to the determination of any of the foregoing), the Company or the Holder (as the case may be) shall submit the dispute to the other
party via facsimile (A) if by the Company, within two (2) Business Days after the occurrence of the circumstances giving rise to
such dispute or (B) if by the Holder, at any time after the Holder learned of the circumstances giving rise to such dispute. If
the Holder and the Company are unable to promptly resolve such dispute relating to such Exercise Price, such Closing Sale Price,
such Bid Price or such fair market value or such arithmetic calculation of the number of Warrant Shares (as the case may be), at
any time after the second (2
nd
) Business Day following such initial notice by the Company or the Holder (as the case
may be) of such dispute to the Company or the Holder (as the case may be), then the Holder may, at its sole option, select an independent,
reputable investment bank to resolve such dispute.
(ii)
The Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered
in accordance with the first sentence of this Section 13 and (B) written documentation supporting its position with respect to
such dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth (5
th
) Business Day immediately following
the date on which the Holder selected such investment bank (the “
Dispute Submission Deadline
”) (the documents
referred to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the “
Required Dispute
Documentation
”) (it being understood and agreed that if either the Holder or the Company fails to so deliver all of the
Required Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the Required Dispute
Documentation shall no longer be entitled to (and hereby waives its right to) deliver or submit any written documentation or other
support to such investment bank with respect to such dispute and such investment bank shall resolve such dispute based solely on
the Required Dispute Documentation that was delivered to such investment bank prior to the Dispute Submission Deadline). Unless
otherwise agreed to in writing by both the Company and the Holder or otherwise requested by such investment bank, neither the Company
nor the Holder shall be entitled to deliver or submit any written documentation or other support to such investment bank in connection
with such dispute (other than the Required Dispute Documentation).
(iii)
The Company and the Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company
and the Holder of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline. The
fees and expenses of such investment bank shall be borne solely by the Company, and such investment bank’s resolution of
such dispute shall be final and binding upon all parties absent manifest error.
(b)
Miscellaneous
. The Company expressly acknowledges and agrees that (i) this Section 13 constitutes an agreement to
arbitrate between the Company and the Holder (and constitutes an arbitration agreement) under the rules then in effect under §
7501, et seq. of the New York Civil Practice Law and Rules (“
CPLR
”) and that the Holder is authorized to apply
for an order to compel arbitration pursuant to CPLR § 7503(a) in order to compel compliance with this Section 13, (ii) the
terms of this Warrant and each other applicable Transaction Document shall serve as the basis for the selected investment bank’s
resolution of the applicable dispute, such investment bank shall be entitled (and is hereby expressly authorized) to make all
findings, determinations and the like that such investment bank determines are required to be made by such investment bank in
connection with its resolution of such dispute and in resolving such dispute such investment bank shall apply such findings, determinations
and the like to the terms of this Warrant and any other applicable Transaction Documents, (iii) the Holder (and only the Holder),
in its sole discretion, shall have the right to submit any dispute described in this Section 13 to any state or federal court
sitting in The City of New York, Borough of Manhattan in lieu of utilizing the procedures set forth in this Section 13 and (iv)
nothing in this Section 13 shall limit the Holder from obtaining any injunctive relief or other equitable remedies (including,
without limitation, with respect to any matters described in this Section 13).
14.
REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF
. The remedies provided in this Warrant shall
be cumulative and in addition to all other remedies available under this Warrant and the other Transaction Documents, at law or
in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right
of the Holder to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Warrant.
The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly
provided herein. Amounts set forth or provided for herein with respect to payments, exercises and the like (and the computation
thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any
other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the event of any such breach or threatened breach, the holder of this Warrant shall be entitled, in addition to
all other available remedies, to specific performance and/or temporary, preliminary and permanent injunctive or other equitable
relief from any court of competent jurisdiction in any such case without the necessity of proving actual damages and without posting
a bond or other security. The Company shall provide all information and documentation to the Holder that is requested by the Holder
to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Warrant (including, without
limitation, compliance with Section 2 hereof). The issuance of shares and certificates for shares as contemplated hereby upon
the exercise of this Warrant shall be made without charge to the Holder or such shares for any issuance tax or other costs in respect
thereof, provided that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any certificate in a name other than the Holder or its agent on its behalf.
15.
PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS
. If (a) this Warrant
is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or
the holder otherwise takes action to collect amounts due under this Warrant or to enforce the provisions of this Warrant or (b)
there occurs any bankruptcy, reorganization, receivership of the company or other proceedings affecting company creditors’
rights and involving a claim under this Warrant, then the Company shall pay the costs incurred by the Holder for such collection,
enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, without
limitation, attorneys’ fees and disbursements.
16.
TRANSFER
. This Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company.
17.
CERTAIN DEFINITIONS
. For purposes of this Warrant, the following terms shall have the following meanings:
(a)
“
1933 Act
” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
(b)
“
1934 Act
” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(c)
Intentionally Omitted.
(d)
“
Affiliate
” means, with respect to any Person, any other Person that directly or indirectly controls,
is controlled by, or is under common control with, such Person, it being understood for purposes of this definition that “control”
of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the
election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by
contract or otherwise.
(e)
Intentionally Omitted.
(f)
“
Attribution Parties
” means, collectively, the following Persons and entities: (i) any investment vehicle,
including, any funds, feeder funds or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly
managed or advised by the Holder’s investment manager or any of its Affiliates or principals, (ii) any direct or indirect
Affiliates of the Holder or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together
with the Holder or any of the foregoing and (iv) any other Persons whose beneficial ownership of the Company’s Common Stock
would or could be aggregated with the Holder’s and the other Attribution Parties for purposes of Section 13(d) of the 1934
Act. For clarity, the purpose of the foregoing is to subject collectively the Holder and all other Attribution Parties to the Maximum
Percentage.
(g)
“
Bid Price
” means, for any security as of the particular time of determination, the bid price for such
security on the Principal Market as reported by Bloomberg as of such time of determination, or, if the Principal Market is not
the principal securities exchange or trading market for such security, the bid price of such security on the principal securities
exchange or trading market where such security is listed or traded as reported by Bloomberg as of such time of determination, or
if the foregoing does not apply, the bid price of such security in the over-the-counter market on the electronic bulletin board
for such security as reported by Bloomberg as of such time of determination, or, if no bid price is reported for such security
by Bloomberg as of such time of determination, the average of the bid prices of any market makers for such security as reported
in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC) as of such time of determination. If the
Bid Price cannot be calculated for a security as of the particular time of determination on any of the foregoing bases, the Bid
Price of such security as of such time of determination shall be the fair market value as mutually determined by the Company and
the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall
be resolved in accordance with the procedures in Section 13. All such determinations shall be appropriately adjusted for any
stock dividend, stock split, stock combination or other similar transaction during such period.
(h)
Intentionally Omitted.
(i)
“
Bloomberg
” means Bloomberg, L.P.
(j)
“
Business Day
” means any day other than Saturday, Sunday or other day on which commercial banks in The
City of New York are authorized or required by law to remain closed.
(k)
“
Change of Control
” means any Fundamental Transaction other than (i) any merger of the Company or any
of its, direct or indirect, wholly-owned Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization
or reclassification of the shares of Common Stock in which holders of the Company’s voting power immediately prior to such
reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to
hold publicly traded securities and, directly or indirectly, are, in all material respects, the holders of the voting power of
the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or their
equivalent if other than a corporation) of such entity or entities) after such reorganization, recapitalization or reclassification,
or (iii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company
or any of its Subsidiaries.
(l)
“
Closing Bid Price
” and “
Closing Sale Price
” means, for any security as of any date,
the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price
or the closing trade price (as the case may be) then the last bid price or last trade price, respectively, of such security prior
to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange
or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal
securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do
not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively,
is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers
for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If the Closing
Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the
Closing Bid Price or the Closing Sale Price (as the case may be) of such security on such date shall be the fair market value as
mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value
of such security, then such dispute shall be resolved in accordance with the procedures in Section 13. All such determinations
shall be appropriately adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions
during such period.
(m)
“
Common Stock
” means (i) the Company’s shares of common stock, $0.001 par value per share,
and (ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification
of such common stock.
(n)
“
Convertible Securities
” means any stock or other security (other than Options) that is at any time and
under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles
the holder thereof to acquire, any shares of Common Stock.
(o)
“
Eligible Market
” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market,
the Nasdaq Global Market, the OTCQX, the OTCQB (or any successors to any of the foregoing) or the Principal Market.
(p)
Intentionally Omitted.
(q)
“
Expiration Date
” means the date that is the fifth (5
th
) anniversary of the Issuance Date
or, if such date falls on a day other than a Trading Day or on which trading does not take place on the Principal Market (a “
Holiday
”),
the next date that is not a Holiday.
(r)
“
Fundamental Transaction
” means (A) that the Company shall, directly or indirectly, including through
subsidiaries, Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not
the Company is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of
all or substantially all of the properties or assets of the Company or any of its “significant subsidiaries” (as defined
in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make,
or allow the Company to be subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a
purchase, tender or exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common
Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities
making or party to, or Affiliated (as defined in the Note) with any Subject Entities making or party to, such purchase, tender
or exchange offer were not outstanding; or (z) such number of shares of Common Stock such that all Subject Entities making or party
to, or Affiliated with any Subject Entity making or party to, such purchase, tender or exchange offer, become collectively the
beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv)
consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually
or in the aggregate, acquire, either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding
shares of Common Stock calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated
with any Subject Entity making or party to, such stock purchase agreement or other business combination were not outstanding; or
(z) such number of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined
in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or
reclassify its Common Stock, (B) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or
otherwise, in one or more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate
to be or become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether
through acquisition, purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common
Stock, merger, consolidation, business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization,
recapitalization or reclassification or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary
voting power represented by issued and outstanding Common Stock, (y) at least 50% of the aggregate ordinary voting power represented
by issued and outstanding Common Stock not held by all such Subject Entities as of the date of this Warrant calculated as if any
shares of Common Stock held by all such Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting
power represented by issued and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow
such Subject Entities to effect a statutory short form merger or other transaction requiring other shareholders of the Company
to surrender their shares of Common Stock without approval of the shareholders of the Company or (C) directly or indirectly, including
through subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other
instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition in which case
this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition
to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent with
the intended treatment of such instrument or transaction.
(s)
“
Group
” means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined
in Rule 13d-5 thereunder.
(t)
“
Options
” means any rights, warrants or options to subscribe for or purchase shares of Common Stock
or Convertible Securities.
(u)
“
Parent Entity
” of a Person means an entity that, directly or indirectly, controls the applicable Person
and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such
Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation
of the Fundamental Transaction.
(v)
“
Person
” means an individual, a limited liability company, a partnership, a joint venture, a corporation,
a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.
(w)
“
Principal Market
” means the Nasdaq Capital Market.
(x)
“
SEC
” means the United States Securities and Exchange Commission or the successor thereto.
(y)
“
Spot Price
” means, as applicable: (i) the Closing Sale Price of the Common Stock on the Trading Day
immediately preceding the date of the applicable Exercise Notice if such Exercise Notice is (1) both executed and delivered pursuant
to Section 1(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 1(a) hereof on
a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS promulgated
under the federal securities laws) on such Trading Day, (ii) the Bid Price of the Common Stock as of the time of the Holder’s
execution of the applicable Exercise Notice if such Exercise Notice is executed during “regular trading hours” on a
Trading Day and is delivered within two (2) hours thereafter pursuant to Section 1(a) hereof, or (iii) the Closing Sale Price of
the Common Stock on the date of the applicable Exercise Notice if the date of such Exercise Notice is a Trading Day and such Exercise
Notice is both executed and delivered pursuant to Section 1(a) hereof after the close of “regular trading hours” on
such Trading Day.
(z)
“Subject Entity
” means any Person, Persons or Group or any Affiliate or associate of any such Person,
Persons or Group.
(aa)
“
Successor Entity
” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting
from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such
Fundamental Transaction shall have been entered into.
(bb)
“
Trading Day
” means, as applicable, (x) with respect to all price or trading volume determinations relating
to the Common Stock, any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the
principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common
Stock is then traded, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the
final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time
of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise
designated as a Trading Day in writing by the Holder or (y) with respect to all determinations other than price or trading volume
determinations relating to the Common Stock, any day on which The New York Stock Exchange (or any successor thereto) is open for
trading of securities.
(cc)
“
VWAP
” means, for any security as of any date, the dollar volume-weighted average price for such security
on the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal
securities exchange or securities market on which such security is then traded) during the period beginning at 9:30:01 a.m., New
York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “HP” function (set to weighted
average) or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter
market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time, and ending
at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security
by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market
makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If
the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date
shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to
agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 13.
All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization
or other similar transaction during such period.
[
signature page follows
]
IN WITNESS WHEREOF,
the Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date set out above.
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MY SIZE, INC.
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By:
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Name:
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Title:
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17
EXHIBIT
A
EXERCISE
NOTICE
TO BE
EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK
MY
SIZE, INC.
The undersigned
holder hereby elects to exercise the Warrant to Purchase Common Stock No. _______ (the “
Warrant
”) of My
Size, Inc., a Delaware corporation (the “
Company
”) as specified below. Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.
1.
Form
of Exercise Price
. The Holder intends that payment of the Aggregate Exercise Price shall be made as:
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☐
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a “
Cash Exercise
” with respect to _________________
Warrant Shares; and/or
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☐
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a “
Cashless Exercise
” with respect to _______________
Warrant Shares.
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In the event that
the Holder has elected a Cashless Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the
Holder hereby represents and warrants that (i) this Exercise Notice was executed by the Holder at __________ [a.m.][p.m.] on the
date set forth below and (ii) if applicable, the Bid Price as of such time of execution of this Exercise Notice was $________.
2.
Payment
of Exercise Price
. In the event that the Holder has elected a Cash Exercise with respect to some or all of the Warrant Shares
to be issued pursuant hereto, the Holder shall pay the Aggregate Exercise
Price
in the sum
of $___________________ to the Company in accordance with the terms of the Warrant.
3.
Variable
Price Securities
. By checking the box in this Item 4, the holder elects to exercise the Warrant by substituting the Variable
Price for the Exercise Price pursuant to Section 2(d) of the Warrant, which Variable Price equals $ per share.☐
4.
Delivery
of Warrant Shares
. The Company shall deliver to Holder, or its designee or agent as specified below, __________ shares of Common
Stock in accordance with the terms of the Warrant. Delivery shall be made to Holder, or for its benefit, as follows:
☐
Check
here if requesting delivery as a certificate to the following name and to the following address:
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☐
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Check
here if requesting delivery by Deposit/Withdrawal at Custodian as follows:
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DTC Participant:
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DTC
Number:
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Account Number:
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Date:
_____________ __,
Name of Registered Holder
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By:
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Name:
Title:
Tax
ID:____________________________
Facsimile:__________________________
E-mail
Address:_____________________
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A-1
EXHIBIT B
ACKNOWLEDGMENT
The
Company hereby acknowledges this Exercise Notice and hereby directs ______________ to issue the above
indicated
number
of shares of Common Stock in accordance with the Transfer Agent Instructions dated _________, 201_, from the Company and acknowledged
and agreed to by _______________.
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MY SIZE, INC.
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By:
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Name:
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Title:
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Exhibit 4.3
[FORM OF WARRANT]
THE
NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF
PURSUANT TO SECTION
1(a)
OF THIS WARRANT.
My Size, Inc.
Warrant To Purchase Common
Stock
Warrant No.:
Date of Issuance: [ ], 2017 (“
Issuance
Date
”)
My Size, Inc., a
Delaware corporation (the “
Company
”), hereby certifies that, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged,
[BUYER]
, the registered holder
hereof or its permitted assigns (the “
Holder
”), is entitled, subject to the terms set forth below, to purchase
from the Company, at the Exercise Price (as defined below) then in effect, upon exercise of this Warrant to Purchase Common Stock
(including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, the “
Warrant
”),
at any time or times on or after the Issuance Date, but not after 11:59 p.m., New York time, on the Expiration Date (as defined
below), _________________
[1]
(subject
to adjustment as provided herein) fully paid and non-assessable shares of Common Stock (as defined below) (the “
Warrant
Shares
”, and such number of Warrant Shares, the “
Warrant Number
”). Except as otherwise defined herein,
capitalized terms in this Warrant shall have the meanings set forth in Section 17. This Warrant is one of the Warrants to
Purchase Common Stock (the “
Registered Warrants
”) issued pursuant to (i) Section 1 of that certain Securities
Purchase Agreement, dated as of December __, 2017 (the “
Subscription Date
”), by and among the Company and the
investors (the “
Buyers
”) referred to therein, as amended from time to time (the “
Securities Purchase
Agreement
”) and (ii) the Company’s Registration Statement on Form S-3 (File number 333- ) (the “
Registration
Statement
”).
PREPAYMENT
OF NOMINAL VALUE
.
Notwithstanding anything herein to the contrary, the Company hereby acknowledges receipt of the nominal
value of $0.001 per Warrant Share from the initial holder of this Warrant as of the initial Issuance Date, which was pre-funded
to the Company on or prior to the initial Issuance Date (as adjusted for stock splits, stock dividends, recapitalizations and similar
events, the “
Nominal Per Share Amount
”, and such prepayment, the “
Prepayment
”). Consequently,
upon each exercise of this Warrant, the applicable Aggregate Exercise Price (as defined below) of this Warrant (less the applicable
Nominal Per Share Amount) shall be the only remaining unpaid amount that must be satisfied by the Holder (whether in cash or by
a Cashless Exercise (as defined below)) to effect an exercise of this Warrant. The Prepayment is nonrefundable, whether or not
this Warrant is exercisable in full.
[1] [ ]% Warrant coverage
1.
EXERCISE OF WARRANT.
(a)
Mechanics of Exercise
. Subject to the terms and conditions hereof (including, without limitation, the limitations
set forth in Section 1(f)), this Warrant may be exercised by the Holder on any day on or after the Issuance Date (an “
Exercise
Date
”), in whole or in part, by delivery (whether via facsimile or otherwise) of a written notice, in the form attached
hereto as
Exhibit A
(the “
Exercise Notice
”), of the Holder’s election to exercise this Warrant.
Within one (1) Trading Day following an exercise of this Warrant as aforesaid, the Holder shall deliver payment to the Company
of an amount equal to the Exercise Price in effect on the date of such exercise multiplied by the number of Warrant Shares as to
which this Warrant was so exercised (the “
Aggregate Exercise Price
”) in cash or via wire transfer of immediately
available funds if the Holder did not notify the Company in such Exercise Notice that such exercise was made pursuant to a Cashless
Exercise (as defined in Section 1(d)). The Holder shall not be required to deliver the original of this Warrant in order to
effect an exercise hereunder. Execution and delivery of an Exercise Notice with respect to less than all of the Warrant Shares
shall have the same effect as cancellation of the original of this Warrant and issuance of a new Warrant evidencing the right to
purchase the remaining number of Warrant Shares. Execution and delivery of an Exercise Notice for all of the then-remaining Warrant
Shares shall have the same effect as cancellation of the original of this Warrant after delivery of the Warrant Shares in accordance
with the terms hereof. On or before the first (1
st
) Trading Day following the date on which the Company has received
an Exercise Notice, the Company shall transmit by facsimile or electronic mail an acknowledgment of confirmation of receipt of
such Exercise Notice, in the form attached hereto as
Exhibit B
, to the Holder and the Company’s transfer
agent (the “
Transfer Agent
”), which confirmation shall constitute an instruction to the Transfer Agent to process
such Exercise Notice in accordance with the terms herein. On or before the second (2nd) Trading Day following the date on which
the Company has received such Exercise Notice (or such earlier date as required pursuant to the 1934 Act or other applicable law,
rule or regulation for the settlement of a trade of such Warrant Shares initiated on the applicable Exercise Date), the Company
shall (X) provided that the Transfer Agent is participating in The Depository Trust Company (“
DTC
”) Fast Automated
Securities Transfer Program, upon the request of the Holder, credit such aggregate number of shares of Common Stock to which the
Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its
Deposit/Withdrawal at Custodian system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program, upon the request of the Holder, issue and deliver (via reputable overnight courier) to the address as specified
in the Exercise Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common
Stock to which the Holder shall be entitled pursuant to such exercise. Upon delivery of an Exercise Notice, the Holder shall be
deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant
has been exercised, irrespective of the date such Warrant Shares are credited to the Holder’s DTC account or the date of
delivery of the certificates evidencing such Warrant Shares (as the case may be). If this Warrant is submitted in connection with
any exercise pursuant to this Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise
is greater than the number of Warrant Shares being acquired upon an exercise and upon surrender of this Warrant to the Company
by the Holder, then, at the request of the Holder, the Company shall as soon as practicable and in no event later than two (2)
Business Days after any exercise and at its own expense, issue and deliver to the Holder (or its designee) a new Warrant (in accordance
with Section 7(d)) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise
under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised. No fractional shares of
Common Stock are to be issued upon the exercise of this Warrant, but rather the number of shares of Common Stock to be issued shall
be rounded up to the nearest whole number. The Company shall pay any and all transfer, stamp, issuance and similar taxes, costs
and expenses (including, without limitation, fees and expenses of the Transfer Agent) that may be payable with respect to the issuance
and delivery of Warrant Shares upon exercise of this Warrant. Notwithstanding the foregoing, except in the case where an exercise
of this Warrant is validly made pursuant to a Cashless Exercise, the Company’s failure to deliver Warrant Shares to the Holder
on or prior to the later of (i) two (2) Trading Days after receipt of the applicable Exercise Notice (or such earlier date as required
pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade of such Warrant Shares initiated
on the applicable Exercise Date) and (ii) one (1) Trading Day after the Company’s receipt of the Aggregate Exercise Price
(or valid notice of a Cashless Exercise) (such later date, the “
Share Delivery Date
”) shall not be deemed to
be a breach of this Warrant. From the Issuance Date through and including the Expiration Date, the Company shall maintain a transfer
agent that participates in the DTC’s Fast Automated Securities Transfer Program.
(b)
Exercise Price
. For purposes of this Warrant, “
Exercise Price
” means $[ ], subject to adjustment
as provided herein.
(c)
Company’s Failure to Timely Deliver Securities
. If the Company shall fail, for any reason or for no reason,
on or prior to the Share Delivery Date, either (I) if the Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program, to issue and deliver to the Holder (or its designee) a certificate for the number of Warrant Shares to which
the Holder is entitled and register such Warrant Shares on the Company’s share register or, if the Transfer Agent is participating
in the DTC Fast Automated Securities Transfer Program, to credit the balance account of the Holder or the Holder’s designee
with DTC for such number of Warrant Shares to which the Holder is entitled upon the Holder’s exercise of this Warrant (as
the case may be) or (II) if the Registration Statement (or prospectus contained therein) covering the issuance of the Warrant Shares
that are the subject of the Exercise Notice (the “
Unavailable Warrant Shares
”) is not available for the issuance
of such Unavailable Warrant Shares and the Company fails to promptly (x) so notify the Holder and (y) deliver the Warrant Shares
electronically without any restrictive legend by crediting such aggregate number of Warrant Shares to which the Holder is entitled
pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal
At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter referred as a “
Notice
Failure
” and together with the event described in clause (I) above, a “
Delivery Failure
”), then, in
addition to all other remedies available to the Holder, (X) the Company shall pay in cash to the Holder on each day after the Share
Delivery Date and during such Delivery Failure an amount equal to 2% of the product of (A) the sum of the number of shares of Common
Stock not issued to the Holder on or prior to the Share Delivery Date and to which the Holder is entitled, multiplied by (B) any
trading price of the Common Stock selected by the Holder in writing as in effect at any time during the period beginning on the
applicable Exercise Date and ending on the applicable Share Delivery Date, and (Y) the Holder, upon written notice to the Company,
may void its Exercise Notice with respect to, and retain or have returned, as the case may be, any portion of this Warrant that
has not been exercised pursuant to such Exercise Notice; provided that the voiding of an Exercise Notice shall not affect the Company’s
obligations to make any payments which have accrued prior to the date of such notice pursuant to this Section 1(c) or otherwise.
In addition to the foregoing, if on or prior to the Share Delivery Date either (I) the Transfer Agent is not participating in the
DTC Fast Automated Securities Transfer Program, the Company shall fail to issue and deliver to the Holder (or its designee) a certificate
and register such shares of Common Stock on the Company’s share register or, if the Transfer Agent is participating in the
DTC Fast Automated Securities Transfer Program, the Transfer Agent shall fail to credit the balance account of the Holder or the
Holder’s designee with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s
exercise hereunder or pursuant to the Company’s obligation pursuant to clause (ii) below or (II) a Notice Failure occurs,
and if on or after such Share Delivery Date the Holder purchases (in an open market transaction or otherwise) shares of Common
Stock corresponding to all or any portion of the number of shares of Common Stock issuable upon such exercise that the Holder is
entitled to receive from the Company and has not received from the Company in connection with such Delivery Failure or Notice Failure,
as applicable (a “
Buy-In
”), then, in addition to all other remedies available to the Holder, the Company shall,
within two (2) Business Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the
Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions and other out-of-pocket expenses,
if any) for the shares of Common Stock so purchased (including, without limitation, by any other Person in respect, or on behalf,
of the Holder) (the “
Buy-In Price
”), at which point the Company’s obligation to so issue and deliver such
certificate (and to issue such shares of Common Stock) or credit the balance account of such Holder or such Holder’s designee,
as applicable, with DTC for the number of Warrant Shares to which the Holder is entitled upon the Holder’s exercise hereunder
(as the case may be) (and to issue such Warrant Shares) shall terminate, or (ii) promptly honor its obligation to so issue and
deliver to the Holder a certificate or certificates representing such Warrant Shares or credit the balance account of such Holder
or such Holder’s designee, as applicable, with DTC for the number of Warrant Shares to which the Holder is entitled upon
the Holder’s exercise hereunder (as the case may be) and pay cash to the Holder in an amount equal to the excess (if any)
of the Buy-In Price over the product of (A) such number of Warrant Shares multiplied by (B) the lowest Closing Sale Price of the
Common Stock on any Trading Day during the period commencing on the date of the applicable Exercise Notice and ending on the date
of such issuance and payment under this clause (ii) (the “
Buy-In Payment Amount
”). Nothing shall limit the Holder’s
right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares
of Common Stock (or to electronically deliver such shares of Common Stock) upon the exercise of this Warrant as required pursuant
to the terms hereof. While this Warrant is outstanding, the Company shall cause its transfer agent to participate in the DTC Fast
Automated Securities Transfer Program. In addition to the foregoing rights, (i) if the Company fails to deliver the applicable
number of Warrant Shares upon an exercise pursuant to Section 1 by the applicable Share Delivery Date, then the Holder shall have
the right to rescind such exercise in whole or in part and retain and/or have the Company return, as the case may be, any portion
of this Warrant that has not been exercised pursuant to such Exercise Notice; provided that the rescission of an exercise shall
not affect the Company’s obligation to make any payments that have accrued prior to the date of such notice pursuant to this
Section 1(c) or otherwise, and (ii) if a registration statement (which may be the Registration Statement) covering the issuance
or resale of the Warrant Shares that are subject to an Exercise Notice is not available for the issuance or resale, as applicable,
of such Warrant Shares and the Holder has submitted an Exercise Notice prior to receiving notice of the non-availability of such
registration statement and the Company has not already delivered the Warrant Shares underlying such Exercise Notice electronically
without any restrictive legend by crediting such aggregate number of Warrant Shares to which the Holder is entitled pursuant to
such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit / Withdrawal At Custodian
system, the Holder shall have the option, by delivery of notice to the Company, to (x) rescind such Exercise Notice in whole or
in part and retain or have returned, as the case may be, any portion of this Warrant that has not been exercised pursuant to such
Exercise Notice; provided that the rescission of an Exercise Notice shall not affect the Company’s obligation to make any
payments that have accrued prior to the date of such notice pursuant to this Section 1(c) or otherwise, and/or (y) switch some
or all of such Exercise Notice from a cash exercise to a Cashless Exercise.
(d)
Cashless Exercise
. Notwithstanding anything contained herein to the contrary (other than Section 1(f) below),
if at the time of exercise hereof the Registration Statement is not effective (or the prospectus contained therein is not available
for use) for the issuance of all of the Warrant Shares, then the Holder may, in its sole discretion, exercise this Warrant in whole
or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment
of the Aggregate Exercise Price, elect instead to receive upon such exercise the “Net Number” of Warrant Shares determined
according to the following formula (a “
Cashless Exercise
”):
Net Number =
(A x B) - (A x C)
D
For purposes of
the foregoing formula:
A= the total number of shares with
respect to which this Warrant is then being exercised.
B = the greater of (A) the Spot
Price and (B) the quotient of (x) the sum of the VWAP of the Common Stock of each of the twenty (20) Trading Days ending at the
close of business on the Principal Market immediately prior to the time of exercise as set forth in the applicable Exercise Notice,
divided by (y) twenty (20).
C = the
difference of (x) the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise less the Nominal
Per Share Amount.
D = the Spot Price.
For purposes of Rule
144(d) promulgated under the 1933 Act, as in effect on the Subscription Date, it is intended that the Warrant Shares issued in
a Cashless Exercise shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be
deemed to have commenced, on the date this Warrant was originally issued pursuant to the Securities Purchase Agreement.
(e)
Disputes
. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of
the number of Warrant Shares to be issued pursuant to the terms hereof, the Company shall promptly issue to the Holder the number
of Warrant Shares that are not disputed and resolve such dispute in accordance with Section 13.
(f)
Limitations on Exercises
. The Company shall not effect the exercise of any portion of this Warrant, and the Holder
shall not have the right to exercise any portion of this Warrant, pursuant to the terms and conditions of this Warrant and any
such exercise shall be null and void and treated as if never made, to the extent that after giving effect to such exercise, the
Holder together with the other Attribution Parties collectively would beneficially own in excess of 4.99% (the “
Maximum
Percentage
”) of the shares of Common Stock outstanding immediately after giving effect to such exercise. For purposes
of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by the Holder and the other Attribution
Parties shall include the number of shares of Common Stock held by the Holder and all other Attribution Parties plus the number
of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being
made, but shall exclude shares of Common Stock which would be issuable upon (A) exercise of the remaining, unexercised portion
of this Warrant beneficially owned by the Holder or any of the other Attribution Parties and (B) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Company (including, without limitation, any convertible notes
or convertible preferred stock or warrants, including other Registered Warrants) beneficially owned by the Holder or any other
Attribution Party subject to a limitation on conversion or exercise analogous to the limitation contained in this Section 1(f).
For purposes of this Section 1(f), beneficial ownership shall be calculated in accordance with Section 13(d) of the 1934 Act. For
purposes of determining the number of outstanding shares of Common Stock the Holder may acquire upon the exercise of this Warrant
without exceeding the Maximum Percentage, the Holder may rely on the number of outstanding shares of Common Stock as reflected
in (x) the Company’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or
other public filing with the SEC, as the case may be, (y) a more recent public announcement by the Company or (z) any other written
notice by the Company or the Transfer Agent, if any, setting forth the number of shares of Common Stock outstanding (the “
Reported
Outstanding Share Number
”). If the Company receives an Exercise Notice from the Holder at a time when the actual number
of outstanding shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall (i) notify the Holder
in writing of the number of shares of Common Stock then outstanding and, to the extent that such Exercise Notice would otherwise
cause the Holder’s beneficial ownership, as determined pursuant to this Section 1(f), to exceed the Maximum Percentage, the
Holder must notify the Company of a reduced number of Warrant Shares to be acquired pursuant to such Exercise Notice (the number
of shares by which such purchase is reduced, the “
Reduction Shares
”) and (ii) as soon as reasonably practicable,
the Company shall return to the Holder any exercise price paid by the Holder for the Reduction Shares. For any reason at any time,
upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing or
by electronic mail to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including
this Warrant, by the Holder and any other Attribution Party since the date as of which the Reported Outstanding Share Number was
reported. In the event that the issuance of shares of Common Stock to the Holder upon exercise of this Warrant results in the Holder
and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number
of outstanding shares of Common Stock (as determined under Section 13(d) of the 1934 Act), the number of shares so issued by which
the Holder’s and the other Attribution Parties’ aggregate beneficial ownership exceeds the Maximum Percentage (the
“
Excess Shares
”) shall be deemed null and void and shall be cancelled ab initio, and the Holder shall not have
the power to vote or to transfer the Excess Shares. As soon as reasonably practicable after the issuance of the Excess Shares has
been deemed null and void, the Company shall return to the Holder the exercise price paid by the Holder for the Excess Shares.
Upon delivery of a written notice to the Company, the Holder may from time to time increase (with such increase not effective until
the sixty-first (61
st
) day after delivery of such notice) or decrease the Maximum Percentage to any other percentage
not in excess of 9.99% as specified in such notice; provided that (i) any such increase in the Maximum Percentage will not be effective
until the sixty-first (61
st
) day after such notice is delivered to the Company and (ii) any such increase or decrease
will apply only to the Holder and the other Attribution Parties and not to any other holder of Registered Warrants that is not
an Attribution Party of the Holder. For purposes of clarity, the shares of Common Stock issuable pursuant to the terms of this
Warrant in excess of the Maximum Percentage shall not be deemed to be beneficially owned by the Holder for any purpose including
for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to exercise this Warrant pursuant to this
paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination
of exercisability. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity
with the terms of this Section 1(f) to the extent necessary to correct this paragraph or any portion of this paragraph which may
be defective or inconsistent with the intended beneficial ownership limitation contained in this Section 1(f) or to make changes
or supplements necessary or desirable to properly give effect to such limitation. The limitation contained in this paragraph may
not be waived and shall apply to a successor holder of this Warrant.
(g)
Reservation of Shares
.
(i)
Required Reserve Amount
. So long as this Warrant remains outstanding, the Company shall at all times keep reserved
for issuance under this Warrant a number of shares of Common Stock at least equal to 100% of the maximum number of shares of Common
Stock as shall be necessary to satisfy the Company’s obligation to issue shares of Common Stock under the Registered Warrants
then outstanding (without regard to any limitations on exercise) (the “
Required Reserve Amount
”); provided that
at no time shall the number of shares of Common Stock reserved pursuant to this Section 1(g)(i) be reduced other than proportionally
in connection with any exercise or redemption of Registered Warrants or such other event covered by Section 2(a) below. The Required
Reserve Amount (including, without limitation, each increase in the number of shares so reserved) shall be allocated pro rata among
the holders of the Registered Warrants based on number of shares of Common Stock issuable upon exercise of Registered Warrants
held by each holder on the Closing Date (as defined in the Securities Purchase Agreement) (without regard to any limitations on
exercise) or increase in the number of reserved shares, as the case may be (the “
Authorized Share Allocation
”).
In the event that a holder shall sell or otherwise transfer any of such holder’s Registered Warrants, each transferee shall
be allocated a pro rata portion of such holder’s Authorized Share Allocation. Any shares of Common Stock reserved and allocated
to any Person which ceases to hold any Registered Warrants shall be allocated to the remaining holders of Registered Warrants,
pro rata based on the number of shares of Common Stock issuable upon exercise of the Registered Warrants then held by such holders
(without regard to any limitations on exercise).
(ii)
Insufficient Authorized Shares
. If, notwithstanding Section 1(g)(i) above, and not in limitation thereof, at any
time while any of the Registered Warrants remain outstanding, the Company does not have a sufficient number of authorized and
unreserved shares of Common Stock to satisfy its obligation to reserve the Required Reserve Amount (an “
Authorized Share
Failure
”), then the Company shall immediately take all action necessary to increase the Company’s authorized shares
of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for all the Registered Warrants
then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence
of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure,
the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common
Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best
efforts to solicit its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its board
of directors to recommend to the stockholders that they approve such proposal. In the event that the Company is prohibited from
issuing shares of Common Stock upon an exercise of this Warrant due to the failure by the Company to have sufficient shares of
Common Stock available out of the authorized but unissued shares of Common Stock (such unavailable number of shares of Common
Stock, the “
Authorization Failure Shares
”), in lieu of delivering such Authorization Failure Shares to the
Holder, the Company shall pay cash in exchange for the cancellation of such portion of this Warrant exercisable into such Authorization
Failure Shares at a price equal to the sum of (i) the product of (x) such number of Authorization Failure Shares and (y) the greatest
Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date the Holder delivers the applicable
Exercise Notice with respect to such Authorization Failure Shares to the Company and ending on the date of such issuance and payment
under this Section 1(g); and (ii) to the extent the Holder purchases (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by the Holder of Authorization Failure Shares, any Buy-In Payment Amount, brokerage
commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection therewith. Nothing contained in this
Section 1(g)(ii) shall limit any obligations of the Company under any provision of the Securities Purchase Agreement.
2.
ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES
.
So long as the
Warrant remains outstanding, the Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject
to adjustment from time to time as set forth in this Section 2.
(a)
Stock Dividends and Splits
. Without limiting any provision of Section 2(b), Section 3 or Section 4, if
the Company, at any time on or after the Subscription Date, (i) pays a stock dividend on one or more classes of its then outstanding
shares of Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock,
(ii) subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its then outstanding
shares of Common Stock into a larger number of shares or (iii) combines (by combination, reverse stock split or otherwise) one
or more classes of its then outstanding shares of Common Stock into a smaller number of shares, then in each such case the Exercise
Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately
before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such
event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for
the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii)
or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination. If any
event requiring an adjustment under this paragraph occurs during the period that an Exercise Price is calculated hereunder, then
the calculation of such Exercise Price shall be adjusted appropriately to reflect such event.
(b)
Adjustment Upon Issuance of Shares of Common Stock
. If and whenever on or after the Subscription Date, the Company
issues or sells, or in accordance with this Section 2 is deemed to have issued or sold, any shares of Common Stock (including
the issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding any Excluded Securities
issued or sold or deemed to have been issued or sold) for a consideration per share (the “
New Issuance Price
”)
less than a price equal to the Exercise Price in effect immediately prior to such issuance or sale or deemed issuance or sale (such
Exercise Price then in effect is referred to herein as the “
Applicable Price
”) (the foregoing a “
Dilutive
Issuance
”), then immediately after such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an amount
equal to the New Issuance Price. For all purposes of the foregoing (including, without limitation, determining the adjusted Exercise
Price and the New Issuance Price under this Section 2(b)), the following shall be applicable:
(i)
Issuance of Options
. If the Company in any manner grants or sells any Options and the lowest price per share for
which one share of Common Stock is at any time issuable upon the exercise of any such Option or upon conversion, exercise or exchange
of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof is less than
the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the
Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 2(b)(i),
the “lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Options
or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant
to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received
or receivable by the Company with respect to any one share of Common Stock upon the granting or sale of such Option, upon exercise
of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise
pursuant to the terms thereof and (y) the lowest exercise price set forth in such Option for which one share of Common Stock is
issuable (or may become issuable assuming all possible market conditions) upon the exercise of any such Options or upon conversion,
exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms
thereof minus (2) the sum of all amounts paid or payable to the holder of such Option (or any other Person) upon the granting or
sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable
upon exercise of such Option or otherwise pursuant to the terms thereof plus the value of any other consideration received or receivable
by, or benefit conferred on, the holder of such Option (or any other Person). Except as contemplated below, no further adjustment
of the Exercise Price shall be made upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon
the exercise of such Options or otherwise pursuant to the terms of or upon the actual issuance of such shares of Common Stock upon
conversion, exercise or exchange of such Convertible Securities.
(ii)
Issuance of Convertible Securities
. If the Company in any manner issues or sells any Convertible Securities and the
lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof
or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to
be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities
for such price per share. For the purposes of this Section 2(b)(ii), the “lowest price per share for which one share
of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof”
shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company
with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise or
exchange of such Convertible Security or otherwise pursuant to the terms thereof and (y) the lowest conversion price set forth
in such Convertible Security for which one share of Common Stock is issuable (or may become issuable assuming all possible market
conditions) upon conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof minus (2) the sum of all amounts
paid or payable to the holder of such Convertible Security (or any other Person) upon the issuance or sale of such Convertible
Security plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Convertible
Security (or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the
actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities or otherwise
pursuant to the terms thereof, and if any such issuance or sale of such Convertible Securities is made upon exercise of any Options
for which adjustment of this Warrant has been or is to be made pursuant to other provisions of this Section 2(b), except as
contemplated below, no further adjustment of the Exercise Price shall be made by reason of such issuance or sale.
(iii)
Change in Option Price or Rate of Conversion
. If the purchase or exercise price provided for in any Options, the
additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the
rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases
or decreases at any time (other than proportional changes in conversion or exercise prices, as applicable, in connection with an
event referred to in Section 2(a)), the Exercise Price in effect at the time of such increase or decrease shall be adjusted to
the Exercise Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased
or decreased purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time
initially granted, issued or sold. For purposes of this Section 2(b)(iii), if the terms of any Option or Convertible Security
that was outstanding as of the Subscription Date are increased or decreased in the manner described in the immediately preceding
sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or
exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this
Section 2(b) shall be made if such adjustment would result in an increase of the Exercise Price then in effect.
(iv)
Calculation of Consideration Received
. If any Option and/or Convertible Security and/or Adjustment Right is issued
in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the
Holder, the “
Primary Security
”, and such Option and/or Convertible Security and/or Adjustment Right, the “
Secondary
Securities
” and together with the Primary Security, each a “
Unit
”), together comprising one integrated
transaction, the aggregate consideration per share of Common Stock with respect to such Primary Security shall be deemed to be
the lowest of (x) the purchase price of such Unit, (y) if such Primary Security is an Option and/or Convertible Security, the lowest
price per share for which one share of Common Stock is at any time issuable upon the exercise or conversion of the Primary Security
in accordance with Section 2(b)(i) or 2(b)(ii) above and (z) the lowest VWAP of the Common Stock on any Trading Day during the
four Trading Day period immediately following the public announcement of such Dilutive Issuance (for the avoidance of doubt, if
such public announcement is released prior to the opening of the Principal Market on a Trading Day, such Trading Day shall be the
first Trading Day in such four Trading Day period). If any shares of Common Stock, Options or Convertible Securities are issued
or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount
of consideration received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued
or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of
such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration
received by the Company for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5)
Trading Days immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued
to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount
of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving
entity as is attributable to such shares of Common Stock, Options or Convertible Securities (as the case may be). The fair market
value of any consideration other than cash or publicly traded securities will be determined jointly by the Company and the Holder.
If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “
Valuation
Event
”), the fair market value of such consideration will be determined within five (5) Trading Days after the tenth
(10th) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder.
The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses
of such appraiser shall be borne by the Company.
(v)
Record Date
. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling
them (A) to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities
or (B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will
be deemed to be the date of the issuance or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration
of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase
(as the case may be).
(c)
Number of Warrant Shares
. Simultaneously with any adjustment to the Exercise Price pursuant to Section 2(a),
the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately,
so that after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be
the same as the aggregate Exercise Price in effect immediately prior to such adjustment (without regard to any limitations on exercise
contained herein).
(d)
Holder’s Right of Alternative Exercise Price Following Issuance of Certain Options or Convertible Securities
.
Notwithstanding the other provisions of this Section 2, if the Company in any manner issues or sells or enters into any agreement
to issue or sell, any Common Stock, Options or Convertible Securities (any such securities, “
Variable Price Securities
”)
after the Subscription Date that are issuable pursuant to such agreement or convertible into or exchangeable or exercisable for
shares of Common Stock at a price which varies or may vary with the market price of the shares of Common Stock, including by way
of one or more reset(s) to a fixed price, but exclusive of such formulations reflecting customary anti-dilution provisions (such
as share splits, share combinations, share dividends and similar transactions) (each of the formulations for such variable price
being herein referred to as, the “
Variable Price
”), the Company shall provide written notice thereof via facsimile
and overnight courier to the Holder on the date of such agreement and the issuance of such Convertible Securities or Options. From
and after the date the Company enters into such agreement or issues any such Variable Price Securities, the Holder shall have the
right, but not the obligation, in its sole discretion to substitute the Variable Price for the Exercise Price upon exercise of
this Warrant by designating in the Exercise Notice delivered upon any exercise of this Warrant that solely for purposes of such
exercise the Holder is relying on the Variable Price rather than the Exercise Price then in effect. The Holder’s election
to rely on a Variable Price for a particular exercise of this Warrant shall not obligate the Holder to rely on a Variable Price
for any future exercises of this Warrant.
(e)
Other Events
. In the event that the Company (or any Subsidiary (as defined in the Securities Purchase Agreement))
shall take any action to which the provisions hereof are not strictly applicable, or, if applicable, would not operate to protect
the Holder from dilution or if any event occurs of the type contemplated by the provisions of this Section 2 but not expressly
provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights
or other rights with equity features), then the Company’s board of directors shall in good faith determine and implement
an appropriate adjustment in the Exercise Price and the number of Warrant Shares (if applicable) so as to protect the rights of
the Holder, provided that no such adjustment pursuant to this Section 2(e) will increase the Exercise Price or decrease the number
of Warrant Shares as otherwise determined pursuant to this Section 2, provided further that if the Holder does not accept such
adjustments as appropriately protecting its interests hereunder against such dilution, then the Company’s board of directors
and the Holder shall agree, in good faith, upon an independent investment bank of nationally recognized standing to make such appropriate
adjustments, whose determination shall be final and binding absent manifest error and whose fees and expenses shall be borne by
the Company.
(f)
Calculations
. All calculations under this Section 2 shall be made by rounding to the nearest cent or the nearest
1/100
th
of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issuance
or sale of Common Stock.
(g)
Voluntary Adjustment By Company
. The Company may at any time during the term of this Warrant, with the prior approval
of the Principal Market and the prior written consent of the Required Holders (as defined in the Securities Purchase Agreement),
reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of
the Company.
3.
RIGHTS UPON DISTRIBUTION OF ASSETS
.
In addition to any adjustments pursuant
to Section 2 above, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire
its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any
distribution of cash, stock or other securities, property, options, evidence of indebtedness or any other assets by way of a dividend,
spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “
Distribution
”),
at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock
acquirable upon complete exercise of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant,
including without limitation, the Maximum Percentage) immediately before the date on which a record is taken for such Distribution,
or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the
participation in such Distribution (provided, however, that to the extent that the Holder’s right to participate in any
such Distribution would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder
shall not be entitled to participate in such Distribution to the extent of the Maximum Percentage (and shall not be entitled to
beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to the extent
of any such excess) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time
or times, if ever, as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum
Percentage, at which time or times the Holder shall be granted such Distribution (and any Distributions declared or made on such
initial Distribution or on any subsequent Distribution held similarly in abeyance) to the same extent as if there had been no
such limitation).
4.
PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.
(a)
Purchase Rights
. In addition to any adjustments pursuant to Section 2 above, if at any time the Company grants,
issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata
to the record holders of any class of Common Stock (the “
Purchase Rights
”), then the Holder will be entitled
to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired
if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to
any limitations or restrictions on exercise of this Warrant, including without limitation, the Maximum Percentage) immediately
before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken,
the date as of which the record holders of shares of Common Stock are to be determined for the grant, issuance or sale of such
Purchase Rights (
provided
,
however
, that to the extent that the Holder’s right to participate in any such Purchase
Right would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not
be entitled to participate in such Purchase Right to the extent of the Maximum Percentage (and shall not be entitled to beneficial
ownership of such shares of Common Stock as a result of such Purchase Right (and beneficial ownership) to the extent of any such
excess) and such Purchase Right to such extent shall be held in abeyance for the benefit of the Holder for a period of up to six
(6) months, until such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution Parties
exceeding the Maximum Percentage, at which time or times the Holder shall be granted such right (and any Purchase Right granted,
issued or sold on such initial Purchase Right or on any subsequent Purchase Right held similarly in abeyance) to the same extent
as if there had been no such limitation).
(b)
Fundamental Transactions
. The Company shall not enter into or be party to a Fundamental Transaction unless (i)
the Successor Entity assumes in writing all of the obligations of the Company under this Warrant and the other Transaction Documents
(as defined in the Securities Purchase Agreement) in accordance with the provisions of this Section 4(b) pursuant to written
agreements in form and substance satisfactory to the Holder and approved by the Holder prior to such Fundamental Transaction, including
agreements to deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Warrant, including, without limitation, which is exercisable for a corresponding
number of shares of capital stock equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant
(without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise
price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of
the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such adjustments
to the number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this
Warrant immediately prior to the consummation of such Fundamental Transaction) and (ii) the Successor Entity (including its
Parent Entity) is a publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible Market. Upon
the consummation of each Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and
after the date of the applicable Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring
to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company
and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect
as if such Successor Entity had been named as the Company herein. Upon consummation of each Fundamental Transaction, the Successor
Entity shall deliver to the Holder confirmation that there shall be issued upon exercise of this Warrant at any time after the
consummation of the applicable Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets
or other property (except such items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable
thereafter)) issuable upon the exercise of this Warrant prior to the applicable Fundamental Transaction, such shares of publicly
traded common stock (or its equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been
entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant been exercised immediately prior
to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this Warrant), as adjusted in accordance
with the provisions of this Warrant. Notwithstanding the foregoing, and without limiting Section 1(f) hereof, the Holder may elect,
at its sole option, by delivery of written notice to the Company to waive this Section 4(b) to permit the Fundamental Transaction
without the assumption of this Warrant. In addition to and not in substitution for any other rights hereunder, prior to the consummation
of each Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive stock, securities,
cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) (the “
Corporate
Event Consideration
”) with respect to or in exchange for shares of Common Stock (a “
Corporate Event
”),
the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon an exercise
of this Warrant at any time after the consummation of the applicable Fundamental Transaction but prior to the Expiration Date,
in lieu of the shares of the Common Stock or Corporate Event Consideration (except such items still issuable under Sections 3
and 4(a) above, which shall continue to be receivable thereafter) issuable upon the exercise of the Warrant prior to such Fundamental
Transaction, such Corporate Event Consideration which the Holder would have been entitled to receive upon the happening of the
applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction
(without regard to any limitations on the exercise of this Warrant). Provision made pursuant to the preceding sentence shall be
in a form and substance reasonably satisfactory to the Holder.
(c)
Change of Control Rights
. Notwithstanding the foregoing and the provisions of Section 4(b) above, at the request
of the Holder delivered at any time commencing on the earliest to occur of (A) the public disclosure of any Change of Control,
(B) the consummation of any Change of Control and (C) the Holder first becoming aware of any Change of Control through the date
that is ninety (90) days after the public disclosure of the consummation of such Change of Control by the Company pursuant to a
Current Report on Form 8-K filed with the SEC, the Company or the Successor Entity (as the case may be) shall exchange this Warrant
for the Black Scholes Value of such portion of this Warrant (less the applicable Nominal Per Share Amount, which is not refundable
hereunder) subject to exchange (collectively, the “
Aggregate Black Scholes Value
”) in cash;
provided
,
however
, that if the Change of Control is not within the Company's control, including not approved by the Company's Board
of Directors, the Holder shall only be entitled to receive the Aggregate Black Scholes Value in the form of, at the Company’s
election (such election to pay in cash or by delivery of the Rights (as defined below), a “
Consideration Election
”),
either (I) rights (with a beneficial ownership limitation in the form of Section 1(f) hereof,
mutatis mutandis
) (collectively,
the “
Rights
”), convertible in whole, or in part, at any time, without the requirement of the Holder to pay any
additional consideration, at the option of the Holder, into such aggregate amount of Corporate Event Consideration applicable to
such Change of Control equal in value to the Aggregate Black Scholes Value (as determined in accordance with Section 2(b)(iv) above),
but with the aggregate number of Successor Shares (as defined below) (on an as-converted or as-exercised basis, with respect to
any Convertible Securities or Options included in such Corporate Event Consideration) issuable upon conversion of the Rights to
be determined in increments of 10% of the portion of the Aggregate Black Scholes Value attributable to such Successor Shares (the
“
Successor Share Value Increment
”), with the aggregate number of Successor Shares issuable upon exercise of
the Rights with respect to the first Successor Share Value Increment determined based on 95% of the Closing Bid Price of the Successor
Shares on the date the Rights are issued and on each of the nine (9) subsequent Trading Days, in each case, the aggregate number
of additional Successor Shares issuable upon exercise of the Rights shall be determined based upon a Successor Share Value Increment
at 95% of the Closing Bid Price of the Successor Shares in effect for such corresponding Trading Day (such ten (10) Trading Day
period commencing on, and including, the date the Rights are issued, the “
Rights Measuring Period
”), or (II)
in cash; provided, that the Company shall not consummate a Change of Control if (x) the Corporate Event Consideration includes
share capital or other equity interest (the “
Successor Shares
”) either in an entity that is not listed on an
Eligible Market or an entity in which the daily share volume for the applicable Successor Shares for each of the twenty (20) Trading
Days prior to the date of consummation of such Change of Control is less than the aggregate number of Successor Shares issuable
to the Holder upon conversion in full of the applicable Rights (without regard to any limitations on conversion therein, assuming
the exercise in full of the Rights on the date of issuance of the Rights and assuming the Closing Bid Price of the Successor Shares
for each Trading Day in the Rights Measuring Period is the Closing Bid Price on the Trading Day ended immediately prior to the
time of consummation of the Change of Control) and (y) the Company shall not have properly elected in accordance with this Section
4(c) to pay the applicable Black Scholes Value to the Holder in cash. The Company shall give the Holder written notice of
each Consideration Election at least twenty (20) Trading Days prior to the time of consummation of such Change of Control.
Payment of such amounts or delivery of the Rights, as applicable, shall be made by the Company (or at the Company’s direction)
to the Holder on the later of (x) the second (2nd) Trading Day after the date of such request and (y) the date of consummation
of such Change of Control (or, with respect to any Right, if applicable, such later time that holders of shares of Common Stock
are initially entitled to receive Corporate Event Consideration with respect to the shares of Common Stock of such holder).
Any Corporate Event Consideration included in the Right, if any, pursuant to this Section 4(c) is
pari passu
with the Corporate
Event Consideration to be paid to holders of shares of Common Stock and the Company shall not permit a payment of any Corporate
Event Consideration to the holders of shares of Common Stock without on or prior to such time delivering the Right to the Holder
hereunder.
(d)
Application
. The provisions of this Section 4 shall apply similarly and equally to successive Fundamental Transactions
and Corporate Events and shall be applied as if this Warrant (and any such subsequent warrants) were fully exercisable and without
regard to any limitations on the exercise of this Warrant (provided that the Holder shall continue to be entitled to the benefit
of the Maximum Percentage, applied however with respect to shares of capital stock registered under the 1934 Act and thereafter
receivable upon exercise of this Warrant (or any such other warrant)).
5.
NONCIRCUMVENTION
.
The Company hereby covenants and agrees that the Company
will not, by amendment of its Certificate of Incorporation (as defined in the Securities Purchase Agreement), Bylaws (as defined
in the Securities Purchase Agreement) or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement,
dissolution, issuance 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, and will at all times in good faith carry out all the provisions of this Warrant and take
all action as may be required to protect the rights of the Holder. Without limiting the generality of the foregoing, the Company
(a) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise
Price then in effect, and (b) shall take all such actions as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and non-assessable shares of Common Stock upon the exercise of this Warrant. Notwithstanding anything
herein to the contrary, if after the sixty (60) calendar day anniversary of the Issuance Date, the Holder is not permitted to exercise
this Warrant in full for any reason (other than pursuant to restrictions set forth in Section 1(f) hereof), the Company shall use
its best efforts to promptly remedy such failure, including, without limitation, obtaining such consents or approvals as necessary
to permit such exercise into shares of Common Stock.
6.
WARRANT HOLDER NOT DEEMED A STOCKHOLDER
.
Except as otherwise specifically
provided herein, the Holder, solely in its capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends
or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed
to confer upon the Holder, solely in its capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company
or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification
of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights,
or otherwise, prior to the issuance to the Holder of the Warrant Shares which it is then entitled to receive upon the due exercise
of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to
purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities
are asserted by the Company or by creditors of the Company. Notwithstanding this Section 6, the Company shall provide the
Holder with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously
with the giving thereof to the stockholders.
7.
REISSUANCE OF WARRANTS.
(a)
Transfer of Warrant
. If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company,
whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)),
registered as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the
Holder and, if less than the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in
accordance with Section 7(d)) to the Holder representing the right to purchase the number of Warrant Shares not being transferred.
(b)
Lost, Stolen or Mutilated Warrant
. Upon receipt by the Company of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of this Warrant (as to which a written certification and the indemnification contemplated
below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this
Warrant, the Company shall execute and deliver to the Holder a new Warrant (in accordance with Section 7(d)) representing
the right to purchase the Warrant Shares then underlying this Warrant.
(c)
Exchangeable for Multiple Warrants
. This Warrant is exchangeable, upon the surrender hereof by the Holder at the
principal office of the Company, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate
the right to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right
to purchase such portion of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however,
no warrants for fractional shares of Common Stock shall be given.
(d)
Issuance of New Warrants
. Whenever the Company is required to issue a new Warrant pursuant to the terms of this
Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such
new Warrant, the right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued
pursuant to Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder which, when added to the number of
shares of Common Stock underlying the other new Warrants issued in connection with such issuance, does not exceed the number of
Warrant Shares then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant
which is the same as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.
8.
NOTICES
.
Whenever notice is required to be given under this Warrant, unless
otherwise provided herein, such notice shall be given in accordance with Section 9(f) of the Securities Purchase Agreement.
The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Warrant (other than the issuance
of shares of Common Stock upon exercise in accordance with the terms hereof), including in reasonable detail a description of such
action and the reason therefor. Without limiting the generality of the foregoing, the Company will give written notice to the Holder
(i) immediately upon each adjustment of the Exercise Price and the number of Warrant Shares, setting forth in reasonable detail,
and certifying, the calculation of such adjustment(s), (ii) at least fifteen (15) days prior to the date on which the Company closes
its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect
to any grants, issuances or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other
property to holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction,
dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction
with such notice being provided to the Holder, and (iii) at least ten (10) Trading Days prior to the consummation of any Fundamental
Transaction. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding
the Company or any of its Subsidiaries (as defined in the Securities Purchase Agreement), the Company shall simultaneously file
such notice with the SEC (as defined in the Securities Purchase Agreement) pursuant to a Current Report on Form 8-K. If the Company
or any of its Subsidiaries provides material non-public information to the Holder that is not simultaneously filed in a Current
Report on Form 8-K and the Holder has not agreed to receive such material non-public information, the Company hereby covenants
and agrees that the Holder shall not have any duty of confidentiality to the Company, any of its Subsidiaries or any of their respective
officers, directors, employees, affiliates or agents with respect to, or a duty to any of the foregoing not to trade on the basis
of, such material non-public information. It is expressly understood and agreed that the time of execution specified by the Holder
in each Exercise Notice shall be definitive and may not be disputed or challenged by the Company.
9.
AMENDMENT AND WAIVER
.
Except as otherwise provided herein, the provisions
of this Warrant (other than Section 1(f)) may be amended and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Holder. No waiver
shall be effective unless it is in writing and signed by an authorized representative of the waiving party.
10.
SEVERABILITY
.
If any provision of this Warrant is prohibited by law or otherwise
determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited,
invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the
invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Warrant so long
as this Warrant as so modified continues to express, without material change, the original intentions of the parties as to the
subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially
impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would
otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid
or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited,
invalid or unenforceable provision(s).
11.
GOVERNING LAW
.
This Warrant shall be governed by and construed and enforced
in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Warrant shall
be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision
or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of New York. The Company hereby irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to the Company at the address set forth in Section 9(f)
of the Securities Purchase Agreement and agrees that such service shall constitute good and sufficient service of process and notice
thereof. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City
of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate
to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect
on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations, or to
enforce a judgment or other court ruling in favor of the Holder.
THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE
TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT
OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.
12.
CONSTRUCTION; HEADINGS
.
This Warrant shall be deemed to be jointly drafted
by the Company and the Holder and shall not be construed against any Person as the drafter hereof. The headings of this Warrant
are for convenience of reference and shall not form part of, or affect the interpretation of, this Warrant. Terms used in this
Warrant but defined in the other Transaction Documents shall have the meanings ascribed to such terms on the Closing Date (as defined
in the Securities Purchase Agreement) in such other Transaction Documents unless otherwise consented to in writing by the Holder.
13.
DISPUTE RESOLUTION
.
(a)
Submission to Dispute Resolution
.
(i)
In the case of a dispute relating to the Exercise Price, the Closing Sale Price, the Bid Price, Black Scholes Value or fair
market value or the arithmetic calculation of the number of Warrant Shares (as the case may be) (including, without limitation,
a dispute relating to the determination of any of the foregoing), the Company or the Holder (as the case may be) shall submit the
dispute to the other party via facsimile (A) if by the Company, within two (2) Business Days after the occurrence of the circumstances
giving rise to such dispute or (B) if by the Holder, at any time after the Holder learned of the circumstances giving rise to such
dispute. If the Holder and the Company are unable to promptly resolve such dispute relating to such Exercise Price, such Closing
Sale Price, such Bid Price, such Black Scholes Value or such fair market value or such arithmetic calculation of the number of
Warrant Shares (as the case may be), at any time after the second (2
nd
) Business Day following such initial notice by
the Company or the Holder (as the case may be) of such dispute to the Company or the Holder (as the case may be), then the Holder
may, at its sole option, select an independent, reputable investment bank to resolve such dispute.
(ii)
The Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered
in accordance with the first sentence of this Section 13 and (B) written documentation supporting its position with respect to
such dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth (5
th
) Business Day immediately following
the date on which the Holder selected such investment bank (the “
Dispute Submission Deadline
”) (the documents
referred to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the “
Required Dispute
Documentation
”) (it being understood and agreed that if either the Holder or the Company fails to so deliver all of the
Required Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the Required Dispute
Documentation shall no longer be entitled to (and hereby waives its right to) deliver or submit any written documentation or other
support to such investment bank with respect to such dispute and such investment bank shall resolve such dispute based solely on
the Required Dispute Documentation that was delivered to such investment bank prior to the Dispute Submission Deadline). Unless
otherwise agreed to in writing by both the Company and the Holder or otherwise requested by such investment bank, neither the Company
nor the Holder shall be entitled to deliver or submit any written documentation or other support to such investment bank in connection
with such dispute (other than the Required Dispute Documentation).
(iii)
The Company and the Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company
and the Holder of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline. The
fees and expenses of such investment bank shall be borne solely by the Company, and such investment bank’s resolution of
such dispute shall be final and binding upon all parties absent manifest error.
(b)
Miscellaneous
. The Company expressly acknowledges and agrees that (i) this Section 13 constitutes an agreement to
arbitrate between the Company and the Holder (and constitutes an arbitration agreement) under the rules then in effect under §
7501, et seq. of the New York Civil Practice Law and Rules (“
CPLR
”) and that the Holder is authorized to apply
for an order to compel arbitration pursuant to CPLR § 7503(a) in order to compel compliance with this Section 13, (ii) a dispute
relating to the Exercise Price includes, without limitation, disputes as to (A) whether an issuance or sale or deemed issuance
or sale of Common Stock occurred under Section 2(b), (B) the consideration per share at which an issuance or deemed issuance of
Common Stock occurred, (C) whether any issuance or sale or deemed issuance or sale of Common Stock was an issuance or sale or deemed
issuance or sale of Excluded Securities, (D) whether an agreement, instrument, security or the like constitutes and Option or Convertible
Security and (E) whether a Dilutive Issuance occurred, (iii) the terms of this Warrant and each other applicable Transaction Document
shall serve as the basis for the selected investment bank’s resolution of the applicable dispute, such investment bank shall
be entitled (and is hereby expressly authorized) to make all findings, determinations and the like that such investment bank determines
are required to be made by such investment bank in connection with its resolution of such dispute (including, without limitation,
determining (A) whether an issuance or sale or deemed issuance or sale of Common Stock occurred under Section 2(b), (B) the consideration
per share at which an issuance or deemed issuance of Common Stock occurred, (C) whether any issuance or sale or deemed issuance
or sale of Common Stock was an issuance or sale or deemed issuance or sale of Excluded Securities, (D) whether an agreement, instrument,
security or the like constitutes and Option or Convertible Security and (E) whether a Dilutive Issuance occurred) and in resolving
such dispute such investment bank shall apply such findings, determinations and the like to the terms of this Warrant and any other
applicable Transaction Documents, (iv) the Holder (and only the Holder), in its sole discretion, shall have the right to submit
any dispute described in this Section 13 to any state or federal court sitting in The City of New York, Borough of Manhattan in
lieu of utilizing the procedures set forth in this Section 13 and (v) nothing in this Section 13 shall limit the Holder from obtaining
any injunctive relief or other equitable remedies (including, without limitation, with respect to any matters described in this
Section 13).
14.
REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF
.
The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant
and the other Transaction Documents, at law or in equity (including a decree of specific performance and/or other injunctive relief),
and nothing herein shall limit the right of the Holder to pursue actual and consequential damages for any failure by the Company
to comply with the terms of this Warrant. The Company covenants to the Holder that there shall be no characterization concerning
this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, exercises
and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that
a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such
breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the holder
of this Warrant shall be entitled, in addition to all other available remedies, to specific performance and/or temporary, preliminary
and permanent injunctive or other equitable relief from any court of competent jurisdiction in any such case without the necessity
of proving actual damages and without posting a bond or other security. The Company shall provide all information and documentation
to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and
conditions of this Warrant (including, without limitation, compliance with Section 2 hereof). The issuance of shares and
certificates for shares as contemplated hereby upon the exercise of this Warrant shall be made without charge to the Holder or
such shares for any issuance tax or other costs in respect thereof, provided that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than
the Holder or its agent on its behalf.
15.
PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS
. If (a) this Warrant
is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or
the holder otherwise takes action to collect amounts due under this Warrant or to enforce the provisions of this Warrant or (b)
there occurs any bankruptcy, reorganization, receivership of the company or other proceedings affecting company creditors’
rights and involving a claim under this Warrant, then the Company shall pay the costs incurred by the Holder for such collection,
enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, without
limitation, attorneys’ fees and disbursements.
16.
TRANSFER
. This Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company.
17.
CERTAIN DEFINITIONS
. For purposes of this Warrant, the following terms shall have the following meanings:
(a)
“
1933 Act
” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
(b)
“
1934 Act
” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(c)
“
Adjustment Right
” means any right granted with respect to any securities issued in connection with,
or with respect to, any issuance or sale (or deemed issuance or sale in accordance with Section 2) of shares of Common Stock
(other than rights of the type described in Section 3 and 4 hereof) that could result in a decrease in the net consideration
received by the Company in connection with, or with respect to, such securities (including, without limitation, any cash settlement
rights, cash adjustment or other similar rights).
(d)
“
Affiliate
” means, with respect to any Person, any other Person that directly or indirectly controls,
is controlled by, or is under common control with, such Person, it being understood for purposes of this definition that “control”
of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the
election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by
contract or otherwise.
(e)
“
Approved Stock Plan
” means any employee benefit plan or similar agreement which has been approved by
the board of directors of the Company prior to or subsequent to the date hereof pursuant to which shares of Common Stock and standard
options to purchase Common Stock may be issued to any employee, officer, director or consultants for services provided to the Company
in their capacity as such.
(f)
“
Attribution Parties
” means, collectively, the following Persons and entities: (i) any investment vehicle,
including, any funds, feeder funds or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly
managed or advised by the Holder’s investment manager or any of its Affiliates or principals, (ii) any direct or indirect
Affiliates of the Holder or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together
with the Holder or any of the foregoing and (iv) any other Persons whose beneficial ownership of the Company’s Common Stock
would or could be aggregated with the Holder’s and the other Attribution Parties for purposes of Section 13(d) of the 1934
Act. For clarity, the purpose of the foregoing is to subject collectively the Holder and all other Attribution Parties to the Maximum
Percentage.
(g)
“
Bid Price
” means, for any security as of the particular time of determination, the bid price for such
security on the Principal Market as reported by Bloomberg as of such time of determination, or, if the Principal Market is not
the principal securities exchange or trading market for such security, the bid price of such security on the principal securities
exchange or trading market where such security is listed or traded as reported by Bloomberg as of such time of determination, or
if the foregoing does not apply, the bid price of such security in the over-the-counter market on the electronic bulletin board
for such security as reported by Bloomberg as of such time of determination, or, if no bid price is reported for such security
by Bloomberg as of such time of determination, the average of the bid prices of any market makers for such security as reported
in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC) as of such time of determination. If the
Bid Price cannot be calculated for a security as of the particular time of determination on any of the foregoing bases, the Bid
Price of such security as of such time of determination shall be the fair market value as mutually determined by the Company and
the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall
be resolved in accordance with the procedures in Section 13. All such determinations shall be appropriately adjusted for any
stock dividend, stock split, stock combination or other similar transaction during such period.
(h)
“
Black Scholes Value
” means the value of the unexercised portion of this Warrant remaining on the date
of the Holder’s request pursuant to Section 4(c), which value is calculated using the Black Scholes Option Pricing Model
obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the greater of (1)
the highest Closing Sale Price of the Common Stock during the period beginning on the Trading Day immediately preceding the announcement
of the applicable Fundamental Transaction (or the consummation of the applicable Fundamental Transaction, if earlier) and ending
on the Trading Day of the Holder’s request pursuant to Section 4(c) and (2) the sum of the price per share being offered
in cash in the applicable Fundamental Transaction (if any) plus the value of the non-cash consideration being offered in the applicable
Fundamental Transaction (if any), (ii) a strike price equal to the Exercise Price in effect on the date of the Holder’s request
pursuant to Section 4(c), (iii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the greater
of (1) the remaining term of this Warrant as of the date of the Holder’s request pursuant to Section 4(c) and (2) the remaining
term of this Warrant as of the date of consummation of the applicable Fundamental Transaction or as of the date of the Holder’s
request pursuant to Section 4(c) if such request is prior to the date of the consummation of the applicable Fundamental Transaction,
(iv) a zero cost of borrow and (v) an expected volatility equal to the greater of 100% and the 30 day volatility obtained from
the “HVT” function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately
following the earliest to occur of (A) the public disclosure of the applicable Fundamental Transaction, (B) the consummation of
the applicable Fundamental Transaction and (C) the date on which the Holder first became aware of the applicable Fundamental Transaction.
(i)
“
Bloomberg
” means Bloomberg, L.P.
(j)
“
Business Day
” means any day other than Saturday, Sunday or other day on which commercial banks in The
City of New York are authorized or required by law to remain closed.
(k)
“
Change of Control
” means any Fundamental Transaction other than (i) any merger of the Company or any
of its, direct or indirect, wholly-owned Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization
or reclassification of the shares of Common Stock in which holders of the Company’s voting power immediately prior to such
reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to
hold publicly traded securities and, directly or indirectly, are, in all material respects, the holders of the voting power of
the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or their
equivalent if other than a corporation) of such entity or entities) after such reorganization, recapitalization or reclassification,
or (iii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company
or any of its Subsidiaries.
(l)
“
Closing Bid Price
” and “
Closing Sale Price
” means, for any security as of any date,
the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price
or the closing trade price (as the case may be) then the last bid price or last trade price, respectively, of such security prior
to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange
or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal
securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do
not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively,
is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers
for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If the Closing
Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the
Closing Bid Price or the Closing Sale Price (as the case may be) of such security on such date shall be the fair market value as
mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value
of such security, then such dispute shall be resolved in accordance with the procedures in Section 13. All such determinations
shall be appropriately adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions
during such period.
(m)
“
Common Stock
” means (i) the Company’s shares of common stock, $0.001 par value per share,
and (ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification
of such common stock.
(n)
“
Convertible Securities
” means any stock or other security (other than Options) that is at any time and
under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles
the holder thereof to acquire, any shares of Common Stock.
(o)
“
Eligible Market
” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market,
the Nasdaq Global Market, the OTCQX, the OTCQB (or any successors to any of the foregoing) or the Principal Market.
(p)
“
Excluded Securities
” means (i) shares of Common Stock or standard options to purchase Common Stock issued
to directors, officers, employees or consultants of the Company for services rendered to the Company in their capacity as such
pursuant to an Approved Stock Plan (as defined above), provided that (A) all such issuances (taking into account the shares of
Common Stock issuable upon exercise of such options) after the Subscription Date pursuant to this clause (i) do not, in the aggregate,
exceed more than (x) 5% of the Common Stock issued and outstanding immediately prior to the Subscription Date and during the six
(6) month period following the Subscription Date and (y) up to 1,230,000 shares of Common Stock to consultants of the Company pursuant
to agreements that have been entered into as of the Subscription Date, and (B) the exercise price of any such options is not lowered,
none of such options are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any
such options are otherwise materially changed in any manner that adversely affects any of the Buyers; (ii) shares of Common Stock
issued upon the conversion or exercise of Convertible Securities (other than standard options to purchase Common Stock issued pursuant
to an Approved Stock Plan that are covered by clause (i) above) issued prior to the Subscription Date, provided that the conversion
price of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock
Plan that are covered by clause (i) above) is not lowered, none of such Convertible Securities (other than standard options to
purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are amended to increase the
number of shares issuable thereunder and none of the terms or conditions of any such Convertible Securities (other than standard
options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are otherwise
materially changed in any manner that adversely affects any of the Buyers; and (iii) the shares of Common Stock issuable upon exercise
of the Registered Warrants; provided, that the terms of the Registered Warrant are not amended, modified or changed on or after
the Subscription Date (other than antidilution adjustments pursuant to the terms thereof in effect as of the Subscription Date).
(q)
“
Expiration Date
” means the date that is the fifth (5
th
) anniversary of the Issuance Date
or, if such date falls on a day other than a Trading Day or on which trading does not take place on the Principal Market (a “
Holiday
”),
the next date that is not a Holiday.
(r)
“
Fundamental Transaction
” means (A) that the Company shall, directly or indirectly, including through
subsidiaries, Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not
the Company is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of
all or substantially all of the properties or assets of the Company or any of its “significant subsidiaries” (as defined
in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make,
or allow the Company to be subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a
purchase, tender or exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common
Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities
making or party to, or Affiliated (as defined in the Note) with any Subject Entities making or party to, such purchase, tender
or exchange offer were not outstanding; or (z) such number of shares of Common Stock such that all Subject Entities making or party
to, or Affiliated with any Subject Entity making or party to, such purchase, tender or exchange offer, become collectively the
beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv)
consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually
or in the aggregate, acquire, either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding
shares of Common Stock calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated
with any Subject Entity making or party to, such stock purchase agreement or other business combination were not outstanding; or
(z) such number of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined
in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or
reclassify its Common Stock, (B) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or
otherwise, in one or more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate
to be or become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether
through acquisition, purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common
Stock, merger, consolidation, business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization,
recapitalization or reclassification or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary
voting power represented by issued and outstanding Common Stock, (y) at least 50% of the aggregate ordinary voting power represented
by issued and outstanding Common Stock not held by all such Subject Entities as of the date of this Warrant calculated as if any
shares of Common Stock held by all such Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting
power represented by issued and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow
such Subject Entities to effect a statutory short form merger or other transaction requiring other shareholders of the Company
to surrender their shares of Common Stock without approval of the shareholders of the Company or (C) directly or indirectly, including
through subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other
instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition in which case
this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition
to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent with
the intended treatment of such instrument or transaction.
(s)
“
Group
” means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined
in Rule 13d-5 thereunder.
(t)
“
Options
” means any rights, warrants or options to subscribe for or purchase shares of Common Stock
or Convertible Securities.
(u)
“
Parent Entity
” of a Person means an entity that, directly or indirectly, controls the applicable Person
and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such
Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation
of the Fundamental Transaction.
(v)
“
Person
” means an individual, a limited liability company, a partnership, a joint venture, a corporation,
a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.
(w)
“
Principal Market
” means the Nasdaq Capital Market.
(x)
“
SEC
” means the United States Securities and Exchange Commission or the successor thereto.
(y)
“
Spot Price
” means, as applicable: (i) the Closing Sale Price of the Common Stock on the Trading Day
immediately preceding the date of the applicable Exercise Notice if such Exercise Notice is (1) both executed and delivered pursuant
to Section 1(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 1(a) hereof on
a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS promulgated
under the federal securities laws) on such Trading Day, (ii) the Bid Price of the Common Stock as of the time of the Holder’s
execution of the applicable Exercise Notice if such Exercise Notice is executed during “regular trading hours” on a
Trading Day and is delivered within two (2) hours thereafter pursuant to Section 1(a) hereof, or (iii) the Closing Sale Price of
the Common Stock on the date of the applicable Exercise Notice if the date of such Exercise Notice is a Trading Day and such Exercise
Notice is both executed and delivered pursuant to Section 1(a) hereof after the close of “regular trading hours” on
such Trading Day.
(z)
“Subject Entity
” means any Person, Persons or Group or any Affiliate or associate of any such Person,
Persons or Group.
(aa)
“
Successor Entity
” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting
from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such
Fundamental Transaction shall have been entered into.
(bb)
“
Trading Day
” means, as applicable, (x) with respect to all price or trading volume determinations relating
to the Common Stock, any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the
principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common
Stock is then traded, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the
final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time
of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise
designated as a Trading Day in writing by the Holder or (y) with respect to all determinations other than price or trading volume
determinations relating to the Common Stock, any day on which The New York Stock Exchange (or any successor thereto) is open for
trading of securities.
(cc)
“
VWAP
” means, for any security as of any date, the dollar volume-weighted average price for such security
on the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal
securities exchange or securities market on which such security is then traded) during the period beginning at 9:30:01 a.m., New
York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “HP” function (set to weighted
average) or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter
market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time, and ending
at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security
by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market
makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If
the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date
shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to
agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 13.
All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization
or other similar transaction during such period.
[
signature page follows
]
IN WITNESS WHEREOF,
the Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date set out above.
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MY SIZE, INC.
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By:
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Name:
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Title:
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EXHIBIT A
EXERCISE
NOTICE
TO BE
EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK
MY
SIZE, INC.
The undersigned
holder hereby elects to exercise the Warrant to Purchase Common Stock No. _______ (the “
Warrant
”) of My
Size, Inc., a Delaware corporation (the “
Company
”) as specified below. Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.
1.
Form
of Exercise Price
. The Holder intends that payment of the Aggregate Exercise Price shall be made as:
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☐
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a “
Cash Exercise
” with respect to _________________
Warrant Shares; and/or
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☐
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a “
Cashless Exercise
” with respect to _______________
Warrant Shares.
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In the event that
the Holder has elected a Cashless Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the
Holder hereby represents and warrants that (i) this Exercise Notice was executed by the Holder at __________ [a.m.][p.m.] on the
date set forth below and (ii) if applicable, the Bid Price as of such time of execution of this Exercise Notice was $________.
2.
Payment
of Exercise Price
. In the event that the Holder has elected a Cash Exercise with respect to some or all of the Warrant Shares
to be issued pursuant hereto, the Holder shall pay the Aggregate Exercise
Price
in the sum
of $___________________ to the Company in accordance with the terms of the Warrant.
3.
Variable
Price Securities
. By checking the box in this Item 4, the holder elects to exercise the Warrant by substituting the Variable
Price for the Exercise Price pursuant to Section 2(d) of the Warrant, which Variable Price equals $ per share.☐
4.
Delivery
of Warrant Shares
. The Company shall deliver to Holder, or its designee or agent as specified below, __________ shares of
Common Stock in accordance with the terms of the Warrant. Delivery shall be made to Holder, or for its benefit, as follows:
☐
Check
here if requesting delivery as a certificate to the following name and to the following address:
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☐
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Check
here if requesting delivery by Deposit/Withdrawal at Custodian as follows:
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DTC Participant:
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DTC
Number:
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Account Number:
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Date:
_____________ __,
Name of Registered Holder
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By:
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Name:
Title:
Tax
ID:____________________________
Facsimile:__________________________
E-mail
Address:_____________________
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EXHIBIT B
ACKNOWLEDGMENT
The
Company hereby acknowledges this Exercise Notice and hereby directs ______________ to issue the above
indicated
number
of shares of Common Stock in accordance with the Transfer Agent Instructions dated _________, 201_, from the Company and acknowledged
and agreed to by _______________.
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MY SIZE, INC.
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By:
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Name:
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Title:
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Exhibit
5.1
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Sheppard, Mullin, Richter & Hampton LLP
30
Rockefeller Plaza
New
York, New York 10112-0015
212.653.8700
main
212.653.8701
fax
www.sheppardmullin.com
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December 18, 2017
VIA
ELECTRONIC MAIL
My
Size, Inc.
3
Arava St., pob 1026
Airport
City, Israel 7010000
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Re:
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Registration
Statement on Form S-1
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Ladies
and Gentlemen:
We
have acted as counsel to My Size, Inc., a Delaware corporation (the “
Company
”), in connection with the filing
of the Company’s Registration Statement on Form S-1, as amended (File No. 333-221741) (the “
Registration Statement
”),
including a related prospectus filed with the Registration Statement (the “
Prospectus
”), under the Securities
Act of 1933, as amended (the “
Securities Act
”). The Registration Statement and Prospectus relate to the offer
and sale by the underwriter identified therein of up to $3,000,000 shares of common stock, par value $0.001 per share (the “
Common
Stock
”), pre-funded warrants to purchase shares of Common Stock (the “
Pre-funded Warrants
”) and common
warrants to purchase shares of Common Stock (the “
Common Warrants
” and together with the Pre-funded Warrants,
the “
Warrants
” and the shares of Common Stock underlying the Warrants the “
Warrant Shares
”).
The Warrants and the Common Stock are referred to herein as the “
Securities
”. The Securities are to be sold
by the Company as described in the Registration Statement.
We
are delivering this opinion to you at your request in accordance with the requirements of Item 601(b)(5) of Regulation S-K under
the Act.
In
connection with rendering this opinion, we have examined and are familiar with (i) the Company’s Amended and Restated Certificate
of Incorporation, as amended, (ii) the Company’s Amended and Restated By-laws, (iii) the Registration Statement and the
related Prospectus, (iv) the form of the placement agency agreement proposed to be entered into between the Company and the underwriter
named therein (the “
Placement Agency Agreement
”) that is filed as Exhibit 1.1 to the Registration Statement;
(v) the Form of Pre-Funded Warrant that is filed as Exhibit 4.2 to the Registration Statement; (vi) the Form of Common Warrant
that is filed as Exhibit 4.3 to the Registration Statement; (vii) corporate proceedings of the Company supplied to us, and (vii)
the originals or copies certified to our satisfaction of such other documents, records, certificates, memoranda and other instruments
as we deem necessary or appropriate to enable us to render the opinion expressed below.
In
making the aforesaid examinations, we have assumed (i) assumed the genuineness and authenticity of all documents submitted to
us as originals and the conformity to originals of all documents submitted to us as copies; (ii) the accuracy, completeness and
authenticity of certificates of public officials, (iii) the due authorization, execution and delivery of all documents where due
execution and delivery are a prerequisite to the effectiveness thereof (except that due authorization by the Company is not assumed),
and (iv) that the terms of the sale of the Common Stock and the Warrants by the Company will be authorized by the Board of Directors
of the Company or the Pricing Committee in accordance with Sections 152 and 153 of the General Corporation Law of the State of
Delaware (the “
DGCL
”). As to certain factual matters, we have relied upon a certificate of an officer
of the Company and have not sought to independently verify such matters.
Our
opinion is expressed only with respect to the DGCL and, as to the Warrants constituting valid and legally binding obligations
of the Company, with respect to the laws of the State of New York. We express no opinion as to whether the laws of any particular
jurisdiction apply and no opinion to the extent that the laws of any jurisdiction other than those identified above are applicable
to the subject matter hereof. We are not rendering any opinion as to compliance with any federal or state law, rule or regulation
relating to securities, or to the sale or issuance thereof.
With
respect to the Warrant Shares, we express no opinion to the extent that, notwithstanding its current reservation of shares of
Common Stock, future issuances of securities of the Company and/or adjustments to outstanding securities of the Company cause
the Warrants to be exercisable for more shares of Common Stock, or the Warrants to be exercisable into, more shares of the Common
Stock, than the number of shares that then remain authorized but unissued.
With
regard to our opinion concerning the Warrants constituting valid and binding obligations of the Company:
(i) Our
opinion is subject to, and may be limited by, (a) applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance,
debtor and creditor, and similar laws which relate to or affect creditors’ rights generally, and (b) general principles
of equity (including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing) regardless of
whether considered in a proceeding in equity or at law.
(ii) Our
opinion is subject to the qualification that the availability of specific performance, an injunction or other equitable remedies
is subject to the discretion of the court before which the request is brought.
(iii) We
express no opinion as to any provision of the Warrants that: (a) provides for liquidated damages, buy-in damages, monetary penalties,
prepayment or make-whole payments or other economic remedies to the extent such provisions may constitute unlawful penalties,
(b) relates to advance waivers of claims, defenses, rights granted by law, or notice, opportunity for hearing, evidentiary requirements,
statutes of limitations, trial by jury, or procedural rights, (c) restricts non-written modifications and waivers, (d) provides
for the payment of legal and other professional fees where such payment is contrary to law or public policy, (e) relates to exclusivity,
election or accumulation of rights or remedies, (f) authorizes or validates conclusive or discretionary determinations, or (g)
provides that provisions of the Warrants are severable to the extent an essential part of the agreed exchange is determined to
be invalid and unenforceable.
(iv) We
express no opinion as to whether a state court outside of the State of New York or a federal court of the United States would
give effect to the choice of New York law provided for in the Warrants.
On
the basis of the foregoing, and in reliance thereon, we are of the opinion (i) that the Common Stock, when sold in accordance
with the Registration Statement and the Prospectus, will be validly issued, fully paid and nonassessable, (ii) provided that the
Warrants have been duly executed and delivered by the Company to the purchasers thereof against payment therefor, the Warrants,
when issued and sold as contemplated in the Registration Statement and the Prospectus, will be valid and binding obligations of
the Company and (iii) the Warrant Shares, when issued and paid for in accordance with the terms of the Warrants, will be validly
issued, fully paid and nonassessable, and.
We
hereby consent to the use of our opinion as an exhibit to the Registration Statement and to the reference to this firm and this
opinion under the heading “Legal Matters” in the prospectus comprising a part of the Registration Statement and any
amendment thereto. In giving such consent, we do not hereby admit that we come within the category of persons whose
consent is required under Section 7 of the Act, or the rules and regulations of the Commission thereunder. This opinion is expressed
as of the date hereof, and we disclaim any undertaking to advise you of any subsequent changes in the facts stated or assumed
herein or of any subsequent changes in applicable law.
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Very
truly yours,
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/s/
Sheppard Mullin Richter & Hampton LLP
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SHEPPARD
MULLIN RICHTER & HAMPTON LLP
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Exhibit 10.17
MY
SIZE, INC.
3
Arava St., pob 1026
Airport
City, Israel 7010000
December
__, 2017
Gentlemen:
The
purpose of this letter agreeement is to inform you of, and to seek your consent and waiver for, a financing transaction that My
Size, Inc., a Delaware corporation (the “
Company
”), is contemplating entering into (the “
New Financing
Transaction
”) to issue up to $3,000,000 of shares of the Company’s common stock, $0.001 par value per share (the
“
Common Stock
”) and/or pre-funded warrants to purchase Common Stock, with an exercise price of $0.001 per share,
and common stock purchase warrants to purchase shares of Common Stock, to various investors, through Roth Capital Partners, LLC,
as placement agent.
Reference
is made to the Securities Purchase Agreement (the “
Securities Purchase Agreement
”), dated October 27, 2017,
by and among the Company, you, and the other investors named therein, whereunder you, along with the other investors, purchased
a Senior Note that the Company issued to you on October 30, 2017 (the “
Note
”). All capitalized terms used herein
but not otherwise defined shall have the meanings set forth in the Note.
WHEREAS
,
Section 1 of the Note provides, in relevant part, that on the Maturity Date, the Company shall pay to the Holder an amount in
cash representing all outstanding Principal, accrued and unpaid Interest and accrued and unpaid Late Charges (as defined in Section
17(c) therein) on such Principal and Interest then outstanding under the Note (the “
Amounts Due
”);
WHEREAS,
the “Maturity Date” is defined in the Note, in part, as the earliest to occur of (x) a Subsequent Placement (as
defined in the Securities Purchase Agreement) and (y) February 28, 2018;
WHEREAS
,
the New Financing Transaction would constitute a Subsequent Placement as defined in the Securities Purchase Agrement, which would
require the Company to repay the Amounts Due under the Note in full, as provided for in the Note;
WHEREAS,
the Company desires to procced with the New Financing Transaction and repay only 50% of the Amounts Due from the proceeds
of the New Financing Transaction at the closing thereof, and to pay the balance of the Amounts Due on the earliest to occur of
(x) a Subsequent Placement (as defined in the Securities Purchase Agreement), other than the New Financing Transaction, and (y)
March 31, 2018;
WHEREAS,
the prior written consent of the Holder is required for any change, waiver or amendment to the Note.
NOW
THEREFORE
, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and otherwise
in accordance with the terms of the Securities Purchase Agreement and Note, you, as the Holder under the Note, and the Company
agree as follows:
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1.
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The
undersigned consents to the New Financing Transaction and to the repayment of only 50%
of the Amounts Due under the Note from the proceds of the New Financing Transaction upon
the closing thereof.
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2.
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The
first two lines of the definition of the “
Maturity Date
” in the Note
is hereby amended and restated to be and read as follows:
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“
Maturity
Date
” shall mean the earliest to occur of (x) a Subsequent Placement (as defined in the Securities Purchase Agreement),
other than the New Financing Transaction (as defined in that certain letter agreement, dated December 14, 2017, by and between
the Company and the holder of this Note as of December 14, 2017), and (y) March 31, 2018;
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3.
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This
letter agreement does not constitute material, non-public information, and is intended
to be a “Pre-Notice” with respect to the New Financing Transaction pursuant
to Section 4(l) of the Securities Purchase Agreement. In accordance with the Securities
Purchase Agreement, the Holder is entitled to receive an Offer Notice (as defined in
the Securities Purchase Agreement) upon its written request in connection with the New
Financing Transaction.
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This
letter agreement shall be for the benefit of and be binding upon, the parties hereto and their respective successors and assigns.
Except as specifically amended hereby, the Securities Purchase Agreement and Note shall remain in full force and effect and all
other terms of the Securities Purchase Agreement and Note remain unchanged. To the extent any provision of the Securities Purchase
Agreement or Note is inconsistent with this letter agreement, this letter agreement shall control. This letter agreement shall
be construed, enforced, and governed under the internal laws of the State of New York, without giving effect to any choice of
law provision or rule of any other jurisdiction. This letter agreement may be executed in counterparts, each of which shall be
deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this
Amendment transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic
means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical
delivery of the paper document bearing an original signature.
Sincerely,
MY
SIZE, INC.
[COUNTERPART
SIGNATURE PAGE FOLLOWS]
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Confirmed and Agreed by the Holder:
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By:
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Name:
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Title:
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[Signature page to Letter
Agreement]
3
Exhibit 10.18
SECURITIES PURCHASE AGREEMENT
This
SECURITIES
PURCHASE AGREEMENT
(this “
Agreement
”), dated as of December ____, 2017, is by and among My Size, Inc., a
Delaware corporation with offices located at 3 Arava St., pob 1026, Airport City, Israel, 7010000 (the “
Company
”),
and each of the investors listed on the Schedule of Buyers attached hereto (individually, a “
Buyer
” and collectively,
the “
Buyers
”).
RECITALS
A. The
Company and each Buyer desire to enter into this transaction to purchase (i) the Common Shares (as defined below), (ii) Pre-Funded
Common Warrants (as defined below); and (iii) Common Warrants (as defined below) pursuant to a currently effective shelf registration
statement on Form S-1, which has at least $[[ ],000,000] of unallocated securities, including Common Stock (as defined below) and
Warrants (as defined below) to purchase Common Stock registered thereunder (Registration Number 333-221741) (the “
Registration
Statement
”), which Registration Statement has been declared effective in accordance with the Securities Act of 1933,
as amended (the “
1933 Act
”), by the United States Securities and Exchange Commission (the “
SEC
”).
B. Each
Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, (i) such aggregate
number of shares of Common Stock as set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers (which aggregate
amount for all Buyers shall be [ ] shares of Common Stock and shall collectively be referred to herein as the “
Common
Shares
”), (ii) a pre-funded warrant to initially acquire up to such aggregate number of shares of Common Stock set forth
opposite such Buyer’s name in column (4) on the Schedule of Buyers, as evidenced by a certificate in the form attached hereto
as
Exhibit A
(the “
Pre-Funded Common Warrants
”) (as exercised, collectively, the “
Pre-Funded
Common Warrant Shares
”), and (iii) a common warrant to initially acquire up to such aggregate number of shares of Common
Stock set forth opposite such Buyer’s name in column (5) on the Schedule of Buyers, as evidenced by a certificate in the
form attached hereto as
Exhibit A-1
(the “
Common Warrants
,” and together with the Pre-Funded Common
Warrants, the “
Warrants
”) (as exercised, collectively, the “
Common Warrant Shares,
” and together
with the Pre-Funded Common Warrant Shares, the “
Warrant Shares
”).
C. The
Common Shares, the Warrants and the Warrant Shares are collectively referred to herein as the “
Securities
”.
AGREEMENT
NOW, THEREFORE,
in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and each Buyer hereby agree as follows:
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1.
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PURCHASE AND SALE OF COMMON SHARES AND WARRANTS.
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(a)
Purchase of Common Shares and Warrants
. Subject to the satisfaction (or waiver) of the conditions set forth in Sections
6 and 7 below, the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from
the Company on the Closing Date (as defined below) (A) such aggregate number of Common Shares as is set forth opposite such Buyer’s
name in column (3) on the Schedule of Buyers, (B) Pre-Funded Common Warrants to initially acquire up to that aggregate number of
Pre-Funded Common Warrant Shares as is set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers, and
(C) Common Warrants to initially acquire up to such aggregate number of Common Warrant Shares as is set forth opposite such Buyer’s
name in column (5) on the Schedule of Buyers.
(b)
Closing
. The closing (the “
Closing
”) of the purchase of the Common Shares and the Warrants by
the Buyers shall occur at the offices of Kelley Drye & Warren LLP, 101 Park Avenue, New York, NY 10178. The date and time of
the Closing (the “
Closing Date
”) shall be 10:00 a.m., New York time, on the first (1st) Business Day (as defined
below) on which the conditions to the Closing set forth in Sections 6 and 7 below are satisfied or waived (or such other date as
is mutually agreed to by the Company and each Buyer). As used herein “
Business Day
” means any day other than
a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to remain closed.
(c)
Purchase Price.
The aggregate purchase price for the Common Shares and Warrants (the “
Purchase Price
”)
shall be the amount set forth opposite such Buyer’s name in column (6) on the Schedule of Buyers, which includes each Prepayment
(as defined in the Warrants).
(d)
Form of Payment; Deliveries
. On the Closing Date, (i) each Buyer shall pay its respective Purchase Price to the Company
for the Common Shares and the Warrants to be issued and sold to such Buyer at the Closing, by wire transfer of immediately available
funds in accordance with the Flow of Funds Letter (as defined below) and (ii) the Company shall (A) cause VStock Transfer,
LLC (together with any subsequent transfer agent, the “
Transfer Agent
”) through the Depository Trust Company
(“
DTC
”) Fast Automated Securities Transfer Program, to credit such aggregate number of Common Shares that each
Buyer is purchasing as is set forth opposite such Buyer’s name in column (3) of the Schedule of Buyers to such Buyer’s
or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system, (B) deliver to each Buyer
a Pre-Funded Common Warrant pursuant to which such Buyer shall have the right to initially acquire up to such aggregate number
of Pre-Funded Common Warrant Shares as is set forth opposite such Buyer’s name in column (4) of the Schedule of Buyers, in
each case, duly executed on behalf of the Company and registered in the name of such Buyer or its designee, and (C) deliver to
each Buyer a Common Warrant pursuant to which such Buyer shall have the right to initially acquire up to such aggregate number
of Common Warrant Shares as is set forth opposite such Buyer’s name in column (5) of the Schedule of Buyers, in each case,
duly executed on behalf of the Company and registered in the name of such Buyer or its designee.
(e)
Placement Agent Fees
. At the Closing, the Company shall pay to ROTH Capital Partners, LLC, as placement agent (the
“
Placement Agent
”), all fees and expenses due to the Placement Agent as of the Closing Date, pursuant to the
terms of (a) the engagement letter, dated as of October 2, 2017, between the Company and the Placement Agent (as amended, the “
Engagement
Letter
”) and (y) that certain Placement Agent Agreement, dated as of December __, 2017, by and between the Company and
the Placement Agent (the “
Placement Agent Agreement
”), in each case, by wire transfer of immediately available
funds in accordance with the Placement Agent's written wire instructions.
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2.
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BUYER’S REPRESENTATIONS AND WARRANTIES.
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Each Buyer, severally
and not jointly, represents and warrants to the Company with respect to only itself that, as of the date hereof and as of the Closing
Date:
(a)
Organization; Authority
. Such Buyer is an entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents (as defined below) to which it is a party and otherwise to carry out its obligations
hereunder and thereunder.
(b)
Validity; Enforcement
. This Agreement has been duly and validly authorized, executed and delivered on behalf of such
Buyer and shall constitute the legal, valid and binding obligations of such Buyer enforceable against such Buyer in accordance
with their respective terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement
of applicable creditors’ rights and remedies.
(c)
No Conflicts
. The execution, delivery and performance by such Buyer of this Agreement and the consummation by such
Buyer of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of such Buyer,
or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument
to which such Buyer is a party or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws) applicable to such Buyer, except, in the case of clauses (ii) and (iii) above, for such conflicts,
defaults, rights or violations which could not, individually or in the aggregate, reasonably be expected to have a material adverse
effect on the ability of such Buyer to perform its obligations hereunder.
(d)
Acknowledgement of Risk
. Such Buyer acknowledges and understands that its investment in the Securities involves a
significant degree of risk, including, without limitation, (i) the Company remains an early stage business with limited operating
history and requires substantial funds in addition to the proceeds from the sale of the Securities; (ii) an investment in
the Company is speculative, and only purchasers who can afford the loss of their entire investment should consider investing in
the Company and the Securities; (iii) such Buyer may not be able to liquidate its investment; (iv) transferability of
the Securities is limited; (v) in the event of a disposition of the Securities, such Buyer could sustain the loss of its entire
investment; and (vi) the Company has not paid any dividends on its Common Stock since inception and does not anticipate the
payment of dividends in the foreseeable future.
(e)
Acknowledgements Regarding Placement Agent
. Such Buyer acknowledges that the Placement Agent is acting as the exclusive
placement agents on a “best efforts” basis for the Securities being offered hereby and will be compensated by the Company
for acting in such capacity. Such Buyer represents that such Buyer was contacted regarding the sale of the Securities by the Placement
Agent (or an authorized agent or representative thereof) with whom such Buyer had a substantial pre-existing relationship and who
entered into a confidentiality agreement or otherwise agreed, orally or in writing, to keep information with respect to the transactions
contemplated hereby confidential.
(f)
Non-Israeli Resident
. Such Buyer acknowledges that the Securities are not being offered or sold in Israel and under
no circumstances is such offering to be construed as an advertisement or a public offering of securities in Israel. Such Buyer
acknowledges that it is not and as of the Closing Date it shall not be a resident of Israel.
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3.
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REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
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The Company represents
and warrants to each of the Buyers that, as of the date hereof and as of the Closing Date:
(a)
Organization and Qualification
. Each of the Company and each of its Subsidiaries are entities duly organized and
validly existing and in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power
and authority to own their properties and to carry on their business as now being conducted and as presently proposed to be conducted.
Each of the Company and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in
every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary,
except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material
Adverse Effect (as defined below). As used in this Agreement, “
Material Adverse Effect
” means any material adverse
effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise)
or prospects of the Company or any Subsidiary, individually or taken as a whole, (ii) the transactions contemplated hereby or in
any of the other Transaction Documents or any other agreements or instruments to be entered into in connection herewith or therewith
or (iii) the authority or ability of the Company or any of its Subsidiaries to perform any of their respective obligations under
any of the Transaction Documents (as defined below). Other than the Persons (as defined below) set forth on Schedule 3(a)
the Company has no Subsidiaries. “
Subsidiaries
” means any Person in which the Company, directly or indirectly,
(A) owns any of the outstanding capital stock or holds any equity or similar interest of such Person or (B) controls or operates
all or any part of the business, operations or administration of such Person, and each of the foregoing, is individually referred
to herein as a “
Subsidiary
”.
(b)
Authorization; Enforcement; Validity
. The Company has the requisite power and authority to enter into and perform
its obligations under this Agreement and the other Transaction Documents and to issue the Securities in accordance with the terms
hereof and thereof. The execution and delivery of this Agreement and the other 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 Common Shares,
the issuance of the Warrants and the reservation for issuance and issuance of the Warrant Shares issuable upon exercise of the
Warrants) have been duly authorized by the Company’s board of directors and (other than the filing with the SEC of the prospectus
forming part of the Registration Statement pursuant to Rule 424(b) under the 1933 Act (as amended or supplemented, from time to
time, the “
Prospectus
”) and any other filings as may be required by any state securities agencies) no further
filing, consent or authorization is required by the Company, its board of directors or its stockholders or other governing body.
This Agreement has been, and the other Transaction Documents will be prior to the Closing, duly executed and delivered by the Company,
and each constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with
its respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities law.
“
Transaction Documents
” means, collectively, this Agreement, the Warrants, the Irrevocable Transfer Agent Instructions
(as defined below) and each of the other agreements and instruments entered into or delivered by any of the parties hereto in connection
with the transactions contemplated hereby and thereby, as may be amended from time to time.
(c)
Issuance of Securities; Registration Statement
. The issuance of the Common Shares and the Warrants are duly authorized
and, upon issuance and payment in accordance with the terms of the Transaction Documents shall be validly issued, fully paid and
non-assessable and free from all preemptive or similar rights, mortgages, defects, claims, liens, pledges, charges, taxes, rights
of first refusal, encumbrances, security interests and other encumbrances (collectively “
Liens
”) with respect
to the issuance thereof. As of the Closing, the Company shall have reserved from its duly authorized capital stock not less than
100% of the maximum number of shares of Common Stock issuable upon exercise of the Warrants (without taking into account any limitations
on the exercise of the Warrants set forth in the Warrants). Upon exercise in accordance with the Warrants, the Warrant Shares,
when issued, will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights or Liens with
respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. The issuance
by the Company of the Securities has been registered under the 1933 Act, the Securities are being issued pursuant to the Registration
Statement and all of the Securities are freely transferable and freely tradable by each of the Buyers without restriction, whether
by way of registration or some exemption therefrom. The Registration Statement is effective and available for the issuance of the
Securities thereunder and the Company has not received any notice that the SEC has issued or intends to issue a stop-order with
respect to the Registration Statement or that the SEC otherwise has suspended or withdrawn the effectiveness of the Registration
Statement, either temporarily or permanently, or intends or has threatened in writing to do so. The “Plan of Distribution”
section under the Registration Statement permits the issuance and sale of the Securities hereunder and as contemplated by the other
Transaction Documents. Upon receipt of the Securities, each of the Buyers will have good and marketable title to the Securities.
The Registration Statement and any prospectus included therein, including the Prospectus, complied in all material respects with
the requirements of the 1933 Act and the Securities Exchange Act of 1934, as amended (the “
1934 Act
”) and the
rules and regulations of the SEC promulgated thereunder and all other applicable laws and regulations. At the time the Registration
Statement and any amendments thereto became effective, at the date of this Agreement and at each deemed effective date thereof
pursuant to Rule 430B(f)(2) of the 1933 Act, the Registration Statement and any amendments thereto complied and will comply in
all material respects with the requirements of the 1933 Act and did not and 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 not misleading.
The Prospectus and any amendments or supplements thereto, at the time the Prospectus or any amendment or supplement thereto was
issued and at the Closing Date, complied, and will comply, in all material respects with the requirements of the 1933 Act and did
not, and will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were made, not misleading. The Company meets all of the
requirements for the use of Form S-1 under the 1933 Act for the offering and sale of the Securities contemplated by this Agreement
and the other Transaction Documents, and the SEC has not notified the Company of any objection to the use of the form of the Registration
Statement pursuant to Rule 401(g)(1) under the 1933 Act. At the earliest time after the filing of the Registration Statement that
the Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under the 1933 Act) relating
to any of the Securities, the Company was not and is not an “Ineligible Issuer” (as defined in Rule 405 under the 1933
Act). The Company (i) has not distributed any offering material in connection with the offer or sale of any of the Securities and
(ii) until no Buyer holds any of the Securities, shall not distribute any offering material in connection with the offer or sale
of any of the Securities to, or by, any of the Buyers (if required), in each case, other than the Registration Statement or the
Prospectus.
(d)
No Conflicts
. The execution, delivery and performance 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 Common Shares,
the Warrants and the Warrant Shares and the reservation for issuance of the Warrant Shares) will not (i) result in a violation
of the Certificate of Incorporation (as defined below) (including, without limitation, any certificate of designation contained
therein), By-Laws (as defined below), certificate of formation, memorandum of association, articles of association, by-laws or
other organizational documents of the Company or any of its Subsidiaries, or any capital stock or other securities of the Company
or any of its Subsidiaries, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both
would become a default) in any respect 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 (iii) result in a violation
of any law, rule, regulation, order, judgment or decree (including, without limitation, foreign, federal and state securities laws
and regulations and the rules and regulations of the Nasdaq Capital Market (the “
Principal Market
”) and including
all applicable foreign, federal and state laws, rules and regulations (including, without limitation, any Israeli law, rule or
regulation) 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.
(e)
Consents
. The Company is not required to obtain any consent from, authorization or order of, or make any filing or
registration with (other than the filing with the SEC of the Registration Statement, the Prospectus and any other filings as may
be required by any state securities agencies and such filings as are required by the Principal Market and Tel Aviv Stock Exchange), any Governmental
Entity (as defined below) or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or
perform any of its obligations under or contemplated by the Transaction Documents, in each case, in accordance with the terms hereof
or thereof. All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to
the preceding sentence have been or will be obtained or effected on or prior to the Closing Date, and the Company is not aware
of any facts or circumstances which might prevent the Company from obtaining or effecting any of the registration, application
or filings contemplated by the Transaction Documents. Except as set forth in the SEC Documents (as defined herein), 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. “
Governmental Entity
”
means any nation, state, county, city, town, village, district, or other political jurisdiction of any nature, federal, state,
local, municipal, foreign, or other government, governmental or quasi-governmental authority of any nature (including any governmental
agency, branch, department, official, or entity and any court or other tribunal), multi-national organization or body; or body
exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority
or power of any nature or instrumentality of any of the foregoing, including any entity or enterprise owned or controlled by a
government or a public international organization or any of the foregoing.
(f)
Acknowledgment Regarding Buyer’s Purchase of Securities
. The Company acknowledges and agrees that each Buyer
is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions
contemplated hereby and thereby and that no Buyer is (i) an officer or director of the Company or any of its Subsidiaries, (ii)
an “affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule thereto) (collectively,
“
Rule 144
”)) of the Company or any of its Subsidiaries or (iii) to its knowledge, a “beneficial owner”
of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the 1934 Act). The Company further acknowledges
that no Buyer is acting as a financial advisor or fiduciary of the Company or any of its Subsidiaries (or in any similar capacity)
with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by a Buyer
or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and
thereby is merely incidental to such Buyer’s purchase of the Securities. The Company further represents to each Buyer that
the Company’s decision to enter into the Transaction Documents has been based solely on the independent evaluation by the
Company and its representatives.
(g)
Placement Agent’s Fees
. The Company shall be responsible for the payment
of any placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for Persons engaged by
any Buyer or its investment advisor) relating to or arising out of the transactions contemplated hereby, including, without limitation,
placement agent fees payable to the Placement Agent in accordance with Engagement Letter and the Placement Agent Agreement. The
Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, attorney's
fees and out-of-pocket expenses) arising in connection with any such claim. The Company acknowledges that it has engaged the Placement
Agent in connection with the sale of the Securities. Other than the Placement Agent, neither the Company nor any of its Subsidiaries
has engaged any placement agent or other agent in connection with the offer or sale of the Securities.
(h)
No Integrated Offering
. None of the Company, its Subsidiaries or any of their affiliates, nor any Person acting on
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 require approval of stockholders of the Company under any
applicable stockholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated
quotation system on which any of the securities of the Company are listed or designated for quotation. None of the Company, its
Subsidiaries, their affiliates nor any Person acting on their behalf will take any action or steps that would cause the offering
of any of the Securities to be integrated with other offerings of securities of the Company.
(i)
Application of Takeover Protections; Rights Agreement
. The Company and its board of directors have taken all necessary
action, if any, in order to render inapplicable any control share acquisition, interested stockholder, business combination, poison
pill (including, without limitation, any distribution under a rights agreement), stockholder rights plan or other similar anti-takeover
provision under the Certificate of Incorporation, By-laws or other organizational documents or the laws of the jurisdiction of
its incorporation or otherwise which is or could become applicable to any Buyer as a result of the transactions contemplated by
this Agreement, including, without limitation, the Company’s issuance of the Securities and any Buyer’s ownership of
the Securities. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable
any stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of shares of Common Stock
or a change in control of the Company or any of its Subsidiaries.
(j)
SEC Documents; Financial Statements
. During the two (2) years prior to the date hereof, the Company has timely filed
all reports, schedules, forms, proxy statements, statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date hereof and all exhibits and appendices
included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter
referred to as the “
SEC Documents
”). The Company has delivered or has made available to the Buyers or their
respective representatives true, correct and complete copies of each of the SEC Documents not available on the EDGAR system. As
of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules
and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not
misleading. As of their respective dates, the financial statements of the Company included in the SEC Documents complied in all
material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto
as in effect as of the time of filing. Such financial statements have been prepared in accordance with generally accepted accounting
principles (“
GAAP
”), consistently applied, during the periods involved (except (i) as may be otherwise indicated
in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may
exclude footnotes or may be condensed or summary statements) 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 then ended (subject, in
the case of unaudited statements, to normal year-end audit adjustments which will not be material, either individually or in the
aggregate). The reserves, if any, established by the Company or the lack of reserves, if applicable, are reasonable based upon
facts and circumstances known by the Company on the date hereof and there are no loss contingencies that are required to be accrued
by the Statement of Financial Accounting Standard No. 5 of the Financial Accounting Standards Board which are not provided for
by the Company in its financial statements or otherwise. No other information provided by or on behalf of the Company to any of
the Buyers which is not included in the SEC Documents (including, without limitation, information in the disclosure schedules to
this Agreement) contains any untrue statement of a material fact or omits to state any material fact necessary in order to make
the statements therein not misleading, in the light of the circumstance under which they are or were made. The Company is not currently
contemplating to amend or restate any of the financial statements (including, without limitation, any notes or any letter of the
independent accountants of the Company with respect thereto) included in the SEC Documents (the “
Financial Statements
”),
nor is the Company currently aware of facts or circumstances which would require the Company to amend or restate any of the Financial
Statements, in each case, in order for any of the Financials Statements to be in compliance with GAAP and the rules and regulations
of the SEC. The Company has not been informed by its independent accountants that they recommend that the Company amend or restate
any of the Financial Statements or that there is any need for the Company to amend or restate any of the Financial Statements.
(k)
Absence of Certain Changes
. Since the date of the Company’s most recent audited financial statements contained
in a 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. Since the date of the Company’s most recent audited financial statements contained in a 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, upon receipt of proceeds from this offering, will not be Insolvent (as defined below). For
purposes of this Section 3(k), “
Insolvent
” means, (i) 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 (as defined below), (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; and (ii) with respect to the Company and each Subsidiary, individually,
(A) the present fair saleable value of the Company’s or such Subsidiary’s (as the case may be) assets is less than
the amount required to pay its respective total Indebtedness, (B) the Company or such Subsidiary (as the case may be) is unable
to pay its respective debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute
and matured or (C) the Company or such Subsidiary (as the case may be) intends to incur or believes that it will incur debts that
would be beyond its respective 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.
(l)
No Undisclosed Events, Liabilities, Developments or Circumstances
. No event, liability, development or circumstance
has occurred or exists, or is reasonably expected to exist or occur with respect to the Company, any of its Subsidiaries or any
of their respective businesses, properties, liabilities, prospects, operations (including results thereof) or condition (financial
or otherwise), that (i) would be required to be disclosed by the Company under applicable securities laws on a registration statement
on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly
announced, (ii) could have a material adverse effect on any Buyer’s investment hereunder or (iii) could have a Material Adverse
Effect.
(m)
Conduct of Business; Regulatory Permits
. Neither the Company nor any of its Subsidiaries is in violation of any term
of or in default under its Certificate of Incorporation or By-laws or their organizational charter, certificate of formation, memorandum
of association, articles of association, Certificate of Incorporation or certificate of incorporation or by-laws, respectively.
Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any statute, ordinance, rule
or regulation applicable to the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct
its business in violation of any of the foregoing, except in all cases for possible violations which could not, individually or
in the aggregate, have a Material Adverse Effect. Except as set forth in the SEC Documents, without limiting the generality of
the foregoing, the Company is not in violation of any of the rules, regulations or requirements of the Principal Market and has
no knowledge of any facts or circumstances that could reasonably lead to delisting or suspension of the Common Stock by the Principal
Market in the foreseeable future. Except as set forth in the SEC Documents, during the two years prior to the date hereof, (i)
the Common Stock has been listed or designated for quotation on the Principal Market, (ii) trading in the Common Stock has not
been suspended by the SEC or the Principal Market and (iii) the Company has received no communication, written or oral, from the
SEC or the Principal Market regarding the suspension or delisting of the Common Stock from the Principal Market. The Company and
each of its Subsidiaries possess all certificates, authorizations and permits issued by the appropriate regulatory authorities
necessary to conduct their respective businesses, except where the failure to possess such certificates, authorizations or permits
would not have, individually or in the aggregate, a Material Adverse Effect, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit.
There is no agreement, commitment, judgment, injunction, order or decree binding upon the Company or any of its Subsidiaries or
to which the Company or any of its Subsidiaries is a party which has or would reasonably be expected to have the effect of prohibiting
or materially impairing any business practice of the Company or any of its Subsidiaries, any acquisition of property by the Company
or any of its Subsidiaries or the conduct of business by the Company or any of its Subsidiaries as currently conducted other than
such effects, individually or in the aggregate, which have not had and would not reasonably be expected to have a Material Adverse
Effect on the Company or any of its Subsidiaries.
(n)
Foreign Corrupt Practices
. Neither the Company, the Company’s subsidiary or any director, officer, agent, employee,
nor any other person acting for or on behalf of the foregoing (individually and collectively, a “
Company Affiliate
”)
have violated the U.S. Foreign Corrupt Practices Act (the “
FCPA
”) or any other applicable anti-bribery or anti-corruption
laws, nor has any Company Affiliate offered, paid, promised to pay, or authorized the payment of any money, or offered, given,
promised to give, or authorized the giving of anything of value, to any officer, employee or any other person acting in an official
capacity for any Governmental Entity to any political party or official thereof or to any candidate for political office (individually
and collectively, a “
Government Official
”) or to any person under circumstances where such Company Affiliate
knew or was aware of a high probability that all or a portion of such money or thing of value would be offered, given or promised,
directly or indirectly, to any Government Official, for the purpose of:
(i)
(A) influencing any act or decision of such Government Official in his/her official capacity, (B) inducing such Government
Official to do or omit to do any act in violation of his/her lawful duty, (C) securing any improper advantage, or (D) inducing
such Government Official to influence or affect any act or decision of any Governmental Entity, or
(ii)
assisting the Company or its Subsidiaries in obtaining or retaining business for or with, or directing business to, the
Company or its Subsidiaries.
(o)
Sarbanes-Oxley Act
. The Company and each Subsidiary is in compliance with any and all applicable requirements of
the Sarbanes-Oxley Act of 2002, as amended, and any and all applicable rules and regulations promulgated by the SEC thereunder.
(p)
Transactions With Affiliates
. Except as set forth on Schedule 3(q), since January 1, 2015, no current or former employee,
partner, director, officer or stockholder (direct or indirect) of the Company or its Subsidiaries, or any associate, or, to the
knowledge of the Company, any affiliate of any thereof, or any relative with a relationship no more remote than first cousin of
any of the foregoing, is presently, or has ever been, (i) a party to any transaction with the Company or its Subsidiaries (including
any contract, agreement or other arrangement providing for the furnishing of services by, or rental of real or personal property
from, or otherwise requiring payments to, any such director, officer or stockholder or such associate or affiliate or relative
Subsidiaries (other than for ordinary course services as employees, officers or directors of the Company or any of its Subsidiaries))
or (ii) the direct or indirect owner of an interest in any corporation, firm, association or business organization which is a competitor,
supplier or customer of the Company or its Subsidiaries (except for a passive investment (direct or indirect) in less than 5% of
the common stock of a company whose securities are traded on or quoted through an Eligible Market (as defined below)), nor does
any such Person receive income from any source other than the Company or its Subsidiaries which relates to the business of the
Company or its Subsidiaries or should properly accrue to the Company or its Subsidiaries. Except as set forth on Schedule 3(p),
no employee, officer, stockholder or director of the Company or any of its Subsidiaries or member of his or her immediate family
is indebted to the Company or its Subsidiaries, as the case may be, nor is the Company or any of its Subsidiaries indebted (or
committed to make loans or extend or guarantee credit) to any of them, other than (i) for payment of salary for services rendered,
(ii) reimbursement for reasonable expenses incurred on behalf of the Company, and (iii) for other standard employee benefits made
generally available to all employees or executives (including stock option agreements outstanding under any stock option plan approved
by the Board of Directors of the Company).
(q)
Equity Capitalization
.
(i)
Definitions
:
“
Common
Stock
” means (x) the Company’s shares of common stock, $0.001 par value per share, and (y) any capital stock
into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(ii)
Authorized and Outstanding Capital Stock
. As of the date hereof, the authorized capital stock of the Company consists
of (A) [50,000,000] shares of Common Stock, of which, [ ] are issued and outstanding and [ ] shares are reserved for issuance pursuant
to Convertible Securities (as defined below) (other than the Common Shares and the Warrants) exercisable or exchangeable for, or
convertible into, shares of Common Stock. “
Convertible Securities
” means any capital stock or other security
of the Company that is at any time and under any circumstances directly or indirectly convertible into, exercisable or exchangeable
for, or which otherwise entitles the holder thereof to acquire, any capital stock or other security of the Company (including,
without limitation, Common Stock).
(iii)
Valid Issuance; Available Shares; Affiliates
. All of such outstanding shares are duly authorized and have been, or
upon issuance will be, validly issued and are fully paid and nonassessable. Schedule 3(q)
(iii)
sets forth the number of
shares of Common Stock that are (A) reserved for issuance pursuant to Convertible Securities (as defined below) (other than the
Warrants) and (B) that are, as of the date hereof, owned by Persons who are “affiliates” (as defined in Rule 405 of
the 1933 Act and calculated based on the assumption that only officers, directors and holders of at least 10% of the Company’s
issued and outstanding Common Stock are “affiliates” without conceding that any such Persons are “affiliates”
for purposes of federal securities laws) of the Company or any of its Subsidiaries. To the Company’s knowledge, no Person
owns 10% or more of the Company’s issued and outstanding shares of Common Stock (calculated based on the assumption that
all Convertible Securities (as defined below), whether or not presently exercisable or convertible, have been fully exercised or
converted (as the case may be) taking account of any limitations on exercise or conversion (including “blockers”)
contained therein without conceding that such identified Person is a 10% stockholder for purposes of federal securities laws).
(iv)
Existing Securities; Obligations
. Except as set forth on Schedule 3(q)(iv): (A) none of the Company’s or any
Subsidiary’s shares, interests or capital stock is subject to preemptive rights or any other similar rights or Liens suffered
or permitted by the Company or any Subsidiary; (B) 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 shares, interests or capital stock 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 shares, interests or
capital stock 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 shares,
interests or capital stock of the Company or any of its Subsidiaries; (C) 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 1933 Act (except pursuant
to this Agreement); (D) 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; (E) there are
no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities;
and (F) neither the Company nor any Subsidiary has any stock appreciation rights or “phantom stock” plans or agreements
or any similar plan or agreement.
(v)
Organizational Documents
. The Company has furnished to the Buyers true, correct and complete copies of the Company’s
Certificate of Incorporation, as amended and as in effect on the date hereof (the “
Certificate of Incorporation
”),
and the Company’s by-laws, as amended and as in effect on the date hereof (the “
By-laws
”), and the terms
of all Convertible Securities and the material rights of the holders thereof in respect thereto.
(r)
Indebtedness and Other Contracts
. Neither the Company nor any of its Subsidiaries, (i) except as set forth on Schedule
3(r), has any 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, (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) has any financing statements securing obligations in any amounts filed in connection with the Company or any of its Subsidiaries;
(iv) 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 (v) 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. Neither the Company nor any of its Subsidiaries
have 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. For purposes of this Agreement: (x) “
Indebtedness
”
of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed
as the deferred purchase price of property or services (including, without limitation, “capital leases” in accordance
with GAAP) (other than trade payables entered into in the ordinary course of business consistent with past practice), (C) all reimbursement
or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced
by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness
(even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession
or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP,
consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses
(A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien upon or in any property or assets (including accounts and contract rights) owned by any Person, even
though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and
(H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through
(G) above; (y) “
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; and (z) “
Person
”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,
any other entity and any Governmental Entity or any department or agency thereof.
(s)
Litigation
. There is no action, suit, arbitration, proceeding, inquiry or investigation before or by the Principal
Market, any court, public board, other Governmental Entity, self-regulatory organization or body pending or, to the knowledge of
the Company, threatened against or affecting the Company or any of its Subsidiaries, the Common Stock or any of the Company’s
or its Subsidiaries’ officers or directors, whether of a civil or criminal nature or otherwise, in their capacities as such,
except as set forth in Schedule 3(s). No director, officer or employee of the Company or any of its subsidiaries has willfully
violated 18 U.S.C. §1519 or engaged in spoliation in reasonable anticipation of litigation. Without limitation of the foregoing,
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, any of its Subsidiaries or any current or former director or officer of the Company or any of its Subsidiaries. The
SEC has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company
under the 1933 Act or the 1934 Act, including, without limitation, the Registration Statement. After reasonable inquiry of its
employees, the Company is not aware of any fact which might result in or form the basis for any such action, suit, arbitration,
investigation, inquiry or other proceeding. Neither the Company nor any of its Subsidiaries is subject to any order, writ, judgment,
injunction, decree, determination or award of any Governmental Entity.
(t)
Insurance
. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses
in which the Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any insurance
coverage sought or applied for, and neither the Company nor any such Subsidiary has any reason to believe that it will be unable
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 at a cost that would not have a Material Adverse Effect.
(u)
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 and its Subsidiaries believe that their relations with their employees are good.
No executive officer (as defined in Rule 501(f) promulgated under the 1933 Act) or other key employee of the Company or any of
its Subsidiaries has notified the Company or any such Subsidiary that such officer intends to leave the Company or any such Subsidiary
or otherwise terminate such officer’s employment with the Company or any such Subsidiary. No executive officer or other key
employee of the Company or any of its Subsidiaries is, or is now expected to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or
agreement or any restrictive covenant, and the continued employment of each such executive officer or other key employee (as the
case may be) does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters.
The Company and its Subsidiaries are in compliance with all 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 where failure
to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse
Effect.
(v)
Title
.
(i)
Real Property
. Each of the Company and its Subsidiaries holds good title to all real property, leases in real property,
facilities or other interests in real property owned or held by the Company or any of its Subsidiaries (the “
Real Property
”)
owned by the Company or any of its Subsidiaries (as applicable). The Real Property is free and clear of all Liens and is not subject
to any rights of way, building use restrictions, exceptions, variances, reservations, or limitations of any nature except for (a)
Liens for current taxes not yet due and (b) zoning laws and other land use restrictions that do not impair the present or anticipated
use of the property subject thereto. Any Real Property held under lease by the Company or any of its Subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company or any of its Subsidiaries.
(ii)
Fixtures and Equipment
. Each of the Company and its Subsidiaries (as applicable) has good title to, or a valid leasehold
interest in, the tangible personal property, equipment, improvements, fixtures, and other personal property and appurtenances that
are used by the Company or its Subsidiary in connection with the conduct of its business (the “
Fixtures and Equipment
”).
The Fixtures and Equipment are structurally sound, are in good operating condition and repair, are adequate for the uses to which
they are being put, are not in need of maintenance or repairs except for ordinary, routine maintenance and repairs and are sufficient
for the conduct of the Company’s and/or its Subsidiaries’ businesses (as applicable) in the manner as conducted prior
to the Closing. Each of the Company and its Subsidiaries owns all of its Fixtures and Equipment free and clear of all Liens except
for (a) Liens for current taxes not yet due and (b) zoning laws and other land use restrictions that do not impair the present
or anticipated use of the property subject thereto.
(w)
Intellectual Property Rights
. The Company and its Subsidiaries own or possess adequate rights or licenses to use
all trademarks, trade names, service marks, service mark registrations, service names, original works of authorship, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property
rights and all applications and registrations therefor (“
Intellectual Property Rights
”) necessary to conduct
their respective businesses as now conducted and presently proposed to be conducted. Each of patents owned by the Company or any
of its Subsidiaries is listed on Schedule 3(y)(i). Except as set forth in Schedule 3(y)(ii), none of the Company's Intellectual
Property Rights have expired or terminated or have been abandoned or are expected to expire or terminate or are expected to be
abandoned, within three years from the date of this Agreement. The Company does not have any knowledge of any infringement by the
Company or its Subsidiaries of Intellectual Property Rights of others. There is no claim, action or proceeding being made or brought,
or to the knowledge of the Company or any of its Subsidiaries, being threatened, against the Company or any of its Subsidiaries
regarding its Intellectual Property Rights. Neither the Company nor any of its Subsidiaries is aware of any facts or circumstances
which might give rise to any of the foregoing infringements or claims, actions or proceedings. The Company and its Subsidiaries
have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their Intellectual Property
Rights.
(x)
Environmental Laws
. (i) The Company and its Subsidiaries (A) are in compliance with any and all Environmental Laws
(as defined below), (B) have received all permits, licenses or other approvals required of them under applicable Environmental
Laws to conduct their respective businesses and (C) are in compliance with all terms and conditions of any such permit, license
or approval where, in each of the foregoing clauses (A), (B) and (C), the failure to so comply could be reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect. The term “Environmental Laws” means all federal,
state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions,
discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes
(collectively, “
Hazardous Materials
”) into the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes,
decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations
issued, entered, promulgated or approved thereunder.
(ii)
No
Hazardous Materials
:
(A) have
been disposed of or otherwise released from any Real Property (as defined below) of the Company or any of its Subsidiaries in violation
of any Environmental Laws; or
(B) are
present on, over, beneath, in or upon any Real Property or any portion thereof in quantities that would constitute a violation
of any Environmental Laws. No prior use by the Company or any of its Subsidiaries of any Real Property has occurred that violates
any Environmental Laws, which violation would have a material adverse effect on the business of the Company or any of its Subsidiaries.
(iii) Neither
the Company nor any of its Subsidiaries knows of any other person who or entity which has stored, treated, recycled, disposed of
or otherwise located any Hazardous Materials on any Real Property, including, without limitation, such substances as asbestos and
polychlorinated biphenyls.
(iv) None
of the Real Properties are on any federal or state “Superfund” list or Liability Information System (“
CERCLIS
”)
list or any state environmental agency list of sites under consideration for CERCLIS, nor subject to any environmental related
Liens.
(y)
Subsidiary Rights
. The Company or one of its Subsidiaries has the unrestricted right to vote, and (subject to limitations
imposed by applicable law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the
Company or such Subsidiary.
(z)
Tax Status
. The Company and each of its Subsidiaries (i) has timely made or filed all foreign, federal and state
income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has timely
paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably
adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers
of the Company and its Subsidiaries know of no basis for any such claim. The Company is not operated in such a manner as to qualify
as a passive foreign investment company, as defined in Section 1297 of the U.S. Internal Revenue Code of 1986, as amended (the
“
Code
”). The net operating loss carryforwards (“
NOLs
”) for United States federal income tax
purposes of the consolidated group of which the Company is the common parent, if any, shall not be adversely effected by the transactions
contemplated hereby. The transactions contemplated hereby do not constitute an “ownership change” within the meaning
of Section 382 of the Code, thereby preserving the Company’s ability to utilize such NOLs.
(aa)
Internal Accounting and Disclosure Controls
. The Company and each of its Subsidiaries maintains internal control
over financial reporting (as such term is defined in Rule 13a-15(f) under the 1934 Act) that is effective to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles, including that (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is
permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for
assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken
with respect to any difference. The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e)
under the 1934 Act) that are effective in ensuring that information required to be disclosed by the Company in the reports that
it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified in the
rules and forms of the SEC, including, without limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the 1934 Act is accumulated and communicated to the
Company’s management, including its principal executive officer or officers and its principal financial officer or officers,
as appropriate, to allow timely decisions regarding required disclosure. Neither the Company nor any of its Subsidiaries has received
any notice or correspondence from any accountant, Governmental Entity or other Person relating to any potential material weakness
or significant deficiency in any part of the internal controls over financial reporting of the Company or any of its Subsidiaries.
(bb)
Off Balance Sheet Arrangements
. There is no transaction, arrangement, or other relationship between the Company or
any of its Subsidiaries and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company
in its 1934 Act filings and is not so disclosed or that otherwise could be reasonably likely to have a Material Adverse Effect.
(cc)
Investment Company Status
. The Company is not, and upon consummation of the sale of the Securities will not be, an
“investment company,” an affiliate of an “investment company,” a company controlled by an “investment
company” or an “affiliated person” of, or “promoter” or “principal underwriter” for,
an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended.
(dd)
Acknowledgement Regarding Buyers’ Trading Activity
. It is understood and acknowledged by the Company that (i)
following the public disclosure of the transactions contemplated by the Transaction Documents, in accordance with the terms thereof,
none of the Buyers have been asked by the Company or any of its Subsidiaries to agree, nor has any Buyer agreed with the Company
or any of its Subsidiaries, to desist from effecting any transactions in or with respect to (including, without limitation, purchasing
or selling, long and/or short) any securities of the Company, or “derivative” securities based on securities issued
by the Company or to hold any of the Securities for any specified term; (ii) any Buyer, and counterparties in “derivative”
transactions to which any such Buyer is a party, directly or indirectly, presently may have a “short” position in the
Common Stock which was established prior to such Buyer’s knowledge of the transactions contemplated by the Transaction Documents;
and (iii) each Buyer shall not be deemed to have any affiliation with or control over any arm’s length counterparty in any
“derivative” transaction. The Company further understands and acknowledges that following the public disclosure of
the transactions contemplated by the Transaction Documents pursuant to the Press Release (as defined below) one or more Buyers
may engage in hedging and/or trading activities at various times during the period that the Securities are outstanding, including,
without limitation, during the periods that the value and/or number of the Warrant Shares deliverable with respect to the Warrants
are being determined and such hedging and/or trading activities, if any, can reduce the value of the existing stockholders’
equity interest in the Company both at and after the time the hedging and/or trading activities are being conducted. The Company
acknowledges that such aforementioned hedging and/or trading activities do not constitute a breach of this Agreement, the Warrants
or any other Transaction Document or any of the documents executed in connection herewith or therewith.
(ee)
Manipulation of Price
. Neither the Company nor any of its Subsidiaries has, and, to the knowledge of the Company,
no Person acting on their behalf has, directly or indirectly, (i) taken any action designed to cause or to result in the stabilization
or manipulation of the price of any security of the Company or any of its Subsidiaries to facilitate the sale or resale of any
of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities (other
than the Placement Agent), (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other
securities of the Company or any of its Subsidiaries or (iv) paid or agreed to pay any Person for research services with respect
to any securities of the Company or any of its Subsidiaries.
(ff)
U.S. Real Property Holding Corporation
. Neither the Company nor any of its Subsidiaries is, or has ever been, and
so long as any of the Securities are held by any of the Buyers, shall become, a U.S. real property holding corporation within the
meaning of Section 897 of the Code, and the Company and each Subsidiary shall so certify upon any Buyer’s request.
(gg)
Registration Eligibility
. The Company is eligible to register the issuance of the Securities by the Company using
Form S-1 promulgated under the 1933 Act.
(hh)
Transfer Taxes
. On the Closing Date, all stock transfer or other taxes (other than income or similar taxes) which
are required to be paid in connection with the issuance, sale and transfer of the Securities to be sold to each Buyer hereunder
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.
(ii)
Bank Holding Company Act
. Neither the Company nor any of its Subsidiaries 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.
(jj)
Illegal or Unauthorized Payments; Political Contributions
. Neither the Company nor any of its Subsidiaries nor, to
the best of the Company’s knowledge (after reasonable inquiry of its officers and directors), any of the officers, directors,
employees, agents or other representatives of the Company or any of its Subsidiaries or any other business entity or enterprise
with which the Company or any Subsidiary is or has been affiliated or associated, has, directly or indirectly, made or authorized
any payment, contribution or gift of money, property, or services, whether or not in contravention of applicable law, (i) as a
kickback or bribe to any Person or (ii) to any political organization, or the holder of or any aspirant to any elective or appointive
public office except for personal political contributions not involving the direct or indirect use of funds of the Company or any
of its Subsidiaries.
(kk)
Money Laundering
. The Company and its Subsidiaries are in compliance with, and have not previously violated, the
USA Patriot Act of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, without
limitation, the laws, regulations and Executive Orders and sanctions programs administered by the U.S. Office of Foreign Assets
Control, including, but not limited, to (i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001));
and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter V.
(ll)
Management
. Except as set forth in
Schedule 3(ll)
hereto, during the past five year period, no current
or former officer or director or, to the knowledge of the Company, no current ten percent (10%) or greater stockholder of the Company
or any of its Subsidiaries has been the subject of:
(i)
a petition under bankruptcy laws or any other insolvency or moratorium law or the appointment by a court of a receiver,
fiscal agent or similar officer for such Person, or any partnership in which such person was a general partner at or within two
years before the filing of such petition or such appointment, or any corporation or business association of which such person was
an executive officer at or within two years before the time of the filing of such petition or such appointment;
(ii)
a conviction in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations
that do not relate to driving while intoxicated or driving under the influence);
(iii)
any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining any such person from, or otherwise limiting, the following activities:
(1)
Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the United States Commodity Futures Trading Commission or an associated
person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person,
director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing
any conduct or practice in connection with such activity;
(2)
Engaging in any particular type of business practice; or
(3)
Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any
violation of securities laws or commodities laws;
(iv)
any order, judgment or decree, not subsequently reversed, suspended or vacated, of any authority barring, suspending or
otherwise limiting for more than sixty (60) days the right of any such person to engage in any activity described in the preceding
sub paragraph, or to be associated with persons engaged in any such activity;
(v)
a finding by a court of competent jurisdiction in a civil action or by the SEC or other authority to have violated any securities
law, regulation or decree and the judgment in such civil action or finding by the SEC or any other authority has not been subsequently
reversed, suspended or vacated; or
(vi)
a finding by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have
violated any federal commodities law, and the judgment in such civil action or finding has not been subsequently reversed, suspended
or vacated.
(mm)
Stock Option Plans
. Each stock option granted by the Company was granted (i) in accordance with the terms of the
applicable stock option plan of the Company 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 the
Company's stock option plan has been backdated. The Company has not knowingly granted, and there is no and has been no policy or
practice of the Company 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.
(nn)
No Disagreements with Accountants and Lawyers
. There are no material 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. In addition, on or prior to the date hereof,
the Company had discussions with its accountants about its financial statements previously filed with the SEC. Based on those discussions,
the Company has no reason to believe that it will need to restate any such financial statements or any part thereof.
(oo)
No Additional Agreements.
The Company does not have any agreement or understanding with any Buyer with respect to
the transactions contemplated by the Transaction Documents other than as specified in the Transaction Documents.
(pp)
Public Utility Holding Act
None of the Company nor any of its Subsidiaries is a “holding company,” or
an “affiliate” of a “holding company,” as such terms are defined in the Public Utility Holding Act of 2005.
(qq)
Federal Power Act.
None of the Company nor any of its Subsidiaries is subject to regulation as a “public utility”
under the Federal Power Act, as amended.
(rr)
Registration Rights
. No holder of securities of the Company has rights to the registration of any securities of the
Company because of the filing of the Registration Statement or the issuance of the Securities hereunder that could expose the Company
to material liability or any Buyer to any liability or that could impair the Company’s ability to consummate the issuance
and sale of the Securities in the manner, and at the times, contemplated hereby, which rights have not been waived by the holder
thereof as of the date hereof.
(ss)
Disclosure
. The Company confirms that neither it nor any other Person acting on its behalf has provided any of the
Buyers or their 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 other Transaction Documents. The Company understands and confirms that each of the Buyers will rely on
the foregoing representations in effecting transactions in securities of the Company. All disclosure provided to the Buyers 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 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. All of the written information furnished after the date hereof by or
on behalf of the Company or any of its Subsidiaries to each Buyer pursuant to or in connection with this Agreement and the other
Transaction Documents, taken as a whole, will be true and correct in all material respects as of the date on which such information
is so provided and will 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. Each press release
issued by the Company or any of its Subsidiaries during the twelve (12) months preceding the date of this Agreement did not at
the time of release 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 the light of the circumstances under which they are made, not misleading.
No event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, liabilities, prospects, operations (including results thereof) or conditions (financial or otherwise), which,
under applicable law, rule or regulation, requires public disclosure at or before the date hereof or announcement by the Company
but which has not been so publicly disclosed. All financial projections and forecasts that have been prepared by or on behalf of
the Company or any of its Subsidiaries and made available to you have been prepared in good faith based upon reasonable assumptions
and represented, at the time each such financial projection or forecast was delivered to each Buyer, the Company’s best estimate
of future financial performance (it being recognized that such financial projections or forecasts are not to be viewed as facts
and that the actual results during the period or periods covered by any such financial projections or forecasts may differ from
the projected or forecasted results). The Company acknowledges and agrees that no Buyer makes or has made any representations or
warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 2.
(a)
Best Efforts
. Each Buyer shall use its best efforts to timely satisfy each of the covenants hereunder and conditions
to be satisfied by it as provided in Section 6 of this Agreement. The Company shall use its best efforts to timely satisfy each
of the covenants hereunder and conditions to be satisfied by it as provided in Section 7 of this Agreement.
(b)
Amendments to the Registration Statement; Prospectus Supplements; Free Writing Prospectuses
.
(i)
Amendments to the Registration Statement; Prospectus Supplements; Free Writing Prospectuses
. Except as provided in
this Agreement and other than periodic reports required to be filed pursuant to the 1934 Act, the Company shall not file with the
SEC any amendment to the Registration Statement that relates to the Buyer, this Agreement or the transactions contemplated hereby
or thereby or file with the SEC any supplement (each, a “
Prospectus Supplement
”) to the initial Prospectus included
in the Registration Statement at the time it was initially declared effective by the SEC (the “
Initial Prospectus
”)
that relates to the Buyer, this Agreement or the transactions contemplated hereby or thereby with respect to which (a) the Buyer
shall not previously have been advised, (b) the Company shall not have given due consideration to any comments thereon received
from the Buyer or its counsel, or (c) the Buyer shall reasonably object after being so advised, unless the Company reasonably has
determined that it is necessary to amend the Registration Statement or make any supplement to the Prospectus to comply with the
1933 Act or any other applicable law or regulation, in which case the Company shall promptly (but in no event later than 24 hours)
so inform the Buyer, the Buyer shall be provided with a reasonable opportunity to review and comment upon any disclosure relating
to the Buyer and the Company shall expeditiously furnish to the Buyer an electronic copy thereof. In addition, for so long as,
in the reasonable opinion of counsel for the Buyer, the Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under
the 1933 Act) is required to be delivered in connection with any acquisition or sale of Securities by the Buyer, the Company shall
not file the Initial Prospectus or any Prospectus Supplement with respect to the Securities without delivering or making available
a copy of such Prospectus (including each Prospectus Supplement in effect as of such time, if any) to the Buyer promptly.
(ii)
The Company has not made, and agrees that unless it obtains the prior written consent of the Buyer it will not make, an
offer relating to the Securities that would constitute an “issuer free writing prospectus” as defined in Rule 433 promulgated
under the 1933 Act (an “
Issuer Free Writing Prospectus
”) or that would otherwise constitute a “free writing
prospectus” as defined in Rule 405 promulgated under the 1933 Act (a “
Free Writing Prospectus
”) required
to be filed by the Company or the Buyer with the SEC or retained by the Company or the Buyer under Rule 433 under the 1933 Act.
The Buyer has not made, and agrees that unless it obtains the prior written consent of the Company it will not make, an offer relating
to the Securities that would constitute a Free Writing Prospectus required to be filed by the Company with the SEC or retained
by the Company under Rule 433 under the 1933 Act. Any such Issuer Free Writing Prospectus or other Free Writing Prospectus consented
to by the Buyer or the Company is referred to in this Agreement as a “
Permitted Free Writing Prospectus
.” The
Company agrees that (x) it has treated and will treat, as the case may be, each Permitted Free Writing Prospectus as an Issuer
Free Writing Prospectus and (y) it has complied and will comply, as the case may be, with the requirements of Rules 164 and 433
under the 1933 Act applicable to any Permitted Free Writing Prospectus, including in respect of timely filing with the SEC, legending
and record keeping.
(c)
Prospectus Delivery
. Immediately prior to execution of this Agreement, the Company shall have delivered to the Buyer,
and as soon as practicable after execution of this Agreement the Company shall file, the Prospectus with respect to the Securities
to be issued on the Closing Date, as required under, and in conformity with, the 1933 Act, including Rule 424(b) thereunder. The
Company shall provide the Buyer a reasonable opportunity to comment on a draft of each Prospectus Supplement and any Issuer Free
Writing Prospectus, if any, shall give due consideration to all such comments and, subject to the provisions of Section 4(b) hereof,
shall deliver or make available to the Buyer, without charge, an electronic copy of the Prospectus (including any Prospectus Supplement
and any Permitted Free Writing Prospectus, if any) on the Closing Date. The Company consents to the use of the Prospectus in accordance
with the provisions of the 1933 Act and with the securities or “blue sky” laws of the jurisdictions in which the Securities
may be sold by the Buyer, in connection with the offering and sale of the Securities and for such period of time thereafter as
the Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the 1933 Act) is required by the 1933 Act to be
delivered in connection with sales of the Securities. If during such period of time any event shall occur that in the judgment
of the Company and its counsel is required to be set forth in the Registration Statement or the Prospectus or any Permitted Free
Writing Prospectus or should be set forth therein in order to make the statements made therein (in the case of the Prospectus,
in light of the circumstances under which they were made) not misleading, or if it is necessary to amend the Registration Statement
or supplement or amend the Prospectus or any Permitted Free Writing Prospectus to comply with the 1933 Act or any other applicable
law or regulation, the Company shall forthwith prepare and, subject to Section 4(b) above, file with the SEC an appropriate amendment
to the Registration Statement or Prospectus Supplement to the Prospectus (or supplement to the Permitted Free Writing Prospectus)
and shall expeditiously furnish or make available to the Buyer an electronic copy thereof.
(d)
Stop Orders
. The Company shall advise the Buyer promptly (but in no event later than 24 hours) and shall confirm
such advice in writing: (i) of the Company’s receipt of notice of any request by the SEC for amendment of or a supplement
to the Registration Statement, the Prospectus, any Permitted Free Writing Prospectus or for any additional information; (ii) of
the Company’s receipt of notice of the issuance by the SEC of any stop order suspending the effectiveness of the Registration
Statement or prohibiting or suspending the use of the Prospectus or any Prospectus Supplement, or of the suspension of qualification
of the Securities for offering or sale in any jurisdiction, or the initiation or contemplated initiation of any proceeding for
such purpose; (iii) of the Company becoming aware of the happening of any event, which makes any statement of a material fact made
in the Registration Statement, the Prospectus or any Permitted Free Writing Prospectus untrue or which requires the making of any
additions to or changes to the statements then made in the Registration Statement, the Prospectus or any Permitted Free Writing
Prospectus in order to state a material fact required by the 1933 Act to be stated therein or necessary in order to make the statements
then made therein (in the case of the Prospectus, in light of the circumstances under which they were made) not misleading, or
of the necessity to amend the Registration Statement or supplement the Prospectus or any Permitted Free Writing Prospectus to comply
with the 1933 Act or any other law or (iv) if at any time following the date hereof the Registration Statement is not effective
or is not otherwise available for the issuance of the Securities or any Prospectus contained therein is not available for use for
any other reason. Thereafter, the Company shall promptly notify such holders when the Registration Statement, the Prospectus, any
Permitted Free Writing Prospectus and/or any amendment or supplement thereto, as applicable, is effective and available for the
issuance of the Securities. If at any time the SEC shall issue any stop order suspending the effectiveness of the Registration
Statement or prohibiting or suspending the use of the Prospectus or any Prospectus Supplement, the Company shall use best efforts
to obtain the withdrawal of such order at the earliest possible time.
(e)
Blue Sky
. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine
is necessary in order to obtain an exemption for, or to, qualify the Securities for sale to the Buyers at the Closing pursuant
to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an
exemption from such qualification), and shall provide evidence of any such action so taken to the Buyers on or prior to the Closing
Date. Without limiting any other obligation of the Company under this Agreement, the Company shall timely make all filings and
reports relating to the offer and sale of the Securities required under all applicable securities laws (including, without limitation,
all applicable federal securities laws and all applicable “Blue Sky” laws), and the Company shall comply with all applicable
foreign, federal, state and local laws, statutes, rules, regulations and the like relating to the offering and sale of the Securities
to the Buyers.
(f)
Reporting Status
. Until the date on which the Buyers shall have sold all of the Securities (the “
Reporting
Period
”), the Company shall timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and the
Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules
and regulations thereunder would no longer require or otherwise permit such termination.
(g)
Use of Proceeds
. The Company will use the proceeds from the sale of the Securities as described in the Prospectus,
but not, directly or indirectly, for (i) except as set forth on Schedule 4(d), the satisfaction of any indebtedness of the Company
or any of its Subsidiaries, (ii) the redemption or repurchase of any securities of the Company or any of its Subsidiaries, or (iii)
the settlement of any outstanding litigation.
(h)
Financial Information
. The Company agrees to send the following to each holder of Warrants (each, an “
Investor
”)
during the Reporting Period (i) unless the following are filed with the SEC through EDGAR and are available to the public through
the EDGAR system, within one (1) Business Day after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K
and Quarterly Reports on Form 10-Q, any interim reports or any consolidated balance sheets, income statements, stockholders’
equity statements and/or cash flow statements for any period other than annual, any Current Reports on Form 8-K and any registration
statements (other than on Form S-8) or amendments filed pursuant to the 1933 Act, (ii) unless the following are either filed with
the SEC through EDGAR or are otherwise widely disseminated via a recognized news release service (such as PR Newswire), on the
same day as the release thereof, facsimile copies of all press releases issued by the Company or any of its Subsidiaries and (iii)
unless the following are filed with the SEC through EDGAR, copies of any notices and other information made available or given
to the stockholders of the Company generally, contemporaneously with the making available or giving thereof to the stockholders.
(i)
Listing
. The Company shall promptly secure the listing or designation for quotation (as the case may be) of all of
the Underlying Securities (as defined below) upon each 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) (subject to official notice of issuance)
and shall maintain such listing or designation for quotation (as the case may be) of all Underlying Securities 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 authorization for quotation (as the case may be) on the Principal Market, The
New York Stock Exchange, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market or the Nasdaq Global Select Market
(each, an “
Eligible Market
”). Neither the Company nor any of its Subsidiaries shall take any action which could
be reasonably expected to result in the delisting or suspension of the Common Stock on an Eligible Market. The Company shall pay
all fees and expenses in connection with satisfying its obligations under this Section 4(i). “
Underlying Securities
”
means the (i) the Common Shares, (ii) the Warrant Shares and (iii) any capital stock of the Company issued or issuable with respect
to the Common Shares, the Warrant Shares, or the Warrants, respectively, including, without limitation, (1) as a result of any
stock split, stock dividend, recapitalization, exchange or similar event or otherwise and (2) shares of capital stock of the Company
into which the shares of Common Stock are converted or exchanged and shares of capital stock of a Successor Entity (as defined
in the Warrants) into which the shares of Common Stock are converted or exchanged, in each case, without regard to any limitations
on exercise of the Warrants.
(j)
Fees
. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees,
transfer agent fees, DTC fees or broker’s commissions (other than for Persons engaged by any Buyer) relating to or arising
out of the transactions contemplated hereby (including, without limitation, any fees or commissions payable to the Placement Agent,
who is the Company’s sole placement agent in connection with the transactions contemplated by this Agreement). The Company
shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable attorneys’
fees and out-of-pocket expenses) arising in connection with any claim relating to any such payment. Except as otherwise set forth
in the Transaction Documents, each party to this Agreement shall bear its own expenses in connection with the sale of the Securities
to the Buyers.
(k)
Disclosure of Transactions and Other Material Information
.
(i)
Disclosure of Transaction
. The Company shall, on or before 9:30 a.m., New York time, on the first (1
st
)
Business Day after the date of this Agreement, issue a press release (the “
Press Release
”) reasonably acceptable
to the Buyers disclosing all the material terms of the transactions contemplated by the Transaction Documents. On or before 9:30
a.m., New York time, on the first (1
st
) Business Day after the date of this Agreement, the Company shall file a Current
Report on Form 8-K describing all the material terms of the transactions contemplated by the Transaction Documents in the form
required by the 1934 Act and attaching all the material Transaction Documents (including, without limitation, this Agreement (and
all schedules to this Agreement), and the form of the Warrants) (including all attachments, the “
8-K Filing
”).
From and after the filing of the Press Release, the Company shall have disclosed all material, non-public information (if any)
provided to any of the Buyers by the Company or any of its Subsidiaries or any of their respective officers, directors, employees
or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon the filing
of the Press Release, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement,
whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, affiliates,
employees or agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall terminate.
(ii)
Limitations on Disclosure
. The Company shall not, and the Company shall cause each of its Subsidiaries and each of
its and their respective officers, directors, employees and agents not to, provide any Buyer with any material, non-public information
regarding the Company or any of its Subsidiaries from and after the date hereof without the express prior written consent of such
Buyer (which may be granted or withheld in such Buyer’s sole discretion). In the event of a breach of any of the foregoing
covenants, or any of the covenants or agreements contained in any other Transaction Document, by the Company, any of its Subsidiaries,
or any of its or their respective officers, directors, employees and agents (as determined in the reasonable good faith judgment
of such Buyer), in addition to any other remedy provided herein or in the Transaction Documents, such Buyer shall have the right
to make a public disclosure, in the form of a press release, public advertisement or otherwise, of such breach or such material,
non-public information, as applicable, without the prior approval by the Company, any of its Subsidiaries, or any of its or their
respective officers, directors, employees or agents. No Buyer shall have any liability to the Company, any of its Subsidiaries,
or any of its or their respective officers, directors, employees, affiliates, stockholders or agents, for any such disclosure.
To the extent that the Company delivers any material, non-public information to a Buyer without such Buyer's consent, the Company
hereby covenants and agrees that such Buyer shall not have any duty of confidentiality with respect to, or a duty not to trade
on the basis of, such material, non-public information. Subject to the foregoing, neither the Company, its Subsidiaries nor any
Buyer shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided,
however, the Company shall be entitled, without the prior approval of any Buyer, to make the Press Release and any press release
or other public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously
therewith and (ii) as is required by applicable law and regulations (provided that in the case of clause (i) each Buyer shall be
consulted by the Company in connection with any such press release or other public disclosure prior to its release). Without the
prior written consent of the applicable Buyer (which may be granted or withheld in such Buyer’s sole discretion), the Company
shall not (and shall cause each of its Subsidiaries and affiliates to not) disclose the name of such Buyer in any filing, announcement,
release or otherwise. Notwithstanding anything contained in this Agreement to the contrary and without implication that the contrary
would otherwise be true, the Company expressly acknowledges and agrees that no Buyer shall have (unless expressly agreed to by
a particular Buyer after the date hereof in a written definitive and binding agreement executed by the Company and such particular
Buyer (it being understood and agreed that no Buyer may bind any other Buyer with respect thereto)), any duty of confidentiality
with respect to, or a duty not to trade on the basis of, any material, non-public information regarding the Company or any of its
Subsidiaries.
(l)
Reservation of Shares
. So long as any of the Warrants remain outstanding, the Company shall take all action necessary
to at all times have authorized, and reserved for the purpose of issuance, no less than 100% of the sum of the maximum number of
Warrant Shares issuable upon exercise of all the Warrants then outstanding (without regard to any limitations on the exercise of
the Warrants set forth therein) (collectively, the “
Required Reserve Amount
”); provided that at no time shall
the number of shares of Common Stock reserved pursuant to this Section 4(l) be reduced other than proportionally in connection
with any exercise of the Warrants. If at any time the number of shares of Common Stock authorized and reserved for issuance is
not sufficient to meet the Required Reserve Amount, the Company will promptly take all corporate action necessary to authorize
and reserve a sufficient number of shares, including, without limitation, calling a special meeting of stockholders to authorize
additional shares to meet the Company's obligations pursuant to the Transaction Documents, in the case of an insufficient number
of authorized shares, obtain stockholder approval of an increase in such authorized number of shares, and voting the management
shares of the Company in favor of an increase in the authorized shares of the Company to ensure that the number of authorized shares
is sufficient to meet the Required Reserve Amount.
(m)
Conduct of Business
. The business of the Company and its Subsidiaries shall not be conducted in violation of any
law, ordinance or regulation of any Governmental Entity, except where such violations would not reasonably be expected to result,
either individually or in the aggregate, in a Material Adverse Effect.
(n)
Dilutive Issuances
. For so long as any Warrants remain outstanding, the Company shall not, in any manner, enter into
or affect any Dilutive Issuance (as defined in the Warrants) if the effect of such Dilutive Issuance is to cause the Company to
be required to issue upon exercise of any Warrant any shares of Common Stock in excess of that number of shares of Common Stock
which the Company may issue upon exercise of the Warrants without breaching the Company’s obligations under the rules or
regulations of the Principal Market.
(o)
Passive Foreign Investment Company
. The Company shall conduct its business, and shall cause its Subsidiaries to conduct
their respective businesses, 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 Code.
(p)
Corporate Existence
. So long as any Buyer beneficially owns any Warrants, the Company shall not be party to any Fundamental
Transaction (as defined in the Warrants) unless the Company is in compliance with the applicable provisions governing Fundamental
Transactions set forth in the Warrants.
(q)
Exercise Procedures
. The form of Exercise Notice (as defined in the Warrants) included in the Warrants sets forth
the totality of the procedures required of the Buyers in order to exercise the Warrants. No legal opinion or other information
or instructions shall be required of the Buyers to exercise their Warrants. The Company shall honor exercises of the Warrants and
shall deliver the Warrant Shares in accordance with the terms, conditions and time periods set forth in the Warrants. Without limiting
the preceding sentences, no ink-original Exercise Notice (as defined in the Warrants) shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any Exercise Notice form be required in order to exercise the Warrants.
(r)
Regulation M
. The Company will not take any action prohibited by Regulation M under the 1934 Act, in connection with
the distribution of the Securities contemplated hereby.
(s)
Closing Documents.
On or prior to fourteen (14) calendar days after the Closing Date, the Company agrees to deliver,
or cause to be delivered, to each Buyer, the Placement Agent and Kelley Drye & Warren LLP a complete closing set of the executed
Transaction Documents, Securities and any other document required to be delivered to any party pursuant to Section 7 hereof or
otherwise.
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5.
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REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.
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(a)
Register
. The Company shall maintain at its principal executive offices (or such other office or agency of the Company
as it may designate by notice to each holder of Securities), a register for the Common Shares and the Warrants in which the Company
shall record the name and address of the Person in whose name the Common Shares and the Warrants have been issued (including the
name and address of each transferee), the number of Common Shares held by such Person and the number of Warrant Shares issuable
upon exercise of the Warrants held by such Person. The Company shall keep the register open and available at all times during business
hours for inspection of any Buyer or its legal representatives.
(b)
Transfer Agent Instructions
. The Company shall issue irrevocable instructions to its Transfer Agent and any subsequent
transfer agent in a form acceptable to each of the Buyers (the “
Irrevocable Transfer Agent Instructions
”) to
issue certificates or credit shares to the applicable balance accounts at DTC, registered in the name of each Buyer or its respective
nominee(s), for the Common Shares and the Warrant Shares in such amounts as specified from time to time by each Buyer to the Company
upon the exercise of the Warrants (as the case may be). The Company represents and warrants that no instruction other than the
Irrevocable Transfer Agent Instructions referred to in this Section 5(b) will be given by the Company to its Transfer Agent
with respect to the Securities, and that the Securities shall otherwise be freely transferable on the books and records of the
Company, as applicable, to the extent provided in this Agreement and the other Transaction Documents. If a Buyer effects a sale,
assignment or transfer of the Securities, the Company shall permit the transfer and shall promptly instruct its Transfer Agent
to issue one or more certificates or credit shares to the applicable balance accounts at DTC in such name and in such denominations
as specified by such Buyer to effect such sale, transfer or assignment. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to a Buyer. Accordingly, the Company acknowledges that the remedy at law for a breach of
its obligations under this Section 5(b) will be inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section 5(b), that a Buyer shall be entitled, in addition to all other available remedies,
to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required. The Company shall cause its counsel to issue each legal opinion
referred to in the Irrevocable Transfer Agent Instructions to the Transfer Agent as follows: (i) at the Closing with respect to
the Common Shares, (ii) upon each exercise of the Warrants (unless such issuance covered by a prior legal opinion previously delivered
to the Transfer Agent), and (iii) on each date a registration statement with respect to the issuance or resale of any of the Securities
is declared effective by the SEC. Any fees (with respect to the Transfer Agent, counsel to the Company or otherwise) associated
with the issuance of such opinions or the removal of any legends on any of the Securities shall be borne by the Company.
(c)
Legends
. Certificates and any other instruments evidencing the Securities shall not bear any restrictive or other
legend.
(d)
FAST Compliance
. While any Warrants remain outstanding, the Company shall maintain a transfer agent that participates
in the DTC Fast Automated Securities Transfer Program.
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6.
|
CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.
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The obligation of
the Company hereunder to issue and sell the Common Shares and the related Warrants to each Buyer at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company’s
sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice
thereof:
(a)
Such Buyer shall have executed each of the other Transaction Documents to which it is a party and delivered the same to
the Company.
(b)
Such Buyer and each other Buyer shall have delivered to the Company the Purchase Price for the Common Shares and the related
Warrants being purchased by such Buyer at the Closing by wire transfer of immediately available funds in accordance with the Flow
of Funds Letter.
(c)
The representations
and warranties of such Buyer shall be true and correct in all material respects as of the date when made and as of the Closing
Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which
shall be true and correct as of such specific date), and such Buyer shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by
such Buyer at or prior to the Closing Date.
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7.
|
CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.
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The obligation of
each Buyer hereunder to purchase its Common Shares and its related Warrants at the Closing is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions, provided that these conditions are for each Buyer’s sole benefit
and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:
(a)
The Company shall have duly executed and delivered to such Buyer each of the Transaction Documents and the Company shall
have duly executed and delivered to such Buyer (x) such aggregate number of Common Shares set forth across from such Buyer’s
name in column (3) of the Schedule of Buyers, (y) Pre-Funded Common Warrants (initially for such aggregate number of Pre-Funded
Common Warrant Shares as is set forth across from such Buyer’s name in column (4) of the Schedule of Buyers), in each case,
as being purchased by such Buyer at the Closing pursuant to this Agreement, (z) Common Warrants (initially for such aggregate number
of Common Warrant Shares as is set forth across from such Buyer’s name in column (5) of the Schedule of Buyers), in each
case, as being purchased by such Buyer at the Closing pursuant to this Agreement.
(b)
Such Buyer and the Placement Agent shall have received the opinion of Sheppard, Mullin, Richter & Hampton LLP, the Company’s
counsel, dated as of the Closing Date, in the form acceptable to such Buyer.
(c)
The Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form acceptable
to such Buyer, which instructions shall have been delivered to and acknowledged in writing by the Company’s transfer agent.
(d)
The Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company in
such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction of formation
as of a date within ten (10) days of the Closing Date.
(e)
The Company shall have delivered to such Buyer a certificate evidencing the Company’s qualification as a foreign corporation
and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the Company conducts business
and is required to so qualify, as of a date within ten (10) days of the Closing Date.
(f)
The Company shall have delivered to such Buyer a certified copy of the Certificate of Incorporation as certified by the
Delaware Secretary of State within ten (10) days of the Closing Date.
(g)
The Company shall have delivered to such Buyer a certificate, in the form acceptable to such Buyer, executed by the Secretary
of the Company and dated as of the Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the
Company’s board of directors in a form reasonably acceptable to such Buyer, (ii) the Certificate of Incorporation of the
Company and (iii) the By-laws of the Company, each as in effect at the Closing.
(h)
Each and every representation and warranty of the Company shall be true and correct as of the date when made and as of the
Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date,
which shall be true and correct as of such specific date) and the Company shall have performed, satisfied and complied in all respects
with the covenants, agreements and conditions required to be performed, satisfied or complied with by the Company at or prior to
the Closing Date. Such Buyer shall have received a certificate, duly executed by the Chief Executive Officer of the Company, dated
as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer in the
form acceptable to such Buyer.
(i)
The Company shall have delivered to such Buyer a letter from the Company’s transfer agent certifying the number of
shares of Common Stock outstanding on the Closing Date immediately prior to the Closing.
(j)
The Common Stock (A) shall be designated for quotation or listed (as applicable) on the Principal Market and (B) shall not
have been suspended, as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market.
(k)
The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for
the sale of the Securities, including without limitation, those required by the Principal Market, if any.
(l)
No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or Governmental Entity of competent jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents.
(m)
Since the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would have
or result in a Material Adverse Effect.
(n)
The Company shall have obtained approval of the Principal Market to list or designate for quotation (as the case may be)
the Common Shares and the Warrant Shares.
(o)
Such Buyer shall have received a letter on the letterhead of the Company, duly executed by the Chief Executive Officer of
the Company, setting forth the wire amounts of each Buyer and the wire transfer instructions of the Company (the “
Flow
of Funds Letter
”).
(p)
From the date hereof to the Closing Date, (i) trading in the Common Stock shall not have been suspended by the SEC or the
Principal Market (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be
terminated prior to the Closing), and, (ii) at any time prior to the Closing Date, trading in securities generally as reported
by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose
trades are reported by such service, or on the Principal Market, nor shall a banking moratorium have been declared either by the
United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or
other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market
which, in each case, in the reasonable judgment of each Buyer, makes it impracticable or inadvisable to purchase the Securities
at the Closing
(q)
The Registration Statement shall be effective and available for the issuance and sale of the Securities hereunder and the
Company shall have delivered to such Buyer the Prospectus as required thereunder.
(r)
The Company and its Subsidiaries shall have delivered to such Buyer such other documents, instruments or certificates relating
to the transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request.
In the event that the Closing
shall not have occurred with respect to a Buyer within five (5) days of the date hereof, then such Buyer shall have the right to
terminate its obligations under this Agreement with respect to itself at any time on or after the close of business on such date
without liability of such Buyer to any other party; provided, however, (i) the right to terminate this Agreement under this Section 8
shall not be available to such Buyer if the failure of the transactions contemplated by this Agreement to have been consummated
by such date is the result of such Buyer’s breach of this Agreement and (ii) the abandonment of the sale and purchase of
the Common Shares and the Warrants shall be applicable only to such Buyer providing such written notice, provided further that
no such termination shall affect any obligation of the Company under this Agreement to reimburse such Buyer for the expenses described
in Section 4(j) above. Nothing contained in this Section 8 shall be deemed to release any party from any liability for
any breach by such party of the terms and provisions of this Agreement or the other Transaction Documents or to impair the right
of any party to compel specific performance by any other party of its obligations under this Agreement or the other Transaction
Documents.
(a)
Governing Law; Jurisdiction; Jury Trial
. All questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or under any of the other Transaction Documents or with any transaction contemplated hereby or thereby,
and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that
the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address
for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted
by law. Nothing contained herein shall be deemed or operate to preclude any Buyer from bringing suit or taking other legal action
against the Company in any other jurisdiction to collect on the Company’s obligations to such Buyer or to enforce a judgment
or other court ruling in favor of such Buyer. The Company hereby appoints Delaney Corporate Services, Ltd., 99 Washington Avenue,
Albany, New York 12210-2822 as its agent for service of process in New York.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT
IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION
DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY OR THEREBY.
The choice of the laws of the State of New York as the governing law of the Transaction Documents is a valid
choice of law and would be recognized and given effect to in any action brought before a court of competent jurisdiction in the
country of Israel or such other jurisdiction applicable to the Company or any of its Subsidiaries except for those laws (i) which
such court considers to be procedural in nature, (ii) which are revenue or penal laws or (iii) the application of which would be
inconsistent with public policy, as such term is interpreted under Israeli law or such other jurisdiction applicable to the Company
or any of its Subsidiaries. The Company or any of their respective properties, assets or revenues does not have any right of immunity
under Israeli law or such other jurisdiction applicable to the Company or any of its Subsidiaries or New York law, from any legal
action, suit or proceeding, from the giving of any relief in any such legal action, suit or proceeding, from set-off or counterclaim,
from the jurisdiction of the courts and/or government of Israel or such other jurisdiction applicable to the Company or any of
its Subsidiaries or any New York or United States federal court, from service of process, attachment upon or prior to judgment,
or attachment in aid of execution of judgment, or from execution of a judgment, or other legal process or proceeding for the giving
of any relief or for the enforcement of a judgment, in any such court, with respect to its obligations, liabilities or any other
matter under or arising out of or in connection with the Transaction Documents; and, to the extent that the Company, or any of
its properties, assets or revenues may have or may hereafter become entitled to any such right of immunity in any such court in
which proceedings may at any time be commenced, the Company hereby waives such right to the extent permitted by law and hereby
consents to such relief and enforcement as provided in this Agreement and the other Transaction Documents.
(b)
Counterparts
. This Agreement may be executed in two or more identical counterparts, all of which shall be considered
one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other
party. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document
format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original
thereof.
(c)
Headings; Gender
. The headings of this Agreement are for convenience of reference and shall not form part of, or
affect the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed
to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,”
“include” and words of like import shall be construed broadly as if followed by the words “without limitation.”
The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement
instead of just the provision in which they are found.
(d)
Severability; Maximum Payment Amounts
. If any provision of this Agreement is prohibited by law or otherwise determined
to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid
or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity
or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this
Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject
matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially
impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would
otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid
or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited,
invalid or unenforceable provision(s). Notwithstanding anything to the contrary contained in this Agreement or any other Transaction
Document (and without implication that the following is required or applicable), it is the intention of the parties that in no
event shall amounts and value paid by the Company and/or any of its Subsidiaries (as the case may be), or payable to or received
by any of the Buyers, under the Transaction Documents (including without limitation, any amounts that would be characterized as
“interest” under applicable law) exceed amounts permitted under any applicable law. Accordingly, if any obligation
to pay, payment made to any Buyer, or collection by any Buyer pursuant the Transaction Documents is finally judicially determined
to be contrary to any such applicable law, such obligation to pay, payment or collection shall be deemed to have been made by mutual
mistake of such Buyer, the Company and its Subsidiaries and such amount shall be deemed to have been adjusted with retroactive
effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by the applicable law. Such
adjustment shall be effected, to the extent necessary, by reducing or refunding, at the option of such Buyer, the amount of interest
or any other amounts which would constitute unlawful amounts required to be paid or actually paid to such Buyer under the Transaction
Documents. For greater certainty, to the extent that any interest, charges, fees, expenses or other amounts required to be paid
to or received by such Buyer under any of the Transaction Documents or related thereto are held to be within the meaning of “interest”
or another applicable term to otherwise be violative of applicable law, such amounts shall be pro-rated over the period of time
to which they relate.
(e)
Entire Agreement; Amendments
. This Agreement, the other Transaction Documents and the schedules and exhibits attached
hereto and thereto and the instruments referenced herein and therein supersede all other prior oral or written agreements between
the Buyers, the Company, its Subsidiaries, their affiliates and Persons acting on their behalf, including, without limitation,
any transactions by any Buyer with respect to Common Stock or the Securities, and the other matters contained herein and therein,
and this Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments
referenced herein and therein contain the entire understanding of the parties solely with respect to the matters covered herein
and therein; provided, however, nothing contained in this Agreement or any other Transaction Document shall (or shall be deemed
to) (i) have any effect on any agreements any Buyer has entered into with, or any instruments any Buyer has received from, the
Company or any of its Subsidiaries prior to the date hereof with respect to any prior investment made by such Buyer in the Company
or (ii) waive, alter, modify or amend in any respect any obligations of the Company or any of its Subsidiaries, or any rights of
or benefits to any Buyer or any other Person, in any agreement entered into prior to the date hereof between or among the Company
and/or any of its Subsidiaries and any Buyer, or any instruments any Buyer received from the Company and/or any of its Subsidiaries
prior to the date hereof, and all such agreements and instruments shall continue in full force and effect. Except as specifically
set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with
respect to such matters. For clarification purposes, the Recitals are part of this Agreement. No provision of this Agreement may
be amended other than by an instrument in writing signed by the Company and the Required Holders (as defined below), and any amendment
to any provision of this Agreement made in conformity with the provisions of this Section 9(e) shall be binding on all Buyers
and holders of Securities, as applicable, provided that no such amendment shall be effective to the extent that it (A) applies
to less than all of the holders of the Securities then outstanding or (B) imposes any obligation or liability on any Buyer without
such Buyer’s prior written consent (which may be granted or withheld in such Buyer’s sole discretion); provided further
that any such amendment or waiver that materially and adversely affects the rights of the Placement Agent shall require the prior
written consent of the Placement Agent. No waiver shall be effective unless it is in writing and signed by an authorized representative
of the waiving party, provided that the Required Holders may waive any provision of this Agreement, and any waiver of any provision
of this Agreement made in conformity with the provisions of this Section 9(e) shall be binding on all Buyers and holders of
Securities, as applicable, provided that no such waiver shall be effective to the extent that it (1) applies to less than all of
the holders of the Securities then outstanding (unless a party gives a waiver as to itself only) or (2) imposes any obligation
or liability on any Buyer without such Buyer’s prior written consent (which may be granted or withheld in such Buyer’s
sole discretion). No consideration (other than reimbursement of legal fees) shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration also is
offered to all of the parties to the Transaction Documents, all holders of the Common Shares, or all holders of the Warrants (as
the case may be). From the date hereof and while any Warrants are outstanding, the Company shall not be permitted to receive any
consideration from a Buyer or a holder of Warrants that is not otherwise contemplated by the Transaction Documents in order to,
directly or indirectly, induce the Company or any Subsidiary (i) to treat such Buyer or holder of Warrants in a manner that is
more favorable than to other similarly situated Buyers or holders of Warrants, as applicable, or (ii) to treat any Buyer(s) or
holder(s) of Warrants in a manner that is less favorable than the Buyer or holder of Warrants that is paying such consideration;
provided, however, that the determination of whether a Buyer has been treated more or less favorably than another Buyer shall disregard
any securities of the Company purchased or sold by any Buyer. The Company has not, directly or indirectly, made any agreements
with any Buyers relating to the terms or conditions of the transactions contemplated by the Transaction Documents except as set
forth in the Transaction Documents. Without limiting the foregoing, the Company confirms that, except as set forth in this Agreement,
no Buyer has made any commitment or promise or has any other obligation to provide any financing to the Company, any Subsidiary
or otherwise. As a material inducement for each Buyer to enter into this Agreement, the Company expressly acknowledges and agrees
that (x) no due diligence or other investigation or inquiry conducted by a Buyer, any of its advisors or any of its representatives
shall affect such Buyer’s right to rely on, or shall modify or qualify in any manner or be an exception to any of, the Company’s
representations and warranties contained in this Agreement or any other Transaction Document and (y) unless a provision of this
Agreement or any other Transaction Document is expressly preceded by the phrase “except as disclosed in the SEC Documents,”
nothing contained in any of the SEC Documents shall affect such Buyer’s right to rely on, or shall modify or qualify in any
manner or be an exception to any of, the Company’s representations and warranties contained in this Agreement or any other
Transaction Document. “
Required Holders
” means (I) prior to the Closing Date, Buyers entitled to purchase, in
the aggregate, at least a majority of the number of Common Shares at the Closing and (II) on or after the Closing Date, holders
of, in the aggregate, at least a majority of the Underlying Securities as of such time (excluding any Underlying Securities held
by the Company or any of its Subsidiaries as of such time) issued or issuable hereunder or pursuant to the Warrants.
(f)
Notices
. Any notices, consents, waivers or other communications required or permitted to be given under the terms
of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii)
upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept
on file by the sending party) or electronic mail (provided that such sent email is kept on file (whether electronically or otherwise)
by the sending party and the sending party does not receive an automatically generated message from the recipient's email server
that such e-mail could not be delivered to such recipient); or (iii) one (1) Business Day after deposit with an overnight courier
service with next day delivery specified, in each case, properly addressed to the party to receive the same. The addresses, facsimile
numbers and e-mail addresses for such communications shall be:
If to the Company:
My Size, Inc.
3 Arava St., pob 1026
Airport City, Israel, 7010000
Telephone: +972-3-600-9030
Facsimile: +972-54-477-5656
Attention: Ronen Luzon, Chief Executive Officer
E-Mail: ronen@mysizeid.com
With a copy (for informational purposes only) to:
Sheppard, Mullin, Richter & Hampton LLP
30 Rockefeller Plaza, 39th Floor
New York, New York 10112
Telephone: (212) 653-8700
Facsimile: (212) 653-8701
Attention: Richard A. Friedman
E-Mail: rfriedman@sheppardmullin.com
If to the Transfer Agent:
VStock Transfer, LLC
18 Lafayette Place
Woodmere, New York 11598
Phone: (212) 828-8436 Ext. 123
Facsimile: (646) 536-3179
If to a Buyer, to its address, e-mail
address and facsimile number set forth on the Schedule of Buyers, with copies to such Buyer’s representatives as set forth
on the Schedule of Buyers.
If to the Placement Agent:
Roth Capital Partners, LLC
888 San Clemente Drive
Newport Beach, CA 92660
Facsimile: (949) 720-7215
Attention: Aaron M. Gurewitz
E-mail: agurewitz@roth.com
With a copy (for informational purposes only) to:
Kelley Drye & Warren LLP
101 Park Avenue
New York, NY 10178
Telephone: (212) 808-7540
Facsimile: (212) 808-7897
Attention: Michael A. Adelstein, Esq.
E-mail: madelstein@kelleydrye.com
or, in each case, to such other address,
e-mail address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given
by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s
facsimile machine or e-mail containing the time, date, recipient facsimile number and, with respect to each facsimile transmission,
an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii)
above, respectively.
(g)
Successors and Assigns
. This Agreement shall be binding upon and inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of any of the Warrants (but excluding any purchasers of Underlying Securities,
unless pursuant to a written assignment by such Buyer). The Company shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Required Holders, including, without limitation, by way of a Fundamental Transaction
(as defined in the Warrants) (unless the Company is in compliance with the applicable provisions governing Fundamental Transactions
set forth in the Warrants). A Buyer may assign some or all of its rights hereunder in connection with any transfer of any of its
Securities without the consent of the Company, in which event such assignee shall be deemed to be a Buyer hereunder with respect
to such assigned rights.
(h)
No Third Party Beneficiaries
. This Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person,
other than (i) the Indemnitees referred to in Section 9(m) and (ii) the Placement Agent shall be a third party beneficiary
of this Section 9(h) and Sections 1(e), 2(e), 2(f), 3(g), 3(ee), 4(j), 4(s), 7(b), 9(e) and 9(i).
(i)
Reliance by the Placement Agent
. Each party agrees and acknowledges that the Placement Agent may rely on the representations,
warranties, agreements and covenants of the Company contained in this Agreement and may rely on the representations and warranties
of the respective Buyers contained in this Agreement as if such representations, warranties, agreements, and covenants, as applicable,
were made directly to the Placement Agent. The parties further agree that the Placement Agent may rely on or, if the Placement
Agent so requests, be specifically named as an addressee of, the legal opinions to be delivered pursuant to Section 7(b) of this
Agreement.
(j)
Exculpation of Placement Agent
. Each party hereto agrees for the express benefit of each of the Placement Agent,
their affiliates and representatives that:
(i)
Neither the Placement Agent nor any of its affiliates or any of its representatives (1) has any duties or obligations other
than those specifically set forth herein or in the Engagement Letter; (2) shall be liable for any improper payment made in accordance
with the information provided by the Company; (3) makes any representation or warranty, or has any responsibilities as to the validity,
accuracy, value or genuineness of any information, certificates or documentation delivered by or on behalf of the Company pursuant
to this Agreement or the Transaction Documents or in connection with any of the transactions contemplated hereby; or (4) shall
be liable (x) for any action taken, suffered or omitted by any of them in good faith and reasonably believed to be authorized or
within the discretion or rights or powers conferred upon it by this Agreement or any Transaction Document or (y) for anything which
any of them may do or refrain from doing in connection with this Agreement or any Transaction Document, except for such party's
own gross negligence, willful misconduct or bad faith.
(ii)
The Placement Agent, and its affiliates and representatives shall be entitled to (1) rely on, and shall be protected in
acting upon, any certificate, instrument, opinion, notice, letter or any other document or security delivered to any of them by
or on behalf of the Company, and (2) be indemnified by the Company for acting as Placement Agent hereunder pursuant the indemnification
provisions set forth in the Engagement Letter.
(k)
Survival
. The representations, warranties, agreements and covenants shall survive the Closing. Each Buyer shall be
responsible only for its own representations, warranties, agreements and covenants hereunder.
(l)
Further Assurances
. Each party shall do and perform, or cause to be done and performed, all such further acts and
things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may
reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions
contemplated hereby.
(m)
Indemnification
.
(i)
In consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities
thereunder and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend,
protect, indemnify and hold harmless each Buyer and each holder of any Securities and all of their stockholders, partners, members,
officers, directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives
(including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively,
the “
Indemnitees
”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the
“
Indemnified Liabilities
”), incurred by any Indemnitee as a result of, or arising out of, or relating to (i)
any misrepresentation or breach of any representation or warranty made by the Company or any Subsidiary in any of the Transaction
Documents, (ii) any breach of any covenant, agreement or obligation of the Company or any Subsidiary contained in any of the Transaction
Documents or (iii) any cause of action, suit, proceeding or claim brought or made against such Indemnitee by a third party (including
for these purposes a derivative action brought on behalf of the Company or any Subsidiary) or which otherwise involves such Indemnitee
that arises out of or results from (A) the execution, delivery, performance or enforcement of any of the Transaction Documents,
(B) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of
the Securities, (C) any disclosure properly made by such Buyer pursuant to Section 4(k), or (D) the status of such Buyer or
holder of the Securities either as an investor in the Company pursuant to the transactions contemplated by the Transaction Documents
or as a party to this Agreement (including, without limitation, as a party in interest or otherwise in any action or proceeding
for injunctive or other equitable relief). To the extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities
which is permissible under applicable law.
(ii)
Promptly after receipt by an Indemnitee under this Section 9(m) of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving an Indemnified Liability, such Indemnitee shall, if a claim in respect
thereof is to be made against the Company under this Section 9(m), deliver to the Company a written notice of the commencement
thereof, and the Company shall have the right to participate in, and, to the extent the Company so desires, to assume control of
the defense thereof with counsel mutually satisfactory to the Company and the Indemnitee; provided, however, that an Indemnitee
shall have the right to retain its own counsel with the fees and expenses of such counsel to be paid by the Company if: (A) the
Company has agreed in writing to pay such fees and expenses; (B) the Company shall have failed promptly to assume the defense of
such Indemnified Liability and to employ counsel reasonably satisfactory to such Indemnitee in any such Indemnified Liability;
or (C) the named parties to any such Indemnified Liability (including any impleaded parties) include both such Indemnitee and the
Company, and such Indemnitee shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnitee and the Company (in which case, if such Indemnitee notifies the Company in writing that it elects
to employ separate counsel at the expense of the Company, then the Company shall not have the right to assume the defense thereof
and such counsel shall be at the expense of the Company), provided further, that in the case of clause (C) above the Company shall
not be responsible for the reasonable fees and expenses of more than one (1) separate legal counsel for the Indemnitees. The Indemnitee
shall reasonably cooperate with the Company in connection with any negotiation or defense of any such action or Indemnified Liability
by the Company and shall furnish to the Company all information reasonably available to the Indemnitee which relates to such action
or Indemnified Liability. The Company shall keep the Indemnitee reasonably apprised at all times as to the status of the defense
or any settlement negotiations with respect thereto. The Company shall not be liable for any settlement of any action, claim or
proceeding effected without its prior written consent, provided, however, that the Company shall not unreasonably withhold, delay
or condition its consent. The Company shall not, without the prior written consent of the Indemnitee, consent to entry of any judgment
or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant
or plaintiff to such Indemnitee of a release from all liability in respect to such Indemnified Liability or litigation, and such
settlement shall not include any admission as to fault on the part of the Indemnitee. Following indemnification as provided for
hereunder, the Company shall be subrogated to all rights of the Indemnitee with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. The failure to deliver written notice to the Company within a reasonable
time of the commencement of any such action shall not relieve the Company of any liability to the Indemnitee under this Section
9(m), except to the extent that the Company is materially and adversely prejudiced in its ability to defend such action.
(iii)
The indemnification required by this Section 9(m) shall be made by periodic payments of the amount thereof during the course
of the investigation or defense, within ten (10) days after bills are received or Indemnified Liabilities are incurred.
(iv)
The indemnity agreement contained herein shall be in addition to (A) any cause of action or similar right of the Indemnitee
against the Company or others, and (B) any liabilities the Company may be subject to pursuant to the law.
(n)
Construction
. The language used in this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against any party. No specific representation or warranty
shall limit the generality or applicability of a more general representation or warranty. Each and every reference to share prices,
shares of Common Stock and any other numbers in this Agreement that relate to the Common Stock shall be automatically adjusted
for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions that occur with respect
to the Common Stock after the date of this Agreement. Notwithstanding anything in this Agreement to the contrary, for the avoidance
of doubt, nothing contained herein shall constitute a representation or warranty against, or a prohibition of, any actions with
respect to the borrowing of, arrangement to borrow, identification of the availability of, and/or securing of, securities of the
Company in order for such Buyer (or its broker or other financial representative) to effect short sales or similar transactions
in the future.
(o)
Remedies
. Each Buyer and in the event of assignment by Buyer of its rights and obligations hereunder, each holder
of Securities, shall have all rights and remedies set forth in the Transaction Documents and all rights and remedies which such
holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under
any law. Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically
(without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. Furthermore, the Company recognizes that in the event that it or any Subsidiary fails
to perform, observe, or discharge any or all of its or such Subsidiary’s (as the case may be) obligations under the Transaction
Documents, any remedy at law would inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled
to specific performance and/or temporary, preliminary and permanent injunctive or other equitable relief from any court of competent
jurisdiction in any such case without the necessity of proving actual damages and without posting a bond or other security. The
remedies provided in this Agreement and the other Transaction Documents shall be cumulative and in addition to all other remedies
available under this Agreement and the other Transaction Documents, at law or in equity (including a decree of specific performance
and/or other injunctive relief).
(p)
Withdrawal Right
. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions
of) the Transaction Documents, whenever any Buyer exercises a right, election, demand or option under a Transaction Document and
the Company or any Subsidiary does not timely perform its related obligations within the periods therein provided, then such Buyer
may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company or such Subsidiary (as the
case may be), any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.
(q)
Payment Set Aside; Currency
. To the extent that the Company makes a payment or payments to any Buyer hereunder or
pursuant to any of the other Transaction Documents or any of the Buyers enforce or exercise their rights hereunder or 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,
foreign, 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. Unless otherwise expressly indicated, all dollar amounts referred
to in this Agreement and the other Transaction Documents are in United States Dollars (“
U.S. Dollars
”), and
all amounts owing under this Agreement and all other Transaction Documents shall be paid in U.S. Dollars. All amounts denominated
in other currencies (if any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on
the date of calculation. “
Exchange Rate
” means, in relation to any amount of currency to be converted into U.S.
Dollars pursuant to this Agreement, the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date
of calculation.
(r)
Judgment Currency
.
(i)
If for the purpose of obtaining or enforcing judgment against the Company in connection with this Agreement or any other
Transaction Document in any court in any jurisdiction it becomes necessary to convert into any other currency (such other currency
being hereinafter in this Section 9(r) referred to as the “
Judgment Currency
”) an amount due in US Dollars
under this Agreement, the conversion shall be made at the Exchange Rate prevailing on the Trading Day (as defined in the Warrants)
immediately preceding:
(1)
the date actual payment of the amount due, in the case of any proceeding in the courts of New York or in the courts of any
other jurisdiction that will give effect to such conversion being made on such date: or
(2)
the date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the
date as of which such conversion is made pursuant to Section 9(r)(i)(1) being hereinafter referred to as the “
Judgment
Conversion Date
”).
(ii)
If in the case of any proceeding in the court of any jurisdiction referred to in Section 9(r)(i)(1) above, there is
a change in the Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due,
the applicable party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency,
when converted at the Exchange Rate prevailing on the date of payment, will produce the amount of US Dollars which could have been
purchased with the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on
the Judgment Conversion Date.
(iii)
Any amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment
being obtained for any other amounts due under or in respect of this Agreement or any other Transaction Document.
(s)
Independent Nature of Buyers’ Obligations and Rights
. The obligations of each Buyer under the Transaction Documents
are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance
of the obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document,
and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company acknowledges
that the Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or create
a presumption that the Buyers are in any way acting in concert or as a group or entity, and the Company shall not assert any such
claim with respect to such obligations or the transactions contemplated by the Transaction Documents or any matters, and the Company
acknowledges that the Buyers are not acting in concert or as a group, and the Company shall not assert any such claim, with respect
to such obligations or the transactions contemplated by the Transaction Documents. The decision of each Buyer to purchase Securities
pursuant to the Transaction Documents has been made by such Buyer independently of any other Buyer. Each Buyer acknowledges that
no other Buyer has acted as agent for such Buyer in connection with such Buyer making its investment hereunder and that no other
Buyer will be acting as agent of such Buyer in connection with monitoring such Buyer’s investment in the Securities or enforcing
its rights under the Transaction Documents. The Company and each Buyer confirms that each Buyer has independently participated
with the Company and its Subsidiaries in the negotiation of the transaction contemplated hereby with the advice of its own counsel
and advisors. Each Buyer shall be entitled to independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary for any other Buyer
to be joined as an additional party in any proceeding for such purpose. The use of a single agreement to effectuate the purchase
and sale of the Securities contemplated hereby was solely in the control of the Company, not the action or decision of any Buyer,
and was done solely for the convenience of the Company and its Subsidiaries and not because it was required or requested to do
so by any Buyer. It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction
Document is between the Company, each Subsidiary and a Buyer, solely, and not between the Company, its Subsidiaries and the Buyers
collectively and not between and among the Buyers.
[
signature pages follow
]
IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first
written above.
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COMPANY:
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MY SIZE, INC.
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By:
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Name:
Title
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IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first
written above.
o
Notwithstanding anything contained in this Agreement to the contrary, by checking this box (i) the obligations of the above-signed
to purchase the securities set forth in this Agreement to be purchased from the Company by the above-signed, and the obligations
of the Company to sell such securities to the above-signed, shall be unconditional and all conditions to Closing shall be disregarded,
(ii) the Closing shall occur on the second (2
nd
) Trading Day following the date of this Agreement and (iii) any condition
to Closing contemplated by this Agreement (but prior to being disregarded by clause (i) above) that required delivery by the Company
or the above-signed of any agreement, instrument, certificate or the like or purchase price (as applicable) shall no longer be
a condition and shall instead be an unconditional obligation of the Company or the above-signed (as applicable) to deliver such
agreement, instrument, certificate or the like or purchase price (as applicable) to such other party on the Closing Date.
SCHEDULE OF BUYERS
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(1)
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(2)
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(3)
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(4)
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(5)
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(6)
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(7)
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Buyer
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Address and Facsimile Number
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Aggregate
Number of
Common Shares
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Aggregate
Number of
Pre-Funded Common Warrant Shares
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Aggregate
Number of
Common Warrant Shares
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Purchase Price
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Legal Representative’s
Address and Facsimile Number
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Exhibit 10.19
LEAK-OUT
AGREEMENT
December
__, 2017
This
agreement (the “
Leak-Out Agreement
”) is being delivered to you in connection with an understanding by and between
My Size, Inc., a Delaware corporation (the “
Company
”), and the person or persons named on the signature pages
hereto (collectively, the “
Holder
”).
Reference
is hereby made to (a) the Securities Purchase Agreement, dated December __, 2017, by and among the Company and the Holder and
certain other purchasers signatory thereto (the “
SPA
”) and (b) the registration statement on Form S-1 (File
No. 333-221741) (“
Registration Statement
”), pursuant to which the Holder acquired (i) Common Shares and/or
Pre-Funded Common Warrants, and (ii) Common Warrants (collectively, the “
Securities
”). Capitalized terms not
defined herein shall have the meaning as set forth in the SPA, unless otherwise set forth herein.
The
Holder agrees solely with the Company that from the date that the undersigned executes the SPA and ending at 4:00 pm (New York
City time) on the earlier of (i) December __, 2017 and (ii) the fifth Trading Day (as such term is defined in the Warrants) of
a period of five consecutive Trading Days during which the VWAP (as such term is defined in the Warrants) for each such Trading
Day during such period is equal to or exceeds $[____] per share (as adjusted for stock splits, stock dividends, stock combinations,
recapitalizations or other similar events occurring after the date hereof) (such period, the “
Restricted Period
”),
neither the Holder, nor any Affiliate (as such term is defined in the Warrants) of such Holder which (x) had or has knowledge
of the transactions contemplated by the SPA, (y) has or shares discretion relating to such Holder’s investments or trading
or information concerning such Holder’s investments, including in respect of the Securities, or (z) is subject to such Holder’s
review or input concerning such Affiliate’s investments or trading (together, the “
Holder’s Trading Affiliates
”),
collectively, shall sell, dispose or otherwise transfer, directly or indirectly, (including, without limitation, any sales, short
sales, swaps or any derivative transactions that would be equivalent to any sales or short positions) on any Trading Day during
the Restricted Period (any such date, a “
Date of Determination
”), shares of Common Stock, or shares of Common
Stock underlying any Convertible Securities, held by the Holder on the date hereof, including the Shares or Warrant Shares (collectively,
the “
Restricted Securities
”), in an amount more than __% of the trading volume of Common Stock as reported
by Bloomberg, LP for the applicable Date of Determination (“
Leak-Out Percentage
”).
Notwithstanding
anything herein to the contrary, during the Restricted Period, the Holder may, directly or indirectly, sell or transfer all, or
any part, of any Restricted Securities to any Person (an “
Assignee
”) in a transaction which does not need to
be reported on the consolidated tape on the Principal Market, without complying with (or otherwise limited by) the restrictions
set forth in this Leak-Out Agreement; provided, that as a condition to any such sale or transfer an authorized signatory of the
Company and such Assignee duly execute and deliver a leak-out agreement in the form of this Leak-Out Agreement (an “
Assignee
Agreement
”, and each such transfer a “
Permitted Transfer
”) and, subsequent to a Permitted Transfer,
sales of the Holder and the Holder’s Trading Affiliates and all Assignees (other than any such sales that constitute Permitted
Transfers) shall be aggregated for all purposes of this Leak-Out Agreement and all Assignee Agreements.
Any
notices, consents, waivers or other communications required or permitted to be given under the terms of this Leak-Out Agreement
must be in writing and shall be given in accordance with the terms of the SPA.
This
Leak-Out Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes
all prior negotiations, letters and understandings relating to the subject matter hereof and are fully binding on the parties
hereto.
This
Leak-Out Agreement may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to be an original,
and all such counterparts shall constitute one and the same instrument. This Leak-Out Agreement may be executed and accepted by
facsimile or PDF signature and any such signature shall be of the same force and effect as an original signature.
The
terms of this Leak-Out Agreement shall be binding upon and shall inure to the benefit of each of the parties hereto and their
respective successors and assigns.
This
Leak-Out Agreement may not be amended or modified except in writing signed by each of the parties hereto.
All
questions concerning the construction, validity, enforcement and interpretation of this Leak-Out Agreement shall be governed by
Section 9 of the SPA.
Each
party hereto acknowledges that, in view of the uniqueness of the transactions contemplated by this Leak-Out Agreement, the other
party or parties hereto may not have an adequate remedy at law for money damages in the event that this Leak-Out Agreement has
not been performed in accordance with its terms, and therefore agrees that such other party or parties shall be entitled to seek
specific enforcement of the terms hereof in addition to any other remedy it may seek, at law or in equity.
The
obligations of the Holder under this Leak-Out Agreement are several and not joint with the obligations of any other holder of
any of the Securities issued under the SPA (each, an “
Other Holder
”) or any other holder of any of the Securities
issued under the Registration Statement that is not a signatory to the SPA (each, a “
Prospectus Purchaser Other Holder
”)
under any other agreement, and the Holder shall not be responsible in any way for the performance of the obligations of any Other
Holder or any Prospectus Purchaser Other Holder under any such other agreement. Nothing contained herein or in this Leak-Out Agreement,
and no action taken by the Holder pursuant hereto, shall be deemed to constitute the Holder and Other Holders or any Prospectus
Purchaser Other Holder as a partnership, an association, a joint venture or any other kind of entity, or create a presumption
that the Holder and the Other Holders or any Prospectus Purchaser Other Holder are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by this Leak-Out Agreement and the Company acknowledges that
the Holder and the Other Holders or any Prospectus Purchaser Other Holder are not acting in concert or as a group with respect
to such obligations or the transactions contemplated by this Leak-Out Agreement or any other agreement. The Company and the Holder
confirm that the Holder has independently participated in the negotiation of the transactions contemplated hereby with the advice
of its own counsel and advisors. The Holder shall be entitled to independently protect and enforce its rights, including, without
limitation, the rights arising out of this Leak-Out Agreement, and it shall not be necessary for any Other Holder or any Prospectus
Purchaser Other Holder to be joined as an additional party in any proceeding for such purpose.
The
Company hereby represents and warrants as of the date hereof and covenants and agrees from and after the date hereof that none
of the terms offered to any Other Holder or any Prospectus Purchaser Other Holder with respect to any restrictions on the sale
of Securities substantially in the form of this Leak-Out Agreement (or any amendment, modification, waiver or release thereof)
(each a “
Settlement Document
”), is or will be more favorable to such Other Holder than those of the Holder
and this Leak-Out Agreement. If, and whenever on or after the date hereof, the Company enters into a Settlement Document with
terms that are materially different from this Leak-Out Agreement, then (i) the Company shall provide notice thereof to the Holder
promptly following the occurrence thereof and (ii) the terms and conditions of this Leak-Out Agreement shall be, without any further
action by the Holder or the Company, automatically amended and modified in an economically and legally equivalent manner such
that the Holder shall receive the benefit of the more favorable terms and/or conditions (as the case may be) set forth in such
Settlement Document, provided that upon written notice to the Company at any time the Holder may elect not to accept the benefit
of any such amended or modified term or condition, in which event the term or condition contained in this Leak-Out Agreement shall
apply to the Holder as it was in effect immediately prior to such amendment or modification as if such amendment or modification
never occurred with respect to the Holder. The provisions of this paragraph shall apply similarly and equally to each Settlement
Document.
[The
remainder of the page is intentionally left blank]
The
parties hereto have executed this Leak-Out Agreement as of the date first set forth above.
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Sincerely,
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MY SIZE, INC.
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By:
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Name:
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Title:
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Agreed
to and Acknowledged:
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“HOLDER”
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[ ]
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By:
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Name:
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Title:
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3
Exhibit
23.1
Weinberg
& Baer LLC
115
Sudbrook Lane, Baltimore, MD 21208
Phone
(410) 702-5660
Consent
of Independent Registered Public Accounting Firm
My
Size Inc.
Airport
City, Israel
We consent to the incorporation by reference in the registration statement on Form S-1 of My Size Inc. (the “Company”)
of our report dated March 1, 2016, except for Note 1c, as to which the date is March 27, 2016, with respect to the financial
statements of the Company as of December 31, 2015, which report appears in the December 31, 2015 annual report on Form 10-K
of the Company. We also consent to the reference to us under the heading “Experts” in such Registration Statement.
Respectfully
submitted,
Weinberg
& Baer LLC
Baltimore,
Maryland
December
18, 2017
Exhibit
23.2
Consent
of Independent Registered Public Accounting Firm
The
Board of Directors
My
Size Inc.:
We consent to the use of our report dated April 14, 2017, with respect to the consolidated balance sheet of My Size Inc.
as of December 31, 2016, and the related consolidated statements of comprehensive loss, shareholders’ equity (deficiency)
and cash flows for the year ended December 31, 2016, incorporated by reference herein and to the reference to our firm under
the heading “Experts” in the prospectus.
Somekh
Chaikin
Certified
Public Accountants (Israel)
Member
Firm of KMPG International
Tel
Aviv, Israel
December
18, 2017