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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): July 19, 2024
Hepion
Pharmaceuticals, Inc.
(Exact
name of registrant as specified in its charter)
Delaware |
|
001-36856 |
|
46-2783806 |
(State
or other jurisdiction
of
incorporation) |
|
(Commission
File
Number) |
|
(IRS
Employer
Identification
No.) |
399
Thornall Street, First Floor, Edison, NJ |
|
08837 |
(Address
of principal executive offices) |
|
(Zip
Code) |
Registrant’s
telephone number, including area code: (732) 902-4000
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
☒ |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
☐ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
Common
Stock |
|
HEPA |
|
Nasdaq
Capital Market |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item
1.01 Entry into a Material Definitive Agreement.
Merger
Agreement
Overview
On
July 19, 2024, Hepion Pharmaceuticals, Inc., a Delaware corporation (the “Company”), Pharma Two B Ltd., a company
organized under the laws of the State of Israel (“Parent”), and Pearl Merger Sub, Inc., a Delaware corporation and
an indirect wholly owned subsidiary of Parent (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger
Agreement”), pursuant to which, among other things, on the terms and subject to the conditions set forth therein, Merger Sub
will merge with and into the Company (the “Merger”), with the Company surviving the Merger as an indirect wholly owned
subsidiary of Parent. Terms capitalized but not defined herein have the meanings given in the Merger Agreement.
Merger
Sub is a newly incorporated Delaware corporation and a wholly owned, direct subsidiary of P2B HoldCo, Inc., a Delaware corporation (“Holdco”).
Holdco is a wholly owned, direct subsidiary of P2B Topco, Inc., a Delaware corporation (“Topco”). Topco is a wholly
owned, direct subsidiary of Parent. Each of Merger Sub, Holdco and Topco were formed for purposes of consummating the transactions contemplated
by the Merger Agreement and the other Transaction Agreements (as defined in the Merger Agreement).
The
Board of Directors of the Company has (i) determined that the Merger Agreement and the transactions contemplated thereby (the “Transactions”),
including the Merger, on the terms and subject to the conditions set forth therein, are in the best interests of the Company and its
stockholders, (ii) approved the Merger Agreement, the execution and delivery by the Company of the Merger Agreement, the performance
by the Company of its obligations contained therein and the consummation of the Transactions, including the Merger, on the terms and
subject to the conditions contained in the Merger Agreement and the other Transaction Agreements to which the Company is a party and
(iii) resolved to recommend adoption and approval of the Merger Agreement, the other Transaction Agreements to which the Company is a
party and the Transactions, including the Merger, to the Company’s stockholders.
Treatment
of Company Common Stock and Parent Ordinary Shares
On
the Closing Date (as defined in the Merger Agreement), subject to obtaining Parent’s shareholder approval and the Company’s
stockholder approval, immediately prior to the Effective Time (as defined below) and prior to the consummation of any of the transactions
contemplated by the PIPE Agreements (as defined in the Merger Agreement), the following actions shall take place or be effected: (A)
the Company shall cause all of its issued capital stock which is not in the form of the Company’s common stock, par value $0.0001
per share (“Common Stock”) to be converted into shares of Common Stock in accordance with the Company’s organizational
documents, and shall further cause any convertible instruments, including but not limited to warrants, to be converted into shares of
Common Stock; and (B) (i) each Ordinary A Share of Parent, nominal value NIS 1 (“Parent Ordinary A Share”), Ordinary
B Share of Parent, nominal value NIS 1 (“Parent Ordinary B Share”), and each of the outstanding classes of Parent’s
preferred shares (collectively, the “Parent Preferred Share”) that is issued and outstanding immediately prior to
the Effective Time shall be automatically converted into such number of Parent’s ordinary shares per the terms of the Merger Agreement;
(ii) the amended and restated articles of association of Parent shall be adopted and become effective; (iii) each of Parent’s ordinary
shares, issued and outstanding immediately prior to the Effective Time (including each of Parent’s ordinary shares that are issued
upon the conversion of Parent Ordinary A Shares, Parent Ordinary B Shares and Parent Preferred Shares pursuant to clause (i) above),
shall be split into such number of Parent’s ordinary shares as shall be necessary for purposes of the closing of the Merger (the
“Closing”) and the initial listing of Parent’s ordinary shares on Nasdaq (the “Share Split”);
provided that no fraction of a Parent’s ordinary share will be issued by virtue of the Share Split, and each of Parent’s
shareholders that would otherwise be so entitled to a fraction of Parent’s ordinary shares (after aggregating all fractional Parent’s
ordinary shares that otherwise would be received by such Parent’s shareholder) shall instead be entitled to receive such number
of Parent’s ordinary shares to which such Parent’s shareholder would otherwise be entitled, rounded to the nearest whole
number; and (iv) any outstanding options and warrants of Parent issued and outstanding immediately prior to the Effective Time shall
be adjusted immediately upon the Share Split to give effect to the foregoing transactions, provided that to the extent such adjustment
would result in (x) a fraction of share being subject to any outstanding stock option or warrant, such share shall be rounded down to
the nearest whole share or (y) the exercise price of an option being a fraction of a cent, the exercise price will be rounded up to the
nearest whole cent.
At
the effective time of the Merger (the “Effective Time”), on the terms and subject to the conditions set forth in the
Merger Agreement, each share of Common Stock that is issued and outstanding immediately prior to the Effective Time shall, by virtue
of the Merger, be converted into the right to receive such ordinary shares of Parent and shall no longer be outstanding and shall automatically
be canceled and shall cease to exist (the “Merger Consideration”).
Additionally,
each share of common stock of Merger Sub that shall be outstanding immediately prior to the Effective Time shall, by virtue of the Merger,
be converted into the right to receive one share of Common Stock.
Closing
Conditions
The
Merger is expected to be consummated in the fourth quarter of 2024. The obligation of the parties to consummate the Merger is subject
to various conditions, including, but not limited to: (i) adoption of the Merger Agreement and the approval of the Merger and the other
Transactions by the required portion of the Company’s stockholders as determined in accordance with applicable law and the Company’s
organizational documents; (ii) adoption of the Merger Agreement and the approval of the Merger and the other Transactions by Parent’s
shareholders, as determined in accordance with applicable law and Parent’s organizational documents (iii) the absence of any judgment,
order or law prohibiting the consummation of the Merger; (iv) upon the Closing, the approval for listing on Nasdaq of Parent’s
ordinary shares to be issued in connection with the Closing of the Merger; (v) the effectiveness of the Registration Statement (as defined
below) to be filed by Parent with the SEC with respect to Parent’s ordinary shares that constitute the Merger Consideration, (vi)
the SPA (as defined below) shall be in full force and effect and concurrently with the Closing cash proceeds of not less than $8,600,000
(eight million six hundred thousand) shall have been received by Parent in connection with the consummation of the transactions contemplated
by such SPA, (vii) the parties shall take all necessary action so that immediately after the Effective Time, the post-Closing board of
directors of Parent (the “Post-Closing Parent Board”) shall be comprised of seven directors; whereby (a) Parent shall
have the right to designate (i) three members to the Post-Closing Parent Board and (ii) two industry experts that shall qualify as independent
directors (as defined under the Nasdaq listing rules); and (b) the Company shall have the right to designate two members to the Post-Closing
Parent Board, (viii) Parent shall file a notice with the Israel Innovation Authority (the “IIA”) in accordance with
applicable law and obtain the unconditional approval of the IIA to consummate the Transactions, (ix) the accuracy of the representations
and warranties of the parties in the Merger Agreement (subject to customary materiality qualifiers except to the extent provided in the
Merger Agreement); (x) each party’s performance in all material respects of its covenants and obligations contained in the Merger
Agreement and (xi) the absence of a Material Adverse Effect. Following the execution of the Merger Agreement, Holdco, in its capacity
as the sole stockholder of Merger Sub, executed and delivered to the Company a written consent approving the Merger Agreement and the
Merger, thereby providing all required stockholder approvals for the Merger. No further action by holders of the Common Stock is required
to complete the Merger.
No-Shop
Under
the Merger Agreement, the Company is subject to a customary “no-shop” provision that restricts the Company and its representatives
from soliciting any Acquisition Proposal or Acquisition Inquiry (each as defined in the Merger Agreement) from third parties or providing
information to or participating in any discussions or negotiations with third parties regarding any Acquisition Proposal or Acquisition
Inquiry.
Termination;
Termination Fees
The
Merger Agreement may be terminated, and the Transactions abandoned prior to the Closing as follows:
(a)
by mutual written agreement of the Company and Parent;
(b)
by either the Company or Parent, if there shall be in effect any (i) law or (ii) Governmental Order (as defined in the Merger Agreement),
other than, for the avoidance of doubt, a temporary restraining order, that (x) in the case of each of clauses (i) and (ii), permanently
restrains, enjoins, makes illegal or otherwise prohibits the consummation of the Merger, and (y) in the case of clause (ii) such Governmental
Order shall have become final and non-appealable;
(c)
by either the Company or Parent, if the Effective Time has not occurred by 11:59 p.m., New York City time, on the date that is 90 days
following the date of the Merger Agreement (the “Termination Date”); provided, however, that if the
SEC has not declared the Registration Statement (as defined below) effective on or prior to the date that is 90 days following the date
of the Merger Agreement, the Termination Date shall be automatically extended to the date that is 180 days following the date of the
Merger Agreement; provided, further, that the right to terminate the Merger Agreement pursuant to this subsection (c) will
not be available to any party whose breach of any provision of the Merger Agreement caused or resulted in the failure of the Transactions
to be consummated by such time;
(d)
by the Company, if Parent or Merger Sub has breached or failed to perform any of its (i) representations or warranties or (ii) covenants
or other agreements contained in the Merger Agreement, which breach or failure to perform (A) would result in the failure of a condition
set forth in Section 9.02(a) or 9.02(b) of the Merger Agreement to be satisfied at the Closing and (B) is not capable of being cured
by the Termination Date or, if capable of being cured by the Termination Date, is not cured by Parent or Merger Sub before the earlier
of (x) the fifth Business Day immediately prior to the Termination Date and (y) the 45th day following receipt of written notice from
the Company of such breach or failure to perform; provided that the Company shall not have the right to terminate the Merger Agreement
pursuant to this subsection (d) if it is then in material breach of any of its representations, warranties, covenants or other agreements
contained in the Merger Agreement;
(e)
by Parent, if the Company has breached or failed to perform any of its respective representations, warranties, covenants or other agreements
contained in the Merger Agreement, which breach or failure to perform (A) would result in the failure of a condition set forth in Section
9.03(a) or 9.03(b) of the Merger Agreement to be satisfied at the Closing and (B) is not capable of being cured by the Termination Date
or, if capable of being cured by the Termination Date, is not cured by the Company before the earlier of (x) the fifth Business Day immediately
prior to the Termination Date and (y) the 45th day following receipt of written notice from Parent of such breach or failure to perform;
provided that Parent shall not have the right to terminate the Merger Agreement pursuant to this subsection (e) if it is then
in material breach of any of its representations, warranties, covenants or other agreements contained in the Merger Agreement;
(f)
by either the Company or Parent, if the Company failed to obtain stockholder approval upon vote taken thereon at a duly convened special
meeting (or at a meeting of its shareholders following any adjournment or postponement thereof); provided that the right to terminate
the Merger Agreement under this subsection (f) shall not be available to the Company if the Company has breached the Merger Agreement;
(g)
by either the Company or Parent, if, at the Parent special meeting (including any adjournments thereof), the Parent transaction proposals
are not duly adopted by Parent’s shareholders by the requisite vote under applicable Law and the Organizational Documents of Parent;
provided that the right to terminate the Merger Agreement under this subsection (g) shall not be available to Parent if Parent has breached
the Merger Agreement; or
(h)
by Parent, if the Company breaches its obligations relating to the special meeting of its stockholders pursuant to Section 8.02(b) of
the Merger Agreement.
Representations,
Warranties and Covenants
Each
of the Company and Parent has agreed to customary representations, warranties and covenants of the Company, including, among others,
covenants relating to (i) obtaining the requisite approval of their respective stockholders and shareholders, as applicable, (ii) use
commercially reasonable efforts (taking into consideration the financial condition and cash runway of the Company) to carry on its business
in all material respects in the ordinary course of business during the period between the execution of the Merger Agreement and the consummation
of the Merger, (iii) non-solicitation of alternative acquisition proposals (iv) not engage in specified types of transactions or take
specified actions during this period unless agreed to in writing by Parent, (v) Parent using its reasonable best efforts obtain approval
from Nasdaq for its initial listing application in connection with the Transactions and cause Parent’s ordinary shares to be issued
in connection with the Merger to be approved for listing on Nasdaq prior to the Closing and (vi) the parties filing with the U.S. Securities
and Exchange Commission (the “SEC”) and causing to become effective a registration statement on Form F-4 to register
Parent’s ordinary shares to be issued in connection with the Merger (the “Registration Statement”).
Delisting
of Shares of Common Stock
If
the Merger is consummated, the Common Stock will cease to be quoted on the Nasdaq Capital Market and will be eligible for deregistration
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Company
Support Agreements
In
connection with the execution of the Merger Agreement, stockholders of the Company entered into support agreements with the Company relating
to the Merger covering approximately 0.025% of the outstanding shares of Common Stock, as of immediately prior to the signing
of the Merger Agreement (the “Company Support Agreements”). The Company Support Agreements provide, among other things,
that the stockholders party to the Company Support Agreements will vote all of the shares of Common Stock held by them in favor of the
Merger and the other Transactions contemplated by the Merger Agreement.
A
form of the Company Support Agreement is attached hereto as Exhibit 10.3.
Lock-Up
Agreements
Concurrently
with the execution of the Merger Agreement, certain stockholders of the Company entered into lock-up agreements (the “Lock-Up
Agreements”), pursuant to which they accepted certain restrictions on transfers of shares of Common Stock held, or to be held,
by them for the 180-day period following the Effective Time.
A
form of Lock-Up Agreement is attached hereto as Exhibit 10.4.
Securities
Purchase Agreement and Registration Rights Agreement
Concurrently
with the Merger, on July 19, 2024, the Company entered into a Securities Purchase Agreement (the “SPA”) with certain
purchasers pursuant to which the Company sold an aggregate of $2.9 million in principal amount of the Company’s Original Issue
Discount Senior Unsecured Nonconvertible Notes (the “Notes”). The Notes are due on the earlier of: (i) December 31,
2024, (ii) the date of the closing of the Merger, (iii) the date that the Merger is terminated pursuant to the terms of the Merger Agreement,
or (iv) such earlier date as the Notes are required or permitted to be repaid as provided in the Note, as may be extended at the option
of the holder of the Note as described in the Note.
Pursuant
to the SPA, the Company shall, in addition to the other closing deliverables, deliver to each purchaser (i) a Note with a principal amount
equal to such purchaser’s subscription amount multiplied by 1.16, and (ii) a number of shares of Common Stock equal to 19.99% of
the total outstanding shares of Common Stock, multiplied by such purchaser’s subscription amount, divided by $2,500,000. The SPA
also contains customary representations, warranties, covenants and conditions to close. A form of Note is filed herewith as Exhibit 4.1.
The
Notes and the shares issued pursuant to the SPA have not been, and the Notes will not be, registered under the Securities Act of 1933,
as amended (the “Securities Act”) or the securities laws of any other jurisdiction. The Notes and the shares may not
be offered or sold in the United States absent registration or an applicable exemption from registration under the Securities Act and
any applicable state securities laws. The Notes and shares were offered and sold in transactions exempt from registration under the Securities
Act in reliance on Section 4(a)(2) thereof and Rule 506(b) of Regulation D thereunder. The purchasers of the Notes and the shares are
each an “accredited investor,” as defined in Regulation D, and are acquiring the Notes and shares for investment only and
not with a view towards, or for resale in connection with, the public sale or distribution thereof.
On
July 19, 2024, in connection with the Merger and the Transactions contemplated by the Merger Agreement and the SPA, the Company entered
into a Registration Rights Agreement (the “RRA”) with Parent and the purchasers identified therein pursuant to which
Parent agreed to provide certain registration rights with respect to the Hepion Registrable Securities (as defined in the RRA), which
securities include the shares of Common Stock issued by the Company pursuant to the SPA.
Description
of Agreements Not Complete
The
Merger Agreement, the Company Support Agreement, the Lock-Up Agreement, the SPA and the RRA, and the above descriptions of the Merger
Agreement, the Company Support Agreement, the Lock-Up Agreement, the SPA and the RRA have been included to provide investors with information
regarding the terms of such agreements. It is not intended to provide any other factual information about the Company, Parent or their
respective subsidiaries or affiliates. The representations, warranties and covenants contained in the Merger Agreement, SPA and RRA were
made only for purposes of the Merger Agreement, the Company Support Agreement, the Lock-Up Agreement, SPA and RRA, respectively, and
as of specific dates, were solely for the benefit of the parties to the Merger Agreement, the Company Support Agreement, the Lock-Up
Agreement, the SPA and the RRA and may be subject to limitations agreed upon by the parties in connection with negotiating the terms
of the Merger Agreement, the Company Support Agreement, the Lock-Up Agreement, the SPA and the RRA, including being qualified by confidential
disclosures made by each party for the purposes of allocating contractual risk between the parties. In addition, certain representations
and warranties may be subject to a contractual standard of materiality different from those generally applicable to investors and may
have been used for the purpose of allocating risk between the parties rather than establishing matters as facts. Information concerning
the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, the Company Support
Agreement, the Lock-Up Agreement, the SPA and the RRA, which subsequent information may or may not be fully reflected in public disclosures
by the Company. The Merger Agreement, the SPA and the RRA should not be read alone, but should instead be read in conjunction with the
other information regarding the parties that is or will be contained in, or incorporated by reference into, the Registration Statement
on Form F-4 to be filed by Parent in connection with the Merger, which will include a proxy statement/prospectus, as well as other filings
made by the Company, Parent and certain other persons in connection with the Merger and related Transactions, such as the Company’s
Annual Report on Form 10-K, as amended, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K and other documents that the
parties will file with the SEC. Investors should not rely on the representations, warranties and covenants or any description thereof
as characterizations of the actual state of facts or condition of the Company, Parent or any of their respective subsidiaries, affiliates
or businesses. The foregoing descriptions of the Merger Agreement, the Company Support Agreement, the Lock-Up Agreement, the SPA, the
RRA and the Transactions contemplated thereby do not purport to be complete and are subject to, and qualified in their entirety by, the
full text of such agreements, copies of which are filed as exhibits herewith, and are incorporated herein by reference.
This
Current Report on Form 8-K does not, and the exhibits attached hereto do not, constitute an offer to sell any security, nor a solicitation
for an offer to purchase any security, nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation,
or sale would be unlawful prior to registration, qualification, or exemption under the securities laws of any such jurisdiction.
Item
2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The
information set forth in Item 1.01 in this Current Report on Form 8-K is incorporated herein by reference into this Item 2.03.
Item
3.02 Unregistered Sales of Equity Securities.
The
information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference into this Item 3.02.
The
Note and share issuance described in Item 1.01 was made in reliance on an exemption from the registration requirements pursuant to Section
4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder, since the share issuance does not involve any public
offering.
Item
5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers
To
the extent responsive to this item, the information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein
by reference into this Item 5.02.
Item
7.01 Regulation FD Disclosure.
Attached
as Exhibit 99.1 to this Current Report on Form 8-K is a transaction presentation used by the Company in relation to the Merger and Transactions.
The
information in this Item 7.01 and Exhibit 99.1 of this Current Report on Form 8-K is furnished and shall not be deemed to be “filed”
for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section. The information in this
Item 7.01 and Exhibit 99.1 of this Current Report on Form 8-K shall not be incorporated by reference into any filing under the Securities
Act or the Exchange Act, whether made before or after the date of this Current Report, regardless of any general incorporation language
in any such filing.
Item 8.01.
Other Events.
On
July 22, 2024, Parent and the Company issued a press release announcing the entry into the Merger Agreement, the SPA, the RRA and the
transactions contemplated thereby. A copy of this press release is attached as Exhibit 99.2 to this Current Report on Form 8-K.
The
information contained in this Current Report on Form 8-K under Item 8.01, including the accompanying Exhibit 99.2, is being furnished
pursuant to Item 8.01 of Form 8-K and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or
otherwise subject to the liabilities of that section. Such information shall not be incorporated by reference into any filing under the
Securities Act or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific
reference in such a filing.
Item
9.01 Financial Statements and Exhibits
(d)
Exhibits.
Exhibit
No. |
|
Exhibit |
2.1* |
|
Agreement
and Plan of Merger, dated as of July 19, 2024, by and among the Company, Parent and Merger Sub. |
|
|
|
4.1* |
|
Form of Senior Unsecured Nonconvertible Note |
|
|
|
10.1* |
|
Form
of Securities Purchase Agreement |
|
|
|
10.2 |
|
Form
of Registration Rights Agreement |
|
|
|
10.3 |
|
Form of Company Support Agreement by and between the Company and each of the parties named in each agreement thereof. |
|
|
|
10.4 |
|
Form of Lock-Up Agreement by and between the Company and each of the parties named in each agreement thereof. |
|
|
|
99.1 |
|
Transaction Presentation dated July 22, 2024 |
|
|
|
99.2 |
|
Press Release, dated July 22, 2024 |
|
|
|
104 |
|
Cover
Page Interactive Data File (embedded within the XBRL document) |
|
|
|
* |
|
This
filing excludes certain schedules and exhibits pursuant to Item 601(a)(5) of Regulation S-K, which the registrant agrees to furnish
supplementally to the SEC upon request by the SEC; provided, however, that the registrant may request confidential treatment pursuant
to Rule 24b-2 of the Exchange Act, for any schedules or exhibits so furnished. |
Forward-Looking
Statements
Certain
statements in this communication may be considered “forward-looking statements”. Forward-looking statements generally relate
to future events or the Company’s or Parent’s future financial or operating performance. For example, statements regarding
the Company and Parent’s expectations with respect to the Merger, including the timing of closing thereof and pro forma ownership
of the combined company, the concurrent financing, the cash runway of the combined company; planned timing of New Drug Application (“NDA”)
submission, P2B001 potential as a treatment for Parkinson’s disease (“PD”) and label expansion, projected net
revenues, and related matters, as well as all other statements other than statements of historical fact included in this communication,
are forward-looking statements. When used in this communication, words such as “anticipate,” “believe,” “continue,”
“could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,”
“possible,” “potential,” “predict,” “project,” “should,” “would”
and similar expressions, as they relate to the Company or Parent, identify forward-looking statements. Such forward-looking statements
are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company’s and
Parent’s management. Actual results could differ materially from those contemplated by the forward-looking statements as a result
of certain factors detailed in the Company’s filings with the SEC. Most of these factors are outside the control of the Company
and/or Parent and are difficult to predict. In addition to factors disclosed in the Company’s filings with the SEC, the following
factors, among others, could cause actual results and the timing of events to differ materially from the anticipated results or other
expectations expressed in the forward-looking statements: the risk that the Merger may not be completed in a timely manner or at all,
which may adversely affect the price of the securities of the Company; the inability to meet the closing conditions to the Merger, including
the failure of Parent to meet Nasdaq initial listing standards in connection with the consummation of the Merger; costs related to the
Merger and the failure to realize anticipated benefits of the Merger or to realize estimated pro forma results with respect thereto as
well as other risks associated with biopharmaceutical companies generally, including the risks of filing an NDA, obtaining regulatory
approval for any product candidates, commercialization of any approved product, including P2B001 for PD, as well as the total addressable
market and potential for success of P2B001, the presentation of financial information in U.S. GAAP, completion of a PCAOB audit of U.S.
GAAP financials, as well as other risks that will be set forth in more detail in the Registration Statement (which will include a proxy
statement/prospectus), when filed with the SEC. The forward-looking statements are based upon management’s beliefs and assumptions;
and other risks and uncertainties to be identified on the Registration Statement (when available) relating to the Merger, including those
under “Risk Factors” therein, and in other filings with the SEC made by Merger. Each of the Company and Parent undertake
no obligation to update these statements for revisions or changes after the date of this communication, except as required by law.
No
Offer or Solicitation
This
communication does not constitute an offer to sell or a solicitation of an offer to buy, or the solicitation of any vote or approval
in any jurisdiction in connection with the proposed Merger or any related transactions, nor shall there be any sale, issuance or transfer
of securities in any jurisdiction where, or to any person to whom, such offer, solicitation or sale may be unlawful. Any offering of
securities or solicitation of votes regarding the proposed transaction will be made only by means of a proxy statement/prospectus that
complies with applicable rules and regulations promulgated under the Securities Act and the Securities Exchange Act of 1934, as amended,
or pursuant to an exemption from the Securities Act or in a transaction not subject to the registration requirements of the Securities
Act.
Additional
Information and Where to Find It
In
connection with the proposed Merger, Parent intends to file the Registration Statement with the SEC, which will include a preliminary
prospectus with respect to its securities to be issued in connection with the Merger, and a preliminary proxy statement with respect
to the Company’s stockholder meeting at which the Company’s stockholders will be asked to vote on the proposed Merger and
related matters. Each of the Company and Parent urge investors, stockholders, and other interested persons to read, when available, the
Registration Statement, including the proxy statement/prospectus, any amendments thereto, and any other documents filed with the SEC,
before making any voting or investment decision because these documents will contain important information about the proposed Merger.
After the Registration Statement has been filed and declared effective, Parent and the Company will mail the definitive proxy statement/prospectus
to stockholders of the Company as of a record date to be established for voting on the Merger. The Company’s stockholders will
also be able to obtain a copy of such documents, without charge, by directing a request to c/o Executive Chairman, Hepion Pharmaceuticals,
Inc., 399 Thornall Street, First Floor, Edison, NJ 08837.
Participants
in the Solicitation
Parent
and the Company and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies
from the Company’s stockholders in connection with the proposed Merger. Information about the Company’s directors and executive
officers and their ownership of the Company’s securities is set forth in the Company’s filings with the SEC. To the extent
that holdings of the Company’s securities have changed since the amounts printed in the Company’s Annual Report on Form 10-K/A,
such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC. A list of the names of
such directors and executive officers and information regarding their interests in the Merger will be contained in the proxy statement/prospectus
when available. You may obtain free copies of these documents as described above.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
|
HEPION
PHARMACEUTICALS, INC. |
|
|
|
Date:
July 22, 2024 |
By: |
/s/
John Cavan |
|
|
John
Cavan |
|
|
Interim
Chief Executive Officer and Chief Financial Officer |
Exhibit
2.1
EXECUTION
AGREEMENT
AND PLAN OF MERGER
by
and among
PHARMA
TWO B LTD.
PEARL
MERGER SUB, INC.
and
HEPION
PHARMACEUTICALS, INC.
dated
as of
JULY
19, 2024
TABLE
OF CONTENTS
|
|
Page |
Article
I CERTAIN DEFINITIONS |
2 |
Section
1.01 |
Definitions |
2 |
Section
1.02 |
Construction |
11 |
Article
II PRE-CLOSING TRANSACTIONS; THE MERGER |
12 |
Section
2.01 |
Pre-Closing
Transactions |
12 |
Section
2.02 |
The
Merger |
12 |
Section
2.03 |
Effective
Time |
12 |
Section
2.04 |
Effect
of the Merger |
12 |
Section
2.05 |
Governing
Documents |
12 |
Section
2.06 |
Directors
and Officers of the Surviving Company |
13 |
Section
2.07 |
Further
Assurances |
13 |
Article
III THE MERGER; CLOSING |
13 |
Section
3.01 |
Effect
of Merger on Securities of Hepion and Merger Sub |
13 |
Section
3.02 |
Closing |
13 |
Section
3.03 |
Delivery |
14 |
Section
3.04 |
Withholding
Rights. |
14 |
Article
IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
16 |
Section
4.01 |
Corporate
Organization of the Company |
16 |
Section
4.02 |
Subsidiaries |
16 |
Section
4.03 |
Due
Authorization |
16 |
Section
4.04 |
No
Conflict |
16 |
Section
4.05 |
Governmental
Authorities; Consents |
17 |
Section
4.06 |
Capitalization |
17 |
Section
4.07 |
Capitalization
of Subsidiaries |
18 |
Section
4.08 |
Financial
Statements; Absence of Changes |
18 |
Section
4.09 |
No
Undisclosed Liabilities |
19 |
Section
4.10 |
Litigation
and Proceedings |
19 |
Section
4.11 |
Compliance
with Laws |
19 |
Section
4.12 |
Contracts;
No Defaults |
19 |
Section
4.13 |
Company
Benefit Plans |
21 |
Section
4.14 |
Labor
Matters |
23 |
Section
4.15 |
Taxes |
23 |
Section
4.16 |
Insurance |
26 |
Section
4.17 |
Real
Property |
26 |
Section
4.18 |
Intellectual
Property and IT Security |
26 |
Section
4.19 |
Environmental
Matters |
30 |
Section
4.20 |
Healthcare
Matters |
30 |
Section
4.21 |
Brokers’
Fees |
31 |
Section
4.22 |
Related
Party Transactions |
31 |
Section
4.23 |
International
Trade; Anti-Corruption |
32 |
Section
4.24 |
Investment
Company Act |
32 |
Section
4.25 |
Product
Liability |
32 |
Section
4.26 |
No
Other Representations |
33 |
Article
V REPRESENTATIONS AND WARRANTIES OF HEPION |
33 |
Section
5.01 |
Corporate
Organization |
33 |
Section
5.02 |
Subsidiaries |
33 |
Section
5.03 |
Due
Authorization |
33 |
Section
5.04 |
No
Conflict |
34 |
Section
5.05 |
Governmental
Authorities; Consents |
34 |
Section
5.06 |
Capitalization |
34 |
Section
5.07 |
Capitalization
of Subsidiaries |
35 |
Section
5.08 |
SEC
Reports; Financial Statements; Sarbanes-Oxley Act; Undisclosed Liabilities |
36 |
Section
5.09 |
No
Undisclosed Liabilities |
37 |
Section
5.10 |
Litigation
and Proceedings |
37 |
Section
5.11 |
Compliance
with Laws |
37 |
Section
5.12 |
Hepion
Benefit Plans. |
37 |
Section
5.13 |
Labor
and Employment Matters |
39 |
Section
5.14 |
Tax
Matters |
40 |
Section
5.15 |
Insurance |
41 |
Section
5.16 |
Real
Property |
42 |
Section
5.17 |
IT
Security. |
42 |
Section
5.18 |
Environmental
Matters. |
43 |
Section
5.19 |
Brokers’
Fees |
43 |
Section
5.20 |
Related
Party Transactions |
43 |
Section
5.21 |
International
Trade; Anti-Corruption |
43 |
Section
5.22 |
Investment
Company Act |
44 |
Section
5.23 |
Product
Liability |
44 |
Section
5.24 |
Nasdaq
Listing |
44 |
Section
5.25 |
Material
Contracts; No Defaults |
44 |
Section
5.26 |
Hepion
Support Agreement |
45 |
Section
5.27 |
Absence
of Changes |
45 |
Section
5.28 |
Residency |
45 |
Section
5.29 |
Shell
Company Status |
45 |
Section
5.30 |
Healthcare
Matters |
45 |
Section
5.31 |
No
Other Representations |
46 |
Article
VI COVENANTS OF THE COMPANY |
46 |
Section
6.01 |
Conduct
of Business |
46 |
Section
6.02 |
Inspection |
48 |
Section
6.03 |
Company
Securities Listing |
49 |
Section
6.04 |
No
Third-Party Beneficiaries |
49 |
Section
6.05 |
Securities
Laws |
49 |
Article
VII COVENANTS OF HEPION |
49 |
Section
7.01 |
Indemnification
and Directors’ and Officers’ Insurance |
49 |
Section
7.02 |
Conduct
of Hepion During the Interim Period |
50 |
Section
7.03 |
Inspection |
52 |
Section
7.04 |
Section
16 Matters |
52 |
Section
7.05 |
Hepion
Public Filings |
52 |
Section
7.06 |
Hepion
Securities Listing |
52 |
Section
7.07 |
Hepion
Board Recommendation |
52 |
Section
7.08 |
IIA |
52 |
Article
VIII JOINT COVENANTS |
53 |
Section
8.01 |
Efforts
to Consummate |
53 |
Section
8.02 |
Registration
Statement; Shareholder Meetings |
54 |
Section
8.03 |
Hepion
Non-Solicitation |
56 |
Section
8.04 |
Company
Non-Solicitation. |
57 |
Section
8.05 |
Tax
Matters |
58 |
Section
8.06 |
Confidentiality;
Publicity |
58 |
Section
8.07 |
Legacy
Asset Disposition |
58 |
Article
IX CONDITIONS TO OBLIGATIONS |
59 |
Section
9.01 |
Conditions
to Obligations of All Parties |
59 |
Section
9.02 |
Additional
Conditions to Obligations of Hepion |
60 |
Section
9.03 |
Additional
Conditions to the Obligations of the Company and Merger Sub |
61 |
Article
X TERMINATION/EFFECTIVENESS |
62 |
Section
10.01 |
Termination |
62 |
Section
10.02 |
Effect
of Termination |
63 |
Article XI MISCELLANEOUS |
63 |
Section
11.01 |
Waiver |
63 |
Section
11.02 |
Notices |
63 |
Section
11.03 |
Assignment |
64 |
Section
11.04 |
Rights
of Third Parties |
64 |
Section
11.05 |
Expenses |
64 |
Section
11.06 |
Governing
Law |
64 |
Section
11.07 |
Captions;
Counterparts; Electronic Signatures |
65 |
Section
11.08 |
Schedules
and Exhibits |
65 |
Section
11.09 |
Entire
Agreement |
65 |
Section
11.10 |
Amendments |
65 |
Section
11.11 |
Severability |
65 |
Section
11.12 |
Jurisdiction;
WAIVER OF TRIAL BY JURY |
65 |
Section
11.13 |
Enforcement |
66 |
Section
11.14 |
Non-Recourse |
66 |
Section
11.15 |
Non-Survival |
66 |
Section
11.16 |
Acknowledgements |
67 |
Section
11.17 |
Waiver
of Conflicts Regarding Representations; Non-Assertion of Attorney-Client Privilege |
67 |
Annex
1 – Hepion Support Agreement Signatories |
Annex
2 – Lock-Up Agreement Signatories |
Annex
3 – Company Knowledge |
Annex
4 – Hepion Knowledge |
Annex
5 – Permitted Liens |
Annex
6 – Exchange Ratio |
Annex
7 – Exchange Ratio Adjustment Illustration |
|
Exhibit
A – Form of Amended and Restated Articles of Association of the Company |
Exhibit
B – Form of Hepion Support Agreement |
Exhibit
C – Form of Amended Investors’ Rights Agreement |
Exhibit
D – Form of Lock-Up Agreement |
Exhibit
E – Form of Subscription Agreement |
AGREEMENT
AND PLAN OF MERGER
THIS
AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as of July 19, 2024, by and among
Hepion Pharmaceuticals, Inc., a Delaware corporation (“Hepion”), Pearl Merger Sub, Inc., a Delaware corporation (“Merger
Sub”), and Pharma Two B Ltd., a company organized under the laws of the State of Israel (the “Company”).
Hepion, Merger Sub and the Company are collectively referred to herein as the “Parties” and individually as a “Party.”
RECITALS
WHEREAS,
Merger Sub is a newly incorporated Delaware corporation and a wholly owned, direct subsidiary of P2B HoldCo, Inc., a Delaware corporation
(the “Holdco”). Holdco is a wholly owned, direct subsidiary of P2B Topco, Inc., a Delaware corporation (the “Topco”).
Topco is a wholly owned, direct subsidiary of the Company.
WHEREAS,
each of Merger Sub, Holdco and Topco were formed for purposes of consummating the transactions contemplated by this Agreement and the
other Transaction Agreements (the “Transactions”).
WHEREAS,
immediately following the Recapitalization (as defined herein), upon the terms and subject to the conditions hereof and in accordance
with the General Corporation Law of the State of Delaware (the “DGCL”), at the Closing (as defined herein), Merger
Sub will merge with and into Hepion (the “Merger”), with Hepion surviving the Merger as an indirect subsidiary of
the Company (the “Surviving Company”).
WHEREAS,
the board of directors of the Company has unanimously: (a) determined that it is in the best interests of the Company and the Company
Shareholders, and declared it advisable, to enter into this Agreement and the other Transaction Agreements to which it is a party and
to consummate the transactions contemplated thereby; and (b) approved and recommended to the Company Shareholders to approve, among other
things, the adoption and approval of this Agreement, the other Transaction Agreements to which it is a party and the other Transactions
contemplated hereby and thereby, including the Merger, and the consummation of such transactions.
WHEREAS,
the board of directors of Merger Sub has unanimously determined that it is in the best interests of Merger Sub to enter into this Agreement
and the other Transaction Agreements to which it is a party and to consummate the transactions contemplated thereby.
WHEREAS,
the board of directors of Hepion has unanimously (i) determined that it is in the best interests of Hepion and the stockholders of Hepion,
and declared it advisable, to enter into this Agreement and the Hepion Support Agreement, (ii) approved this Agreement and the Transactions,
including the Merger, on the terms and subject to the conditions of this Agreement, and (iii) adopted a resolution recommending to its
stockholders the approval of the Hepion Transaction Proposals (as defined herein) (the “Hepion Board Recommendation”).
WHEREAS,
the Company, in its capacity as the sole stockholder of Merger Sub, has approved this Agreement, the other Transaction Agreements to
which Merger Sub is a party and the Transactions contemplated hereby and thereby, including the Merger, in accordance with applicable
Law, upon the terms and subject to the conditions of this Agreement.
WHEREAS,
prior to the Closing, the Company shall, subject to obtaining the Company Shareholder Approval, adopt the amended and restated articles
of association of the Company in substantially the form attached hereto as Exhibit A (the “A&R AoA”).
WHEREAS,
concurrently with the execution and delivery of this Agreement, the Company, Hepion and each of the Hepion stockholders listed on Annex
1 hereto are entering into the transaction support agreement in the form attached hereto as Exhibit B (the “Hepion Support
Agreement”).
WHEREAS,
prior to the Closing, the Company shall amend and restate its Amended Investors’ Rights Agreement in the form attached hereto as
Exhibit C (the “Amended IRA”).
WHEREAS,
as a condition to the willingness of, and as an inducement to Hepion to enter into this Agreement, contemporaneously with the execution
and delivery of this Agreement, each of the signatories listed on Annex 2 hereto is entering into a lock-up agreement, in the form attached
hereto as Exhibit D (the “Lock-up Agreements”).
WHEREAS,
on or prior to the date hereof, the Company has obtained commitments from certain investors for a private placement of Company Ordinary
Shares (as defined herein) pursuant to the terms of the subscription agreements in the form attached hereto as Exhibit E (as may
be amended or otherwise modified from time to time, collectively, the “PIPE Agreements”), such transactions to be
consummated substantially concurrently with the Closing, in accordance with the terms of the PIPE Agreements (the “PIPE Financing”).
NOW,
THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in
this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending
to be legally bound, the Parties hereby agree as follows:
Article
I
CERTAIN DEFINITIONS
Section
1.01 Definitions. For purposes of this Agreement, the following capitalized terms have the following meanings:
“Action”
means any action, claim, suit, audit, arbitration or legal, judicial or administrative proceeding (whether at law or in equity) by or
before any Governmental Authority.
“Affiliate”
means, with respect to any specified Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common
control with, such specified Person, through one or more intermediaries or otherwise. The term “control” means the ownership
of a majority of the voting securities of the applicable Person or the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of the applicable Person, whether through ownership of voting securities, by contract
or otherwise, and the terms “controlled” and “controlling” have meanings correlative thereto.
“Anti-Corruption
Laws” means the U.S. Foreign Corrupt Practices Act of 1977 (“FCPA”), the UK Bribery Act 2010, Sub-chapter
5 of Chapter 9 of Part B of the Israeli Penal Law, 1977, the Israeli Prohibition on Money Laundering Law (Bribery Transactions), 2000,
and any other applicable anti-bribery, anti-corruption or anti-money laundering Laws.
“Acquisition
Inquiry” means, with respect to a Party, an inquiry, indication of interest or request for information (other than an inquiry,
indication of interest or request for information made or submitted by the Company, on the one hand, or Hepion, on the other hand, to
the other Party) that would reasonably be expected to lead to an Acquisition Proposal.
“Acquisition
Proposal” means, with respect to a Party, any offer or proposal, whether written or oral (other than an offer or proposal made
or submitted by or on behalf of the Company or any of its Affiliates, on the one hand, or by or on behalf of Hepion or any of its Affiliates,
on the other hand, to the other Party) contemplating or otherwise relating to any Acquisition Transaction with such Party.
“Acquisition
Transaction” means any transaction or series of related transactions involving:
(i)
any merger, consolidation, amalgamation, share exchange, business combination, issuance of securities, acquisition of securities, reorganization,
recapitalization, tender offer, exchange offer or other similar transaction: (i) in which a Party is a constituent entity; (ii) in which
a Person or “group” (as defined in the Exchange Act and the rules promulgated thereunder) of Persons directly or indirectly
acquires beneficial or record ownership of securities representing more than 20% of the outstanding securities of any class of voting
securities of a Party or any of its Subsidiaries; or (iii) in which a Party or any of its Subsidiaries issues securities representing
more than 20% of the outstanding securities of any class of voting securities of such Party or any of its Subsidiaries; provided,
that in the case of Company, the PIPE Financing shall not be an “Acquisition Transaction”; or
(ii)
any sale, lease, exchange, transfer, license, acquisition or disposition of any business or businesses or assets that constitute or account
for 20% or more of the consolidated book value or the fair market value of the assets of a Party and its Subsidiaries, taken as a whole.
“Business
Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York or Tel Aviv, Israel
are authorized or required by Law to close.
“Cash
and Cash Equivalents” means all (a) cash (not including restricted cash) and cash equivalents (not including restricted cash)
(including, for the avoidance of doubt, any cash received by Hepion pursuant to any promissory notes delivered concurrently with the
signing of this Agreement or prior to the Closing Date or the PIPE Financing); (b) deposits; (c) marketable securities and (d) short
term receivables, in each case determined in accordance with GAAP, consistently applied.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Company
Ordinary Shares” means Ordinary Shares nominal value NIS 1 each of the Company.
“Company
Ordinary A Shares” means Ordinary A Shares nominal value NIS 1 each of the Company.
“Company
Ordinary B Shares” means Ordinary B Shares nominal value NIS 1 each of the Company.
“Company
Outstanding Shares” means the total number of Company Ordinary Shares outstanding immediately prior to the Effective Time.
For clarity, all Company Ordinary Shares underlying outstanding options, warrants or any equity securities of the Company and outstanding
Company Preferred Shares shall be included in the total number of Company Ordinary Shares for purposes of determining the Company Outstanding
Shares, to the extent not terminated prior to the Closing Date, and no shares issued in connection with the PIPE Financing shall be included
in the Company Outstanding Shares.
“Company
Preferred C Shares” means Preferred C Shares nominal value NIS 1 each of the Company.
“Company
Preferred D Shares” means Preferred D Shares nominal value NIS 1 each of the Company.
“Company
Preferred E Shares” means Preferred E Shares nominal value NIS 1 each of the Company.
“Company
Preferred E-1 Shares” means Preferred E-1 Shares nominal value NIS 1 each of the Company.
“Company
Preferred E-2 Shares” means Preferred E-2 Shares nominal value NIS 1 each of the Company.
“Company
Preferred E-3 Shares” means Preferred E-3 Shares nominal value NIS 1 each of the Company.
“Company
Preferred F Shares” means Preferred F Shares nominal value NIS 1 each of the Company.
“Company
Preferred F-1 Shares” means Preferred F-1 Shares nominal value NIS 1 each of the Company.
“Company
Preferred F-2 Shares” means Preferred F-2 Shares nominal value NIS 1 each of the Company.
“Company
Preferred F-3 Shares” means Preferred F-3 Shares nominal value NIS 1 each of the Company, as may be registered during the Interim
Period.
“Company
Preferred F-4 Shares” means Preferred F-4 Shares nominal value NIS 1 each of the Company, as may be registered during the Interim
Period.
“Company
Preferred Shares” means the Company Ordinary A Shares, Company Ordinary B Shares, Company Preferred C Shares, Company Preferred
D Shares, Company Preferred E Shares, Company Preferred E-1 Shares, Company Preferred E-2 Shares, Company Preferred E-3 Shares, Company
Preferred F Shares, Company Preferred F-1 Shares, Company Preferred F-2 Shares, Company Preferred F-3 Shares, and Company Preferred F-4
Shares.
“Company
Shareholders” means, collectively, the holders of Company Ordinary Shares, Company Ordinary A Shares, Company Ordinary B Shares
and Company Preferred Shares, as of any determination time prior to the Effective Time, as applicable.
“Company
Shareholder Approval” means the vote of Company Shareholders required to approve the Company Transaction Proposals, as determined
in accordance with applicable Law and the Organizational Documents of the Company.
“Company
Transaction Proposals” means (i) approval of the A&R AoA, and (ii) such other matters as shall be determined by the Board
of the Company.
“Company
Valuation” means $40,000,000.
“Company
Value Per Share” equals the Company Valuation divided by the number of Company Outstanding Shares.
“Competition
Laws” means the Sherman Act of 1890, the Clayton Antitrust Act of 1914, the Hart-Scott-Rodino Antitrust Improvements Act of
1976, and the rules and regulations promulgated thereunder, the Federal Trade Commission Act of 1914, EU Council Regulation (EC) No 139/2004
of 20 January 2004 on the control of concentrations between undertakings (the EU Merger Regulation) and all other Laws that are designed
or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization, abuse of dominance or restraint
of trade or lessening competition through merger or acquisition, including all antitrust, competition, merger control and unfair competition
Laws.
“Consent”
means any approval, consent, clearance, waiver, exemption, waiting period expiration or termination, Governmental Order or other authorization
issued by or obtained from any Governmental Authority.
“Contracts”
means any legally binding contracts, agreements, licenses, subcontracts, leases, subleases and other commitment (excluding purchase orders
entered into in the ordinary course of business).
“Environmental
Laws” means any and all applicable Laws relating to pollution, protection of the environment (including natural resources),
the use, storage, emission, distribution, transport, handling, disposal or release of, or exposure of any Person to, Hazardous Materials,
or to the extent related to exposure to Hazardous Materials, public or worker health and safety.
“Equity
Securities” means, with respect to any Person, (i) any shares of capital or capital stock, partnership, membership, joint venture
or similar interest, or other voting securities of, or other ownership interest in, such Person, (ii) any securities of such Person convertible
into or exchangeable for cash or shares of capital or capital stock or other voting securities of, or other ownership interests in, such
Person, (iii) any warrants, calls, options or other rights to acquire from such Person, or other obligations of such Person to issue,
any shares of capital or capital stock or other voting securities of, or other ownership interests in, or securities convertible into
or exchangeable for shares of capital or capital stock or other voting securities of, or other ownership interests in, such Person, and
(iv) any restricted shares, stock appreciation rights, restricted units, performance units, contingent value rights, “phantom”
stock or similar securities or rights issued by or with the approval of such Person that are derivative of, or provide economic benefits
based, directly or indirectly, on the value or price of, any shares of capital or capital stock or other voting securities of, other
ownership interests in, or any business, products or assets of, such Person.
“Exchange
Act” means the Securities and Exchange Act of 1934, as amended.
“Existing
AoA” means the amended and restated articles of association of the Company, last amended on September 15, 2022.
“Exchange
Ratio” means the ratio (rounded to four decimal places) equal to (a) Hepion Value Per Share divided by (b) the Company Value
Per Share. For the avoidance of doubt, an illustrative example of the calculation of the “Exchange Ratio” is set forth in
Annex 6, which shall be subject to the Exchange Ratio Adjustment detailed in Section 3.01(a) below.
“Fraud”
means a misrepresentation or omission of a fact that constitutes common law fraud in the State of Delaware.
“Fully-Diluted”
shall include (i) all issued and outstanding shares of the Company on an as-converted basis, with all securities convertible into
share capital, and other rights (or promises or undertakings to grant such rights, including, without limitation, any written or
oral undertaking with respect to such rights) to acquire and/or receive shares or securities exchangeable for shares (including,
without limitation, options, warrants, convertible notes and SAFE’s) deemed converted or exercised, as the case may be, at
their applicable conversion or exercise price, as the case may be, and including, without limitation, any pre-emptive rights,
anti-dilution rights and adjustments that may be activated or triggered as a result of or in connection with the transactions
contemplated under this Agreement and also taking into account any and all shares of the Company reserved for issuance upon exercise
of options, whether promised, granted or to be granted to directors, employees and consultants of the Company under the
Company’s Share Incentive Plan. “GAAP” means United States generally accepted accounting principles,
consistently applied.
“Government
Official” means any officer or employee of a Governmental Authority or any department, agency or instrumentality thereof, including
state-owned entities, or of a public organization or any person acting in an official capacity for or on behalf of any such government,
department, agency, or instrumentality or on behalf of any such public organization.
“Governmental
Authority” means any federal, state, provincial, municipal, local or foreign government, governmental authority, regulatory
or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, court, arbitral body (public
or private) or tribunal.
“Governmental
Order” means any order, judgment, injunction, decree, writ, ruling, stipulation, determination or award, in each case, entered
by or with any Governmental Authority.
“Hazardous
Material” means (i) any material, substance, chemical or waste, that is listed, regulated, or otherwise defined as “hazardous,”
“toxic,” or “radioactive” or as a “pollutant” or “contaminant” (or words of similar intent
or meaning) under Environmental Laws, and (ii) any radioactive substances, petroleum, petroleum byproducts, asbestos or asbestos containing
materials, polychlorinated biphenyls, per and polyfluoroalkyl substances, flammable or explosive substances, or pesticides.
“Hepion
Certificate of Incorporation” means Hepion’s Certificate of Incorporation, dated as of May 15, 2013, as amended.
“Hepion
Common Stock” means each share of common stock, par value $0.0001 per share, of Hepion.
“Hepion
Equity Plan” means each of Hepion’s 2013 Equity Incentive Plan and 2023 Omnibus Equity Incentive Plan.
“Hepion
Net Cash” means a dollar amount which may be greater than or lower than zero, equal to the sum of (a) Hepion’s Cash and
Cash Equivalents in each case as of the Closing Date, minus (b) the sum of Hepion’s short and long term liability
or obligations accrued at Closing (as reasonably and in good faith estimated by Hepion, (including, for the avoidance of any doubt, any
promissory notes delivered by Hepion concurrently with the signing of this Agreement or prior to the Closing Date), minus
(c) all fees and expenses incurred in connection with this Agreement and the Transactions (including but not limited to, any professional
and advisor fees, fees related to investment bankers, financial advisors, attorneys, accountants or other advisors, agents or representatives,
the exchange agent and printer for SEC filings retained by Hepion or any of its Subsidiaries) outstanding and not paid as of the Closing,
minus (d) expenses incurred by Hepion prior to the Closing associated with the disposition of its existing assets and any
contingent obligations arising from such dispositions, minus (e) costs remaining to wind down Hepion’s operations,
including severance, change-in-control, retention or other compensatory payments that may be payable as well as associated employer-side
payroll taxes, remaining lease costs, unpaid accrued expenses, and long-term follow-up costs, cost of D&O policy plus
the sum of (f) any prepaid expenses or deposits of Hepion that the Parties agree will be usable by or available to Hepion within ninety
(90) days of Closing plus (g) amounts payable pursuant to any promissory notes delivered by Company to Hepion concurrently
with the signing of this Agreement or prior to the Closing Date.
“Hepion
Preferred A Stock” means each share of Series A convertible preferred stock, par value $0.0001 per share, of Hepion.
“Hepion
Preferred C Stock” means each share of Series C convertible preferred stock, par value $0.0001 per share, of Hepion.
“Hepion
Preferred Stock” means Hepion Preferred A Stock and Hepion Preferred C Stock.
“Hepion
Organizational Documents” means the Organizational Documents of Hepion, as amended and/or restated (where applicable).
“Hepion
Stock Option” means an option to purchase Hepion Common Stock granted under a Hepion Equity Plan.
“Hepion
Stockholder Approval” means the vote of the majority of the shareholders of Hepion cast at a meeting in which a quorum is present,
reflecting the majority required to approve the Hepion Transaction Proposals, as determined in accordance with applicable Law and Hepion
Organizational Documents.
“Hepion
Stockholders” means any holder of Hepion Shares.
“Hepion
Shares” means the Hepion Common Stock and Hepion Preferred Stock.
“Hepion
Transaction Proposals” means (i) the adoption of this Agreement and approval of the Transactions, including the authorization
of the Merger, (ii) the adoption and approval of each other proposal reasonably agreed to by Hepion and the Company as necessary or appropriate
in connection with the consummation of the Transactions (including any proposal to alter the authorized share capital of Hepion to match
the authorized share capital of Merger Sub), (iii) the adoption and approval of a proposal for the adjournment of the Hepion Special
Meeting, if necessary, to permit further solicitation of proxies because there are not sufficient votes to approve and adopt any of the
foregoing, and (iv) the adoption and approval of each other proposal that the SEC (or its staff members) indicates is necessary in its
comments to the Proxy Statement or in correspondence related thereto.
“Hepion
Outstanding Stock” means the total number of shares of Hepion Common Stock outstanding on a Fully Diluted basis (following
the Hepion Stock Conversion) immediately prior to the Effective Time, assuming the exercise, conversion and exchange of all options,
warrants, conversion rights, exchange rights or any other rights to receive shares of Hepion Common Stock which exists immediately prior
to the Effective Time.
“Hepion
Valuation” means $10,000,000, which shall be subject to the Exchange Ratio Adjustment detailed in Section 3.01(a)
below.
“Hepion
Value Per Share” equals the Hepion Valuation divided by the number of Hepion Outstanding Stock.
“IFRS”
means International Financial Reporting Standards, consistently applied.
“IIA”
means the Israel Innovation Authority, formerly known as the Office of the Chief Scientist of the State of Israel.
“Intellectual
Property” means (i) inventions (whether or not patentable and whether or not reduced to practice), improvements thereto, and
patents, patent applications and patent disclosures, together with any reissuances, provisionals, divisionals, substitutions, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof; (ii) trademarks, service marks, trade names, trade dress, company
names, doing business as names and fictitious names, together with translations, adaptations, derivations and combinations thereof and
including goodwill associated therewith, and all registrations, applications and renewals in connection therewith, (iii) copyrightable
works, copyrights and all registrations and applications in connection therewith, (iv) internet domain names, (v) design rights, (vi)
database rights, (vii) trade secrets, (viii) know-how, (ix) any other intellectual property rights (registered or unregistered), (x)
copies and tangible embodiments and expressions (in whatever form or medium), all improvements and modifications and derivative works
of any of the foregoing, and (xi) all rights to sue at law or in equity for any past or future infringement or other impairment of any
of the foregoing, including the right to receive all proceeds and damages therefrom.
“Israeli
Income Tax Ordinance” means the Israeli Income Tax Ordinance (New Version), 5721-1961.
“ITA”
means the Israel Tax Authority.
“IT
Systems” means all software, computer systems, servers, networks, databases, computer hardware and equipment, information,
record keeping, communications, telecommunications, interfaces, platforms, and peripherals that are owned or controlled by the Company
or any of its Subsidiaries and used in the conduct of their business.
“Knowledge”
means, with respect to the Company and Hepion, the knowledge that each of the individuals listed on Annex 3 (with respect to the
Company), or Annex 4 (with respect to Hepion), actually has as of the date of this Agreement, or the knowledge that any of them
would or would be reasonably expected to have following a reasonable inquiry conducted prior to the date of this Agreement; provided
that, for the avoidance of doubt, other than such reasonable inquiry, no such individual will be under any express or implied duty
to investigate.
“Law”
means any statute, act, code, law (including common law), ordinance, rule, regulation or Governmental Order, in each case, of any Governmental
Authority.
“Lien”
means any mortgage, deed of trust, pledge, hypothecation, encumbrance, easement, or other lien of any kind (other than, in the case of
a security, any restriction on transfer of such security arising under Securities Laws).
“Material
Adverse Effect” means a material adverse effect on (i) the Company and its Subsidiaries (taken as a whole) or Hepion, or (ii)
the results of operations or financial condition of the Company and its Subsidiaries, in each case, taken as a whole, or of Hepion, provided,
however, that in no event would any of the following (or the effect of any of the following), alone or in combination, be deemed
to constitute, or be taken into account in determining whether there has been or will be, a “Material Adverse Effect”
on or in respect of the Company and its Subsidiaries or Hepion: (a) any change in Law, regulatory policies, accounting standards or principles
(including GAAP) or any guidance relating thereto or interpretation thereof; (b) any change in interest rates or economic, political,
business or financial market conditions generally (including any changes in credit, financial, commodities, securities or banking markets);
(c) any change generally affecting any of the industries in which the Company and its Subsidiaries or Hepion operates or the economy
as a whole; (d) any epidemic, pandemic or disease outbreak, or any Law, directive, guidelines or recommendations issued by a Governmental
Authority, the Centers for Disease Control and Prevention, the World Health Organization, any other Governmental Authority or industry
group providing for business closures, “sheltering-in-place,” curfews or other restrictions that relate to, or arise out
of, an epidemic, pandemic or disease outbreak, or any change in such Law, directive, guidelines, recommendations or interpretation thereof;
(e) the announcement or the execution of this Agreement, the pendency of the Transactions, or the performance of this Agreement, including,
with respect to the Company and its Subsidiaries, or Hepion, losses or threatened losses of employees, customers, suppliers, vendors,
distributors or others having relationships with the Company and its Subsidiaries; or Hepion (f) any action taken or not taken at the
request of Hepion, or the Company and its Subsidiaries (taken as a whole); (g) any change in budgets, planning, priorities or policies
of any Governmental Authority; (h) any weather conditions, earthquake, hurricane, tsunami, tornado, flood, mudslide, wild fire or other
natural disaster, act of God or other force majeure event; (i) any acts of terrorism, sabotage, war, riot, the outbreak or escalation
of hostilities, or change in geopolitical conditions; or (j) with respect to the Company and its Subsidiaries, or Hepion, any failure
of the Company or its Subsidiaries, or Hepion, to meet, with respect to any period or periods, any internal or industry analyst projections,
forecasts, estimates, expected milestones or business plans (provided, however, that this clause (j) shall not prevent
a determination that any change or effect underlying such failure to meet projections or forecasts has resulted in a Material Adverse
Effect (to the extent such change or effect is not otherwise excluded from this definition of Material Adverse Effect)); except, in the
case of clauses (a), (b), (c), (d), (h) or (i) above, to the extent that any such change, event or effect has a materially
disproportionate and adverse effect on Hepion or the Company and its Subsidiaries relative to other similarly situated businesses in
the industries in which Hepion or the Company and its Subsidiaries operate.
“Nasdaq”
means the Nasdaq Stock Market LLC.
“NIS”
means New Israeli Shekels.
“Organizational
Documents” means, with respect to any Person that is not an individual, the articles or certificate of incorporation or organization,
bylaws, memorandum and articles of association, limited partnership agreement, partnership agreement, limited liability company agreement,
shareholders agreement and other similar organizational documents of such Person.
“Owned
Intellectual Property” means all Intellectual Property that is owned by the Company or its Subsidiaries.
“PCAOB”
means the Public Company Accounting Oversight Board.
“Permitted
Liens” means (i) statutory or common law Liens of mechanics, materialmen, warehousemen, landlords, carriers, repairmen, construction
contractors and other similar Liens that arise in the ordinary course of business, that relate to amounts not yet delinquent or that
are being contested in good faith through appropriate Actions or that may thereafter be paid without penalty to the extent appropriate
reserves have been established in accordance with GAAP or IFRS, (ii) Liens arising under original purchase price conditional sales contracts
and equipment leases with third parties entered into in the ordinary course of business, (iii) Liens for Taxes not yet delinquent or
which are being contested in good faith through appropriate Actions for which appropriate reserves have been established in accordance
with GAAP or IFRS, (iv) leases, subleases and similar agreements with respect to the Leased Company Real Property or Leased Hepion Real
Property, (v) Liens, defects or imperfections on title, encumbrances and restrictions on real property (including easements, covenants,
rights of way and similar restrictions of record) that (A) are matters of record, (B) would be discovered by a current, accurate survey
or physical inspection of such real property and (C) do not materially interfere with the present uses of such real property, (vi) Liens
that are not material to the Company and its Subsidiaries, taken as a whole, (vii) non-exclusive licenses of Intellectual Property entered
into in the ordinary course of business, (viii) Liens that secure obligations that are reflected as liabilities on the Most Recent Balance
Sheet (which such Liens are referenced, or the existence of which such Liens is referred to, in the notes to Most Recent Balance Sheet),
(ix) Liens securing any indebtedness of the Company or its Subsidiaries (including pursuant to existing credit facilities), (x) Liens
arising under applicable Securities Laws, (xi) with respect to an entity, Liens arising under the Organizational Documents of such entity,
and (xii) Liens described on Annex 5.
“Person”
means any individual, corporation, partnership, limited liability company, incorporated or unincorporated association, joint venture,
joint stock company, Governmental Authority or other entity of any kind.
“Product”
means investigational and/or approved products, as the context requires.
“Registration
Statement” means the Registration Statement on Form F-4, or other appropriate form, including any pre-effective or post-effective
amendments or supplements thereto, to be filed with the SEC by the Company under the Securities Act with respect to the Company Ordinary
Shares that constitute the Hepion Shares Merger Consideration.
“Representative”
means, as to any Person, any of the officers, directors, managers, employees, counsel, accountants, financial advisors, and consultants
of such Person.
“Sanctioned
Country” means any country or region that is the subject or target of a country-wide or territory-wide embargo under Sanctions
Laws (as of the date of this Agreement, Cuba, Iran, North Korea, Syria, and the Crimea region of Ukraine).
“Sanctioned
Person” means any individual or entity that is the subject or target of Sanctions Laws, including: (i) any Person listed on
any list of designated Persons maintained by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”)
or other U.S. or non-U.S. Governmental Authority under Sanctions Laws; or (ii) any Person organized, resident in, or operating from a
Sanctioned Country.
“Sanctions
Laws” means all applicable U.S. and non-U.S. Laws relating to economic or trade sanctions, including the Laws administered
or enforced by the United States (including by OFAC or the U.S. Department of State), the United Nations Security Council, and the European
Union.
“Schedules”
means the disclosure schedules of the Company or Hepion, as applicable.
“SEC”
means the United States Securities and Exchange Commission.
“Securities
Act” means the Securities Act of 1933, as amended.
“Securities
Laws” means the securities Laws of any state, federal or foreign entity and the rules and regulations promulgated thereunder
(including the Securities Act, the Exchange Act and the Israeli Securities Law, 1968, and the rules and regulations thereunder).
“Subsidiary”
means, with respect to a Person, any corporation or other organization (including a limited liability company or a partnership), whether
incorporated or unincorporated, of which such Person directly or indirectly owns or controls a majority of the Equity Securities having
by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect
to such corporation or other organization or any organization of which such Person or any of its Subsidiaries is, directly or indirectly,
a general partner or managing member.
“Tax”
means any federal, state, provincial, territorial, local, foreign and other net income tax, alternative or add-on minimum tax, withholding,
franchise tax, gross income, adjusted gross income or gross receipts tax, employment related tax (including employee withholding or employer
payroll tax, including social security, national health insurance and wage tax) ad valorem, transfer, franchise, license, excise,
severance, stamp, occupation, premium, personal property, real property, capital stock, profits, disability, registration, value added,
estimated, customs duties, and sales or use tax, or other tax or like assessment or charge, in each case imposed by any Governmental
Authority, together with any interest, indexation, penalty, addition to tax or additional amount imposed with respect thereto (or in
lieu thereof) by a Governmental Authority.
“Tax
Return” means any return, report, statement, refund, claim, declaration, information return, statement, estimate or other document
filed or required to be filed with a Governmental Authority in respect of Taxes, including any schedule or attachment thereto and including
any amendments thereof.
“Trade
Control Laws” means all applicable laws and regulations relating to the export, reexport, transfer, import of products, software
or technology.
“Transaction
Agreements” means this Agreement, the Hepion Support Agreement, the PIPE Agreements, the Amended IRA, and all the agreements,
documents, instruments and certificates entered into in connection herewith or therewith and any and all exhibits and schedules thereto.
“Treasury
Regulations” means the regulations promulgated under the Code.
“Valid
Certificate” means, in respect of a payor, a valid certificate or ruling issued by the ITA in form and substance reasonably
acceptable to the Company and the Exchange Agent: (a) exempting such payor from the duty to withhold Israeli Taxes with respect to the
applicable payment, (b) determining the applicable rate of Israeli Taxes to be withheld from the applicable payment or (c) providing
any other instructions regarding the payment or withholding with respect to the applicable payment.
Section
1.02 Construction.
(a)
Unless the context of this Agreement otherwise requires, (i) words of any gender include each other gender, (ii) words using the singular
or plural number also include the plural or singular number, respectively, (iii) the terms “hereof,” “herein,”
“hereby,” “hereto” and derivative or similar words refer to this entire Agreement, (iv) the terms “Article”,
“Section”, “Schedule”, “Exhibit” and “Annex” refer to the specified Article, Section,
Schedule, Exhibit or Annex of or to this Agreement unless otherwise specified, (v) the word “including” shall mean “including
without limitation,” (vi) the word “or” shall be disjunctive but not exclusive and have the meaning represented by
the term “and/or”, and (vii) the phrase “to the extent” means the degree to which a subject matter or other thing
extends, and such phrase shall not mean simply “if”.
(b)
Unless the context of this Agreement otherwise requires, references to Contracts shall be deemed to include all subsequent amendments
and other modifications thereto (subject to any restrictions on amendments or modifications set forth in this Agreement).
(c)
Unless the context of this Agreement otherwise requires, references to statutes shall include all regulations promulgated thereunder
and references to Laws shall be construed as including all Laws consolidating, amending or replacing the Law.
(d)
The language used in this Agreement shall be deemed to be the language chosen by the Parties to express their mutual intent and no rule
of strict construction shall be applied against any Party.
(e)
Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified. If any
action is to be taken or given on or by a particular calendar day, and such calendar day is not a Business Day, then such action may
be deferred until the next Business Day.
(f)
The phrases “provided to Hepion,” “delivered to Hepion”, “furnished to Hepion,” “made available
to Hepion” and phrases of similar import when used herein, unless the context otherwise requires, means that a copy of the information
or material referred to has been made available to Hepion no later than 11:59 p.m. (Israel time) on the day prior to the date of this
Agreement in the virtual “data room” maintained by DataRooms.com that has been set up by the Company in connection with this
Agreement.
(g)
The phrases “provided to the Company,” “delivered to the Company”, “furnished to the Company,” “made
available to the Company” and phrases of similar import when used herein, unless the context otherwise requires, means that a copy
of the information or material referred to has been made available to the Company no later than 11:59 p.m. (Israel time) on the day prior
to the date of this Agreement in the virtual “data room” maintained by DataRooms.com that has been set up by Hepion in connection
with this Agreement.
(h)
References to “$” or “dollar” or “US$” shall be references to United States dollars.
Article
II
PRE-CLOSING TRANSACTIONS; THE MERGER
Section
2.01 Pre-Closing Transactions. On the Closing Date, subject to obtaining the Company Shareholder Approval, immediately prior to
the Effective Time and prior to the consummation of any of the transactions contemplated by the PIPE Agreements, the following actions
shall take place or be effected (in the order set forth in this Section 2.01): (A) Hepion shall cause all of its issued capital
stock which is not in the form of Hepion Common Stock to be converted into shares of Hepion Common Stock in accordance with the Hepion
Organizational Documents, and shall further cause any convertible instruments, including but not limited to warrants, to be converted
into shares of Hepion Common Stock (the “Hepion Stock Conversion”); and (B) (i) each Company Ordinary A Shares, Company
Ordinary B Shares, and Company Preferred Share that is issued and outstanding immediately prior to the Effective Time shall be automatically
converted into such number of Company Ordinary Shares as determined in accordance with the Existing AoA (as may be amended during the
interim period); (ii) the A&R AoA shall be adopted and become effective; (iii) each Company Ordinary Share that is issued and outstanding
immediately prior to the Effective Time (including each Company Ordinary Share that is issued upon conversion pursuant to clause (i)
above) shall be split into such number of Company Ordinary Shares as shall be necessary for purposes of the Closing and the initial listing
of the Company Ordinary Shares on Nasdaq (the “Share Split”); provided that no fraction of a Company Ordinary Share
will be issued by virtue of the Share Split, and each Company Shareholder that would otherwise be so entitled to a fraction of a Company
Ordinary Share (after aggregating all fractional Company Ordinary Shares that otherwise would be received by such Company Shareholder)
shall instead be entitled to receive such number of Company Ordinary Shares to which such Company Shareholder would otherwise be entitled,
rounded to the nearest whole number; and (iv) any outstanding options and warrants of the Company issued and outstanding immediately
prior to the Effective Time shall be adjusted immediately upon the Share Split to give effect to the foregoing transactions, provided
that to the extent such adjustment would result in (x) a fraction of share being subject to any outstanding stock option or warrant,
such share shall be rounded down to the nearest whole share or (y) the exercise price of an option being a fraction of a cent, the exercise
price will be rounded up to the nearest whole cent (clauses (i) through (iv), the “Recapitalization”).
Section
2.02 The Merger. At the Effective Time, on the terms and subject to the conditions of this Agreement and in accordance with the
applicable provisions of the DGCL, Merger Sub and Hepion shall consummate the Merger, pursuant to which Merger Sub shall be merged with
and into Hepion, following which the separate corporate existence of Merger Sub shall cease and Hepion shall continue as the Surviving
Company after the Merger and as an indirect subsidiary of the Company.
Section
2.03 Effective Time. On the terms and subject to the conditions set forth herein, on the Closing Date, following the consummation
of the Recapitalization, Hepion and Merger Sub shall cause the Merger to be consummated by filing the certificate of merger (the “Certificate
of Merger”) with the Secretary of State of the State of Delaware in accordance with the applicable provisions of the DGCL. The
Merger shall become effective at the time of the filing of the Certificate of Merger, or such later time as may be agreed by the Company
and Hepion and specified in the Certificate of Merger (the “Effective Time”).
Section
2.04 Effect of the Merger. The effect of the Merger shall be as provided in this Agreement, the Certificate of Merger and the
applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all
the property, rights, privileges, agreements, powers and franchises, debts, liabilities, duties and obligations of Merger Sub and Hepion
shall become the property, rights, privileges, agreements, powers and franchises, debts, liabilities, duties and obligations of the Surviving
Company, which shall include the assumption by the Surviving Company of any and all agreements, covenants, duties and obligations of
Merger Sub and Hepion set forth in this Agreement to be performed after the Effective Time.
Section
2.05 Governing Documents. At the Effective Time, the Hepion Certificate of Incorporation shall be amended and restated in its
entirety to read the same as the certificate of incorporation of Merger Sub, and the bylaws of Hepion shall be amended and restated in
their entirety to read the same as the bylaws of Merger Sub, in each case, as in effect immediately prior to the Effective Time, except
all references to the name of the Merger Sub shall be replaced by the name of the Surviving Company, until, thereafter changed or amended
as provided therein or by applicable Law.
Section
2.06 Directors and Officers of the Surviving Company. At the Effective Time, the directors and officers of Merger Sub immediately
prior to the Effective Time shall be the initial directors and officers of the Surviving Company, each to hold office in accordance with
the Organizational Documents of the Surviving Company until such director’s or officer’s successor is duly elected or appointed
and qualified, or until the earlier of their death, resignation or removal.
Section
2.07 Further Assurances. If, at any time after the Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Company following the Merger with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of the Company and Merger Sub, the applicable directors, officers and members of
the Company and Merger Sub (or their designees) are fully authorized in the name of their respective corporations or otherwise to take,
and shall take, all such lawful and necessary action, so long as such action is not inconsistent with this Agreement.
Article
III
THE MERGER; CLOSING
Section
3.01 Effect of Merger on Securities of Hepion and Merger Sub. On the terms and subject to the conditions set forth herein, at
the Closing, by virtue of the Merger and without any further action on the part of any Party or any other Person, the following shall
occur:
(a)
Each share of Hepion Common Stock issued and outstanding as of immediately prior to the Effective Time including following the Hepion
Stock Conversion (i) shall be converted automatically into, and the holder of such share of Hepion Common Stock shall be entitled to
receive from the Exchange Agent, for each such share of Hepion Common Stock, such number of Company Ordinary Shares calculated in accordance
with the Exchange Ratio (for the avoidance of doubt, after giving effect to the Recapitalization) (the “Hepion Shares Merger
Consideration”), and (ii) shall no longer be outstanding and shall automatically be canceled and shall cease to exist by virtue
of the Merger and each former holder of Hepion Common Stock shall thereafter cease to have any rights with respect to such securities,
except as expressly provided herein. In any event, the entire Hepion Shares Merger Consideration shall not reflect more than 17% and
not less than 13% of the Fully Diluted share capital of the Surviving Company immediately prior to the Closing. As such, the Exchange
Ratio shall be adjusted, if necessary, to result in a percentage between 17% and 13%, as applicable, within these thresholds and in accordance
with the illustrative Exchange Ratio adjustment set forth in Annex 7 (the “Exchange Ratio Adjustment”).
(b)
Each share of common stock, par value $0.01 per share, of Merger Sub that is issued and outstanding immediately prior to the Effective
Time shall automatically convert into one share of common stock, par value $0.01 per share, of the Surviving Company. The common stock
of the Surviving Company shall have the same rights, powers and privileges as the shares so converted and shall constitute the only issued
and outstanding share capital of the Surviving Company.
Section
3.02 Closing. On the terms and subject to the conditions of this Agreement, the consummation of the Merger (the “Closing”)
shall take place electronically by the mutual exchange of electronic signatures (including portable document format (“pdf”))
on the first Business Day following the date on which all conditions set forth in Article IX have been satisfied or waived (other
than those conditions that by their terms or nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of
such conditions at the Closing), or at such other place, time or date as Hepion and the Company may mutually agree in writing. The date
on which the Closing occurs is referred to herein as the “Closing Date.”
Section
3.03 Delivery.
(a)
Prior to the Effective Time, the Company shall appoint a Person authorized to act as exchange agent in connection with the transactions
contemplated by Section 3.01, which Person shall be selected by the Company and be reasonably acceptable to Hepion (the “Exchange
Agent”) and enter into an exchange agent agreement reasonably acceptable to the Company and Hepion with the Exchange Agent
(the “Exchange Agent Agreement”) for the purpose of exchanging, upon the terms and subject to the conditions set forth
in this Agreement, each share of Hepion Common Stock on the register of stockholders of Hepion as of immediately prior to the Effective
Time for the Hepion Shares Merger Consideration issuable in respect of such Hepion Common Stock. At least two Business Days prior to
the Closing, the Company and Hepion shall direct the Exchange Agent to, at the Effective Time, exchange each such share of Hepion Common
Stock for the applicable Merger Consideration pursuant to the Exchange Agent Agreement and perform the Exchange Agent’s other obligations
thereunder.
(b)
All Company Ordinary Shares delivered upon the exchange of Hepion Common Stock in accordance with the terms of this Article III
shall be deemed to have been exchanged in full satisfaction of all rights pertaining to the securities represented by such shares of
Hepion Common Stock and there shall be no further registration of transfers on the register of shareholders of Hepion of the Hepion Common
Stock. From and after the Effective Time, holders of shares of Hepion Common Stock shall cease to have any rights as shareholders of
Hepion, except the right to receive Company Ordinary Shares in exchange therefor, as provided in this Agreement.
(c)
From and after the Effective Time, until surrendered or transferred, as applicable, in accordance with this Section 3.03, each
share of Hepion Common Stock shall solely represent the right to receive the Hepion Shares Merger Consideration to which such Hepion
Common Stock is entitled to receive pursuant to this Agreement.
(d)
Notwithstanding anything to the contrary in this Agreement, none of the Parties or the Surviving Company or the Exchange Agent shall
be liable to any Person for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar
applicable Law. Any portion of the Merger Consideration remaining unclaimed by Hepion Stockholders immediately prior to such time when
the amounts would otherwise escheat to, or become property of, any Governmental Authority shall become, to the extent permitted by applicable
Law, the property of the Company free and clear of any claims or interest of any Person previously entitled thereto.
Section
3.04 Withholding Rights.
(a)
Each of the Company, Merger Sub, the Exchange Agent and each of their respective Affiliates and any other Person making a payment under
this Agreement (each, a “Payor”) shall be entitled to deduct and withhold (or cause to be deducted and withheld) from
any consideration payable or issued pursuant to this Agreement such amounts as are required to be deducted and withheld under applicable
Tax Law. To the extent that amounts are so withheld and timely remitted to the applicable Governmental Authority, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding
was made. The Parties shall cooperate in good faith to eliminate or reduce any such deduction or withholding (including through the request
and provision of any statements, forms or other documents to reduce or eliminate any such deduction or withholding).
(b)
With respect to Israeli Taxes, as soon as reasonably practicable after the execution of this Agreement, the Company will cause its Israeli
advisors, in coordination with Hepion and its Israeli counsel and subject to its written confirmation, to prepare and file with the ITA
an application for a ruling, requesting (i) the exemption of each Payor and its respective agents from any obligation to withhold Israeli
Tax from any consideration payable, issued or otherwise deliverable to the holders of Hepion Common Stock (each, a “Payee”)
pursuant to this Agreement or clarifying that no such obligation exists, or (ii) instructing the Payor and its agents as to the amount
and from of such withholding Tax to be withheld from such consideration (the “Withholding Ruling”). If the Withholding
Ruling is obtained by the Closing Date, then the Payor shall comply with the provisions of the Withholding Ruling; provided, however,
that if the Withholding Ruling is not obtained for any reason whatsoever prior to the Closing Date, the Closing will not be delayed,
postponed or otherwise effected. Each Payor shall be entitled to deduct and withhold (or cause to be deducted and withheld) from any
amount payable or issued pursuant to this Agreement to a Payee who holds 5% or more in the Hepion share capital (on an issued and Fully
Diluted basis) immediately prior to the Closing (each, a “5% Payee”). The consideration payable or issued to each
5% Payee shall be retained by the Exchange Agent for the benefit of each such 5% Payee for a period of up to 180 days from the Closing
Date (which may be extended as the parties agree in good faith) or as otherwise requested in writing by the ITA (the “Withholding
Drop Date”) (during which time (i) no Payor shall make any payments to any 5% Payee or withhold any amounts for Israeli Taxes
from the payments deliverable pursuant to this Agreement, except as provided below and during which time each 5% Payee may obtain a Valid
Certificate and (ii) a Payee may order the Exchange Agent to sell such Payee’s retained Company Ordinary Shares, or a portion thereof).
If a 5% Payee delivers, no later than three Business Days prior to the Withholding Drop Date, a Valid Certificate to the Payor, then
the deduction and withholding of any Israeli Taxes shall be made only in accordance with the provisions of such Valid Certificate, and
the balance of the consideration that is not withheld shall be transferred to such 5% Payee concurrently therewith subject to any non-Israeli
withholding which is applicable to the payment (if any). If any 5% Payee (i) fails to provide the Payor with a Valid Certificate at least
three Business Days prior to the Withholding Drop Date, or (ii) submits a written request to the Exchange Agent to release its portion
of the consideration prior to the Withholding Drop Date and fails to submit a Valid Certificate at or before such time, then the amount
to be withheld from such Payee’s portion of the consideration shall be calculated according to the applicable withholding rate
in accordance with Applicable Law.
(c)
To the extent that the Exchange Agent is obliged to withhold Israeli Taxes, the Payee shall provide the Exchange Agent with the amount
due with regards to such Israeli Taxes prior to the release of the consideration to the Payee. In the event that the Payee fails to provide
the Exchange Agent with the full amount necessary to satisfy such Israeli Taxes no later than three Business Days before the Withholding
Drop Date, the Exchange Agent shall be entitled to sell the Payee’s retained Company Ordinary Shares to the extent necessary to
satisfy the full amount due with regards to such Israeli Taxes.
(d)
Any withholding made in NIS with respect to payments made hereunder in dollars shall be calculated based on a dollars-to-NIS exchange
rate known on the date of the actual payment.
(e)
Each Payee hereby shall be deemed, by virtue of the Merger, to have waived, released and absolutely and forever discharged the Payor
from and against any and all claims for any losses in connection with the forfeiture or sale of any portion of the Company Ordinary Shares
otherwise deliverable to such Payee in compliance with the withholding requirements under this Section 3.04. To the extent that
the Exchange Agent is unable, for whatever reason, to sell the applicable portion of Company Ordinary Shares required to finance applicable
deduction or withholding requirements, then the Exchange Agent shall be entitled to hold all of the Company Ordinary Shares otherwise
deliverable to the applicable Payee until the earlier of: (i) the receipt of a Valid Certificate fully exempting the Exchange Agent from
tax withholding or receipt of cash amount equal to the tax that should be withheld by the Exchange Agent; or (ii) such time when the
Exchange Agent is able to sell the portion of such Company Ordinary Shares otherwise deliverable to such Payee that is required to enable
the Exchange Agent to comply with such applicable deduction or withholding requirements. Any costs or expenses incurred by the Exchange
Agent in connection with such sale shall be borne by, and deducted from the payment to, the applicable Payee.
Article
IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except
as set forth in the Schedules to this Agreement delivered by the Company to Hepion, dated as of the date of this Agreement, the Company
represents and warrants to Hepion as follows:
Section
4.01 Corporate Organization of the Company. The Company has been duly incorporated and is validly existing as a limited company
under the Laws of the State of Israel and has the company power and authority to own, operate and lease its properties, rights and assets
and to conduct its business as it is now being conducted. The Company has made available to Hepion true and correct copies of its Organizational
Documents as in effect as of the date hereof. The Company is duly licensed or qualified and in good standing (where such concept is applicable)
as a foreign entity in each jurisdiction in which the ownership of its property or the character of its activities is such as to require
it to be so licensed or qualified, except where failure to be so licensed or qualified has not had, and would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.
Section
4.02 Subsidiaries. The Subsidiaries of the Company (including Topco, Holdco and Merger Sub), together with details of their respective
jurisdiction of incorporation or organization, are set forth on Schedule 4.02. The Subsidiaries of the Company have been
duly formed or organized, are validly existing under the laws of their jurisdiction of incorporation or organization and have the power
and authority to own, operate and lease their respective properties, rights and assets and to conduct their business as it is now being
conducted, except in each case as has not had, and would not, individually or in the aggregate, reasonably be expected to have, a Material
Adverse Effect. Each Subsidiary of the Company is duly licensed or qualified as a foreign entity in each jurisdiction in which its ownership
of property or the character of its activities is such as to require it to be so licensed or qualified, except where the failure to be
so licensed or qualified has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect.
Section
4.03 Due Authorization. Each of the Company and Merger Sub has the requisite power and authority
to execute and deliver this Agreement and each other Transaction Agreement to which it is or will be a party and (subject to the
consents, approvals, authorizations and other requirements described in Section 4.04 or Section 4.05) to
perform all obligations to be performed by it hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance of this Agreement and such other Transaction Agreements and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the board of directors of the Company and Merger Sub, and other than the
consents, approvals, authorizations and other requirements described in Section 4.04 or Section 4.05 and the Company Shareholder
Approval, no other corporate proceeding on the part of the Company or Merger Sub is necessary to authorize this Agreement or any other
Transaction Agreements or the Company’s performance hereunder or thereunder. This Agreement has been, and each such other Transaction
Agreement (when executed and delivered by the Company or Merger Sub, as applicable) will be, duly and validly executed and delivered
by the Company or Merger Sub, as applicable, and, assuming due and valid authorization, execution and delivery by each other party hereto
and thereto, this Agreement constitutes, and each such other Transaction Agreement will constitute, a valid and binding obligation of
the Company or Merger Sub, as applicable, enforceable against the Company or Merger Sub, as applicable, in accordance with its terms,
subject to (x) obtaining the Company Shareholder Approval and (y) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar Laws affecting or relating to creditors’ rights generally and subject, as to enforceability, to general
principles of equity, whether such enforceability is considered in a proceeding in equity or at Law (the “Enforceability Exceptions”).
Section
4.04 No Conflict. Subject to the receipt of the consents, approvals, authorizations, and other requirements set forth in Section
4.05 and obtaining the Company Shareholder Approval, the execution, delivery and performance by each of the Company and Merger Sub
of this Agreement and the Transaction Agreements to which each is a party and the consummation by each of the Company and Merger Sub
of the transactions contemplated hereby and thereby do not and will not, (a) contravene or conflict with the Organizational Documents
of the Company or Merger Sub, (b) contravene or conflict with or constitute a violation of any provision of any Law, Permit or Governmental
Order binding upon or applicable to the Company or any of its Subsidiaries or any of their respective assets or properties, (c) violate,
conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default under, or result in the
termination or acceleration of, or a right of termination, cancellation, modification, acceleration or amendment under, accelerate the
performance required by, any of the terms, conditions or provisions of any Company Specified Contract or (d) result in the creation or
imposition of any Lien on any asset, property or Equity Security of the Company or any of its Subsidiaries (other than any Permitted
Liens), except in the case of each of clauses (c) through (d) as would not, and would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.
Section
4.05 Governmental Authorities; Consents. No notice to, action by, consent, approval, permit or authorization of, or designation,
declaration or filing with, any Governmental Authority is required on the part of the Company or Merger Sub with respect to each of their
execution, delivery and performance of this Agreement and the other Transaction Agreements to which each is a party and the consummation
by the Company or Merger Sub of the transactions contemplated hereby and thereby, except for (i) obtaining the consents of, or submitting
notifications, filings, notices or other submissions to, the Governmental Authorities listed on Schedule 4.05, (ii) the filing
(A) with the SEC of the Proxy Statement/Prospectus and the declaration of the effectiveness thereof by the SEC and (B) any other documents
or information required pursuant to applicable requirements, if any, of applicable Securities Laws, (iii) compliance with and filings
or notifications required to be filed with the state securities regulators pursuant to “blue sky” Laws and state takeover
Laws as may be required in connection with this Agreement, the other Transaction Agreements or the Transactions, (iv) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware in accordance with the DGCL, and (v) any actions, consents,
approvals, permits or authorizations, designations, declarations or filings, the absence of which would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.
Section
4.06 Capitalization.
(a)
As of the date of this Agreement, the authorized share capital of the Company is comprised of 916,921 Company Ordinary Shares, 3,453
Company Ordinary A Shares, 2,000 Company Ordinary B Shares, 7,862 Company Preferred C Shares, 2,618 Company Preferred D Shares, 18,521
Company Preferred E Shares, 10,398 Company Preferred E-1 Shares, 1,623 Company Preferred E-2 Shares, 3,890 Company Preferred E-3 Shares,
17,161 Company Preferred F Shares, 7,161 Company Preferred F-1 Shares, and 10,000 Company Preferred F-2 Shares. The number and class
of securities (if applicable) of all of the issued and outstanding Equity Securities of the Company as of the date of this Agreement
are set forth on Schedule 4.06(a). The issued and outstanding Equity Securities of
the Company have been duly authorized and validly issued and are fully paid and non-assessable and have not been issued in violation
of preemptive or similar rights or applicable Law.
(b)
Except as set forth on Schedule 4.06(b), there are no outstanding options, warrants, call rights, restricted stock, restricted
stock units, equity appreciation, phantom stock, profit participation or similar rights with respect to the Equity Securities of, or
other equity or voting interest in, the Company. Except as set forth in the Organizational Documents of the Company, the Transaction
Agreements, and Schedule 4.06(b), (i) no Person is entitled to any preemptive or similar rights to subscribe for Equity Securities
of the Company, (ii) there are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any Equity
Securities of the Company, and (iii) there are no outstanding bonds, debentures, notes or other indebtedness of the Company having the
right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matter for which the Company’s
shareholders may vote.
(c)
(i) There are no declared but unpaid dividends or distributions in respect of any Equity Securities of the Company and (ii) since the
date of the Most Recent Balance Sheet through the date of this Agreement, the Company has not made, declared, set aside, established
a record date for or paid any dividends.
Section
4.07 Capitalization of Subsidiaries.
(a)
The issued and outstanding Equity Securities of each of the Company’s Subsidiaries have been
duly authorized and validly issued and are fully paid and non-assessable. All of the issued and outstanding Equity Securities of each
Subsidiary of the Company are owned as set forth on Schedule 4.07(a), free and clear of any Liens (other than Permitted Liens)
and have not been issued in violation of preemptive or similar rights.
(b)
There are no outstanding equity appreciation, phantom stock, profit participation or similar rights with respect to the Equity Securities
of, or other equity or voting interest in, any Subsidiary of the Company. No Person is entitled to any preemptive or similar rights to
subscribe for Equity Securities of any Subsidiary of the Company. There are no outstanding contractual obligations of any Subsidiary
of the Company to repurchase, redeem or otherwise acquire any Equity Securities of any Subsidiary of Company. There are no outstanding
bonds, debentures, notes or other indebtedness of any Subsidiary of the Company having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matter for which the shareholders of the Company’s Subsidiaries may vote.
(c)
Except as set forth on Schedule 4.07(c), as of the date of this Agreement, neither the Company nor any of its Subsidiaries owns
any Equity Securities in any Person, other than shares publicly traded on a stock exchange held for cash management purposes.
Section
4.08 Financial Statements; Absence of Changes.
(a)
Attached as Schedule 4.08 hereto are copies of the unaudited consolidated balance sheets of the Company and its Subsidiaries
as of December 31, 2022 (the latter, the “Most Recent Balance Sheet”), and the related unaudited consolidated statements
of operations, of changes in shareholders’ equity and of cash flows as of September 30, 2023 (together with, once available and
delivered by the Company, the Additional Financial Statements (but only as of the time so available and delivered), the “Financial
Statements”).
(b)
Other than as set forth on Schedule 4.08, each of the Financial Statements (including the notes thereto) (i) was prepared in accordance
with IFRS applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto) and (ii) present
fairly, in all material respects, the financial position of the Company and its Subsidiaries as of the dates and for the periods indicated
in such Financial Statements, and the results of their operations and cash flows for the periods then ended in conformity with IFRS.
(c)
The Company and its Subsidiaries have established and maintain systems of internal accounting controls. Such systems are designed to
provide, in all material respects, reasonable assurance that (i) all transactions are executed in accordance with management’s
authorization and (ii) all transactions are recorded as necessary to permit preparation of proper and accurate financial statements in
accordance with IFRS and to maintain accountability for the Company’s and its Subsidiaries’ assets.
(d)
Since the date of the Most Recent Balance Sheet, through and including the date of this Agreement no Material Adverse Effect has occurred
that is continuing.
(e)
Since the date of the Most Recent Balance Sheet, through and including the date of this Agreement, except as expressly contemplated by
this Agreement, the other Transaction Agreements or in connection with the transactions contemplated hereby and thereby or as required
by applicable Law, the Company and its Subsidiaries have carried on their respective businesses in all material respects in the ordinary
course of business.
(f)
Merger Sub was formed solely for the purpose of engaging in the Transactions, has not conducted any business and has no assets, liabilities
or obligations of any nature other than those incident to its formation and pursuant to this Agreement and any other Transaction Agreement
to which it is a party, as applicable, and the other transactions contemplated by this Agreement and such Transaction Agreements, as
applicable.
Section
4.09 No Undisclosed Liabilities. As of the date of this Agreement, neither the Company nor any of its Subsidiaries has any liability,
indebtedness or obligation, whether accrued, contingent, absolute, determined, determinable or otherwise, required to be reflected or
reserved for on a balance sheet prepared in accordance with IFRS, except for liabilities, indebtedness or obligations (a) reflected or
reserved for in the Financial Statements or disclosed in any notes thereto, (b) that have arisen since the date of the Most Recent Balance
Sheet in the ordinary course of business of the Company and its Subsidiaries, (c) incurred or arising under or in connection with the
Transactions, including expenses related thereto, (d) disclosed in the Schedules or (e) that would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
Section
4.10 Litigation and Proceedings. Since January 1, 2021, there has been no pending or, to the Knowledge of the Company, threatened
(in writing) Actions by or against the Company or any of its Subsidiaries that, if adversely decided or resolved, had, or would reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect. There is no Governmental Order imposed upon the Company
or any of its Subsidiaries that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Neither
the Company nor any of its Subsidiaries is party to a settlement or similar agreement regarding any of the matters set forth in the two
preceding sentences that contains any ongoing obligations, restrictions or liabilities (of any nature) that would reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.
Section
4.11 Compliance with Laws. The Company and its Subsidiaries are, and since January 1, 2021, have been, in compliance in all material
respects with all applicable material Laws. None of the Company or its Subsidiaries has received any written notice from any Governmental
Authority of a material violation of any applicable Law at any time since January 1, 2021. The Company and its Subsidiaries hold, and
since January 1, 2021 have held, all material licenses, approvals, consents, registrations, franchises and permits necessary for the
lawful conduct of the business of the Company as currently conducted (the “Company Permits”). The Company and its Subsidiaries
are, and since January 1, 2022 have been, in material compliance with and not in material default under such Company Permits.
Section
4.12 Contracts; No Defaults.
(a)
Schedule 4.12(a) contains a list of all Contracts described in clauses (i) through (xi) of this Section 4.12(a) to which,
as of the date of this Agreement, the Company or any of its Subsidiaries is a party other than Company Benefit Plans and Company Leases
(all such Contracts as described in clauses (i) through (xi), collectively, the “Company Specified Contracts”). True, correct
and complete copies of the Company Specified Contracts have been made available to Hepion.
(i)
Each Contract that involves aggregate payments or consideration furnished (x) by the Company or by any of its Subsidiaries of more than
$1,000,000 or (y) to the Company or to any of its Subsidiaries of more than $1,000,000, in each case, in the calendar year ended December
31, 2023 or during the term of the Contract;
(ii)
Each Contract relating to indebtedness for borrowed money having an outstanding principal amount in excess of $1,000,000;
(iii)
Each Contract that is a purchase and sale or similar agreement for the acquisition of any Person or any business unit thereof, in each
case, involving payments in excess of $1,000,000 and with respect to which there are any material ongoing obligations;
(iv)
Each joint venture or similar Contract (other than Contracts between wholly owned Subsidiaries of the Company);
(v)
Each Contract requiring capital expenditures after the date of this Agreement in an amount in excess of $1,000,000 in the aggregate;
(vi)
Each Contract under which the Company or any of its Subsidiaries (x) is an exclusive licensee of material Intellectual Property (excluding
(A) click-wrap, shrink-wrap and off-the-shelf software licenses, (B) other licenses of software that are commercially available to the
public generally, (C) agreements between the Company and its Subsidiaries on the one hand, and their respective employees on the other
hand, entered into in the ordinary course of business and pursuant to which such employees assign to the Company or one of its Subsidiaries
all right, title and interest in and to all Intellectual Property developed by such employees, and (D) non-exclusive licenses included
in sponsored research agreements, material transfer agreements, consulting or service agreements or other similar agreements entered
into by the Company in the ordinary course of business);
(vii)
Each collective bargaining agreement or other Contract with any labor union, labor organization, works council or other employee representative
organization (each a “CBA”);
(viii)
Each Contract which grants any Person a right of first refusal, right of first offer or similar right with respect to any material properties,
assets or businesses of the Company and its Subsidiaries, taken as a whole;
(ix)
Each Contract expressly limiting, in any material manner, the type of business in which the Company
or its Subsidiaries may engage, the geographic area in which they may engage in business or the ability to sell or purchase to or from
any Person;
(x)
Each Contract the primary purpose of which is indemnification and that represents a material obligation
of the Company or its Subsidiaries, other than in the ordinary course of business;
(xi)
Each Contract that is a settlement, conciliation or similar agreement with any Governmental Authority pursuant to which the Company or
any of its Subsidiaries will have any material outstanding obligation after the date of this Agreement;
(xii)
Each Contract entered into primarily for the purpose of interest rate or foreign currency hedging;
(b)
Each Contract that relates to the acquisition or disposition of any Equity Securities in, or assets or properties of, the Company or
any of its Subsidiaries (whether by merger, sale of stock, sale of assets or otherwise) pursuant to which (A) payment obligations by
or to the Company or any of its Subsidiaries remain outstanding or (B) any earn-out, indemnification, deferred or contingent payment
obligations remain outstanding (excluding acquisitions or dispositions in the ordinary course of business consistent with past practice
or of assets that are obsolete, worn out, surplus or no longer used in the conduct of the Company’s business); and except (x) for
any Contract that has terminated, or will terminate, upon the expiration of the stated term thereof prior to the Closing Date or (y)
as would not reasonably be expected to have a Material Adverse Effect, each Company Specified Contract is (i) in full force and effect
and (ii) represents the legal, valid and binding obligations of the Company or one or more of its Subsidiaries party thereto and, to
the Knowledge of the Company, represents the legal, valid and binding obligations of the other parties thereto, in each case, subject
to the Enforceability Exceptions. None of the Company, any of its Subsidiaries or, to the Knowledge of the Company, any other party thereto
is in material breach or default of any Company Specified Contract. Neither the Company nor any Subsidiary thereof has received written
notice from any other party to any such Company Specified Contract that such party intends to terminate any such Company Specified Contract.
Section
4.13 Company Benefit Plans.
(a)
Schedule 4.13(a) sets forth a true and complete list of each material Company Benefit Plan maintained for the benefit of employees.
For purposes of this Agreement, a “Company Benefit Plan” is each “employee benefit plan” as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and any material vacation,
paid time off (“PTO”), education assistance, cafeteria, flexible spending account, stock ownership, stock purchase,
stock option, phantom stock, equity or other equity-based, severance, employment (other than offer letters that do not provide severance
benefits or notice periods in excess of 30 days upon termination of the employment relationship), individual consulting, retention, change-in-control,
transaction, fringe benefit, pension (including pension fund, managers’ insurance and/or similar fund), education fund (‘keren
hishtalmut’), expansion orders (except for those which generally apply to all employees in Israel), bonus, incentive, profit
sharing, profits interest, deferred compensation, employee loan and all other benefit or compensation plans, agreements or other general
arrangements, whether or not subject to ERISA, which are, in each case, material and contributed to, required to be contributed to, sponsored
by or maintained by the Company or any of its Subsidiaries for the benefit of any current employee, officer or director of the Company
or its Subsidiaries (without regarding to materiality, the “Company Employees”) or under or with respect to which
the Company or any of its Subsidiaries has any material liability, contingent or otherwise, but not including (x) any multiemployer plan
or any plan, policy, program, arrangement or agreement that covers only former directors, officers, employees, independent contractors
and service providers and with respect to which the Company and its Subsidiaries have no remaining obligations or liabilities, or (y)
any personal employment, engagement or similar agreements with employees, consultants, or independent contractors of the Company or any
of its Subsidiaries.
(b)
With respect to each material Company Benefit Plan, the Company has made available to Hepion (i) copies of the Company Benefit Plan and
any trust agreement or other funding instrument relating to such plan and to the extent any Company Benefit Plan is not set forth in
writing, a written summary of the material terms thereof; and (ii) any material notices, letters or correspondence to or from any Governmental
Authority with respect to such Company Benefit Plan within the past three (3) years from the date hereof.
(c)
Except as would not have, or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect:
(i)
each Company Benefit Plan has been established, maintained, funded and administered in compliance in all material respects with its terms
and all applicable Laws, including, where applicable, ERISA and the Code;
(ii)
each Company Benefit Plan which is intended to be qualified within the meaning of Section 401(a) of the Code is so qualified and (A)
has received a favorable determination or opinion letter as to its qualification prior to the date of this Agreement or (B) has been
established under a standardized master and prototype or volume submitter plan for which a current favorable Internal Revenue Service
advisory letter or opinion letter has been obtained by the plan sponsor and is valid as to the adopting employer, and any trusts related
thereto that are intended to be exempt from taxation under Section 501(a) of the Code are so exempt. To the Knowledge of the Company,
nothing has occurred, whether by action or failure to act, that would reasonably be expected to adversely affect such qualification.
All benefits, contributions, and premiums relating to each Company Benefit Plan have been timely paid in accordance with the terms of
such Plan and all applicable Laws and accounting principles, and all benefits accrued under any unfunded Plan have been paid, accrued
or otherwise adequately reserved to the extent required by, and in accordance with, generally accepted accounting principles. To the
Knowledge of the Company, no fact or set of circumstances exists and no event has occurred with respect to any Company Benefit Plan that
would reasonably be expected to result in any Company Benefit Plan or the Company (or any Subsidiary thereof) being required to pay any
material Tax or penalty under applicable Law; and
(iii)
each Company Benefit Plan that is subject to the Laws of a jurisdiction other than the United States has been maintained, funded and
administered in compliance in all material respects with applicable Law.
(d)
Except as would not have a Material Adverse Effect, (i) all of the Company’s and its Subsidiaries’ liabilities to Company
Employees regarding severance pay, accrued vacation, recreation pay, sick pay, and contributions to all pension plans or Company Benefit
Plans are fully funded or, if not, are accrued on the Financial Statements as of the date of such Financial Statements, and (ii) the
Company’s arrangement under Section 14 the Severance Pay Law 5723-1963 (the “Section 14 Arrangement”) was properly
applied in accordance with the terms of the general permit issued by the Israeli Minister of Labor regarding mandatory pension arrangement
regarding all Company Employees based on their full salaries and from their commencement date of employment and, upon the termination
of employment of any Company Employees, the Company will not have to make any payment under the Severance Pay Law 5723-1963, except for
release of the funds accumulated in accordance with the applicable Section 14 Arrangement.
(e)
Neither the Company, its Subsidiaries, nor any ERISA Affiliate has at any time sponsored, maintained, contributed to or had any liability
(contingent or otherwise) in respect of (i) any “defined benefit plan” (as defined in Section 3(35) of ERISA), (ii) any plan
subject to Section 412 of the Code or Section 302 or Title IV of ERISA, including any “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA, (iii) any “multiple employer plan” within the meaning of Section 413(c) of the Code or (iv)
any “multiple employer welfare arrangement” (as defined in Section 3(40) of ERISA). Except as required under Section 601
eq seq. of ERISA or similar state or local Law pursuant to which the covered individual pays the full cost of coverage, no Company Benefit
Plan provides benefits or coverage in the nature of health, life or disability insurance following retirement or other termination of
employment.
(f)
Other than as set forth on Schedule 4.13(f), neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby (either alone or upon the occurrence of any additional or subsequent event or events) (i) entitle any
Company service providers to receive any compensation or benefit (or increase thereto); (ii) accelerate the time of payment or vesting,
or trigger any payment or funding, of any compensation or benefits; or (iii) limit or restrict the right of the Company to merge, amend
or terminate any Company Benefit Plan.
(g)
Each Company Benefit Plan that is subject to Section 409A of the Code has been adopted and administered in compliance with its terms
and the operational and documentary requirements of Section 409A of the Code and all applicable regulatory guidance (including notices,
rulings and proposed and final regulations) thereunder.
(h)
No Company Benefit Plan provides for any tax gross-up payments to any Company employees.
(i)
There are no material claims or causes of action pending (other than routine claims for benefits) or, to the Knowledge of the Company,
threatened against the Company in connection with any Company Benefit Plan, and no Company Benefit Plan has within the six (6) years
prior to the date hereof been the subject of an examination, investigation or audit by a Governmental Authority or the subject of an
application or filing under or is a participant in any amnesty, voluntary compliance, self-correction or similar program sponsored by
any Governmental Authority. The Company is not engaged in any legal proceedings brought by or on behalf of any Company employee and,
to the Knowledge of the Company, no such proceedings have been threatened which, if determined adversely, would have a Material Adverse
Effect on the Company.
(j)
With respect to each Company Benefit Plan that is subject to the laws of a jurisdiction outside of the United States (a “Foreign
Company Plan”) (i) if required to be registered or approved by a non-U.S. Governmental Authority, has been registered or approved
and has been maintained in good standing with the applicable Governmental Authority, and, to the Knowledge of the Company, no event has
occurred since the date of the most recent approval or application therefore relating to any such Foreign Company Plan that would reasonably
be expected to adversely affect any such approval or good standing; (ii) that is intended to qualify for special Tax treatment meets
all requirements for such treatment; (iii) is not a defined benefit pension plan (as defined in ERISA, whether or not subject to ERISA)
or a similar arrangement and has no material unfunded or underfunded liabilities. All employer and employee contributions to each Foreign
Company Plan have been timely made in all material respects, or, if applicable, accrued in accordance with normal accounting practices.
Section
4.14 Labor Matters.
(a)
Neither the Company nor any of its Subsidiaries is party to or bound by any CBA. To the
Knowledge of the Company, no employees are represented by any labor organization, labor union, or works council or other similar employee
representative organization with respect to their employment with the Company or any of its Subsidiaries. Except as would not have, or
would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (i) there are no activities or
proceedings of any labor union, works council or labor organization to organize any of the Company Employees; and (ii) there is no, and
since January 1, 2022 there has been no, organized labor dispute, labor grievance or strike, lockout, picketing, hand billing, slowdown,
concerted refusal to work overtime, or work stoppage against the Company or any of its Subsidiaries, in each case, pending or, to the
Knowledge of the Company, threatened.
(b)
Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, neither the Company
nor any of its Subsidiaries has incurred any liability or obligation under the Worker Adjustment and Retraining Notification Act or any
similar state or local Law that remains unsatisfied.
Section
4.15 Taxes.
(a)
Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect:
(i)
all Tax Returns required to be filed by the Company or its Subsidiaries have been duly and timely filed (taking into account extensions)
and all such Tax Returns are true, correct and complete in all material respects;
(ii)
all Taxes required to be paid by the Company and its Subsidiaries have been duly and timely paid in full when due, regardless of whether
shown on a Tax Return;
(iii)
to the Knowledge of the Company, no Tax audit, examination or other proceeding with respect to Taxes of the Company or any of its Subsidiaries
is pending or has been threatened in writing since January 1, 2022;
(iv)
the Company and each of its Subsidiaries has complied in all material respects with all applicable Laws relating to the collection and
withholding of Taxes, including with respect to (x) any amounts paid or owing to any employee, independent contractor, creditor, shareholder
or other third party and (y) the Recapitalization;
(v)
there are no Liens for Taxes on any of the assets of the Company or its Subsidiaries, other than Permitted Liens;
(vi)
(x) there are no written assessments, deficiencies, adjustments or other written claims with respect to Taxes that have been claimed,
asserted or assessed against the Company or its Subsidiaries, (y) there are no ongoing or pending, nor has the Company or any of its
Subsidiaries received written notice of the expected commencement of any actions with respect to any material Taxes of the Company or
any Subsidiary and (z) there are no waivers or extensions of any statute of limitations currently in effect with respect to any Taxes
of the Company or any of its Subsidiaries (other than extensions that arise as a result of filing Tax Returns by the extended due date
therefor);
(vii)
Neither the Company nor any of its Subsidiaries has any material liability for the Taxes of any Person (other than the Company or its
Subsidiaries) (i) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign Law) or (ii) as a transferee
or successor, or by Contract (except for liabilities pursuant to commercial contracts not primarily relating to Taxes); and
(viii)
Neither the Company nor any of its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from,
taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting
for a taxable period ending on or prior to the Closing Date; (ii) installment sale made prior to the Closing Date; (iii) prepaid amount
received on or prior to the Closing Date; or (iv) use of an improper method of accounting for a taxable period on or prior to the Closing
Date. Neither the Company nor any of its Subsidiaries has made an election pursuant to Section 965(h) of the Code.
(b)
No “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local
or non-U.S. income Tax Law), private letter rulings, tax opinions, technical advice memoranda or similar agreements or rulings have been
entered into or issued by any Tax Authority with respect to the Company and its Subsidiaries.
(c)
To the Knowledge of the Company, the Company and each of its Subsidiaries is in compliance, in all material respects, with all terms
and conditions of any Tax exemption, Tax holiday or other Tax reduction agreement or order of a Governmental Authority.
(d)
To the Knowledge of the Company, no claims have been made by any Tax Authority in a jurisdiction where the Company and its Subsidiaries
do not file Tax Returns that the Company and its Subsidiaries is or may be subject to income taxation (other than an obligation to withhold
tax) by that jurisdiction.
(e)
Neither the Company nor any of its Subsidiaries is a party to or bound by any Tax allocation, indemnification or sharing agreement (other
than any such agreement between solely the Company and its Subsidiaries or any Tax indemnification provisions in commercial agreements
that are not primarily related to Taxes).
(f)
Neither the Company nor any of its Subsidiaries (or any predecessor thereof) has constituted either a “distributing corporation”
or a “controlled corporation” in a distribution of stock qualifying for income tax-free treatment under Section 355 of the
Code (or so much of Section 356 of the Code as relates to Section 355 of the Code) in the last two (2) years.
(g)
Each of the Company and its Subsidiaries is a Tax resident only in its jurisdiction of formation.
(h)
Neither the Company nor any of its Subsidiaries organized or formed under the laws of a jurisdiction outside of the United States (i)
is a “surrogate foreign corporation” or “expatriated entity” within the meaning of Section 7874 of the Code (or
any corresponding or similar provision of state, local or non-U.S. Tax Law) or is treated as a U.S. corporation for U.S. federal Tax
purposes by reason of the application of Sections 269B or 7874(b) of the Code (or any corresponding or similar provision of state, local
or non-U.S. Tax Law) or (ii) was created or organized in the United States such that such entity would be taxable in the United States
as a domestic entity pursuant to the dual charter provision of Treasury Regulation Section 301.7701-5(a) (or any corresponding or similar
provision of state, local or non-U.S. Tax Law).
(i)
The Company has no Knowledge of any fact or any reason that (when taken together with the Company’s understanding of other relevant
facts) would reasonably be expected to cause the Company to be treated, following the completion of the Transactions, as a Tax resident
of a country other than Israel.
(j)
Neither the Company nor any of its Subsidiaries has a permanent establishment (within the meaning of an applicable Tax treaty) in a country
other than the country in which it is organized.
(k)
Neither the Company nor any of its Subsidiaries (i) participated or engaged in any transaction listed in Section 131(g) of the Israeli
Income Tax Ordinance and the Israeli Income Tax Regulations (Reportable Tax Planning), 2006, promulgated thereunder, (ii) taken a tax
position that is subject to reporting under Section 131E of the Israeli Income Tax Ordinance, (iii) obtained a legal or tax opinion that
is subject to reporting under Section 131D of the Israeli Income Tax Ordinance, (iv) performed any action or transaction that is classified
as a “reportable opinion” under Section 67C of the Israeli Value Added Tax Law, 1975 (the “Israeli VAT Law”)
or a “reportable position” under Section 67D of the Israeli VAT Law.
(l)
The Company is duly registered for the purposes of Israeli value added tax (VAT) and has complied in all material respects with all requirements
concerning VAT. The Company (i) has not made any exempt transactions (as defined in the Israeli VAT Law) and there are no circumstances
by reason of which there might not be an entitlement to full credit of all VAT chargeable or paid on inputs, supplies and other transactions
and imports made by it or them, (ii) has collected and remitted in a timely manner to the ITA all output VAT which it is required to
collect and remit under any applicable Law and (iii) has not received a refund for input VAT for which it is not entitled under any applicable
Law. Except for the Company, none of its Subsidiaries has ever been or currently is, required to effect Israeli VAT registration.
(m)
The Company and its Subsidiaries have complied and are in compliance with all relevant requirements of (i) Section 102 of the Israeli
Income Tax Ordinance and the regulations promulgated thereunder, with respect to any equity awards issued pursuant to the provisions
of such section, and (ii) Section 3(i) of the Israeli Income Tax Ordinance with respect to the grant of options or shares to independent
contractors or “controlling shareholders” (as defined in such section). The Company incentive equity plan and any amendments
thereto were filed with the ITA, and the issuance of all Section 102 equity awards were timely and duly filed with, or reported to, the
102 trustee in accordance with the time specifications set forth in the Israeli Income Tax Ordinance and all such equity awards purported
by the terms of the grant thereof to be granted under Section 102(b)(2) of the Israeli Income Tax Ordinance (capital gains route) are
in full compliance with the provisions of Section 102 of the Israeli Income Tax Ordinance, including with respect to the due deposit
of Section 102 equity awards with the Section 102 Trustee pursuant to the terms of Section 102 of the Israeli Income Tax Ordinance and
any regulation or publication issued by the ITA. Each equity awarded pursuant to the incentive equity plan intended to qualify for the
capital gains route under Section 102 are so qualified. No adjustment mechanism was implemented to any outstanding equity awarded under
Section 102 of the Israeli Income Tax Ordinance which would require the pre-approval of the ITA.
(n)
The Company, or any of its Subsidiaries, are not and have not been a real property corporation (Igud Mekarke’in) within
the meaning of such term under Section 1 of the Israeli Land Taxation Law (Appreciation and Acquisition), 5723-1963.
(o)
Neither the Company nor any of its Subsidiaries is subject to any restrictions or limitations pursuant to Part E2 of the Israeli Income
Tax Ordinance or pursuant to any Tax ruling made with reference to the provisions of Part E2.
(p)
Neither the Company nor any of its Subsidiaries own any interest in any controlled foreign corporation pursuant to Section 75B of the
Israeli Income Tax Ordinance, or other entity the income of which is required to be included in the income of the Company.
(q)
The Company is not a “controlled foreign corporation” as defined under Section 957(a) of the Code.
Section
4.16 Insurance. The Company and its Subsidiaries are covered by valid and currently effective insurance policies issued in favor
of the Company and its Subsidiaries that are customary and adequate for companies of a similar size and nature in the industries and
locations in which the Company operates. Schedule 4.16 sets forth, as of the date hereof, a true and complete list of all current,
material insurance policies issued in favor of the Company and its Subsidiaries, or pursuant to which the Company or its Subsidiaries
are a named insured or otherwise a beneficiary, as well as any historic incurrence-based policies still in force. With respect to each
such insurance policy, (a) such policy is in full force and effect and all premiums due thereon have been paid, (b) the Company and its
Subsidiaries are not in breach or default thereof, and have not taken any action or failed to take any action which (with or without
notice or lapse of time, or both) would be reasonably expected to constitute such a breach or default, or would permit termination or
modification of, any such policy and (c) to the Company’s Knowledge, no insurer issuing any such policy has been declared insolvent
or placed in receivership, conservatorship or liquidation. No written notice of cancellation or termination has been received by the
Company with respect to any such policy, nor will any such cancellation or termination result from the consummation of the transactions
contemplated by this Agreement.
Section
4.17 Real Property.
(a)
Neither the Company nor any of its Subsidiaries owns any real property.
(b)
Except as would not reasonably be expected to have a Material Adverse Effect, the Company or its applicable Subsidiary, has a valid leasehold
interest in all real property leased by the Company or any of its Subsidiaries (“Leased Company Real Property”). All
material leases for the Leased Company Real Property under which the Company or any of its Subsidiaries is a lessee (collectively, the
“Company Leases”) are in full force and effect and are enforceable in accordance with their respective terms, subject
to the Enforceability Exceptions, except as would not reasonably be expected to have a Material Adverse Effect. None of the Company or
any of its Subsidiaries has received any written notice of any, and to the Knowledge of the Company there is no, material default under
any such Company Lease.
Section
4.18 Intellectual Property and IT Security.
(a)
All right, title and interest in Owned Intellectual Property is owned by the Company or one or more of its Subsidiaries. Without limiting
the generality of the foregoing, to the Knowledge of the Company, (A) no former or current shareholder, founder, director, officer, employee,
independent contractor, consultant or agent of the Company or any of its Subsidiaries have filed or delivered to the Company (or its
Subsidiaries) any written claim, or, to the Knowledge of the Company, have any claim or any license, right (whether or not currently
exercisable) or interest in or to any Owned Intellectual Property and (B), to the Knowledge of the Company, no former or current shareholder,
founder, director, officer, employee, independent contractor, consultant or agent of the Company or any of its Subsidiaries is in breach
of any Contract with his or her former employer or other Person concerning Owned Intellectual Property or confidentiality, where the
cause or nature of the breach allegedly arises out of the performance of any services on behalf of the Company (or any of its Subsidiaries)
related to the development of any Owned Intellectual Property, in each case of (A) and (B), except as would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.
(b)
To the Knowledge of the Company, the Company and its Subsidiaries are in compliance in all material respects with the terms of all material
agreements relating to the Owned Intellectual Property. Except as set forth in Schedule 4.18(b), as of the date hereof, neither
the Company nor any of its Subsidiaries has assigned, licensed, transferred, or conveyed any Owned Intellectual Property to a third party.
To the knowledge of the Company, the execution and delivery of this Agreement by the Company and the consummation of the Transactions
(alone or in combination with any other event) and the compliance with the provisions of this Agreement and the other Transaction Agreements
do not and will not: result in (A) a loss, alteration, or impairment (in whole or in part) of any of the rights of the Company or its
Subsidiaries in or to any of the Owned Intellectual Property that is assignable by its terms, or the validity, enforceability, use, right
to use, ownership, duration, scope or effectiveness of the Owned Intellectual Property, or (B) the grant, assignment, or transfer to
any Person of any license or other right, authorization, or interest under, to or in any of the Owned Intellectual Property.
(c)
Schedule 4.18(c)(i) lists all patents, patent applications, trademark or service mark registrations, applications for the registration
of trademark or service marks, copyright registrations, and domain name registrations included in the Owned Intellectual Property as
of the date of this Agreement (“Registered Intellectual Property”) indicating for each item (as applicable): (i) all
registration numbers, issuance numbers and application numbers, as applicable; (ii) all filing, registration, issuance, and grant dates,
as applicable; and (iii) all jurisdictions in which such Registered Intellectual Property has been or is registered, granted, issued
or in which registrations, grants or issuances have been applied for. To the Knowledge of the Company, each item of Registered Intellectual
Property is subsisting. Except as set forth in Schedule 4.18(c)(ii), there is no Action pending or, to the Knowledge of the Company,
threatened against the Company in writing, challenging the validity, enforceability, ownership, registration, or use of any Registered
Intellectual Property, except for ordinary course patent, trademark, or service mark prosecution communications. To the Knowledge of
the Company, (A) none of the Registered Intellectual Property has expired, lapsed, been abandoned, been disclaimed, or been cancelled
or been declared invalid or unenforceable, in whole or in part, by any Governmental Authority, and (B) neither the Company nor any of
its Subsidiaries has taken any action or failed to take any action that would reasonably be expected to result in abandonment, cancellation,
invalidity, or unenforceability of any Registered Intellectual Property or an inventorship claim by a third party to any Registered Intellectual
Property.
(d)
(i) Each issued or granted Intellectual Property right that is a patent included in the Registered Intellectual Property identifies all
inventors thereof, (ii) each inventor of each such Intellectual Property right has executed a valid and enforceable written agreement
assigning all of such inventor’s rights, title, and interests in and to such Intellectual Property right (and the inventions and
discoveries claimed or otherwise disclosed therein) to the Company or applicable Subsidiary (or a Third Party Assignor), (iii) to the
Company’s Knowledge, the compliance by each such inventor with each such written agreement does not conflict with any of such inventor’s
obligations to third parties, and (iv) all such assignments have been timely and properly recorded with the U.S. Patent and Trademark
Office or its foreign equivalent(s), as and to the extent applicable. To the extent any such Intellectual Property right included in
the issued or granted Registered Intellectual Property has been assigned to the Company by any Person who is not an inventor of such
Intellectual Property right (“Third Party Assignor”), (A) any and all such Third Party Assignors of such Intellectual
Property rights have each executed a valid and enforceable written agreement assigning all of such third party’s rights, title,
and interests in and to such Intellectual Property rights (and the inventions and discoveries claimed or otherwise disclosed therein)
to the Company, and (B) all such assignments have been timely and properly recorded with the U.S. Patent and Trademark Office or its
foreign equivalent(s), as and to the extent applicable.
(e)
To the Knowledge of the Company, for each patent right listed in Schedule 4.18(c), that is a U.S. patent right, the duty of disclosure
and candor and good faith as required under 37 C.F.R. § 1.56 has been complied with, or that is a non-US patent right, analogous
Laws outside the U.S. have been compiled with.
(f)
Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (i) to the Knowledge
of the Company, the conduct of the business of the Company and its Subsidiaries as currently conducted (including the research, development,
testing, manufacture, distribution, use, sale, offer for sale, importation, exportation, commercialization, marketing, supply, licensing
and other exploitation of any of the Company’s Products or services) is not infringing upon, misappropriating or otherwise violating
any Intellectual Property rights of any third party, and has not infringed upon, misappropriated or otherwise violated any Intellectual
Property rights of any third party since January 1, 2020, (ii) to the Knowledge of the Company, no third party is infringing upon, misappropriating
or otherwise violating any Owned Intellectual Property and (iii) the Company and its Subsidiaries have not received from any Person any
written notice since January 1, 2020 that the Company or any of its Subsidiaries is infringing upon, misappropriating or otherwise violating
any Intellectual Property rights of such Person that has not been resolved.
(g)
The Company and its Subsidiaries have in place commercially reasonable measures designed to protect and maintain the confidentiality
of any material trade secrets included in the Owned Intellectual Property, including by requiring all current and former employees and
consultants, and any other Person who has had access at any time to any confidential Company information to execute and deliver to the
Company a written Contract that includes customary confidentiality provisions and restrictions on use sufficient to maintain the confidential
status and limit the use of such confidential Company information. To the Knowledge of the Company, no current or former employees or
consultants are, and no other Person who has executed such confidentiality agreements is, in violation of any such confidentiality agreements.
To the Knowledge of the Company, there has been no unauthorized access, use or disclosure of any such material trade secrets included
in the Owned Intellectual Property, except as would not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
(h)
Each of the Company and its Subsidiaries has obtained from (i) each of its current and former employees and (ii) all other Persons, who
are or were involved in, or who have participated in or contributed to, the conception, creation, development, reduction to practice,
improvement to or modification of Owned Intellectual Property (or any portion thereof), a written Contract that assigns solely and exclusively
to the Company or its applicable Subsidiary all rights, title and interests in and to any and all such Owned Intellectual Property arising
out of such Person’s activities in the course of its engagement with Company or its Subsidiaries or with respect to the Company’s
business. To the Knowledge of the Company, no current or former employees or consultants are, and no other Person who has executed such
invention assignment agreements with the Company or the applicable Subsidiary is, in violation in any material respect of any such invention
assignment agreements, except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(i)
Schedule 4.18(i) sets forth: (i) each grant that has been received from a Governmental Authority by the Company (“Governmental
Grant”); and (ii) the aggregate outstanding obligations of the Company under each Governmental Grant with respect to royalties
or other payments. Except as set forth in Schedule 4.18(i), no Governmental Authority has any right to (including any “step-in”
or “march-in” rights with respect to), ownership of, or right to royalties for, or to impose any requirement on the manufacture
or commercialization of any Product incorporating, any Owned Intellectual Property. Without limiting the generality of the foregoing,
except as set forth in Schedule 4.18(i), no invention claimed or covered within the Owned Intellectual Property (i) was conceived
or reduced to practice in connection with any research activities funded, in whole or in part, by any Governmental Authority or the Israeli
Defense Force. Except as set forth in Schedule 4.18(i), (A) no funding, facilities, or personnel of any educational or
research institution were used, directly or indirectly, to develop or create in whole or in part, any of the Owned Intellectual Property,
and (B) no educational institution has any right to, or right to royalties for, or to impose any requirement on the manufacture or commercialization
of any product incorporating, any Intellectual Property that is, or is purportedly, owned by the Company or any Subsidiary.
(j)
To the Knowledge of the Company, (i) no Person other than the Company possesses any current or contingent rights to any source code that
is a material part of the Owned Intellectual Property (including any software), and (ii) the Company or any Subsidiary has not granted
any current or contingent rights to any source code that is a material part of the Owned Intellectual Property (including any software)
(including any escrow arrangements).
(k)
To the Knowledge of the Company, the Company and its Subsidiaries have in place commercially reasonable measures designed to protect
the confidentiality, integrity and security of the IT Systems, and commercially reasonable back up and disaster recovery procedures designed
for the continued operation of their businesses in the event of a failure of the IT Systems. To the Knowledge of the Company, the IT
Systems operate and perform in all material respects as is necessary and sufficient for the conduct of the business of the Company and,
as applicable, its Subsidiaries as currently conducted. Except as would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect, to the Knowledge of the Company, there has been no outage of the IT Systems, security breach or other unauthorized
access to the IT Systems that has resulted in the unauthorized access, use, disclosure, modification, encryption, loss, or destruction
of any material information or data contained or stored therein since January 1, 2020.
(l)
The Company and each Subsidiary is in compliance in all material respects with (i) all applicable Laws pertaining to (A) data security
and privacy and (B) the collection, storage, use, access, disclosure, processing, security and transfer of Personal Information (defined
below) (referred to collectively in this Agreement as “Data Activities”), including, in each case to the extent applicable,
the Israeli Privacy Protection Law, 5741-1981 (“IPPL”) and the regulations promulgated thereunder, and the applicable
guidelines and policies of the Israeli Data Base Registrar and the Privacy Protection Authority (to the extent binding under applicable
Law) applicable to the Company and the Subsidiaries (clauses (A) and (B) together, “Privacy Law”); and (ii) all Contracts
to which the Company or any Subsidiary is a party that are applicable to Data Activities (collectively, “Privacy Agreements”).
“Personal Information” means any information which alone or in combination with other information can reasonably identify
a single individual, including, but not limited to, an individual’s: (a) personally identifiable information (e.g., name, address,
telephone number, email address, financial account number, government-issued identifier, and any other data used or intended to be used
to identify a person), (b) Internet Protocol address or other persistent or unique identifier and (c) in each case to the extent the
IPPL and the regulations promulgated thereunder, and the applicable guidelines and policies of the Israeli Data Base Registrar and the
Privacy Protection Authority (to the extent binding under applicable Law) are applicable to the Company and the Subsidiaries, “information”
as defined by the IPPL and applicable Israeli judicial precedents defining that term.
(m)
To the Knowledge of the Company, the Company and its Subsidiaries have implemented written policies relating to Data Activities, including,
without limitation, a publicly posted website privacy policy and commercially reasonable written information security policies (each,
a “Privacy and Data Security Policy”) which are compliant in all material respects with the requirements under applicable
Privacy Law. The Company and each Subsidiary is in compliance in all material respects with each Privacy and Data Security Policy. To
the extent required by applicable Law for Data Activities, the Company and its Subsidiaries have provided necessary notifications to,
and where required by Privacy Law, have obtained necessary consents from, Persons regarding its Data Activities. None of the disclosures
made or contained in any Privacy and Data Security Policy has been inaccurate, misleading or deceptive in any material respect or in
material non-compliance with any applicable Privacy Laws. Neither the execution, delivery nor performance of this Agreement and the other
Transaction Agreements, nor the consummation of any of the Transactions, results in a material non-compliance with any of the Privacy
Agreements, Privacy and Data Security Policies, or any applicable Privacy Law.
(n)
To the Knowledge of the Company, there is no pending, nor has there been any written complaint, audit, proceeding, investigation or claim
against the Company or any Subsidiary initiated by (i) any Person, (ii) any Governmental Authority, foreign or domestic, or (iii) any
regulatory entity alleging that any Data Activity of the Company or any Subsidiary (A) is in violation of any applicable Privacy Law
in any material respect, (B) is in violation of any Privacy Agreements in any material respect, (C) is in violation of any Privacy and
Data Security Policy in any material respect, or (D) otherwise constitutes an unfair, deceptive or misleading trade practice in any material
respect.
Section
4.19 Environmental Matters.
(a)
The Company and its Subsidiaries are, and since January 1, 2021 have been, in compliance with all Environmental Laws applicable thereto
and have no material liability under any Environmental Laws, except where any such failure to comply would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.
(b)
As of the date hereof, neither the Company nor any of its Subsidiaries has received written notice of any Actions (including notices
of violation) alleging violations of or liability under Environmental Laws and, to the Knowledge of the Company, no such matter is otherwise
pending or threatened, against the Company or any of its Subsidiaries, except for any such matter that would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.
(c)
Neither the Company nor any of its Subsidiaries has treated, stored, manufactured, transported, handled, disposed or released any Hazardous
Materials, except in compliance with Environmental Laws in all material respects and in a quantity or manner reasonably required for
the conduct of the business of the Company and its Subsidiaries or so as to give rise to liabilities for remedial obligations pursuant
to Environmental Laws except for any such noncompliance or liabilities that would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.
(d)
Neither the Company nor any of its Subsidiaries has contractually assumed or provided any indemnity with respect to liability of any
other Person under any Environmental Laws that would reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect.
Section
4.20 Healthcare Matters.
(a)
The preclinical and clinical studies conducted by or on behalf of or sponsored by the Company, and that are intended to be submitted
to Healthcare Regulatory Authorities as a basis for product approval (collectively, “Studies”), were and, if still
pending, are being conducted by the Company or, to the Knowledge of the Company, on behalf of the Company in all material respects in
accordance with all applicable statutes, rules and regulations of the United States Food and Drug Administration (the “FDA”)
or comparable drug regulatory agencies outside of the United States to which such Studies are subject (collectively, the “Healthcare
Regulatory Authorities”). The Company has not received any written notices or correspondence from the Healthcare Regulatory
Authorities or any other Governmental Authority requiring the premature termination or suspension of such Studies and, to the Company’s
Knowledge, there are no reasonable grounds for the same.
(b)
The Company has, since January 1, 2022, operated and currently is in compliance with all applicable health care Laws, including, (i)
the Federal Food, Drug and Cosmetic Act (21 U.S.C. §§ 301 et seq.); (ii) all applicable federal, state, local and all applicable
foreign healthcare related fraud and abuse Laws, including the federal Anti-kickback Statute (42 U.S.C. § 1320a-7b(b)), the U.S.
Physician Payments Sunshine Act (42 U.S.C. § 1320a-7h), the civil False Claims Act (31 U.S.C. §§ 3729 et seq.), the criminal
False Claims Law (42 U.S.C. § 1320a-7b(a)), all criminal laws relating to healthcare fraud and abuse, including 18 U.S.C. Sections
286 and 287, the healthcare fraud criminal provisions under the U.S. Health Insurance Portability and Accountability Act of 1996 (“HIPAA”)
(42 U.S.C. Section 1320d et seq.), the exclusion laws (42 U.S.C. § 1320a-7), and the civil monetary penalties law (42 U.S.C. §
1320a-7a); (iii) HIPAA, as amended by the Health Information Technology for Economic Clinical Health Act (42 U.S.C. Section 17921 et
seq.); (iv) the regulations promulgated pursuant to such Laws; and (v) any other comparable local, state, federal, or foreign Laws (collectively,
the “Healthcare Laws”). The Company has not received written notice or other written correspondence of any Action
from any Governmental Authority or third party alleging that any Product, operation or activity is in violation of any Healthcare Laws,
and, to the Company’s Knowledge, no such Action is threatened. The Company is not a party to and does not have any ongoing reporting
obligations pursuant to any corporate integrity agreement, deferred prosecution agreement, monitoring agreement, consent decree, settlement
order, plan of correction or similar agreement imposed by any Governmental Authority. Additionally, neither the Company, nor to the Company’s
Knowledge, any of its employees, officers or directors, has been excluded, suspended or debarred from participation in any U.S. state
or federal health care program or human clinical research or, to the Knowledge of the Company, is subject to a governmental inquiry,
investigation, proceeding, or other similar action that could reasonably be expected to result in debarment, suspension, or exclusion.
(c)
The Company holds all material certificates, authorizations, registrations, permits or licenses required to be filed, maintained or furnished
under applicable Healthcare Laws (“Healthcare Permits”). All Healthcare Permits are in full force and effect in all
material respects and no suspension, revocation, cancellation, or withdrawal of such Healthcare Permits has been threatened in writing.
(d)
The Company has not received any written notice or communication from any Healthcare Regulatory Authority or Governmental Authority of
any actual or threatened investigation, inquiry, or administrative, judicial, or regulatory action, hearing, or enforcement proceeding
against the Company regarding any violation of applicable Healthcare Laws or other applicable local, state, and federal laws and regulations
of the relevant Healthcare Regulatory Authority or Governmental Authority, including but not limited to a notice of adverse finding,
warning letter, untitled letter, or Form FDA-483.
(e)
To the Knowledge of the Company, no officer, employee, or agent of the Company is or has been threatened in writing to be (i) disqualified
under any FDA investigator qualification proceedings; (ii) subject to the FDA’s Application Integrity Policy; or (iii) subject
to any enforcement proceeding arising from material false statements to the FDA pursuant to 18 U.S.C. § 1001.
(f)
Neither the Company nor any of its managers, directors, officers, agents, or employees have (i) used any corporate funds of the Company
for unlawful contributions, gifts, entertainment or other unlawful expenses related to political activity, (ii) made any unlawful payments
to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns from corporate funds
or violated any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or any other U.S. or foreign Laws concerning
corrupt payments applicable to its business or (iii) made or received any other payment, contribution, gift, bribe, rebate, payoff or
kick-back prohibited under any applicable Law. Neither the Company nor any of its managers, directors, officers, stockholders, agents,
or employees is or has been the subject of any investigation, inquiry or enforcement Proceeding by any Governmental Authority regarding
any offense or alleged offense under anti-bribery, anti-corruption, or anti-fraud Law in any jurisdiction and, no such investigation,
inquiry or Proceedings have been threatened.
Section
4.21 Brokers’ Fees. Other than as set forth on Schedule 4.21, no broker, finder, financial advisor, investment
banker or other Person is entitled to any brokerage fee, finders’ fee or other similar fee, commission or other similar payment
in connection with the Transactions based upon arrangements made by or on behalf of the Company or any of its Subsidiaries.
Section
4.22 Related Party Transactions. Except for the Contracts set forth on Schedule 4.22, and Contracts that will be terminated
prior to the Closing without any liability to the Company or its Subsidiaries continuing following the Closing, there are no Contracts
between the Company or any of its Subsidiaries, on the one hand, and any Affiliate, officer or director of the Company or its Subsidiaries,
on the other hand, except in each case, for (i) employment or consulting agreements, fringe benefits and other compensation paid to directors,
officers and employees, (ii) reimbursements of expenses incurred in the ordinary course of business in connection with their employment
or service, (iii) amounts paid pursuant to Company Benefit Plans, (iv) powers of attorney and similar grants of authority made in the
ordinary course of business and (v) intercompany Contracts that are between the Company and its wholly-owned Subsidiaries.
Section
4.23 International Trade; Anti-Corruption.
(a)
Neither the Company nor any of its Subsidiaries, nor, to the Knowledge of the Company, any of their respective directors, officers, employees,
agents or other third-party representatives acting on behalf of the Company or any of its Subsidiaries, is currently, or has been since
January 1, 2022: (i) a Sanctioned Person; (ii) organized, resident or operating from a Sanctioned Country; (iii) knowingly engaged in
any dealings or transactions with any Sanctioned Person or in any Sanctioned Country, in violation of Sanctions Laws; or (iv) otherwise
in violation of applicable Sanctions Laws or Trade Control Laws (collectively, “Trade Controls”), except as would
not be material to the Company and its Subsidiaries, taken as a whole.
(b)
Neither the Company nor any of its Subsidiaries, nor, to the Knowledge of the Company, any of their respective directors, officers, employees,
agents or other third-party representatives acting on behalf of the Company or any of its Subsidiaries, has since January 1, 2022 been
the subject of written any claim or allegation by any Governmental Authority that such Person has made any unlawful payment or given,
offered, promised, or authorized or agreed to give, or received, any money or thing of value, directly or indirectly, to or from any
Government Official or other Person in violation of any Anti-Corruption Laws, except as would not be material to the Company and its
Subsidiaries, taken as a whole.
(c)
Since January 1, 2022, neither the Company nor any of its Subsidiaries has received from any Governmental Authority or any other Person
any notice, inquiry, or internal or external allegation; made any voluntary or involuntary disclosure to a Governmental Authority; or
conducted any internal investigation or audit concerning any actual or potential violation or wrongdoing related to Trade Controls or
Anti-Corruption Laws, except as would not be material to the Company and its Subsidiaries, taken as a whole. The Company and its Subsidiaries
maintain and enforce policies, procedures and internal controls reasonably designed to promote compliance with Anti-Corruption Laws and
Trade Controls.
Section
4.24 Investment Company Act. As of the date hereof, neither the Company nor any of its Subsidiaries is an “investment company”
or a Person directly or indirectly “controlled” by or acting on behalf of an “investment company”, or required
to register as an “investment company”, in each case within the meaning of the Investment Company Act of 1940, as amended.
Section
4.25 Product Liability.
(a)
For the past three (3) years, neither the Company nor any of its Subsidiaries have received any written notice from any Person regarding
any actual, alleged, possible or potential claim by any Person or group of Persons, including any Governmental Authority, for money damages
or any other form of relief, whether in law or equity, in respect of potential or actual injury or harm allegedly resulting from or due
and owing in connection with the purchase, use, application of or defect (including alleged failure to warn) relating to any Product
of the Company and its Subsidiaries, irrespective of the legal theory of liability. To the Company’s Knowledge, no injury or harm
has occurred to any Person or group of Persons related to (i) any Product of the Company or its Subsidiaries or (ii) the purchase, use
or application of (including alleged failure to warn in respect of) any Product of the Company or its Subsidiaries or any defect in any
such Product.
(b)
In the past three (3) years, no Products sold by the Company or any of its Subsidiaries have been subject to a recall, market withdrawal,
or stock recovery.
Section
4.26 No Other Representations. Except as provided in this Article IV, neither the Company, nor the Company Shareholders,
nor any other Person has made, or is making, any representation or warranty whatsoever in respect of the Company, the Company’s
Subsidiaries or their respective businesses.
Article
V
REPRESENTATIONS AND WARRANTIES OF HEPION
Except
as set forth in (i) the Schedules to this Agreement delivered by Hepion, dated as of the date of this Agreement or (ii) the SEC Reports
that are available on the SEC’s website through EDGAR as of the date hereof (excluding (x) any disclosures in such SEC Reports
under the headings “Risk Factors,” “Forward-Looking Statements” or “Qualitative Disclosures About Market
Risk” or other disclosures that are predictive, cautionary or forward-looking in nature and (y) any exhibits or other documents
appended thereto), Hepion represents and warrants to the Company as follows:
Section
5.01 Corporate Organization. Hepion is a corporation duly incorporated, validly existing and is in good standing under the Laws
of the State of Delaware and has the corporate power and authority to own, lease or operate its assets and properties and to conduct
its business as it is now being conducted. Hepion has made available to the Company true and correct copies of each of the Hepion Organizational
Documents as in effect as of the date hereof. Hepion is, and at all times has been, in compliance in all material respects with all restrictions,
covenants, terms and provisions set forth in the Hepion Organizational Documents. Hepion is duly licensed or qualified and in good standing
as a foreign corporation in all jurisdictions in which its ownership of property or the character of its activities is such as to require
it to be so licensed or qualified, except where failure to be so licensed or qualified would not, individually or in the aggregate, reasonably
be expected to prevent or materially delay or materially impair the ability of Hepion to consummate the Transactions or otherwise have
a material adverse effect on the Transactions (a “Hepion Material Adverse Effect”).
Section
5.02 Subsidiaries. The Subsidiaries of Hepion, together with details of their respective jurisdiction of incorporation or organization,
are set forth on Schedule 5.02. The Subsidiaries of Hepion have been duly formed or organized, are validly existing under
the laws of their jurisdiction of incorporation or organization and have the power and authority to own, operate and lease their respective
properties, rights and assets and to conduct their business as it is now being conducted, except in each case as has not had, and would
not, individually or in the aggregate, reasonably be expected to have, a Material Adverse Effect. Each Subsidiary of Hepion is duly licensed
or qualified as a foreign entity in each jurisdiction in which its ownership of property or the character of its activities is such as
to require it to be so licensed or qualified, except where the failure to be so licensed or qualified has not had, and would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect.
Section
5.03 Due Authorization.
(a)
Hepion has all requisite corporate power and authority to execute and deliver this Agreement and each other Transaction Agreement to
which it is a party and to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance of this Agreement and such other Transaction Agreements and the consummation of the
transactions contemplated hereby and thereby have been duly, validly and unanimously authorized and approved by the board of directors
of Hepion and no other corporate or equivalent proceeding on the part of Hepion is necessary to authorize this Agreement or such other
Transaction Agreements or Hepion’s performance hereunder or thereunder (except that the Hepion Stockholder Approval is a condition
to the consummation of the Merger). This Agreement has been, and each such other Transaction Agreement (when executed and delivered by
Hepion) will be, duly and validly executed and delivered by Hepion and, assuming due authorization and execution by each other party
hereto and thereto, this Agreement constitutes, and each such other Transaction Agreement will constitute a legal, valid and binding
obligation of Hepion, enforceable against each Hepion in accordance with its terms, subject to the Enforceability Exceptions.
(b)
The only approvals or votes required from the holders of Hepion’s Equity Securities in connection with the entry into this Agreement
by Hepion, the consummation of the Transactions, including the Closing, and the approval of the Hepion Transaction Proposals are as set
forth on Schedule 5.02(b).
(c)
At a meeting duly called and held, the board of directors of Hepion has unanimously: (i) determined that this Agreement and the Transactions
are fair to and in the best interests of Hepion and Hepion’s shareholders, (ii) approved the Transactions and (iii) resolved to
recommend that Hepion’s stockholders approve each of the Hepion Transaction Proposals.
Section
5.04 No Conflict. Subject to the receipt of the consents, approvals, authorizations, and other requirements set forth in Section
5.05 and obtaining the Hepion Stockholder Approval, the execution, delivery and performance by Hepion of this Agreement and the Transaction
Agreements and the consummation by Hepion of the transactions contemplated hereby and thereby do not and will not, (a) contravene or
conflict with the Organizational Documents of Hepion, (b) contravene or conflict with or constitute a violation of any provision of any
Law, Permit or Governmental Order binding upon or applicable to Hepion or any of its respective assets or properties, (c) violate, conflict
with, result in a breach of any provision of or the loss of any benefit under, constitute a default under, or result in the termination
or acceleration of, or a right of termination, cancellation, modification, acceleration or amendment under, accelerate the performance
required by, any of the terms, conditions or provisions of any Hepion Specified Contract or (d) result in the creation or imposition
of any Lien on any asset, property or Equity Security of Hepion or any of its Subsidiaries (other than any Permitted Liens), except in
the case of each of clauses (c) through (d) as would not, and would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect.
Section
5.05 Governmental Authorities; Consents. No action by, consent, approval, permit or authorization of, or designation, declaration
or filing with, any Governmental Authority or notice, approval, consent waiver or authorization from any Governmental Authority is required
on the part of Hepion with respect to Hepion’s execution, delivery and performance of this Agreement and the other Transaction
Agreements to which it is a party and the consummation of the transactions contemplated hereby and thereby, except for (i) obtaining
the consents of, or submitting notifications, filings, notices or other submissions to, the Governmental Authorities listed on Schedule
5.05, (ii) the filing with the SEC of (A) the Proxy Statement/Prospectus and the declaration of the effectiveness thereof by
the SEC, (B) any other documents or information required pursuant to applicable requirements, if any, of applicable Securities Laws,
and (C) such reports under Section 13(a) or 15(d) of the Exchange Act as may be required in connection with this Agreement, the other
Transaction Agreements or the Transactions, (iii) compliance with and filings or notifications required to be filed with the state securities
regulators pursuant to “blue sky” Laws and state takeover Laws as may be required in connection with this Agreement, the
other Transaction Agreements or the Transactions, (iv) the filing of the Certificate of Merger in accordance with the DGCL, and (v) the
Hepion Stockholder Approval.
Section
5.06 Capitalization.
(a)
The authorized, issued and outstanding capital stock of Hepion is set forth in the SEC Reports, which were true and correct in all material
respects as of the respective dates of their filing. The issued and outstanding Hepion Common Stock and Convertible Preferred Stock were
validly issued, fully paid and nonassessable (which term means that no further sums are required to be paid by the holders thereof in
connection with the issue of such shares) and were free of preemptive rights. The SEC Reports (which were true and correct in all material
respects as of the respective dates of their filings) set forth the total number and amount of all of the issued and outstanding Equity
Securities of Hepion, and further sets forth the amount and type of Equity Securities of Hepion owned or held by Hepion’s Affiliates.
All of the issued and outstanding shares of Equity Securities of Hepion (i) have been duly authorized and validly issued and are fully
paid and non-assessable, (ii) were issued in full compliance with applicable Law and the Hepion Organizational Documents and (iii) were
not issued in breach or violation of any preemptive rights or Contract.
(b)
Except as set forth on Schedule 5.06(b), there are no outstanding options, warrants, call rights, restricted stock, restricted
stock units, equity appreciation, phantom stock, profit participation or similar rights with respect to the Equity Securities of, or
other equity or voting interest in, Hepion. Except as set forth in the Organizational Documents of Hepion, the Transaction Agreements,
and Schedule 5.06(b), (i) no Person is entitled to any preemptive or similar rights to subscribe for Equity Securities of Hepion,
(ii) there are no outstanding contractual obligations of Hepion to repurchase, redeem or otherwise acquire any Equity Securities of Hepion,
and (iii) there are no outstanding bonds, debentures, notes or other indebtedness of Hepion having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any matter for which the Hepion’s shareholders may vote.
(c)
Except as set forth on Schedule 5.06(c), Hepion has not granted or promised to any Person any options or other rights to acquire
any Equity Securities of Hepion, and there are no outstanding or promised options or other rights to acquire any Equity Securities of
Hepion. Schedule 5.06(c) sets forth, with respect to each Person who holds an outstanding option or other right to purchase Equity
Securities of Hepion as of the date of this Agreement, the following information: (i) the name and status of such Person (and whether
such Person is an employee or consultant of Hepion); (ii) the number and class of shares underlying the option; (iii) the vesting terms
and conditions of the option; (iv) the exercise price and period of the option; (v) the plan and agreement under which the option was
issued, and (vi) any other material terms or conditions underlying such option. Except for the Hepion Equity Plans, Hepion has no incentive
stock plan or any similar plan.
(d)
(i) There are no declared but unpaid dividends or distributions in respect of any Equity Securities of Hepion and (ii) since January
1, 2020 through the date of this Agreement, Hepion has not made, declared, set aside, established a record date for or paid any dividends.
Section
5.07 Capitalization of Subsidiaries.
(a)
The issued and outstanding Equity Securities of each of Hepion’s Subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable. All of the issued and outstanding Equity Securities of each Subsidiary
of Hepion are owned as set forth on Schedule 5.07(a), free and clear of any Liens (other than Permitted Liens) and have not
been issued in violation of preemptive or similar rights.
(b)
There are no outstanding equity appreciation, phantom stock, profit participation or similar rights with respect to the Equity Securities
of, or other equity or voting interest in, any Subsidiary of Hepion. No Person is entitled to any preemptive or similar rights to subscribe
for Equity Securities of any Subsidiary of Hepion. There are no outstanding contractual obligations of any Subsidiary of Hepion to repurchase,
redeem or otherwise acquire any Equity Securities of any Subsidiary of Hepion. There are no outstanding bonds, debentures, notes or other
indebtedness of any Subsidiary of Hepion having the right to vote (or convertible into, or exchangeable for, securities having the right
to vote) on any matter for which the shareholders of Hepion’s Subsidiaries may vote.
(c)
Except as set forth on Schedule 5.07(c), as of the date of this Agreement, neither Hepion nor any of its Subsidiaries owns any
Equity Securities in any Person, other than shares publicly traded on a stock exchange held for cash management purposes.
Section
5.08 SEC Reports; Financial Statements; Sarbanes-Oxley Act; Undisclosed Liabilities.
(a)
Other than as set forth in Schedule 5.08, for the past two (2) years Hepion has filed or furnished in a timely manner all required
registration statements, reports, schedules, forms, statements and other documents required to be filed or furnished by it with the SEC
(collectively, including any statements, reports, schedules, forms, statements and other documents required to be filed or furnished
by it with the SEC subsequent to the date of this Agreement, each as it has been amended since the time of its filing and including all
exhibits thereto, the “SEC Reports”). Each SEC Report, as of their respective dates (or if amended or superseded by
a filing prior to the date of this Agreement, then on the date of such filing), complied in all material respects with the applicable
requirements of the Exchange Act, the Securities Act and the other U.S. federal securities laws and the rules and regulations of the
SEC promulgated thereunder or otherwise (collectively, the “Federal Securities Laws”) (including, as applicable, the
Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and any rules and regulations promulgated thereunder). None
of the SEC Reports, as of their respective dates (or if amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing), contains 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 made therein, in light of the circumstances under which they were made, not misleading.
As of the date of this Agreement, there are no outstanding or unresolved comments from the SEC with respect to the SEC Reports. None
of the SEC Reports filed on or prior to the date hereof is subject to ongoing SEC review or investigation as of the date hereof.
(b)
The SEC Reports contain true and complete copies of the applicable financial statements of Hepion. The audited financial statements and
unaudited interim financial statements (including, in each case, the notes and schedules thereto) included in the SEC Reports complied
as to form in all material respects with the published rules and regulations of the SEC with respect thereto, were prepared in accordance
with GAAP applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto, none
of which is expected to be material) and fairly present (subject, in the case of the unaudited interim financial statements included
therein, to normal year-end adjustments and the absence of complete footnotes) in all material respects the financial position of Hepion
as of the respective dates thereof and the results of their operations and cash flows for the respective periods then ended. Hepion does
not have any material off-balance sheet arrangements that are not disclosed in the SEC Reports.
(c)
Hepion has established and maintains disclosure controls and procedures (as defined in Rule 13a-15 and Rule 15d-15 under the Exchange
Act). Such disclosure controls and procedures are designed to ensure that material information relating to Hepion is made known to Hepion’s
principal executive officer and its principal financial officer. Such disclosure controls and procedures are effective in timely alerting
Hepion’s principal executive officer and principal financial officer to material information required to be included in Hepion’s
financial statements included in Hepion’s periodic reports required under the Exchange Act.
(d)
Hepion has established and maintains systems of internal accounting controls that are sufficient to provide reasonable assurance that
(i) all transactions are executed in accordance with management’s authorization and (ii) all transactions are recorded as necessary
to permit preparation of proper and accurate financial statements in accordance with GAAP and to maintain accountability for Hepion’s
assets. Hepion maintains, and since its incorporation has maintained, its books and records in the ordinary course of business that are
accurate and complete and reflect the revenues, expenses, assets and liabilities of Hepion in all material respects.
(e)
Except as set forth in the SEC Reports, there is no, and for the last two years there has not been, a (i) “significant deficiency”
in the internal controls over financial reporting of Hepion, (ii) “material weakness” in the internal controls over financial
reporting of Hepion or (iii) Fraud, whether or not material, that involves management or other employees of Hepion who have a significant
role in the internal controls over financial reporting of Hepion.
(f)
In the last two (2) years, each director and executive officer of Hepion has filed with the SEC on a timely basis all statements required
by Section 16(a) of the Exchange Act and the rules and regulations promulgated thereunder.
(g)
Hepion has not taken any action prohibited by Section 402 of the Sarbanes-Oxley Act. There are no outstanding loans or other extensions
of credit made by Hepion to any executive officer (as defined in Rule 3b-7 under the Exchange Act) or director of Hepion.
(h)
Hepion has no liabilities, debts or obligations, whether accrued, contingent, absolute, determined, determinable or otherwise, required
to be reflected or reserved for on a balance sheet prepared in accordance with GAAP, except for liabilities, debts or obligations (i)
incurred or arising under or in connection with the Transactions, including expenses related thereto, or (ii) incurred in connection
with or incident or related to Hepion’s incorporation or continuing corporate existence, which are immaterial in nature.
Section
5.09 No Undisclosed Liabilities. As of the date of this Agreement, neither Hepion nor any of its Subsidiaries has any liability,
indebtedness or obligation, whether accrued, contingent, absolute, determined, determinable or otherwise, required to be reflected or
reserved for on a balance sheet prepared in accordance with GAAP, except for liabilities, indebtedness or obligations (a) reflected or
reserved for in the Financial Statements or disclosed in any notes thereto, (b) that have arisen since January 1, 2020 in the ordinary
course of business of Hepion and its Subsidiaries, (c) incurred or arising under or in connection with the Transactions, including expenses
related thereto, (d) disclosed in the Schedules or (e) that would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect.
Section
5.10 Litigation and Proceedings. Since January 1, 2021, there has been no pending or, to the Knowledge of Hepion, threatened (in
writing) Actions by or against Hepion or any of its Subsidiaries that, if adversely decided or resolved, had, or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect. There is no Governmental Order imposed upon Hepion or
any of its Subsidiaries that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Neither
Hepion nor any of its Subsidiaries is party to a settlement or similar agreement regarding any of the matters set forth in the two preceding
sentences that contains any ongoing obligations, restrictions or liabilities (of any nature) that would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
Section
5.11 Compliance with Laws. Hepion and its Subsidiaries are, and since January 1, 2021, have been, in compliance in all material
respects with all applicable material Laws. None of Hepion or its Subsidiaries has received any written notice from any Governmental
Authority of a material violation of any applicable Law at any time since January 1, 2021. Hepion and its Subsidiaries hold, and since
January 1, 2021 have held, all material licenses, approvals, consents, registrations, franchises and permits necessary for the lawful
conduct of the business of Hepion as currently conducted (the “Hepion Permits”). Hepion and its Subsidiaries are, and since
January 1, 2022 have been, in material compliance with and not in material default under such Hepion Permits.
Section
5.12 Hepion Benefit Plans.
(a)
Schedule 5.12(a) sets forth a true and complete list of each material Hepion Benefit Plan maintained for the benefit of employees.
For purposes of this Agreement, a “Hepion Benefit Plan” is each “employee benefit plan” as defined in
Section 3(3) of ERISA, and any material vacation, PTO, education assistance, cafeteria, flexible spending account, stock ownership, stock
purchase, stock option, phantom stock, equity or other equity-based, severance, employment (other than offer letters that do not provide
severance benefits or notice periods in excess of 30 days upon termination of the employment relationship), individual consulting, retention,
change-in-control, transaction, fringe benefit, pension (including pension fund, managers’ insurance and/or similar fund), expansion
orders, bonus, incentive, profit sharing, profits interest, deferred compensation, employee loan and all other benefit or compensation
plans, agreements or other general arrangements, whether or not subject to ERISA, which are, in each case, material and contributed to,
required to be contributed to, sponsored by or maintained by Hepion or any of its Subsidiaries for the benefit of any current employee,
officer or director of Hepion or its Subsidiaries (the “Hepion Employees”) or under or with respect to which Hepion
or any of its Subsidiaries has any material liability, contingent or otherwise, but not including (x) any multiemployer plan or any plan,
policy, program, arrangement or agreement that covers only former directors, officers, employees, independent contractors and service
providers and with respect to which Hepion and its Subsidiaries have no remaining obligations or liabilities, or (y) any personal employment,
engagement or similar agreements with employees, consultants, or independent contractors of Hepion or any of its Subsidiaries.
(b)
With respect to each material Hepion Benefit Plan, Hepion has made available to the Company (i) copies of Hepion Benefit Plan and any
trust agreement or other funding instrument relating to such plan, and to the extent any Hepion Benefit Plan is not set forth in writing,
a written summary of the material terms thereof; (ii) the most recent summary plan description currently in effect and any summaries
of material modifications thereto; and (iii) any material notices, letters or correspondence to or from any Governmental Authority with
respect to such Hepion Benefit Plan within the past three (3) years from the date hereof; (iv) the Forms 5500 annual return (or local
non-US equivalent) and all schedules thereto with respect to the most recent three (3) years; (v) the most recent determination, opinion
or advisory letter issued from the IRS (or local non-US equivalent from applicable similar Governmental Authority); (vi) the most recent
actuarial valuation report or trust statement for any Hepion Benefit Plan that is either funded or has assets set aside to pay Company
Benefit Plan benefits; and (vii) the most recent nondiscrimination tests performed under the Code (or local non-US equivalent).
(c)
Except as would not have, or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect:
(i)
each Hepion Benefit Plan has been established, maintained, funded and administered in compliance in all material respects with its terms
and all applicable Laws, including, where applicable, ERISA and the Code;
(ii)
each Hepion Benefit Plan which is intended to be qualified within the meaning of Section 401(a) of the Code is so qualified and (A) has
received a favorable determination or opinion letter as to its qualification prior to the date of this Agreement or (B) has been established
under a standardized master and prototype or volume submitter plan for which a current favorable Internal Revenue Service advisory letter
or opinion letter has been obtained by the plan sponsor and is valid as to the adopting employer, and any trusts related thereto that
are intended to be exempt from taxation under Section 501(a) of the Code are so exempt. To the Knowledge of Hepion, nothing has occurred,
whether by action or failure to act, that would reasonably be expected to adversely affect such qualification. All benefits, contributions,
and premiums relating to each Hepion Benefit Plan have been timely paid in accordance with the terms of such Plan and all applicable
Laws and accounting principles, and all benefits accrued under any unfunded Plan have been paid, accrued or otherwise adequately reserved
to the extent required by, and in accordance with, generally accepted accounting principles. To the Knowledge of Hepion, no fact or set
of circumstances exists and no event has occurred with respect to any Hepion Benefit Plan that would reasonably be expected to result
in any Hepion Benefit Plan or Hepion (or any Subsidiary thereof) being required to pay any material Tax or penalty under applicable Law;
and
(iii)
each Hepion Benefit Plan that is subject to the Laws of a jurisdiction other than the United States has been maintained, funded and administered
in compliance in all material respects with applicable Law.
(d)
Neither Hepion, its Subsidiaries, nor any ERISA Affiliate has at any time sponsored, maintained, contributed to or had any liability
(contingent or otherwise) in respect of (i) any “defined benefit plan” (as defined in Section 3(35) of ERISA), (ii) any plan
subject to Section 412 of the Code or Section 302 or Title IV of ERISA, including any “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA, (iii) any “multiple employer plan” within the meaning of Section 413(c) of the Code or (iv)
any “multiple employer welfare arrangement” (as defined in Section 3(40) of ERISA). Except as required under Section 601
eq seq. of ERISA or similar state or local Law pursuant to which the covered individual pays the full cost of coverage, no Hepion Benefit
Plan provides benefits or coverage in the nature of health, life or disability insurance following retirement or other termination of
employment.
(e)
Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby (either alone or upon
the occurrence of any additional or subsequent event or events) (i) entitle any Hepion service providers to receive any compensation
or benefit (or increase thereto); (ii) accelerate the time of payment or vesting, or trigger any payment or funding, of any compensation
or benefits; or (iii) limit or restrict the right of Hepion to merge, amend or terminate any Hepion Benefit Plan.
(f)
Each Hepion Benefit Plan that is subject to Section 409A of the Code has been adopted and administered in compliance with its terms and
the operational and documentary requirements of Section 409A of the Code and all applicable regulatory guidance (including notices, rulings
and proposed and final regulations) thereunder.
(g)
No Hepion Benefit Plan provides for any tax gross-up payments to any Hepion employees.
(h)
There are no material claims or causes of action pending (other than routine claims for benefits) or, to the Knowledge of Hepion, threatened
against Hepion in connection with any Hepion Benefit Plan, and no Hepion Benefit Plan has within the six (6) years prior to the date
hereof been the subject of an examination, investigation or audit by a Governmental Authority or the subject of an application or filing
under or is a participant in any amnesty, voluntary compliance, self-correction or similar program sponsored by any Governmental Authority.
Hepion is not engaged in any legal proceedings brought by or on behalf of any Hepion employee and, to the Knowledge of Hepion, no such
proceedings have been threatened which, if determined adversely, would have a Material Adverse Effect on Hepion.
(i)
No Hepion Benefit Plan is subject to the laws of any jurisdiction outside the United States.
Section
5.13 Labor and Employment Matters.
(a)
Neither Hepion nor any of its Subsidiaries is party to or bound by any CBA. To the Knowledge
of Hepion, no employees are represented by any labor organization, labor union, or works council or other similar employee representative
organization with respect to their employment with Hepion or any of its Subsidiaries. Except as would not have, or would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect, (i) there are no activities or proceedings of any labor
union, works council or labor organization to organize any of Hepion Employees; and (ii) there is no, and since January 1, 2022 there
has been no, organized labor dispute, labor grievance or strike, lockout, picketing, hand billing, slowdown, concerted refusal to work
overtime, or work stoppage against Hepion or any of its Subsidiaries, in each case, pending or, to the Knowledge of Hepion, threatened.
(b)
Hepion currently classifies, and for the past three (3) years has properly classified, each of its employees as exempt or non-exempt
for purposes of the Fair Labor Standards Act and state and local wage and hour laws, and is and has been otherwise in compliance with
all such laws.
(c)
Hepion currently classifies, and for the past three (3) years has properly classified, each of its workers as employees or independent
contractors.
(d)
Hepion is not delinquent in any payments to any worker for any wages, salaries, fees, or other compensation due with respect to any services
performed for it or amounts required to be reimbursed to such workers.
(e)
Hepion is, and for the past three (3) years has been, in compliance in all material respects with all applicable laws and regulations
respecting employment matters, including all laws regarding wages and hours, payment of minimum wages, meal and rest breaks, and overtime.
(f)
Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, neither Hepion nor any
of its Subsidiaries has incurred any liability or obligation under the Worker Adjustment and Retraining Notification Act or any similar
state or local Law that remains unsatisfied.
Section
5.14 Tax Matters.
(a)
Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect:
(i)
all Tax Returns required to be filed by Hepion have been filed (taking into account extensions) and all such Tax Returns are true, correct
and complete in all material respects;
(ii)
all Taxes required to be paid by Hepion have been duly and timely paid in full when due, regardless of whether shown on a Tax Return;
(iii)
To the Knowledge of Hepion, no Tax audit, examination or other proceeding with respect to Taxes of Hepion is pending or has been threatened
in writing;
(iv)
Hepion has complied in all material respects with all applicable Laws relating to the collection and withholding of Taxes, including
with respect to any amounts paid or owing to any employee, independent contractor, creditor, shareholder, or other third party;
(v)
Hepion has not participated in any “listed transaction” within the meaning of Treasury Regulations Section 1.6011-4;
(vi)
there are no written assessments, deficiencies, adjustments or other claims with respect to Taxes that have been asserted or assessed
against Hepion that have not been paid or otherwise resolved, (y) there are no ongoing or pending, nor has Hepion received written notice
of the expected commencement of, any actions with respect to any material Taxes of Hepion and (z) there are no waivers or extensions
of any statute of limitations currently in effect with respect to any Taxes of Hepion (other than extensions that arise as a result of
filing Tax Returns by the extended due date therefor);
(vii)
Hepion is not subject to any Tax sharing, allocation or similar agreement (other than such Agreements that have been disclosed in public
filings with respect to Hepion);
(viii)
There are no Liens with respect to Taxes on any of the assets of Hepion, other than Permitted Liens;
(ix)
Hepion does not have any material liability for the Taxes of any Person (other than Hepion) (i) under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local or foreign Law) or (ii) as a transferee or successor, or by Contract (except for liabilities
pursuant to commercial contracts not primarily relating to Taxes);
(x)
Hepion does not have a permanent establishment (within the meaning of an applicable Tax treaty) or otherwise have an office or fixed
place of business in a country other than the country in which it is organized;
(xi)
Hepion will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period
(or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting for a taxable period ending
on or prior to the Closing Date; (ii) installment sale made prior to the Closing Date; (iii) prepaid amount received on or prior to the
Closing Date; or (iv) use of an improper method of accounting for a taxable period on or prior to the Closing Date. Hepion has not made
an election pursuant to Section 965(h) of the Code.
(b)
No “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local
or non-U.S. income Tax Law), private letter rulings, tax opinions, technical advice memoranda or similar agreements or rulings have been
entered into or issued by any Tax Authority with respect to Hepion.
(c)
To the Knowledge of the Hepion, Hepion is in compliance, in all material respects, with all terms and conditions of any Tax exemption,
Tax holiday or other Tax reduction agreement or order of a Governmental Entity.
(d)
To the Knowledge of Hepion, no claims have been made by any Tax Authority in a jurisdiction where Hepion does not file Tax Returns that
Hepion is or may be subject to income taxation (other than an obligation to withhold tax) by that jurisdiction.
(e)
Hepion is not a party to or bound by any Tax allocation, indemnification or sharing agreement (other than any Tax indemnification provisions
in commercial agreements that are not primarily related to Taxes).
(f)
Hepion (or any predecessor thereof) has not constituted either a “distributing corporation” or a “controlled corporation”
in a distribution of stock qualifying for income tax-free treatment under Section 355 of the Code (or so much of Section 356 of the Code
as relates to Section 355 of the Code) since January 1, 2022.
(g)
Hepion is a Tax resident only in its jurisdiction of formation.
(h)
Hepion does not have Knowledge of any fact or any reason that (when taken together with Hepion’s understanding of other relevant
facts) would reasonably be expected to cause the Company to be treated, following the completion of the Transactions, as a Tax resident
of a country other than Israel.
(i)
Hepion is and has since incorporation been treated as a corporation for U.S. federal (and applicable state and local) income Tax purposes.
Section
5.15 Insurance. Hepion and its Subsidiaries are covered by valid and currently effective insurance policies issued in favor of
Hepion and its Subsidiaries that are customary and adequate for companies of a similar size and nature in the industries and locations
in which Hepion operates. Schedule 5.15 sets forth, as of the date hereof, a true and complete list of all current, material insurance
policies issued in favor of Hepion and its Subsidiaries, or pursuant to which Hepion or its Subsidiaries are a named insured or otherwise
a beneficiary, as well as any historic incurrence-based policies still in force. With respect to each such insurance policy, (a) such
policy is in full force and effect and all premiums due thereon have been paid, (b) Hepion and its Subsidiaries are not in breach or
default thereof, and have not taken any action or failed to take any action which (with or without notice or lapse of time, or both)
would be reasonably expected to constitute such a breach or default, or would permit termination or modification of, any such policy
and (c) to Hepion’s Knowledge, no insurer issuing any such policy has been declared insolvent or placed in receivership, conservatorship
or liquidation. No written notice of cancellation or termination has been received by Hepion with respect to any such policy, nor will
any such cancellation or termination result from the consummation of the transactions contemplated by this Agreement.
Section
5.16 Real Property.
(a)
Neither Hepion nor any of its Subsidiaries owns any real property.
(b)
Except as would not reasonably be expected to have a Material Adverse Effect, Hepion or its applicable Subsidiary, has a valid leasehold
interest in all real property leased by Hepion or any of its Subsidiaries (“Leased Hepion Real Property”). All material
leases for the Leased Hepion Real Property under which Hepion or any of its Subsidiaries is a lessee (collectively, the “Hepion
Leases”) are in full force and effect and are enforceable in accordance with their respective terms, subject to the Enforceability
Exceptions, except as would not reasonably be expected to have a Material Adverse Effect. None of Hepion or any of its Subsidiaries has
received any written notice of any, and to the Knowledge of Hepion there is no, material default under any such Hepion Lease.
Section
5.17 IT Security.
(a)
To the Knowledge of Hepion, Hepion and its Subsidiaries have in place commercially reasonable measures designed to protect the confidentiality,
integrity and security of the IT Systems, and commercially reasonable back up and disaster recovery procedures designed for the continued
operation of their businesses in the event of a failure of the IT Systems. To the Knowledge of Hepion, the IT Systems operate and perform
in all material respects as is necessary and sufficient for the conduct of the business of Hepion and, as applicable, its Subsidiaries
as currently conducted. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect,
to the Knowledge of Hepion, to the Knowledge of Hepion, there has been no outage of the IT Systems, security breach or other unauthorized
access to the IT Systems that has resulted in the unauthorized access, use, disclosure, modification, encryption, loss, or destruction
of any material information or data contained or stored therein since January 1, 2020.
(b)
Hepion and each Subsidiary is in compliance in all respects with (i) all applicable Laws pertaining to Data Activities; and (ii)
all Contracts to which Hepion or any Subsidiary is a party that are applicable to Data Activities (collectively, “Hepion Privacy
Agreements”).
(c)
To the Knowledge of Hepion, Hepion and its Subsidiaries have implemented written policies relating to Data Activities, including, without
limitation, a publicly posted website privacy policy and commercially reasonable written information security policies (each, a “Hepion
Privacy and Data Security Policy”) which are also compliant in all material respects with the requirements under any applicable
Privacy Law. Hepion and each Subsidiary is in compliance in all material respects with each Hepion Privacy and Data Security Policy.
To the extent required by applicable Law for Data Activities, Hepion and its Subsidiaries have provided necessary notifications to, and
have obtained necessary consents from, Persons regarding its Data Activities. None of the disclosures made or contained in any Hepion
Privacy and Data Security Policy has been inaccurate, misleading or deceptive in a material manner or in material non-compliance with
any applicable Privacy Laws. Neither the execution, delivery nor performance of this Agreement and the other Transaction Agreements,
nor the consummation of any of the Transactions, results in a material non-compliance with any of the Hepion Privacy Agreements, Privacy
and Data Security Policies, or any applicable Privacy Law.
(d)
To the Knowledge of Hepion, there is no pending, nor has there been any written complaint, audit, proceeding, investigation or claim
against Hepion or any Subsidiary initiated by (i) any Person, (ii) any Governmental Authority, foreign or domestic, or (iii) any regulatory
or self-regulatory entity alleging that any Data Activity of any of Hepion or any Subsidiary (A) is in violation of any applicable Privacy
Law in any material respect, (B) is in violation of any Hepion Privacy Agreements in any material respect, (C) is in violation of any
Hepion Privacy and Data Security Policy in any material respect, or (D) otherwise constitutes an unfair, deceptive or misleading trade
practice in any material respect.
Section
5.18 Environmental Matters.
(a)
Hepion and its Subsidiaries are, and since January 1, 2021 have been, in compliance with all Environmental Laws applicable thereto and
have no material liability under any Environmental Laws, except where any such failure to comply would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.
(b)
As of the date hereof, neither Hepion nor any of its Subsidiaries has received written notice of any Actions (including notices of violation)
alleging violations of or liability under Environmental Laws and, to the Knowledge of Hepion, no such matter is otherwise pending or
threatened, against Hepion or any of its Subsidiaries, except for any such matter that would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.
(c)
Neither Hepion nor any of its Subsidiaries has treated, stored, manufactured, transported, handled, disposed or released any Hazardous
Materials, except in compliance with Environmental Laws in all material respects and in a quantity or manner reasonably required for
the conduct of the business of Hepion and its Subsidiaries or so as to give rise to liabilities for remedial obligations pursuant to
Environmental Laws except for any such noncompliance or liabilities that would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.
(d)
Neither Hepion nor any of its Subsidiaries has contractually assumed or provided any indemnity with respect to liability of any other
Person under any Environmental Laws that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
Section
5.19 Brokers’ Fees. Other than as set forth on Schedule 5.19, no broker, finder, financial advisor, investment
banker or other Person is entitled to any brokerage fee, finders’ fee or other similar fee, commission or other similar payment
in connection with the Transactions based upon arrangements made by or on behalf of Hepion or any of its Subsidiaries.
Section
5.20 Related Party Transactions. Schedule 5.20 sets forth all Contracts, transactions, arrangements or understandings
between (a) Hepion, on the one hand, and (b) any officer, director, employee, partner, member, manager, direct or indirect equityholder
or warrant holder or Affiliate of either Hepion or any of the respective officers, directors, employees, partners, members, managers
or direct or indirect equityholders of any of the foregoing Persons, on the other hand (each Person identified in this clause (b),
a “Hepion Related Party”). Except as set forth in Schedule 5.20, no Hepion Related Party (i) owns any interest
in any asset used by Hepion, or (ii) owes any material amount to, or is owed any material amount by, Hepion.
Section
5.21 International Trade; Anti-Corruption.
(a)
Neither Hepion nor any of its Subsidiaries, nor, to the Knowledge of Hepion, any of their respective directors, officers, employees,
agents or other third-party representatives acting on behalf of Hepion or any of its Subsidiaries, is currently, or has been since January
1, 2022: (i) a Sanctioned Person; (ii) organized, resident or operating from a Sanctioned Country; (iii) knowingly engaged in any dealings
or transactions with any Sanctioned Person or in any Sanctioned Country, in violation of Sanctions Laws; or (iv) otherwise in violation
of Trade Controls, except as would not be material to Hepion and its Subsidiaries, taken as a whole.
(b)
Neither Hepion nor any of its Subsidiaries, nor, to the Knowledge of Hepion, any of their respective directors, officers, employees,
agents or other third-party representatives acting on behalf of Hepion or any of its Subsidiaries, has since January 1, 2022 been the
subject of written any claim or allegation by any Governmental Authority that such Person has made any unlawful payment or given, offered,
promised, or authorized or agreed to give, or received, any money or thing of value, directly or indirectly, to or from any Government
Official or other Person in violation of any Anti-Corruption Laws, except as would not be material to Hepion and its Subsidiaries, taken
as a whole.
(c)
Since January 1, 2022, neither Hepion nor any of its Subsidiaries has received from any Governmental Authority or any other Person any
notice, inquiry, or internal or external allegation; made any voluntary or involuntary disclosure to a Governmental Authority; or conducted
any internal investigation or audit concerning any actual or potential violation or wrongdoing related to Trade Controls or Anti-Corruption
Laws, except as would not be material to Hepion and its Subsidiaries, taken as a whole. Hepion and its Subsidiaries maintain and enforce
policies, procedures and internal controls reasonably designed to promote compliance with Anti-Corruption Laws and Trade Controls.
Section
5.22 Investment Company Act. As of the date hereof, neither Hepion nor any of its Subsidiaries is an “investment company”
or a Person directly or indirectly “controlled” by or acting on behalf of an “investment company”, or required
to register as an “investment company”, in each case within the meaning of the Investment Company Act of 1940, as amended.
Section
5.23 Product Liability.
(a)
For the past three (3) years, neither Hepion nor any of its Subsidiaries have received any written notice from any Person regarding any
actual, alleged, possible or potential claim by any Person or group of Persons, including any Governmental Authority, for money damages
or any other form of relief, whether in law or equity, in respect of potential or actual injury or harm allegedly resulting from or due
and owing in connection with the purchase, use, application of or defect (including alleged failure to warn) relating to any Product
of Hepion and its Subsidiaries, irrespective of the legal theory of liability. To Hepion’s Knowledge, no injury or harm has occurred
to any Person or group of Persons related to (i) any Product of Hepion or its Subsidiaries or (ii) the purchase, use or application of
(including alleged failure to warn in respect of) any Product of Hepion or its Subsidiaries or any defect in any such Product.
(b)
In the past three (3) years, no Products sold by Hepion or any of its Subsidiaries have been subject to a recall, market withdrawal,
or stock recovery.
Section
5.24 Nasdaq Listing. The Hepion Common Stock are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading
on the Nasdaq under the symbol “HEPA.” Hepion is in compliance with and has complied with the applicable listing requirements
of the Nasdaq. There is no Action pending or, to the Knowledge of Hepion, threatened against Hepion by the Nasdaq or the SEC with respect
to any intention by such entity to deregister the Hepion Common Stock or terminate the listing of Hepion Common Stock on the Nasdaq.
None of Hepion or its Affiliates has taken any action in an attempt to terminate the registration of the Hepion Common Stock under the
Exchange Act except as contemplated by this Agreement. Hepion has not received any notice from the Nasdaq or the SEC regarding the revocation
of such listing or otherwise regarding the delisting of the Hepion Common Stock from the Nasdaq or the SEC.
Section
5.25 Material Contracts; No Defaults.
(a)
Hepion has filed as an exhibit to the SEC Reports all Contracts, including every “material contract” (as such term is defined
in Item 601(b)(10) of Regulation S-K of the SEC) (other than confidentiality and non-disclosure agreements and this Agreement) to which,
as of the date of this Agreement, Hepion is a party or by which any of its respective assets are bound.
(b)
Each Contract of a type required to be filed as an exhibit to the SEC Reports, whether or not filed, was entered into at arm’s
length. Except for any Contract that has terminated or will terminate upon the expiration of the stated term thereof prior to the Closing
Date, with respect to any Contract of the type required to be filed as an exhibit to the SEC Reports, whether or not filed, (i) such
Contracts are in full force and effect and represent the legal, valid and binding obligations of Hepion, and, to the Knowledge of Hepion,
the other parties thereto, and are enforceable by Hepion to the extent a party thereto in accordance with their terms, subject in all
respects to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other Laws relating to or affecting
creditors’ rights generally and general equitable principles (whether considered in a proceeding in equity or at law), (ii) Hepion
and, to the Knowledge of Hepion, the counterparties thereto, are not in material breach of or material default (or would be in material
breach, violation or default but for the existence of a cure period) under any such Contract, (iii) Hepion has not received any written
or oral claim or notice of material breach of or material default under any such Contract, (iv) no event has occurred which, individually
or together with other events, would reasonably be expected to result in a material breach of or a material default under any such Contract
by Hepion or any other party thereto (in each case, with or without notice or lapse of time or both) and (v) Hepion has not received
written notice from any other party to any such Contract that such party intends to terminate or not renew any such Contract.
Section
5.26 Hepion Support Agreement. Hepion has delivered to the Company a true, correct and complete copy of the Hepion Support Agreement.
The Hepion Support Agreement is in full force and effect and has not been withdrawn or terminated, or otherwise amended or modified,
in any respect, and no withdrawal, termination, amendment or modification is contemplated by Hepion. The Hepion Support Agreement is
a legal, valid and binding obligation of Hepion and, each other party thereto and neither the execution or delivery by any party thereto,
nor the performance of any party’s obligations under, the Hepion Support Agreement violates any provision of, or results in the
breach of or default under, or require any filing, registration or qualification under, any applicable Law. No event has occurred that,
with or without notice, lapse of time or both, would constitute a default or breach of any party under the Hepion Support Agreement.
Section
5.27 Absence of Changes. Since the date of Hepion’s incorporation (a) there has not been any event or occurrence that has
had, or would reasonably be expected to have, individually or in the aggregate, a Hepion Material Adverse Effect, and (b) except as expressly
contemplated by this Agreement, the other Transaction Agreements or in connection with the Transactions, Hepion has carried on its business
in all material respects in the ordinary course of business.
Section
5.28 Residency. Hepion is a non-Israeli resident company that has no activities in Israel, and its activity is controlled and
managed outside of Israel. Each of Hepion’s directors, officers and managers are non-Israeli residents and conduct Hepion’s
activity outside of Israel.
Section
5.29 Shell Company Status. Hepion is not an issuer identified in Rule 144(i)(1) promulgated under the Securities Act or a shell
company as defined in Rule 12b-2 promulgated under the Exchange Act.
Section
5.30 Healthcare Matters. Except as would not, individually or in the aggregate, reasonably be expected to have a Hepion Material
Adverse Effect, since the date of Hepion’s incorporation:
(a)
The clinical studies conducted by or on behalf of or sponsored by Hepion or in which Hepion has participated (collectively, “Studies”),
were and, if still pending, are being conducted by Hepion or, to the Knowledge of Hepion, on behalf of Hepion in all material respects
in accordance with all applicable statutes, rules and regulations of the applicable Healthcare Regulatory Authorities. Hepion has not
received any written notices or correspondence from the Healthcare Regulatory Authorities or any other Governmental Authority requiring
or threatening the premature termination or suspension of such Studies and, to the Knowledge of Hepion, there are no reasonable grounds
for the same.
(b)
Hepion has since its incorporation operated and is currently in compliance with all applicable Healthcare Laws. Hepion has not received
written notice or other correspondence of any Action from any Governmental Authority, institutional review board, ethics committee, or
other third party alleging that any product, operation or activity is in violation of any Healthcare Laws, and, to the Knowledge of Hepion,
no such Action is threatened. Hepion is not a party to and does not have any ongoing reporting obligations pursuant to any corporate
integrity agreement, deferred prosecution agreement, monitoring agreement, consent decree, settlement order, plan of correction or similar
agreement imposed by any Governmental Authority. Additionally, neither Hepion, nor any of its employees, officers or directors, has been
excluded, suspended or debarred from participation in any U.S. state or federal health care program or human clinical research or is
subject to a governmental inquiry, investigation, proceeding, or other similar action that could reasonably be expected to result in
debarment, suspension, or exclusion.
(c)
Hepion has filed with the applicable Healthcare Regulatory Authorities all required material filings, declarations, listings, registrations,
reports or submissions, including adverse event reports, with respect to its products, operations, and activities (collectively, “Healthcare
Submissions”). All Healthcare Submissions were complete and accurate in all material respects and in material compliance with
applicable Laws when filed, or were subsequently corrected or completed by a subsequent filing made prior to the date hereof. Hepion
has made available to the Company true, correct and complete copies of all Healthcare Submissions and all material correspondence with
and from all Healthcare Regulatory Authorities. No deficiencies have been asserted by any Healthcare Regulatory Authority with respect
to any Healthcare Submission, except as are not, and would not reasonably be expected to be, individually or in the aggregate, material
to Hepion, taken as a whole.
(d)
Neither Hepion, nor any authorized person acting on its behalf, has (i) made an untrue statement of a material fact or a fraudulent statement
to the FDA or any other Healthcare Regulatory Authority, (ii) failed to disclose a material fact required to be disclosed to the FDA
or any other Healthcare Regulatory Authority, or (iii) committed any act, made any statement or failed to make a statement to the FDA
or any other Healthcare Regulatory Authority, in each such case, that, at the time such statement was made or such disclosure or statement
was not made, would reasonably be expected to provide a basis for the FDA to invoke its policy respecting “Fraud, Untrue Statements
of Material Facts, Bribery, and Illegal Gratuities,” set forth in 56 Fed. Reg. 46191 (September 10, 1991) or for any Healthcare
Regulatory Authority to invoke any similar policy.
Section
5.31 No Other Representations. Except as provided in this Article V, neither Hepion nor any other Person has made, or is
making, any representation or warranty whatsoever in respect of Hepion or its business.
Article
VI
COVENANTS OF THE COMPANY
Section
6.01 Conduct of Business. From the date of this Agreement until the earlier of the Closing or the termination of this Agreement
in accordance with its terms (the “Interim Period”), the Company shall, and shall cause its Subsidiaries to, except (i) as
expressly contemplated by this Agreement (including the Recapitalization) or any other Transaction Agreement, (ii) as set forth on Schedule
6.01, (iii) as consented to in writing by Hepion (which consent shall not be unreasonably conditioned, withheld or delayed),
or (iv) as required by applicable Law, use reasonable best efforts to conduct and operate its business in the ordinary course of business,
consistent with past practice. Without limiting the generality of the foregoing, except (i) as contemplated by this Agreement (including
the Recapitalization) or in any other Transaction Agreement, (ii) as set forth on Schedule 6.01, (iii) as consented to by
Hepion in writing (such consent not to be unreasonably conditioned, withheld or delayed), or (iv) as required by applicable Law, the
Company shall not, and the Company shall cause its Subsidiaries not to, during the Interim Period:
(a)
change or amend its Organizational Documents in any material respect;
(b)
make, declare, set aside, establish a record date for or pay any dividend or distribution, other than any dividends or distributions
from any wholly owned Subsidiary of the Company either to the Company or any other wholly owned Subsidiaries of the Company;
(c)
except for entries, modifications, amendments, waivers or terminations in the ordinary course of business, enter into, materially modify,
materially amend, waive any material right under or terminate, any Company Specified Contract, or any Company Lease;
(d)
issue, deliver, sell, transfer, pledge or dispose of, or place any Lien (other than a Permitted Lien) on, any Equity Securities of the
Company or any of its Subsidiaries;
(e)
sell, assign, transfer, convey, lease, license, abandon, allow to lapse or expire, subject to or
grant any material Lien (other than Permitted Liens) on, or otherwise dispose of, any material assets, rights or properties (including
material Intellectual Property), other than (i) the sale or license of goods and services to customers in the ordinary course
of business, (ii) the sale or other disposition of assets or equipment deemed by the Company in its reasonable business judgment to be
obsolete or otherwise warranted in the ordinary course of business, (iii) grants of non-exclusive licenses of Intellectual Property,
(iv) as already contracted by the Company or any of its Subsidiaries, or (v) transactions among the Company and its Subsidiaries or among
its Subsidiaries;
(f)
settle any pending or threatened Action, if such settlement would require payment by the Company
or any Subsidiary thereof in an amount greater than $1,000,000, or admit criminal wrongdoing;
(g)
except required by the terms of any existing Company Benefit Plan or under applicable Law, (i) promise award, amend, terminate or grant
any severance, change in control, transaction bonus, equity or equity-based, retention or termination payment, award or arrangement to
any officer-level Company Employee, (ii) take any action to increase or accelerate any compensation or benefits, or the funding of any
compensation or benefits, payable or to become payable to any Company Employees; (iii) hire, terminate or promote any employee, except
in the ordinary course of business with respect to employees whose base salary is less than $100,000; (iv) establish, adopt, enter into,
amend or terminate any material Company Benefit Plan or any Contract that would be a material Company Benefit Plan if it were in existence
as of the date of this Agreement, or (v) provide loans to any individual service provider of the Company;
(h)
make any loans or advance any money or other property to any Person, except for (A) advances in the ordinary course of business to employees,
officers or directors of the Company or any of its Subsidiaries for expenses, (B) prepayments and deposits paid to suppliers of the Company
or any of its Subsidiaries in the ordinary course of business, (C) trade credit extended to customers of the Company or any of its Subsidiaries
in the ordinary course of business and (D) advances or other payments among the Company and its Subsidiaries;
(i)
redeem, purchase, repurchase or otherwise acquire, or offer to redeem, purchase, repurchase or
acquire, any Equity Securities of the Company any of its Subsidiaries other than transactions among the Company and its Subsidiaries
or among the Subsidiaries of the Company;
(j)
adjust, split, combine, subdivide, recapitalize, reclassify or otherwise effect any change in respect of any Equity Securities of the
Company or any of its Subsidiaries;
(k)
adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of the Company or its Subsidiaries;
(l)
other than in the ordinary course of business or as required by applicable Laws, make, change or revoke any material Tax election in
a manner inconsistent with past practice, change or revoke any material accounting method with respect to Taxes, file any material Tax
Return in a manner materially inconsistent with past practice, settle or compromise any material Tax claim or Tax liability, enter into
any material closing agreement with respect to any Tax, or surrender any right to claim a material refund of Taxes, in each case, if
such action would be reasonably expected to have an adverse and disproportionate impact on Hepion and its equity holders (as compared
to the impact of such actions on the Company and its pre-Merger equity holders);
(m)
incur, create or assume any indebtedness for borrowed money in excess of $1,000,000, other than (x) ordinary course trade payables, (y)
between the Company and any of its wholly owned Subsidiaries or between any of such wholly owned Subsidiaries or (z) in connection with
borrowings, extensions of credit and other financial accommodations under the Company’s and Subsidiaries’ existing credit
facilities, notes and other existing indebtedness and, in each case, any refinancings thereof;
(n)
other than in the ordinary course of business, enter into any agreement that materially restricts the ability of the Company or its Subsidiaries
to engage or compete in any line of business, enter into any agreement that materially restricts the ability of the Company or its Subsidiaries
to enter into a new line of business or enter into any new line of business;
(o)
make any capital expenditures that in the aggregate exceed $1,000,000, other than any capital expenditure (or series of related capital
expenditures) consistent in all material respects with the Company’s annual capital expenditures budget for periods following the
date hereof, made available to Hepion;
(p)
enter into any Contract with any broker, finder, investment banker or other Person under which such Person is or will be entitled to
any brokerage fee, finders’ fee or other commission in connection with the Transactions; or
(q)
enter into any Contract to do any action prohibited under Section 6.01 above.
Notwithstanding
anything to the contrary contained herein (including this Section 6.01), nothing in this Section 6.01 is intended to give
Hepion or any of its Affiliates, directly or indirectly, the right to control or direct the business or operations of the Company or
its Subsidiaries prior to the Closing, and prior to the Closing, the Company and its Subsidiaries shall exercise, consistent with the
terms and conditions of this Agreement, complete control and supervision over their respective businesses and operations.
Section
6.02 Inspection. Subject to confidentiality obligations and similar restrictions that may be applicable to information furnished
to the Company or any of its Subsidiaries by third parties that may be in the Company’s or any of its Subsidiaries’ possession
from time to time, and except for any information which (x) relates to the negotiation of this Agreement or the Transactions, (y) is
prohibited from being disclosed by applicable Law or (z) on the advice of legal counsel of the Company would result in the loss of attorney-client
privilege or other privilege from disclosure, the Company shall, and shall cause its Subsidiaries to, afford to Hepion and its Representatives
reasonable access during the Interim Period, and with reasonable advance notice, in such manner as to not interfere with the normal operation
of the Company and its Subsidiaries and so long as reasonably feasible or permissible under applicable Law, to the properties, books,
Tax Returns, records and appropriate officers and employees of the Company and its Subsidiaries, and shall use its reasonable best efforts
to furnish such Representatives with all financial and operating data and other information concerning the affairs of the Company and
its Subsidiaries that are in the possession of the Company or its Subsidiaries, in each case, as Hepion and its Representatives may reasonably
request solely for purposes of consummating the Transactions; provided that such access shall not include any invasive or intrusive investigations
or testing, sampling or analysis of any properties, facilities or equipment of the Company or its Subsidiaries. All information obtained
by Hepion and its Representatives under this Agreement shall be subject to the Confidentiality Agreement.
Section
6.03 Company Securities Listing. The Company will use its reasonable best efforts to cause: (i) the Company’s initial listing
application with the Nasdaq in connection with the Transactions to have been approved; (ii) the Company to satisfy all applicable initial
listing requirements of the Nasdaq; and (iii) the Company Ordinary Shares issuable in accordance with this Agreement, including the Merger,
to be approved for listing on the Nasdaq (and Hepion shall reasonably cooperate in connection therewith), subject to official notice
of issuance, in each case, as promptly as reasonably practicable after the date of this Agreement, and in any event, with respect to
clauses (i) and (ii), prior to the Effective Time.
Section
6.04 No Third-Party Beneficiaries. Notwithstanding anything herein or otherwise to the contrary, all provisions contained in this
Section 6.04 are included for the sole benefit of Hepion, Merger Sub and the Company, and that nothing in this Agreement, whether
express or implied, (i) shall limit the right of the Company or its Affiliates to amend, terminate or otherwise modify any Company Benefit
Plan or other employee benefit plan, agreement or other arrangement following the Closing Date, or (ii) shall confer upon any Person
who is not a party to this Agreement (including any equity holder, any current or former director, manager, officer, employee or independent
contractor of the Company, or any participant in any Company Benefit Plan or other employee benefit plan, agreement or other arrangement
(or any dependent or beneficiary thereof)), any right to continued or resumed employment or recall, any right to compensation or benefits,
or any third-party beneficiary or other right of any kind or nature whatsoever.
Section
6.05 Securities Laws. Each of the Company and Hepion acknowledges and agrees that it is aware of the restrictions imposed by U.S.
Federal Securities Laws and the rules and regulations of Nasdaq promulgated thereunder or otherwise and other applicable foreign and
domestic Laws on a Person possessing material nonpublic information about a publicly traded company.
Section
6.06 Indemnification Agreements. At the Closing, the Company shall execute and enter into an Indemnification Agreement with each
Hepion Designee, which shall be in the same form as the Indemnification Agreements entered into with the Company Designees.
Article
VII
COVENANTS OF HEPION
Section
7.01 Indemnification and Directors’ and Officers’ Insurance.
(a)
All rights to exculpation, indemnification and advancement of expenses existing as of the date
of this Agreement in favor of the current or former directors or officers of Hepion (each, together with such person’s heirs, executors
or administrators, a “D&O Indemnitees”) under the Hepion Organizational Documents or under any indemnification
agreement such D&O Indemnitee may have with Hepion that has been made available to the Company prior to the date of this Agreement,
in each case, as in effect as of immediately prior to the date of this Agreement (collectively, the “Existing D&O Arrangements”),
shall survive the Closing and shall continue in full force and effect for a period of six years from the Closing Date. For a period of
six years from the Closing Date, to the maximum extent permitted under applicable Law, the Company shall cause the Surviving Company
to maintain in effect the Existing D&O Arrangements, and the Company shall, and shall cause the Surviving Company to, not amend,
repeal or otherwise modify any such provisions in any manner that would materially and adversely affect the rights thereunder of any
D&O Indemnitee; provided, however, that all rights to indemnification or advancement of expenses in respect of any
Action pending or asserted or any claim made within such period shall continue until the disposition of such Action or resolution of
such claim. The Company shall not have any obligation under this Section 7.01 to any D&O Indemnitee when and if a court of
competent jurisdiction shall determine that the indemnification of such D&O Indemnitee in the manner contemplated hereby is prohibited
by applicable Law.
(b)
Prior to the Closing, Hepion shall purchase a six year “tail” or “runoff”
directors’ and officers’ liability insurance policy (the “D&O Tail”) in respect of acts or omissions
occurring prior to the Effective Time covering each individual who is a director or officer of Hepion
currently covered by the directors’ and officers’ liability insurance policy of Hepion
on terms with respect to coverage, deductibles and amounts no less favorable than those of such policy in effect on the date of
this Agreement. The Company shall, and shall cause the Surviving Company to, use reasonable best efforts to maintain the D&O Tail
in full force and effect for its full term.
Section
7.02 Conduct of Hepion During the Interim Period.
(a)
During the Interim Period, except as (i) set forth on Schedule 7.02, (ii) required by this Agreement, (ii) consented to by the
Company in writing (which consent shall not be unreasonably withheld, delayed or conditioned), or (iii) required by applicable Law, Hepion
shall not:
(i)
change, amend, restate, supplement or otherwise modify any of the Hepion Organizational
Documents;
(ii)
(A) declare, set aside or pay any dividends on, or make any other distribution in respect of any outstanding Equity Securities of Hepion;
(B) split, combine or reclassify any Equity Securities of Hepion; or (C) repurchase, redeem
or otherwise acquire, or offer to repurchase, redeem or otherwise acquire, any Equity Securities of Hepion;
(iii)
except for entries, modifications, amendments, waivers or terminations in the ordinary course of business, enter into, materially modify,
materially amend, waive any material right under or terminate, any Hepion Specified Contract, or any Hepion Lease;
(iv)
issue, deliver, sell, transfer, pledge or dispose of, or place any Lien (other than a Permitted Lien) on, any Equity Securities of the
Company or any of its Subsidiaries;
(v)
(A) merge, consolidate, combine or amalgamate Hepion with any Person or (B) purchase or
otherwise acquire (whether by merging or consolidating with, purchasing any Equity Security in or a substantial portion of the assets
of, or by any other manner) any corporation, partnership, association or other business entity or organization or division thereof;
(vi)
make, change or revoke any material Tax election, adopt, change or revoke any material accounting method with respect to Taxes, settle
or compromise any material Tax claim or Tax liability, enter into any material closing agreement with respect to any Tax, file any material
Tax Return in a manner materially inconsistent with past practice, or surrender any right to claim a material refund of Taxes, in each
case, if such action would be reasonably expected to materially increase the present or future Tax liability of Hepion,
the Company or any of its Subsidiaries;
(vii)
enter into, renew or amend in any respect, any transaction or Contract with an Hepion Related
Party (including any agreement or arrangements related to transaction bonuses or similar payments, however effected or whenever paid);
(viii)
waive, release, compromise, settle or satisfy any pending or threatened material claim or Action or compromise or settle any liability;
(ix)
incur, guarantee or otherwise become liable for (whether directly, contingently or otherwise) any indebtedness; provided that, subject
to and without limiting anything contained in this Agreement (including Article IX), this Section 7.02(a)(ix) shall not
prevent Hepion from borrowing funds necessary to finance its ordinary course administrative
costs and expenses incurred in connection with the consummation of the Merger and the other transactions contemplated by this Agreement
in an aggregate amount not to exceed $1,000,000;
(x)
except for extensions of currently outstanding Hepion options issued to Hepion board members, offer, issue, deliver, grant or sell, or
authorize or propose to offer, issue, deliver, grant or sell, any Equity Securities;
(xi)
engage in any activities or business, other than activities or business (A) in connection with or incident or related to Hepion’s
formation or continuing corporate (or similar) existence, (B) contemplated by, or incident or related to, this Agreement, any other Transaction
Agreement, the performance of covenants or agreements hereunder or thereunder or the consummation of the Transactions or (C) those that
are administrative or ministerial, in each case, which are immaterial in nature;
(xii)
enter into any settlement, conciliation or similar Contract that would impose non-monetary obligations on Hepion
or any of its Affiliates (or the Company or any of its Subsidiaries after the Closing);
(xiii)
authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation, restructuring, recapitalization,
dissolution or winding-up of Hepion or liquidate, dissolve, reorganize or otherwise wind-up
the business or operations of Hepion or resolve to approve any of the foregoing;
(xiv)
change Hepion’s methods of accounting in any material respect, other than changes
that are made in accordance with PCAOB standards;
(xv)
(A) enter into any Contract with any broker, finder, investment banker or other Person under which such Person is or will be entitled
to any brokerage fee, finders’ fee or other commission in connection with the Transactions, or (B) incur any liabilities or obligations
in connection with this Agreement or the Transactions other than as set forth on Schedule 7.02(a)(xv);
(xvi)
except in the ordinary course of business or as otherwise required by the terms of any existing Hepion Benefit Plan or existing employment
Contract as in effect on the date hereof or as otherwise required under applicable Law, (i) pay or promise to pay, fund any new, enter
into or make any grant of any material severance, change in control, transaction bonus, equity or equity-based, retention or termination
payment or arrangement to any officer-level Hepion Employee, except in connection with the promotion, hiring or termination of employment
of any employee of Hepion or its Subsidiaries in the ordinary course of business, (ii) take any action to accelerate any material payments
or benefits, or the funding of any material payments or benefits, payable or to become payable to any officer-level Hepion Employees
or (iii) establish, adopt, enter into, amend or terminate any material Hepion Benefit Plan or any Contract that would be a material Hepion
Benefit Plan if it were in existence as of the date of this Agreement; or
(xvii)
enter into any agreement, or otherwise become obligated, to do any action prohibited under this Section 7.02(a).
(b)
During the Interim Period, Hepion shall comply with, and continue performing under, as applicable,
the Hepion Organizational Documents, the Transaction Agreements and all other agreements
or Contracts to which Hepion is party.
Section
7.03 Inspection. Hepion shall afford to the Company, its Affiliates and their respective
Representatives reasonable access during the Interim Period, and with reasonable advance notice, to the books, Tax Returns, records and
appropriate officers and employees of Hepion, and shall use its reasonable best efforts
to furnish such Representatives with all financial and operating data and other information concerning the affairs of Hepion,
in each case as the Company and its Representatives may reasonably request for purposes of the Transactions.
Section
7.04 Section 16 Matters. Prior to the Effective Time, Hepion shall take all reasonable
steps as may be required to cause any acquisition or disposition of the Hepion Common Stock
that occurs or is deemed to occur by reason of or pursuant to the Transactions by each Person who is or will be subject to the reporting
requirements of Section 16(a) of the Exchange Act with respect to Hepion to be exempt under
Rule 16b-3 promulgated under the Exchange Act, including by taking steps in accordance with the No-Action Letter, dated January 12, 1999,
issued by the SEC regarding such matters.
Section
7.05 Hepion Public Filings.
(a)
From the date hereof through the Closing, Hepion will keep current and timely file all SEC
Reports required to be filed or furnished with the SEC and otherwise comply in all material respects with its reporting obligations under
applicable Laws.
(b)
As promptly as practicable after execution of this Agreement, Hepion will prepare and file
a Current Report on Form 8-K pursuant to the Exchange Act to report the execution of this Agreement, the form and substance of which
has been approved by the Company prior to the execution of this Agreement.
Section
7.06 Hepion Securities Listing. From the date hereof through the Closing, Hepion
shall ensure Hepion remains listed as a public company on, and for Hepion
Common Stock to be listed on, the Nasdaq. Prior to the Closing Date, Hepion shall
cooperate with the Company and use commercially reasonable efforts to take such actions as are reasonably necessary or advisable to cause
the Hepion Common Stock to be delisted from the Nasdaq and deregistered under the Exchange
Act as soon as practicable following the Effective Time.
Section
7.07 Hepion Board Recommendation. The board of directors of Hepion shall not (and
no committee or subgroup thereof shall) change, withdraw, withhold, amend, qualify or modify, or (privately or publicly) propose to change,
withdraw, withhold, amend, qualify or modify, the Hepion Board Recommendation for any reason.
Section
7.08 IIA. (i) Hepion shall sign an undertaking to the IIA (as required under applicable Law) in such customary form and in connection
with the filing and/or approval process with the IIA and in accordance with applicable law, and (ii) each Stockholder of Hepion who is
not an Israeli citizen, resident or entity, and who immediately following the Closing shall hold more than 5% of the share capital of
the Company, on an as issued and as converted basis, shall deliver to the Company, immediately prior to the Closing a duly executed undertaking
towards the IIA, in a form mutually agreed to by the parties.
Article
VIII
JOINT COVENANTS
Section
8.01 Efforts to Consummate.
(a)
Subject to the terms and conditions herein, each of the Parties shall use their respective reasonable best efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things reasonably necessary or advisable to consummate and make effective
as promptly as reasonably practicable the Transactions contemplated by this Agreement (including (i) the satisfaction of the closing
conditions set forth in Article IX and (ii) using reasonable best efforts to consummate the PIPE Financing on the terms and subject
to the conditions set forth in the PIPE Agreements). Without limiting the generality of the foregoing, each of the Parties shall use
reasonable best efforts to obtain, file with or deliver to, as applicable, any Consents of any Governmental Authorities (including notice
to the IIA) or other Persons necessary to consummate the Transactions and the transactions contemplated by the Transaction Agreements.
Each Party shall respond as promptly as reasonably practicable to any requests by any Governmental Authority (including notice to the
IIA) for additional information and documentary material that may be requested pursuant to any Competition Laws. Hepion
shall promptly inform the Company of any communication between Hepion, on the one
hand, and any Governmental Authority, on the other hand, and the Company shall promptly inform Hepion
of any communication between the Company, on the one hand, and any Governmental Authority, on the other hand, in either case,
regarding any of the Transactions or any Transaction Agreement. Without limiting the foregoing, each Party and their respective Affiliates
shall not extend any waiting period, review period or comparable period under any Competition Laws or enter into any agreement with any
Governmental Authority not to consummate the Transactions or by the other Transaction Agreements, except with the prior written consent
of Hepion and the Company.
(b)
During the Interim Period, Hepion, on the one hand, and the Company, on the other hand,
shall give counsel for the Company (in the case of Hepion) or Hepion
(in the case of the Company), a reasonable opportunity to review in advance, and consider in good faith the views of the other
in connection with, any proposed written communication to any Governmental Authority (including notice to the IIA) relating to the Transactions
or the Transaction Agreements. Each of the Parties agrees not to participate in any substantive meeting or discussion, either in person
or by telephone with any Governmental Authority in connection with the Transactions unless it consults with, in the case of Hepion,
the Company, or, in the case of the Company, Hepion in advance and, to the extent not prohibited
by such Governmental Authority, gives, in the case of Hepion, the Company, or, in the case
of the Company, Hepion, the opportunity to attend and participate in such meeting or discussion.
(c)
Notwithstanding anything to the contrary in the Agreement, (i) in the event that this Section 8.01 conflicts with any other covenant
or agreement in this Agreement that is intended to specifically address any subject matter, then such other covenant or agreement shall
govern and control solely to the extent of such conflict, (ii) in no event shall the Company or its Subsidiaries be obligated to bear
any expense or pay any fee or grant any concession in connection with obtaining any consents, authorizations or approvals pursuant to
the terms of any Contract to which the Company or its Subsidiaries is a party or otherwise in connection with the consummation of the
Transactions, and (iii) in no event shall the failure to obtain any Consent (including of the IIA), except to the extent expressly provided
in Section 9.01, be considered, constitute, triggered or give any rights in respect of, failure of a condition to the Closing.
(d)
During the Interim Period, Hepion, on the one hand, and the Company, on the other hand,
shall each notify the other in writing promptly after learning of any shareholder demands or other shareholder proceedings (including
derivative claims) relating to this Agreement, any other Transaction Agreements or any matters relating thereto (collectively, the “Transaction
Litigation”) commenced against, in the case of Hepion, Hepion
or any of its Representatives (in their capacity as a representative of Hepion) or,
in the case of the Company, any Subsidiary of the Company or any of their respective Representatives (in their capacity as a representative
of the Company or any Subsidiary of the Company). Hepion and the Company shall each (i)
keep the other reasonably informed regarding any Transaction Litigation, (ii) give the other the opportunity to, at its own cost and
expense, participate in the defense, settlement and compromise of any such Transaction Litigation and reasonably cooperate with the other
in connection with the defense, settlement and compromise of any such Transaction Litigation, (iii) consider in good faith the other’s
advice with respect to any such Transaction Litigation and (iv) reasonably cooperate with each other. Notwithstanding anything to the
contrary, (i) Hepion and the Company shall jointly control the negotiation, defense and
settlement of any such Transaction Litigation brought against Hepion or its Representatives
and (ii) in no event shall Hepion (or any of its Representatives) settle or compromise any
Transaction Litigation brought against Hepion or its Representatives without the prior written consent of the Company.
Section
8.02 Registration Statement; Shareholder Meetings.
(a)
Proxy Statement/Registration Statement.
(i)
As promptly as practicable after the execution of this Agreement, (x) Hepion and the Company
shall jointly prepare and the Company shall file with the SEC, mutually acceptable materials which shall include the proxy statement
to be filed with the SEC as part of the Registration Statement and sent to the Hepion Stockholders
relating to the Hepion Special Meeting (such proxy statement, together with any amendments
or supplements thereto, the “Proxy Statement”), and (y) the Company shall prepare (with Hepion’s
cooperation) and file with the SEC the Registration Statement, in which the Proxy Statement will be included as a prospectus (the “Proxy
Statement/Prospectus”), in connection with the registration under the Securities Act of Company Ordinary Shares to be issued
in exchange for the issued and outstanding Hepion Common Stock. Subject to Schedule 8.02,
each of Hepion and the Company shall use its reasonable best efforts to cause the Registration
Statement, including the Proxy Statement/Prospectus, to comply with the rules and regulations promulgated by the SEC, to have the Registration
Statement declared effective under the Securities Act as promptly as practicable after such filing and to keep the Registration Statement,
including the Proxy Statement/Prospectus, effective as long as is necessary to consummate the Transactions. In the event there is any
tax opinion required to be provided in connection with the Registration Statement, counsel to Hepion
shall provide such tax opinion(s), and the costs and expenses associate with obtaining such tax opinion(s) shall be borne equally
by the Company and Hepion. The Company also agrees to use its reasonable best efforts to obtain all necessary state Securities Laws or
“blue sky” permits and approvals required to carry out the Transactions, and Hepion
shall furnish all information concerning itself and its equityholders as may be reasonably requested in connection with any such
action. Each of Hepion and the Company agrees to furnish to the other Party and its Representatives
all information concerning itself, its Subsidiaries, officers, directors, managers, shareholders, and other equityholders and information
regarding such other matters as may be reasonably necessary or advisable or as may be reasonably requested in connection with the Registration
Statement, including the Proxy Statement/Prospectus, a Current Report on Form 8-K or 6-K, as applicable, pursuant to the Exchange Act
in connection with the Transactions, or any other statement, filing, notice or application made by or on behalf of Hepion
or the Company to any regulatory authority (including the Nasdaq) in connection with the Merger and the Transactions (the “Transaction
Filings”). Hepion will cause the Proxy Statement to be mailed to the Hepion
Stockholders as promptly as practicable after the Registration Statement is declared effective under the Securities Act.
(ii)
To the extent not prohibited by applicable Law, the Company will advise Hepion, reasonably
promptly after the Company receives notice thereof, of the time when the Registration Statement has become effective or any supplement
or amendment has been filed, of the issuance of any stop order or the suspension of the qualification of the Company Ordinary Shares
for offering or sale in any jurisdiction, of the initiation or written threat of any proceeding for any such purpose, or of any request
by the SEC for the amendment or supplement of the Registration Statement or for additional information. To the extent not prohibited
by applicable Law, Hepion and its counsel, on the one hand, and the Company and its counsel,
on the other hand, shall be given a reasonable opportunity to review and comment on the Registration Statement, the Proxy Statement and
any Transaction Filings each time before any such document is filed with the SEC, and the other Party shall give reasonable and good
faith consideration to any comments made by Hepion and its counsel or the Company and its
counsel, as applicable. To the extent not prohibited by applicable Law, the Company, on the one hand, and Hepion,
on the other hand, shall provide the other Party and its counsel with (i) any comments or other communications, whether written or oral,
that Hepion or its counsel or the Company or its counsel, as the case may be, may receive
from time to time from the SEC or its staff with respect to the Registration Statement, the Proxy Statement or any Transaction Filings
promptly after receipt of those comments or other communications and (ii) a reasonable opportunity to participate in the response of
Hepion or the Company, as applicable, to those comments and to provide comments on that
response (to which reasonable and good faith consideration shall be given), including, to the extent reasonably practicable, by participating
with Hepion or its counsel or the Company or its counsel, as the case may be, in any discussions
or meetings with the SEC.
(iii)
If at any time prior to the Effective Time any information relating to the Company, Hepion
or any of their respective Subsidiaries, Affiliates, directors or officers is discovered by the Company or Hepion,
which is required to be set forth in an amendment or supplement to the Registration Statement or the Proxy Statement, so that neither
of such documents would include any misstatement of a material fact or omit to state any material fact necessary to make the statements
therein, with respect to the Registration Statement or the Proxy Statement, in light of the circumstances under which they were made,
not misleading, the Party which discovers such information shall promptly notify the other Parties and an appropriate amendment or supplement
describing such information shall be promptly filed with the SEC and, to the extent required by applicable Law, disseminated to Hepion
Stockholders.
(b)
Hepion Special Meeting. Hepion shall, as promptly as reasonably practicable following
the date the Registration Statement is declared effective by the SEC under the Securities Act, establish a record date for, duly call
and give notice of, convene and hold a meeting of Hepion Stockholders (the “Hepion
Special Meeting”), and Hepion shall convene and hold the Hepion
Special Meeting, in each case in accordance with Hepion’s Organizational Documents
and applicable Law, solely for the purpose of (i) obtaining the Hepion Stockholders Approval,
and (ii) related and customary procedural and administrative matters. Hepion shall use its
reasonable best efforts to obtain such approvals and authorizations from the Hepion Stockholders
at the Hepion Special Meeting, including by soliciting proxies as promptly as practicable
in accordance with applicable Law for the purpose of seeking such approvals and authorizations from the Hepion
Stockholders. Hepion shall include the Hepion
Board Recommendation in the Proxy Statement. Notwithstanding anything to the contrary contained in this Agreement, Hepion
shall be entitled to postpone or adjourn the Hepion Special Meeting solely to the
extent necessary (a “Hepion Meeting Change”): (i) to comply with applicable Law, (ii) to ensure that any supplement
or amendment to the Proxy Statement that the board of directors of Hepion has determined
in good faith is required by applicable Law is disclosed to Hepion Stockholders and for
such supplement or amendment to be promptly disseminated to Hepion Stockholders with sufficient time prior to the Hepion
Special Meeting for Hepion Stockholders to consider the disclosures contained in
such supplement or amendment; or (iii) if, as of the time for which the Hepion Special Meeting
is originally scheduled (as set forth in the Proxy Statement), there are insufficient Hepion
Shares represented (either in person or by proxy) to constitute a quorum necessary conduct the business to be conducted at the Hepion
Special Meeting; provided that, without the prior written consent of the Company, Hepion
may only be entitled to one Hepion Meeting Change (excluding any postponements or
adjournments required by applicable Law), and the Hepion Special Meeting may not be adjourned
or postponed to a date that is more than five Business Days after the date for which the Hepion
Special Meeting was originally scheduled (excluding any postponements or adjournments mandated by applicable Law) and provided
it is held no later than three Business Days prior to the Termination Date; provided, further, that in the event of a postponement
or adjournment pursuant to clauses (ii) or (iii), the Hepion Special Meeting shall be reconvened
as promptly as practicable following such time as the matters described in such clauses have been resolved.
(c)
Company Special Meeting. The Company shall, as promptly as practicable following the date the Registration Statement is declared
effective by the SEC under the Securities Act, establish a record date for, duly call and give notice of a meeting of the Company Shareholders
(the “Company Special Meeting”) and the Company shall convene and hold the Company Special Meeting, in each case,
in accordance with the Organizational Documents of the Company and applicable Law, for the purpose of, inter alia, obtaining all
requisite approvals and authorizations from the Company Shareholders in connection with the Transactions (including the Company Shareholder
Approval). The Company shall, through approval of its board of directors, recommend to the Company Shareholders the adoption and approval
of the Company Transaction Proposals by the Company Shareholders (the “Company Board Recommendation”). The Company
shall use its reasonable best efforts to obtain such approvals and recommendations from the Company Shareholders at the Company Special
Meeting, including by soliciting approvals as promptly as practicable after the date hereof in accordance with applicable Law for the
purpose of obtaining such approvals and authorizations from the Company Shareholders. The Company shall, through its board of directors,
recommend to Company Shareholders that they provide the Company Shareholder Approval. The board of directors of the Company shall not
(and no committee or subgroup thereof shall) change, withdraw, withhold, qualify or modify, or publicly propose to change, withdraw,
withhold, qualify or modify, the Company Board Recommendation. Notwithstanding anything to the contrary contained in this Agreement,
the Company shall be entitled to postpone or adjourn the Company Special Meeting (a “Company Meeting Change”): (i)
to the extent required by applicable Law, (ii) if, as of the time for which the Company Special Meeting is originally scheduled, there
are insufficient shares of stock entitled to vote represented (either in person or by proxy) to constitute a quorum necessary to conduct
the business to be conducted at the Company Special Meeting; or (iii) in order to solicit additional approvals from shareholders for
purposes of obtaining approval from the Company Shareholders; provided that, without the prior written consent of Hepion,
the Company may only be entitled to one Company Meeting Change (excluding any postponements or adjournments required by applicable Law),
and the Company Special Meeting may not be adjourned or postponed to a date that is more than five Business Days after the date for which
the Company Special Meeting was originally scheduled (excluding any postponements or adjournments required by applicable Law) and provided
it is held no later than three Business Days prior to the Termination Date; provided further, that in the event of a postponement
or adjournment pursuant to clauses (ii) or (iii) above, the Company Special Meeting shall be reconvened as promptly as practicable following
such time as the matters described in such clauses have been resolved.
Section
8.03 Hepion Non-Solicitation.
(a)
Hepion agrees that, during the Interim Period, neither it nor any of its Subsidiaries shall, and it shall not authorize any of its Representatives
to, directly or indirectly: (i) solicit, initiate or knowingly encourage, induce or facilitate the communication, making, submission
or announcement of any Acquisition Proposal or Acquisition Inquiry or take any action that could reasonably be expected to lead to an
Acquisition Proposal or Acquisition Inquiry; (ii) furnish any non-public information regarding Hepion or any of its Subsidiaries to any
Person in connection with or in response to an Acquisition Proposal or Acquisition Inquiry; (iii) engage in discussions (other than to
inform any Person of the existence of the provisions in this Section 8.03(a)) or negotiations with any Person with respect to
any Acquisition Proposal or Acquisition Inquiry; (iv) approve, endorse or recommend any Acquisition Proposal; (v) execute or enter into
any letter of intent or any Contract contemplating or otherwise relating to any Acquisition Transaction (other than a confidentiality
agreement permitted under this Section 8.03(a)); or (vi) publicly propose to do any of the foregoing. Without limiting the generality
of the foregoing, Hepion acknowledges and agrees that, in the event any Representative of Hepion (whether or not such Representative
is purporting to act on behalf of Hepion) takes any action that, if taken by Hepion, would constitute a breach of this Section 8.03,
the taking of such action by such Representative shall be deemed to constitute a breach of this Section 8.03 by Hepion for purposes
of this Agreement.
(b)
If Hepion or any Representative of Hepion receives an Acquisition Proposal or Acquisition Inquiry at any time during the Interim Period,
then Hepion shall promptly (and in no event later than one Business Day after Hepion becomes aware of such Acquisition Proposal or Acquisition
Inquiry) advise the Company orally and in writing of such Acquisition Proposal or Acquisition Inquiry (including the identity of the
Person making or submitting such Acquisition Proposal or Acquisition Inquiry, and the material terms thereof). Hepion shall keep the
Company reasonably informed with respect to the status and material terms of any such Acquisition Proposal or Acquisition Inquiry and
any material modification or proposed material modification thereto.
(c)
Hepion shall immediately cease and cause to be terminated any existing discussions, negotiations and communications with any Person that
relate to any Acquisition Proposal or Acquisition Inquiry that has not already been terminated as of the date of this Agreement and request
the destruction or return of any nonpublic information of Hepion provided to such Person.
Section
8.04 Company Non-Solicitation.
(a)
The Company agrees that, during the Interim Period, the Company shall not, nor shall it authorize any of its Representatives to, directly
or indirectly: (i) solicit, initiate or knowingly encourage, induce or facilitate the communication, making, submission or announcement
of any Acquisition Proposal or Acquisition Inquiry or take any action that could reasonably be expected to lead to an Acquisition Proposal
or Acquisition Inquiry; (ii) furnish any non-public information regarding the Company to any Person in connection with or in response
to an Acquisition Proposal or Acquisition Inquiry; (iii) engage in discussions (other than to inform any Person of the existence of the
provisions in this Section 8.04) or negotiations with any Person with respect to any Acquisition Proposal or Acquisition Inquiry;
(iv) approve, endorse or recommend any Acquisition Proposal; (v) execute or enter into any letter of intent or any Contract contemplating
or otherwise relating to any Acquisition Transaction (other than a confidentiality agreement permitted under this Section 8.04(a));
or (vi) publicly propose to do any of the foregoing. Without limiting the generality of the foregoing, the Company acknowledges and agrees
that, in the event any Representative of the Company (whether or not such Representative is purporting to act on behalf of the Company)
takes any action that, if taken by the Company, would constitute a breach of this Section 8.04, the taking of such action by such
Representative shall be deemed to constitute a breach of this Section 8.04 by the Company for purposes of this Agreement. Notwithstanding
the above, it is acknowledged and agreed that the Company has and shall continue to have communications and discussions with various
companies relating to its business (including with pharmaceutical companies) and provide information to such companies or enter into
confidentiality agreements with such companies, provided, however, that the Company (and its Representatives) shall not engage
in any discussions (other than to inform any Person of the existence of the provisions in this Section 8.04) or negotiations with
any Person with respect to any Acquisition Proposal or Acquisition Transaction.
(b)
If the Company or any Representative of the Company receives an Acquisition Proposal or Acquisition Inquiry at any time during the Interim
Period, then the Company shall promptly (and in no event later than one Business Day after the Company becomes aware of such Acquisition
Proposal or Acquisition Inquiry) advise Hepion orally and in writing of such Acquisition Proposal or Acquisition Inquiry (including the
identity of the Person making or submitting such Acquisition Proposal or Acquisition Inquiry, and the material terms thereof). The Company
shall keep Hepion reasonably informed with respect to the status and material terms of any such Acquisition Proposal or Acquisition Inquiry
and any material modification or proposed material modification thereto.
(c)
The Company shall immediately cease and cause to be terminated any existing discussions, negotiations and communications with any Person
that relate to any Acquisition Proposal or Acquisition Inquiry that has not already been terminated as of the date of this Agreement
and request the destruction or return of any nonpublic information of the Company provided to such Person.
Section
8.05 Tax Matters.
(a)
With respect to each taxable year of the Company ending after the Closing Date, the Company shall use best efforts to (i) determine if
it is a “passive foreign investment company” within the meaning of Section 1297 of the Code (a “PFIC”)
for such taxable year, and (ii) make such determination within ninety (90) days after the end of such taxable year. If the Company determines
that it is a PFIC for a taxable year ending after the Closing Date, the Company shall use best efforts to timely provide to its U.S.
shareholders all information (for such taxable year and for subsequent taxable years) with respect to the Company and its Subsidiaries
that is reasonably necessary for any such shareholder (or any direct or indirect owner of such shareholder) to make and maintain a qualified
electing fund election pursuant to Section 1295 of the Code with respect to the Company (and any of its Subsidiaries that is a PFIC),
including by posting such information to the Company’s website.
(b)
All transfer, stamp, documentary, sales, use, registration, value-added and other similar Taxes incurred in connection with this Agreement
and the transactions contemplated hereby (“Transfer Taxes”) will be borne by the party responsible therefor under
applicable Law. Each of Hepion, Merger Sub and the Company shall use reasonable best efforts
to obtain any certificate or other document from any Governmental Authority or any other Person as may be necessary to mitigate, reduce
or eliminate any Transfer Tax that could be imposed in connection with the transactions contemplated hereby.
Section
8.06 Confidentiality; Publicity.
(a)
Hepion acknowledges that the information being provided to it in connection with this Agreement
and the Transactions is subject to the terms of the Confidentiality Agreement, the terms of which are incorporated herein by reference.
The Confidentiality Agreement shall survive the execution and delivery of this Agreement and shall apply to all information furnished
thereunder or hereunder and any other activities contemplated thereby.
(b)
None of Hepion, the Company or any of their respective Affiliates, or their respective Representatives
(acting on their behalf), shall make any public announcement or issue any public communication regarding this Agreement or the Transactions,
or any matter related to the foregoing, without first obtaining the prior consent of the Company or Hepion,
as applicable (which consent shall not be unreasonably withheld, conditioned or delayed), except if such announcement or other communication
is required by applicable Law, in which case Hepion or the Company, as applicable, shall
use their reasonable best efforts to coordinate such announcement or communication with the other Party, prior to announcement or issuance;
provided that each Party and its Affiliates may make announcements regarding the status and terms (including price terms) of this
Agreement and the Transactions to their respective Representatives and indirect current or prospective limited partners or investors
or otherwise in the ordinary course of their respective businesses, in each case, so long as such recipients are obligated to keep such
information confidential without the consent of any other Party; and provided that the foregoing shall not prohibit any Party
from communicating with third parties to the extent necessary for the purpose of seeking any third party consent or with any Governmental
Authorities under Section 8.01.
Section
8.07 Legacy Asset Disposition.
(a)
Prior to the first anniversary of the Closing, Hepion shall use its reasonable best efforts to sell, transfer, license, assign or otherwise
divest any or all of the assets and rights exclusively relating to Hepion’s Rencofilstat (formerly CRV431) drug (the “Legacy
Assets”) in a transaction or series of transactions (the “Legacy Asset Disposition”), and shall, as promptly
as practicable thereafter, notify the Company in writing of any such Legacy Asset Disposition. Each Party acknowledges that Hepion may,
in contemplation of the Legacy Asset Disposition, (a) establish one or more Subsidiaries to hold the Legacy Assets, (b) transfer to any
such Subsidiary any or all of the Legacy Assets and the liabilities and obligations related thereto and (c) take such other steps that
are reasonably necessary to prepare for the Legacy Asset Disposition. For the avoidance of doubt, if Hepion transfers the Legacy Assets
to one or more Subsidiaries, the terms of this Section 8.07 shall apply to such Subsidiaries in addition to Hepion. Each Party
further acknowledges that Hepion may not be successful in completing, or may determine not to proceed, with the Legacy Asset Disposition.
Notwithstanding the foregoing, Hepion may not enter into any agreement with respect to the Legacy Asset Disposition that would result
in a continuing obligation or liability without the prior written consent of the Company (such consent shall not be unreasonably withheld,
conditioned or delayed); provided, further, that Hepion shall provide the Company with a copy of any agreement with respect to an Legacy
Asset Disposition that would be reasonably likely to result in a continuing obligation or liability of either Hepion or the Company on
or after the Effective Time, at least five Business Days prior to entry into such agreement.
(b)
Notwithstanding the terms and obligations set forth in Section 8.07(a), in the event that Hepion determines following the Effective
Time to proceed with any form of monetization of its assets contemplated under the Legacy Assets, Hepion shall be obligated to reimburse
the Company with respect to any deficit resulting therefrom.
Article
IX
CONDITIONS TO OBLIGATIONS
Section
9.01 Conditions to Obligations of All Parties. The obligations of the Parties to consummate, or cause to be consummated, the Merger
is subject to the satisfaction at the Closing of the following conditions, any one or more of which may be waived (if legally permitted)
in writing by all of the Parties:
(a)
No Prohibition. There shall not be in force and effect any (i) Law or (ii) Governmental Order by any Governmental Authority of
competent jurisdiction, in either case, enjoining, prohibiting, or making illegal the consummation of the Merger.
(b)
Hepion Stockholder Approval. The Hepion Stockholder Approval shall have been obtained.
(c)
Company Shareholder Approval. The Company Shareholder Approval shall have been obtained.
(d)
Nasdaq Listing. The Company Ordinary Shares to be issued pursuant to Section 3.01(b), in connection with the Closing shall
be approved for listing upon the Closing on the Nasdaq, subject to official notice of issuance thereof.
(e)
Registration Statement. The Registration Statement shall have become effective, and no stop order with respect thereto shall be
in effect.
(f)
PIPE Financing. The share purchase agreement in respect of the PIPE Financing shall be in full force and effect and shall provide
for cash proceeds of not less than $10,000,000 (ten million) to be received by the Company in connection with the consummation of the
transactions contemplated by such share purchase agreement immediately after the Effective Time.
(g)
Directors and Officers. The Parties shall take all necessary action so that immediately after the Effective Time, the post-Closing
board of directors of the Company (the “Post-Closing Company Board”) shall be comprised of seven directors; whereby
(a) the Company shall have the right to designate (i) three members to the Post-Closing Company Board (“Company Designees”)
and (ii) two industry experts that shall qualify as independent directors (as defined under the Nasdaq listing rules); and (b) Hepion
shall have the right to designate two members to the Post-Closing Company Board (the “Hepion Designees”); provided
further, and notwithstanding the foregoing, in the event that the A&R AOA includes for a classified board of directors, the Hepion
Designees shall be classified as Class III directors (or such class that shall provide the Hepion Designees to be subject to re-election
to the Post-Closing Company Board the maximum term following the Closing).
(h)
IIA Approval. The Company shall file a notice with the IIA in accordance with applicable Law and obtain the approval of the IIA
to consummate the Transactions.
Section
9.02 Additional Conditions to Obligations of Hepion. The obligations of Hepion to consummate, or cause to be consummated, the
Merger is subject to the satisfaction as of the Closing of each of the following additional conditions, any one or more of which may
be waived (in whole or in part) in writing by Hepion:
(a)
Representations and Warranties.
(i)
Each of the representations and warranties of the Company contained in Section 4.01 (Corporation Organization of the Company),
Section 4.03 (Due Authorization) and Section 4.21 (Brokers’ Fees) (collectively, the “Specified Representations”)
shall be true and correct (without giving any effect to any limitation as to “materiality” or “Material Adverse Effect”
or any similar limitation set forth therein) in all material respects as of the Closing Date as though then made (except to the extent
such representations and warranties expressly relate to an earlier date, and in such case, shall be true and correct on and as of such
earlier date).
(ii)
Each of the representations and warranties of the Company contained in Article IV (other than the Specified Representations and
the representations and warranties of the Company contained in Section 4.06 or Section 4.08(d)), shall be true and correct
(without giving any effect to any limitation as to “materiality” or “Material Adverse Effect” or any similar
limitation set forth therein) as of the Closing Date as though then made (except to the extent such representations and warranties expressly
relate to an earlier date, and in such case, shall be true and correct on and as of such earlier date), except, in either case, where
the failure of such representations and warranties to be so true and correct, individually or in the aggregate, has not had, and would
not reasonably be expected to have, a Material Adverse Effect.
(iii)
The representations and warranties set forth in Section 4.06 (Capitalization) shall be true and correct in all respects, other
than de minimis inaccuracies, as of the Closing Date, as though then made.
(iv)
The representations and warranties set forth in Section 4.08(d) (Absence of Changes) shall be true and correct as of the Closing
Date as though then made.
(b)
Agreements and Covenants. The covenants and agreements of the Company in this Agreement to be performed as of or prior to the
Closing shall have been performed in all material respects.
(c)
No Material Adverse Effect. Since the date of this Agreement, no Material Adverse Effect has occurred that is continuing.
(d)
Officer’s Certificate. The Company shall have delivered to Hepion a certificate, dated the Closing Date, to the effect that
the conditions specified in Section 9.02(a), Section 9.02(b) and Section 9.02(c) have been fulfilled.
(e)
Lock-up Agreements. The Lock-up Agreements will continue to be in full force and effect as of immediately following the Effective
Time.
Section
9.03 Additional Conditions to the Obligations of the Company and Merger Sub. The obligation of the Company and Merger Sub to consummate,
or cause to be consummated, the Merger is subject to the satisfaction as of the Closing of each of the following additional conditions,
any one or more of which may be waived (in whole or in part) in writing by the Company:
(a)
Representations and Warranties.
(i)
Each of the representations and warranties of Hepion contained in Article V (other than the representations and warranties of
Hepion contained in Section 5.01 (Organization), Section 5.03 (Authorization) and Section 5.19 (Brokers Fees)) shall
be true and correct (without giving any effect to any limitation as to “materiality” or any similar limitation set forth
therein) in all material respects as of the Closing Date as though then made (except to the extent such representations and warranties
expressly relate to an earlier date, and in such case, shall be true and correct on and as of such earlier date).
(ii)
Each of the representations and warranties of Hepion contained in Section 5.01 (Organization), Section 5.03 (Authorization)
and Section 5.19 (Brokers Fees) shall be true and correct (without giving any effect to any limitation as to “materiality”
or any similar limitation set forth therein) in all respects as of the Closing Date as though then made (except to the extent such representations
and warranties expressly relate to an earlier date, and in such case, shall be true and correct on and as of such earlier date).
(iii)
The representations and warranties of Hepion contained in Section 5.06 (Capitalization) shall be true and correct in all respects,
other than de minimis inaccuracies, as of the Closing Date, as though then made.
(b)
Agreements and Covenants. The covenants and agreements of Hepion in this Agreement to be performed as of or prior to the Closing
shall have been performed in all material respects.
(c)
No Material Adverse Effect. Since the date of this Agreement, no Material Adverse Effect has occurred that is continuing.
(d)
Officer’s Certificate. Hepion shall have delivered to the Company a certificate signed by an officer of Hepion, dated the
Closing Date, to the effect that the conditions specified in Section 9.03(a), Section 9.03(b) and Section 9.03(c)
have been fulfilled.
(e)
Lock-up Agreements. The Lock-up Agreements will continue to be in full force and effect as of immediately following the Effective
Time.
(f)
Minimum Cash Condition. The amount of (a) Hepion Net Cash on Hepion’s balance
sheet as of immediately prior to Closing and (b) cash proceeds to be received from the PIPE Financing (following expenses related to
the Transactions), shall be at least $10,000,000 (the “Minimum Cash Condition”).
(g)
Financial Obligations. Hepion shall have settled and satisfied in full all financial obligations in connection with any and all
clinical trials of Hepion outstanding as of immediately prior to Closing.
(h)
Conversion of Hepion Preferred Stock. Hepion shall have caused all Hepion Preferred Stock to have converted into shares of Hepion
Common Stock in accordance with the terms of the Hepion Organizational Documents.
(i)
Cancellation of Hepion Equity Awards. Prior to the Closing, Hepion shall cause (i) all outstanding options, stock appreciation
rights, restricted stock, restricted stock units and any other awards granted or promised under any Hepion Equity Plan to be cancelled
and forfeited without any consideration, and (ii) each Hepion Equity Plan to be terminated and cease to have any further force or effect.
Article
X
TERMINATION/EFFECTIVENESS
Section
10.01 Termination. This Agreement may be validly terminated and the Transactions may be abandoned at any time prior to the Closing
only as follows (it being understood and agreed that this Agreement may not be terminated for any other reason or on any other basis):
(a)
by mutual written agreement of Hepion and the Company;
(b)
by either Hepion or the Company, if there shall be in effect any (i) Law or (ii) Governmental Order (other than, for the avoidance of
doubt, a temporary restraining order), that (x) in the case of each of clauses (i) and (ii), permanently restrains, enjoins, makes illegal
or otherwise prohibits the consummation of the Merger, and (y) in the case of clause (ii) such Governmental Order shall have become final
and non-appealable;
(c)
by either Hepion or the Company, if the Effective Time has not occurred by 11:59 p.m., New York City time, on the date that is 90 days
following the date hereof (the “Termination Date”); provided, however, that if the SEC has not declared
the Proxy Statement/Registration Statement effective on or prior to the date that is 90 days following the date hereof, the Termination
Date shall be automatically extended to the date that is 180 days following the date hereof; provided, further, that the
right to terminate this Agreement pursuant to this Section 10.01(c) will not be available to any Party whose breach of any provision
of this Agreement caused or resulted in the failure of the Transactions to be consummated by such time;
(d)
by Hepion, if the Company or Merger Sub has breached or failed to perform any of its (i) representations or warranties or (ii) covenants
or other agreements contained in this Agreement, which breach or failure to perform (A) would result in the failure of a condition set
forth in Section 9.02(a) and Section 9.02(b) to be satisfied at the Closing and (B) is not capable of being cured by the
Termination Date or, if capable of being cured by the Termination Date, is not cured by the Company or Merger Sub before the earlier
of (x) the fifth Business Day immediately prior to the Termination Date and (y) the 45th day following receipt of written notice from
Hepion of such breach or failure to perform: provided that Hepion shall not have the right to terminate this Agreement pursuant
to this Section 10.01(d) if it is then in material breach of any of its representations, warranties, covenants or other agreements
contained in this Agreement;
(e)
by the Company, if Hepion has breached or failed to perform any of its respective representations, warranties, covenants or other agreements
contained in this Agreement, which breach or failure to perform (A) would result in the failure of a condition set forth in Section
9.03(a) and Section 9.03(b) to be satisfied at the Closing and (B) is not capable of being cured by the Termination Date or,
if capable of being cured by the Termination Date, is not cured by Hepion before the earlier of (x) the fifth Business Day immediately
prior to the Termination Date and (y) the 45th day following receipt of written notice from the Company of such breach or failure to
perform; provided that the Company shall not have the right to terminate this Agreement pursuant to this Section 10.01(e)
if it is then in material breach of any of its representations, warranties, covenants or other agreements contained in this Agreement;
(f)
by either Hepion or the Company, if Hepion failed to obtain the Hepion Stockholder Approval upon vote taken thereon at a duly convened
Hepion Special Meeting (or at a meeting of its shareholders following any adjournment or postponement thereof); provided that the right
to terminate this Agreement under this Section 10.01(f) shall not be available to Hepion if Hepion has breached this Agreement
(including Section 8.02(b));
(g)
by either Hepion or the Company, if, at the Company Special Meeting (including any adjournments thereof), the Company Transaction Proposals
are not duly adopted by the Company Shareholders by the requisite vote under applicable Law and the Organizational Documents of the Company;
provided that the right to terminate this Agreement under this Section 10.01(g) shall not be available to the Company if the Company
has breached this Agreement (including Section 8.02(c)); or
(h)
by the Company, if Hepion breaches its obligations under Section 8.02(b).
Section
10.02 Effect of Termination. Except as otherwise set forth in this Section 10.02 or Section 11.13, in the event
of the termination of this Agreement pursuant to Section 10.01, this Agreement shall forthwith become void and have no effect,
without any liability on the part of any Party or its Affiliates, or its Affiliates’ Representatives, other than liability of any
Party for any Fraud or any intentional and willful breach of this Agreement by such Party occurring prior to such termination. The provisions
of Section 8.06 (Confidentiality; Publicity), this Section 10.02 (Effect of Termination) and Article XI and the
Confidentiality Agreement, shall in each case survive any termination of this Agreement.
Article
XI
MISCELLANEOUS
Section
11.01 Waiver. At any time and from time to time prior to the Effective Time, Hepion and the Company may, to the extent legally
allowed and except as otherwise set forth herein, (a) extend the time for the performance of any of the obligations or other acts of
the other Party, as applicable; (b) waive any inaccuracies in the representations and warranties of the other Party contained herein
or in any document delivered pursuant hereto; and (c) subject to the requirements of applicable Law, waive compliance by the other Party
with any of the agreements or conditions contained herein applicable to such Party. Any agreement on the part of a Party to any such
extension or waiver will be valid only if set forth in an instrument in writing signed by such Party. Any delay in exercising any right
pursuant to this Agreement will not constitute a waiver of such right.
Section
11.02 Notices. All notices and other communications among the Parties shall be in writing and shall be deemed to have been duly
given (i) when delivered in person, (ii) when delivered after posting in the United States mail having been sent registered or certified
mail return receipt requested, postage prepaid, (iii) when delivered by FedEx or other nationally recognized overnight delivery service
or (iv) when e-mailed during normal business hours (and otherwise as of the immediately following Business Day), addressed as follows:
(a)
If to Hepion, prior to the Closing, to:
Hepion
Pharmaceuticals, Inc.
399
Thornall Street, First Floor
Edison,
New Jersey 08837
Tel:
(732) 902-4000
Attn:
John Brancaccio
E-mail:
Brancaccio1234@gmail.com
with
copies (which shall not constitute notice) to:
Sheppard,
Mullin, Richter & Hampton LLP
30
Rockefeller Plaza, 39th Floor
New
York, New York 10112
Attn:
Jeffrey Fessler and Lindsay Ferguson
E-mail:
JFessler@sheppardmullin.com and LFerguson@sheppardmullin.com
If
to the Company or Merger Sub, or Hepion following the Closing, to:
Pharma
Two B Ltd.
Dan
Teleman, Chief Executive Officer
E-mail:
dan@pharma2b.com
with
a copy (which shall not constitute notice) to:
Meitar
| Law Offices
16
Abba Hillel Road
Ramat
Gan, Israel 5250608
Attention:
Mike Rimon
Matthew
Rudolph
Email:
mrimon@meitar.com
matthewr@meitar.com
and
Goodwin
Procter LLP
620
Eighth Avenue
New
York, NY 10018-1405
Attention:
Mayan Katz
Marianne
C. Sarrazin
E-mail:
mkatz@goodwinlaw.com
msarrazin@goodwinlaw.com
or
to such other address or addresses as the Parties may from time to time designate in writing. Without limiting the foregoing, any Party
may give any notice, request, instruction, demand, document or other communication hereunder using any other means (including personal
delivery, expedited courier, messenger service, ordinary mail or electronic mail), but no such notice, request, instruction, demand,
document or other communication shall be deemed to have been duly given unless and until it actually is received by the Party for whom
it is intended.
Section
11.03 Assignment. No Party shall assign this Agreement or any part hereof without the prior written consent of the other Parties.
Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors
and permitted assigns. Any attempted assignment in violation of the terms of this Section 11.03 shall be null and void, ab
initio.
Section
11.04 Rights of Third Parties. Nothing expressed or implied in this Agreement is intended or shall be construed to confer upon
or give any Person, other than the Parties, any right or remedies under or by reason of this Agreement; provided that notwithstanding
the foregoing (a) in the event the Closing occurs, D&O Indemnitees are intended third-party beneficiaries of, and may enforce, Section
7.01, (b) the Non-Recourse Parties are intended third-party beneficiaries of, and may enforce, Section 11.13 and Section
11.14 and (c) Prior Counsel is an intended third-party beneficiary of, and may enforce, Section 11.17.
Section
11.05 Expenses. Except as otherwise expressly provided herein, each Party shall bear its own expenses incurred in connection with
this Agreement and the Transactions, whether or not such transactions shall be consummated, including all fees of its legal counsel,
financial advisors and accountants.
Section
11.06 Governing Law. This Agreement, and all Actions or causes of action based upon, arising out of, or related to this Agreement
or the Transactions, shall be governed by, and construed in accordance with, the internal substantive Laws of the State of Delaware applicable
to contracts entered into and to be performed solely within such state, without giving effect to principles or rules of conflict of laws
to the extent such principles or rules would require or permit the application of Laws of another jurisdiction.
Section
11.07 Captions; Counterparts; Electronic Signatures. The captions in this Agreement are for convenience only and shall not be
considered a part of or affect the construction or interpretation of any provision of this Agreement. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
Delivery of an executed counterpart of a signature page to this Agreement or any Transaction Agreement (including any of the closing
deliverables contemplated hereby) by electronic means, including docusign, e-mail, or scanned pages shall be effective as delivery of
a manually executed counterpart to this Agreement or any such Transaction Agreement.
Section
11.08 Schedules and Exhibits. The Schedules and Exhibits referenced herein are a part of this Agreement as if fully set forth
herein. All references herein to Schedules and Exhibits shall be deemed references to such parts of this Agreement, unless the context
shall otherwise require. Any disclosure made by a Party in the Schedules with reference to any section or schedule of this Agreement
shall be deemed to be a disclosure with respect to all other sections or schedules to which such disclosure may apply solely to the extent
the relevance of such disclosure is reasonably apparent on the face of the disclosure in such Schedule. Certain information set forth
in the Schedules is included solely for informational purposes. The disclosure of any information shall not be deemed to constitute an
acknowledgment that such information is required to be disclosed in connection with the representations and warranties made in this Agreement,
nor shall such information be deemed to establish a standard of materiality.
Section
11.09 Entire Agreement. This Agreement (together with the Schedules and Exhibits to this Agreement), the other Transaction Agreements
and that certain mutual confidentiality agreement, dated as of February 29, 2024 by and between the Company and Hepion (as amended, modified
or supplemented from time to time, the “Confidentiality Agreement”), constitute the entire agreement among the Parties relating
to the transactions contemplated hereby and thereby and supersede any other agreements, whether written or oral, that may have been made
or entered into by or among any of the Parties or any of their respective Subsidiaries relating to the Transactions.
Section
11.10 Amendments. This Agreement may be amended or modified in whole or in part, only by an agreement in writing executed by each
of the Parties in the same manner as this Agreement and which makes reference to this Agreement. The approval of this Agreement by the
shareholders of any of the Parties shall not restrict the ability of the board of directors (or other body performing similar functions)
of any of the Parties to terminate this Agreement in accordance with Section 10.01 or to cause such Party to enter into an amendment
to this Agreement pursuant to this Section 11.10.
Section
11.11 Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction,
the other provisions of this Agreement shall remain in full force and effect. The Parties further agree that if any provision contained
herein is, to any extent, held invalid or unenforceable in any respect under the Laws governing this Agreement, they shall take any actions
necessary to render the remaining provisions of this Agreement valid and enforceable to the fullest extent permitted by Law.
Section
11.12 Jurisdiction; WAIVER OF TRIAL BY JURY. Any Action based upon, arising out of or related to this Agreement or the Transactions
shall be brought in the Delaware Court of Chancery, and if the Delaware Court of Chancery does not have or take jurisdiction over such
Action, any other federal or state courts located in the State of Delaware, and each of the Parties irrevocably submits to the exclusive
jurisdiction of each such court in any such Action, waives any objection it may now or hereafter have to personal jurisdiction, venue
or to convenience of forum, agrees that all claims in respect of the Action shall be heard and determined only in any such court, and
agrees not to bring any Action arising out of or relating to this Agreement or the Transactions in any other court. Nothing herein contained
shall be deemed to affect the right of any Party to serve process in any manner permitted by Law or to commence legal proceedings or
otherwise proceed against any other Party in any other jurisdiction, in each case, to enforce judgments obtained in any Action brought
pursuant to this Section 11.12. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION
BASED UPON, ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS.
Section
11.13 Enforcement. The Parties agree that irreparable damage for which monetary damages, even if available, would not be an adequate
remedy, would occur in the event that the Parties do not perform their obligations under the provisions of this Agreement (including
failing to take such actions as are required of them hereunder to consummate this Agreement) in accordance with its specified terms or
otherwise breach such provisions. The Parties acknowledge and agree that (i) the Parties shall be entitled to an injunction, specific
performance, or other equitable relief, to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof,
without proof of damages, prior to the valid termination of this Agreement in accordance with Section 10.01, this being in addition
to any other remedy to which they are entitled under this Agreement or any Transaction Agreement, and (ii) the right of specific enforcement
is an integral part of the transactions contemplated by this Agreement and without that right, none of the Parties would have entered
into this Agreement. Each Party agrees that it will not allege, and each Party hereby waives the defense, that the other Parties have
an adequate remedy at Law or that an award of specific performance is not an appropriate remedy for any reason at Law or equity. The
Parties acknowledge and agree that any Party seeking an injunction to prevent breaches of this and to enforce specifically the terms
and provisions of this Agreement in accordance with this Section 11.13 shall not be required to provide any bond or other security
in connection with any such injunction. The Parties hereby agree that, in the event that any Action is brought against either Party as
contemplated by this Section 11.13, the Termination Date shall be extended until 30 days following the date of resolution of such
Action.
Section
11.14 Non-Recourse. This Agreement may only be enforced against, and any claim or cause of action based upon, arising out of,
or related to this Agreement or the Transactions may only be brought against, the entities that are expressly named as Parties and then
only with respect to the specific obligations set forth herein with respect to such Party. Except to the extent a Party (and then only
to the extent of the specific obligations undertaken by such Party in this Agreement), (a) no past, present or future director, officer,
employee, sponsor, incorporator, member, partner, shareholder, Affiliate, agent, attorney, advisor or representative or Affiliate of
any Party and (b) no past, present or future director, officer, employee, sponsor, incorporator, member, partner, shareholder, Affiliate,
agent, attorney, advisor or representative or Affiliate of any of the foregoing shall have any liability (whether in contract, tort,
equity or otherwise) for any one or more of the representations, warranties, covenants, agreements or other obligations or liabilities
of any one or more of the Company, Hepion or Merger Sub under this Agreement of or for any claim based on, arising out of, or related
to this Agreement or the Transactions (each of the Persons identified in clauses (a) or (b), a “Non-Recourse Party”,
and collectively, the “Non-Recourse Parties”).
Section
11.15 Non-Survival. Notwithstanding anything herein or otherwise to the contrary, none of the representations, warranties, covenants,
obligations or other agreements of the Parties contained in this Agreement or in any certificate delivered pursuant to this Agreement,
including any rights arising out of any breach of such representations, warranties, covenants, obligations, agreements and other provisions,
shall survive the Closing, and, from and after the Closing, no Action shall be brought and no recourse shall be had against or from any
Person in respect of such non-surviving representations, warranties, covenants or agreements, other than in the case of Fraud against
the Party committing such Fraud. All such representations, warranties, covenants, obligations and other agreements shall terminate and
expire upon the occurrence of the Effective Time (and there shall be no liability after the Closing in respect thereof). Notwithstanding
the foregoing, (a) those covenants and agreements contained herein that by their terms expressly require performance after the Closing
shall survive the Effective Time but only with respect to that portion of such covenant or agreement that is expressly to be performed
following the Closing and (b) this Article XI shall survive the Closing. For the avoidance of doubt, the terms of the Hepion Support
Agreement, the Company Shareholder Support Agreements, the Amended IRA and the Joinder shall not be affected by this Section 11.15.
Section
11.16 Acknowledgements. Each of the Parties acknowledges and agrees (on its own behalf and on behalf of its respective Affiliates
and its and their respective Representatives) that: (i) it has conducted its own independent investigation of the financial condition,
results of operations, assets, liabilities, properties and projected operations of the other Parties (and, in the case of the Company,
its Subsidiaries) and has been afforded satisfactory access to the books and records, facilities and personnel of the other Parties (and
their respective Subsidiaries) for purposes of conducting such investigation; (ii) the representations and warranties in Article IV
constitute the sole and exclusive representations and warranties in respect of the Company and its Subsidiaries; (iii) the representations
and warranties in Article V constitute the sole and exclusive representations and warranties in respect of Hepion; (iv) except
for the representations and warranties in Article IV by the Company and the representations and warranties in Article V
by Hepion, none of the Parties or any other Person (including any of the Non-Recourse Parties) makes, or has made, any other express
or implied representation or warranty with respect to any Party (or any Party’s Subsidiaries), including any implied warranty or
representation as to condition, merchantability, suitability or fitness for a particular purpose or trade as to any of the assets of
the such Party or its Subsidiaries or the transactions contemplated by this Agreement and all other representations and warranties of
any kind or nature expressed or implied (including (x) regarding the completeness or accuracy of, or any omission to state or to disclose,
any information, including in the estimates, projections or forecasts or any other information, document or material provided to or made
available to any Party or their respective Affiliates or Representatives in certain “data rooms,” management presentations
or in any other form in expectation of the Transactions, including meetings, calls or correspondence with management of any Party (or
any Party’s Subsidiaries), and (y) any relating to the future or historical business, condition (financial or otherwise), results
of operations, prospects, assets or liabilities of any Party (or its Subsidiaries), or the quality, quantity or condition of any Party’s
or its Subsidiaries’ assets) are specifically disclaimed by all Parties and their respective Subsidiaries and all other Persons
(including the Representatives and Affiliates of any Party or its Subsidiaries); and (v) neither Party nor any of its Affiliates is relying
on any representations and warranties in connection with the Transactions except the representations and warranties in Article IV
by the Company and the representations and warranties in Article V by Hepion. The foregoing does not limit any rights of any
Party (or any other Person party to any other Transaction Agreements) pursuant to any other Transaction Agreement against any other Party
(or any other Person party to any other Transaction Agreements) pursuant to such Transaction Agreement to which it is a party or an express
third party beneficiary thereof.
Section
11.17 Waiver of Conflicts Regarding Representations; Non-Assertion of Attorney-Client Privilege.
(a)
Conflicts of Interest. Each Party acknowledges that each of Sheppard, Mullin, Richter & Hampton LLP, Meitar Law Offices and
Goodwin Procter LLP (each of them, the “Prior Counsel”) has on or prior to the Closing Date represented, as applicable,
the Company, its Subsidiaries, the Company Shareholders, Hepion, the Hepion Stockholders, and any of their respective Affiliates, and
their respective officers, employees and directors (each such Person, in such pre-Closing capacity, a “Designated Person”)
in one or more matters relating to this Agreement or any other Transaction Agreements or transactions contemplated hereby or thereby
(including any matter that may be related a litigation, claim or dispute arising under or related to this Agreement or such other Transaction
Agreements or in connection with such transactions) (each, an “Existing Representation”), and that, in the event of
any post-Closing matters (x) relating to this Agreement or any other agreements or transactions contemplated hereby (including any matter
that may be related to a litigation, claim or dispute arising under or related to this Agreement or such other Transaction Agreements
or in connection with such transactions), and (y) in which the Company or its Subsidiaries (including Hepion) or Hepion Stockholders
(for the purposes of this Section 11.17, in such post-Closing capacity, the “Post-Closing Group”), on the one
hand, and one or more Designated Persons, on the other hand, are or may be adverse to each other (each, a “Post-Closing Matters”),
the Designated Persons reasonably anticipate that the Prior Counsel may represent them in connection with such matters. Accordingly,
each member of the Post-Closing Group hereby (i) waives and shall not assert, and agrees after the Closing to not assert, any conflict
of interest arising out of or relating to the representation by the Prior Counsel of one or more Designated Persons in connection with
one or more Post-Closing Matters (the “Post-Closing Representations”), and (ii) agrees that, in the event that
a Post-Closing Matter arises, any Prior Counsel may represent one or more Designated Persons in such Post-Closing Matter even though
the interests of such Person(s) may be directly adverse to any member of the Post-Closing Group.
(b)
Attorney-Client Privilege. Each member of the Post-Closing Group waives and shall not assert, and agrees after the Closing to
waive and to not assert, any attorney-client privilege, attorney work-product protection or expectation of client confidence with respect
to any communication between the Prior Counsel, on the one hand, and any Designated Person (collectively, the “Pre-Closing Designated
Persons”), or any advice given to any Pre-Closing Designated Person by the Prior Counsel, occurring during one or more Existing
Representations (collectively, “Pre-Closing Privileges”) in connection with any Post-Closing Representation, including
in connection with a dispute between any Designated Person and any member of the Post-Closing Group, it being the intention of the Parties
that all rights to such Pre-Closing Privileges, and all rights to waiver or otherwise control such Pre-Closing Privilege, shall be retained
by the Designated Persons. Furthermore, each member of the Post-Closing Group acknowledges and agrees that any advice given to or communication
with any of the Designated Persons shall not be subject to any joint privilege and shall be owned solely by such Designated Persons.
(c)
Privileged Materials. All such Pre-Closing Privileges, and all books and records and other documents of the Company and its Subsidiaries
containing any advice or communication that is subject to any Pre-Closing Privilege (“Privileged Materials”), shall
be retained by the Designated Persons. No member of the Post-Closing Group shall have a right of access to such Privileged Materials.
(d)
Miscellaneous. Each Party hereby acknowledges that it has had the opportunity (including on behalf of its Affiliates) to discuss
and obtain adequate information concerning the significance and material risks of, and reasonable available alternatives to, the waivers,
permissions and other provisions of this Agreement, including the opportunity to consult with counsel other than Prior Counsel. This
Section 11.17 shall be irrevocable, and no term of this Section 11.17 may be amended, waived or modified, without the prior
written consent of the Prior Counsels.
[Signature
pages follow.]
IN
WITNESS WHEREOF, the parties hereto have hereunto caused this Agreement and Plan of Merger to be duly executed as of the date hereof.
|
Pharma
Two B Ltd. |
|
|
|
|
By: |
/s/ Dan Teleman |
|
Name: |
Dan
Teleman |
|
Title: |
Chief
Executive Officer |
|
|
|
|
Pearl
Merger Sub, Inc. |
|
|
|
|
By: |
/s/ Dan Teleman |
|
Name: |
Dan Teleman |
|
Title: |
President |
IN
WITNESS WHEREOF, the parties hereto have hereunto caused this Agreement and Plan of Merger to be duly executed as of the date hereof.
|
Hepion
Pharmaceuticals, Inc. |
|
|
|
By: |
/s/ John Brancaccio |
|
Name:
|
John
Brancaccio |
|
Title: |
Executive
Chairman |
ANNEX
1
Hepion
Support Agreement Signatories
|
1. |
Armistice Capital, LLC |
ANNEX
2
Lock-Up
Agreement Signatories
[To
be completed prior to Closing]2
2
Note: Parties have agreed this Annex will be completed prior to Closing with any individual that fits within the lock-up category
(i.e., post closing director, officer, and affiliate stockholders).
ANNEX
3
Company
Knowledge
ANNEX
4
Hepion
Knowledge
ANNEX
5
Permitted
Liens
ANNEX
6
Exchange
Ratio Model
ANNEX
7
Exchange
Ratio Adjustment Illustration
Term
Sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
Cap |
|
Cash |
|
Split |
|
|
Hepion |
|
$10
|
|
$0
|
|
$10 |
|
15% |
P2B |
|
$56
|
|
$56 |
|
85% |
|
|
|
|
|
|
$66 |
|
|
Scenario
#1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
Cap |
|
Hepion
Deficit |
|
Split |
|
|
Hepion |
|
$10
|
|
-$4
|
|
$6 |
|
13% |
P2B |
|
$40
|
|
$40 |
|
87% |
|
|
|
|
|
|
$46 |
|
|
Scenario
#2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
Cap |
|
Hepion
Deficit |
|
Split |
|
|
Hepion |
|
$10
|
|
-$3
|
|
$7 |
|
15% |
P2B |
|
$40
|
|
$40 |
|
85% |
|
|
|
|
|
|
$47 |
|
|
Scenario
#3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
Cap |
|
Hepion
Deficit |
|
Split |
|
|
Hepion |
|
$10
|
|
-$2
|
|
$8 |
|
17% |
P2B |
|
$40
|
|
$40 |
|
83% |
|
|
|
|
|
|
$48 |
|
|
EXHIBIT
A
Form
of Amended and Restated Articles of Association of the Company
EXHIBIT
B
Form
of Hepion Support Agreement
EXHIBIT
C
Form
of Amended Investors’ Rights Agreement
EXHIBIT
D
Form
of Lock-Up Agreement
EXHIBIT
E
Form
of Subscription Agreement
Exhibit
4.1
[FORM
OF SENIOR UNSECURED NONCONVERTIBLE NOTE]
THIS
SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER
LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR
OTHER LOAN SECURED BY SUCH SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTIONS
3 AND 18(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE MAY BE LESS THAN THE AMOUNT SET FORTH ON THE FACE HEREOF PURSUANT TO
SECTION 3) OF THIS NOTE.
THIS
NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”). PURSUANT TO TREASURY REGULATION §1.1275-3(b)(1), A REPRESENTATIVE
OF THE COMPANY HEREOF WILL, BEGINNING TEN DAYS AFTER THE ISSUANCE DATE OF THIS NOTE, PROMPTLY MAKE AVAILABLE TO THE HOLDER UPON REQUEST
THE INFORMATION DESCRIBED IN TREASURY REGULATION §1.1275-3(b)(1)(i).
HEPION
PHARMACEUTICALS, INC.
SENIOR
UNSECURED NONCONVERTIBLE NOTE
Issuance
Date: July 19, 2024 |
Original
Principal Amount: U.S. $[●] |
|
Purchase
Price: U.S. $[●] |
FOR
VALUE RECEIVED, Hepion Pharmaceuticals, Inc., a Delaware corporation (the “Company”), hereby promises to pay to
_________ or registered assigns (the “Holder”) in cash the amount set forth above as the Original Principal Amount
(as reduced pursuant to the terms hereof pursuant to redemption or otherwise, the “Principal”) when due, whether upon
the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to
pay interest (“Interest”), if applicable, on any outstanding Principal at the applicable Default Rate at any time
during the occurrence and continuance of an Event of Default occurring from the date set out above as the Issuance Date (the “Issuance
Date”) until the same becomes due and payable, whether upon the Maturity Date, acceleration, redemption or otherwise (in each
case in accordance with the terms hereof). This Senior Unsecured Nonconvertible Note (including all Senior Unsecured Nonconvertible Notes
issued in exchange, transfer or replacement hereof, this “Note”) is one of an issue of Senior Unsecured Nonconvertible
Notes issued pursuant to the Securities Purchase Agreement on the Closing Date (collectively, the “Notes” and such
other Senior Unsecured Nonconvertible Notes, the “Other Notes”). Certain capitalized terms used herein are defined
in Section 31.
(1)
ORIGINAL ISSUE DISCOUNT; PAYMENTS OF PRINCIPAL; PREPAYMENT. The Company acknowledges and agrees that this Note was issued at an
original issue discount. On the Maturity Date, if any portion of this Note remains outstanding, the Company shall pay to the Holder an
amount in cash representing all outstanding Principal and any accrued and unpaid Interest. The “Maturity Date” shall
be the earlier of: (i) December 31, 2024, (ii) the date of the closing of the Business Combination, (iii) the date that the Business
Combination is terminated pursuant to the terms of the Merger Agreement, and (iv) or such earlier date as this Note is required or permitted
to be repaid as provided hereunder, as may be extended at the option of the Holder (x) in the event that, and for so long as, an Event
of Default (as defined in Section 4(a)) shall have occurred and be continuing on the Maturity Date (as may be extended pursuant to this
Section 1) or any event shall have occurred and be continuing on the Maturity Date (as may be extended pursuant to this Section 1) that
with the passage of time and the failure to cure would result in an Event of Default and/or (y) through the date that is ten (10) Business
Days after the consummation of a Change of Control in the event that a Change of Control is publicly announced or a Change of Control
Notice (as defined in Section 5(b)) is delivered prior to the Maturity Date. Other than as specifically permitted by this Note, the Company
may not prepay any portion of the outstanding Principal or accrued and unpaid Interest, if any.
(2)
INTEREST. No Interest shall accrue hereunder unless and until an Event of Default has occurred. From and after the occurrence
and during the continuance of any Event of Default, Interest shall accrue hereunder at fourteen percent (14.0%) per annum (the “Default
Rate”) and shall be computed on the basis of a 360-day year and twelve 30-day months and shall be payable, if applicable, on
the Maturity Date to the record holder of this Note in cash by wire transfer of immediately available funds pursuant to wire instructions
provided by the Holder in writing to the Company. Accrued and unpaid Interest, if any, may also be payable, at the election of the Holder,
by way of inclusion of the Interest in the Note Amount (as defined below) upon any redemption hereunder occurring prior to the Maturity
Date, including, without limitation, upon a Bankruptcy Event of Default redemption. In the event that an Event of Default is subsequently
cured (and no other Event of Default then exists (including, without limitation, for the Company’s failure to pay such Interest
at the Default Rate on the Maturity Date)), Interest shall cease to accrue hereunder as of the calendar day immediately following the
date of such cure; provided that the Interest as calculated and unpaid during the continuance of such Event of Default shall continue
to apply to the extent relating to the days after the occurrence of such Event of Default through and including the date of such cure
of such Event of Default; provided, further, that for the purpose of this Section 2, such Event of Default shall not be
deemed cured unless and until any accrued and unpaid Interest shall be paid to the Holder. As used herein, “Note Amount”
means the sum of (x) the portion of the Principal to be redeemed or otherwise with respect to which this determination is being made,
and (y) accrued and unpaid Interest, if any, with respect to such Principal.
(3)
NOTE REGISTRATION; BOOK ENTRY. The Company shall maintain a register (the “Register”) for the recordation of
the names and addresses of the holders of each Note and the Principal amount of the Notes (and stated interest thereon) held by such
holders (the “Registered Notes”). The entries in the Register shall be conclusive and binding for all purposes absent
manifest error. The Company and the holders of the Notes shall treat each Person whose name is recorded in the Register as the owner
of a Note for all purposes, including, without limitation, the right to receive payments of Principal and Interest, if any, hereunder,
notwithstanding notice to the contrary. A Registered Note may be assigned or sold in whole or in part only by registration of such assignment
or sale on the Register. Upon its receipt of a request to assign or sell all or part of any Registered Note by the Holder, the Company
shall record the information contained therein in the Register and issue one or more new Registered Notes in the same aggregate Principal
amount as the Principal amount of the surrendered Registered Note to the designated assignee or transferee pursuant to Section 18. Notwithstanding
anything to the contrary in this Section 3, the Holder may assign any Note or any portion thereof to an Affiliate of the Holder or a
Related Fund of the Holder without delivering a request to assign or sell the Note to the Company and the recordation of such assignment
or sale in the Register (a “Related Party Assignment”); provided, that (x) the Company may continue to deal solely
with such assigning or selling Holder unless and until the Holder has delivered a request to assign or sell the Note or portion thereof
to the Company for recordation in the Register; (y) the failure of such assigning or selling Holder to deliver a request to assign or
sell the Note or portion thereof to the Company shall not affect the legality, validity, or binding effect of such assignment or sale
and (z) such assigning or selling Holder shall, acting solely for this purpose as a non-fiduciary agent of the Company, maintain a register
(the “Related Party Register”) comparable to the Register on behalf of the Company, and any such assignment or sale
shall be effective upon recordation of such assignment or sale in the Related Party Register.
(4)
RIGHTS UPON EVENT OF DEFAULT.
(a)
Event of Default. Each of the following events or failure to comply therewith shall constitute an “Event of Default”
and each of the events described in clauses (iii) and (iv) shall also constitute a “Bankruptcy Event of Default”:
(i)
the Company’s failure to pay to the Holder any amount of Principal, Interest, Redemption Price or other amounts when and as due
under this Note or any other Transaction Document, except, in the case of a failure to pay Interest when and as due, in which case only
if such failure continues for a period of at least an aggregate of two (2) Business Days;
(ii)
any default under, redemption of or acceleration prior to maturity of any Indebtedness of the Company or any of its Subsidiaries other
than with respect to this Note or any Other Notes;
(iii)
the Company or any of its Subsidiaries, pursuant to or within the meaning of Title 11, U.S. Code, or any similar federal, foreign or
state law for the relief of debtors (collectively, “Bankruptcy Law”), (A) commences a bankruptcy voluntary case, (B)
consents to the entry of an order for relief against it in an involuntary bankruptcy case, (C) consents to the appointment of a receiver,
trustee, assignee, liquidator or similar official (a “Custodian”), (D) makes a general assignment for the benefit
of its creditors or (E) admits in writing that it is generally unable to pay its debts as they become due;
(iv)
a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (A) is for relief against the Company or any
of its Subsidiaries in an involuntary case, (B) appoints a Custodian of the Company or any of its Subsidiaries or (C) orders the liquidation
of the Company or any of its Subsidiaries;
(v)
a final judgment or judgments for the payment of money aggregating in excess of $250,000 are rendered against the Company or any of its
Subsidiaries and which judgments are not, within sixty (60) days after the entry thereof, bonded, discharged or stayed pending appeal,
or are not discharged within sixty (60) days after the expiration of such stay; provided, however, that any judgment which
is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $250,000 amount set forth
above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement
shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company
or such Subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity within thirty (30) days of the issuance
of such judgment;
(vi)
other than as specifically set forth in another clause of this Section 4(a), the Company or any of its Subsidiaries breaches any representation,
warranty, covenant or other term or condition of any Transaction Document, except, in the case of a breach of a covenant or other term
or condition of any Transaction Document which is curable, only if such breach continues for a period of at least an aggregate of five
(5) Business Days;
(vii)
any breach or failure in any respect to comply with either Sections 14 or 15 of this Note;
(viii)
any material damage to, or loss, theft or destruction of a material amount of property of the Company, whether or not insured, or any
strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty which causes, for more than fifteen
(15) consecutive days, the cessation or substantial curtailment of revenue producing activities at any facility of the Company or any
Subsidiary, if any such event or circumstance would reasonably be expected to have a Material Adverse Effect;
(ix)
any Material Adverse Effect occurs;
(x)
the Company fails to comply with Section 4.4 of the Securities Purchase Agreement;
(xi)
any Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes.
(b)
Redemption Right. At any time after the earlier of the Holder’s receipt of an Event of Default Notice (as defined in Section
15(f)) and the Holder becoming aware of an Event of Default, the Holder may require the Company to redeem (an “Event of Default
Redemption”) all or any portion of this Note by delivering written notice thereof (the “Event of Default Redemption
Notice”) to the Company, which Event of Default Redemption Notice shall indicate the portion of this Note the Holder is electing
to require the Company to redeem. Each portion of this Note subject to redemption by the Company pursuant to this Section 4(b) shall
be redeemed by the Company in cash by wire transfer of immediately available funds at a price equal to the product of (A) the Redemption
Premium and (B) the Note Amount being redeemed (the “Event of Default Redemption Price”). Redemptions required by
this Section 4(b) shall be made in accordance with the provisions of Section 11. To the extent redemptions required by this Section 4(b)
are deemed or determined by a court of competent jurisdiction to be prepayments of the Note by the Company, such redemptions shall be
deemed to be voluntary prepayments. The parties hereto agree that in the event of the Company’s redemption of any portion of the
Note under this Section 4(b), the Holder’s damages would be uncertain and difficult to estimate because of the parties’ inability
to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for the Holder.
Accordingly, any Redemption Premium with respect to an Event of Default due under this Section 4(b) is intended by the parties to be,
and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment opportunity and not as a penalty.
(c)
Redemption upon Bankruptcy Event of Default. Notwithstanding anything to the contrary herein upon any Bankruptcy Event of Default,
whether occurring prior to or following the Maturity Date, the Company shall immediately pay to the Holder an amount in cash representing
100% of all outstanding Principal, accrued and unpaid Interest, if any, in addition to any and all other amounts due hereunder (the “Bankruptcy
Event of Default Redemption Price”), without the requirement for any notice or demand or other action by the Holder or any
other Person; provided that the Holder may, in its sole discretion, waive such right to receive payment upon a Bankruptcy Event of Default,
in whole or in part, and any such waiver shall not affect any other rights of the Holder hereunder, including any other rights in respect
of such Bankruptcy Event of Default, and any right to payment of the Event of Default Redemption Price or any other Redemption Price,
as applicable. Redemptions required by this Section 4(c) shall be made in accordance with the provisions of Section 11.
(5)
RIGHTS UPON FUNDAMENTAL TRANSACTION AND CHANGE OF CONTROL.
(a)
Assumption. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor
(the “Successor Entity”) to assume in writing all of the obligations of the Company under this Note and the other
Transaction Documents in accordance with the provisions of this Section 5(a) pursuant to written agreements in form and substance reasonably
satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at
the option of the Holder, deliver to the Holder in exchange for this Note a security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Note. Upon the occurrence of any such Fundamental Transaction, the Successor Entity
shall be added to the term “Company” under this Note (so that from and after the occurrence or consummation of such Fundamental
Transaction, each and every provision of this Note and the other Transaction Documents referring to the “Company” shall refer
instead to each of the Company and the Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor
Entities, jointly and severally with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity
or Successor Entities shall assume all of the obligations of the Company prior thereto under this Note and the other Transaction Documents
with the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named as the
Company in this Note.
(b)
Redemption Right. No later than ten (10) days prior to the consummation of a Change of Control, except for a Change of Control
as a result of the Business Combination, the Company shall deliver written notice thereof via electronic mail and overnight courier to
the Holder (a “Change of Control Notice”) setting forth a description of such transaction in reasonable detail and
the anticipated Change of Control Redemption Date (as defined in Section 11(a)) if then known. At any time during the period beginning
on the earlier to occur of (x) any oral or written agreement by the Company or any of its Subsidiaries, upon consummation of which the
transaction contemplated thereby would reasonably be expected to result in a Change of Control, (y) the Holder becoming aware of a Change
of Control and (z) the Holder’s receipt of a Change of Control Notice and ending twenty-five (25) days after the date of the consummation
of such Change of Control, the Holder may require the Company to redeem (a “Change of Control Redemption”) all or
any portion of this Note by delivering written notice thereof (“Change of Control Redemption Notice”) to the Company,
which Change of Control Redemption Notice shall indicate the Note Amount the Holder is electing to require the Company to redeem. The
portion of this Note subject to redemption pursuant to this Section 5(b) shall be redeemed by the Company in cash by wire transfer of
immediately available funds at a price equal to the Note Amount being redeemed (the “Change of Control Redemption Price”).
Redemptions required by this Section 5 shall be made in accordance with the provisions of Section 11 and shall have priority to payments
to stockholders in connection with a Change of Control. To the extent redemptions required by this Section 5(b) are deemed or determined
by a court of competent jurisdiction to be prepayments of the Note by the Company, such redemptions shall be deemed to be voluntary prepayments.
The parties hereto agree that in the event of the Company’s redemption of any portion of the Note under this Section 5(b), the
Holder’s damages would be uncertain and difficult to estimate because of the parties’ inability to predict future interest
rates and the uncertainty of the availability of a suitable substitute investment opportunity for the Holder.
(6)
[Intentionally Omitted]
(7)
MANDATORY REDEMPTION.
(a)
Occurrence of Mandatory Redemption. While this Note is outstanding, the Company shall use at least 100% of the net proceeds of
any offering of its securities, including any underwritten or other public offering of securities (any such offering, a “Subsequent
Offering”) to first redeem this Note in full, including the Note Amount and all other amounts due and payable pursuant to this
Note, and all other then outstanding Notes (a “Mandatory Redemption”); provided, however, that if 100%
of the net proceeds of the Subsequent Offering are less than the amount required to repay all of the Notes in full, (i) the Company’s
repayment obligation under this Section 6(a) shall be limited to the amount of such net proceeds, (ii) the net proceeds shall be applied
to all of the Notes then outstanding pro rata based on the principal amount of such Notes then outstanding and (iii) the Company shall
effect successive Mandatory Redemptions upon each Subsequent Offering until the Notes are repaid in full or otherwise no longer outstanding.
(b)
Mandatory Notices. With respect to each Mandatory Redemption, the Company shall deliver a written notice to all, but not less
than all, of the holders of Notes (the “Mandatory Redemption Notice” and the date such notice is delivered to all
such holders is referred to as a “Mandatory Redemption Notice Date”) (a) stating the date on which the Mandatory Redemption
shall occur (a “Mandatory Redemption Date”), which date shall be the date of the consummation of the applicable Subsequent
Offering, (b) stating the expected amount of Net Proceeds with respect to the applicable Subsequent Offering and (c) contain a certification
from the Chief Executive Officer or Chief Financial Officer of the Company that the Company has simultaneously taken the same action
with respect to all of the Notes. Each Mandatory Redemption Notice shall be delivered no later than the first (1st) Business Day following
the announcement of the pricing of the applicable Subsequent Offering, and the Company shall make a public announcement containing the
information set forth in the applicable Mandatory Redemption Notice on or before the related Mandatory Redemption Notice Date to the
extent that the notice contains any, or constitutes, material, non-public information.
(c)
Mandatory Redemption Procedure. The payment of cash pursuant to the Mandatory Redemption shall be payable in full on the Business
Day immediately following the Mandatory Redemption Date by wire transfer of immediately available funds in accordance with the Holder’s
wire instructions. If any portion of the payment pursuant to a Mandatory Redemption shall not be paid by the Company by the applicable
due date, interest shall accrue thereon at an interest rate equal to the lesser of eighteen percent (18%) per annum or the maximum rate
permitted by applicable law until such amount is paid in full. Notwithstanding anything to the contrary in this Section 6(c), the Net
Proceeds shall be applied ratably among the Holders of the Notes.
(8)
OPTIONAL PREPAYMENT. The Company may prepay (each, an “Optional Prepayment”) the Note in whole or in part at
any time or from time to time by paying the Holder in cash by wire transaction of immediately available funds 100% of the Note Amount
being prepaid. The Company may exercise its right to require prepayment under this Section 8 by delivering a written notice thereof by
electronic mail and overnight courier to the Holder and all, but not less than all, of the holders of the Other Notes (an “Optional
Prepayment Notice” and the date all of the holders of the Notes received such notice is referred to as the “Optional
Prepayment Notice Date”). Each Optional Prepayment Notice shall be irrevocable. Each Optional Prepayment Notice shall (i) state
the date on which the Optional Prepayment shall occur (the “Optional Prepayment Date”), which date shall not be less
than two (2) Business Days following the applicable Optional Prepayment Notice Date, and (ii) state the aggregate Note Amount of the
Notes which the Company has elected to be subject to Optional Prepayment from the Holder and all of the other holders of the Other Notes
pursuant to this Section 8 (and analogous provisions under the Other Notes) on the related Optional Prepayment Date. If the Company elects
to cause an Optional Prepayment pursuant to this Section 8, then it must simultaneously take the same action in the same proportion with
respect to the Other Notes.
(9)
NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation
or Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale
of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note,
and will at all times in good faith carry out all of the provisions of this Note and take all action as may be required to protect the
rights of the Holder of this Note.
(10)
Most-Favored Nation. So long as the Notes are outstanding, upon any issuance by
the Company of any new security, with any term that the Purchasers reasonably believe is more favorable to the holder of such security
or with a term in favor of the holder of such security that the Purchasers reasonably believe was not similarly provided to the holder
of such security in these Transaction Documents, then (i) the Purchaser shall notify the Company of such additional or more favorable
term within one (1) Business Day of the issuance or amendment (as applicable) of the respective security, and (ii) such term, at Purchaser’s
option, shall become a part of the Note (regardless of whether the Company or the Purchaser complied with the notification provision
of the Note). The types of terms contained in another security that may be more favorable to the holder of such security include, but
are not limited to, terms addressing conversion or exercise discounts, conversion or exercise lookback periods, and discounts to the
effective price per share. If the Purchaser elects to have the term become a part of the Note, then the Company shall immediately deliver
acknowledgment of such adjustment in form and substance reasonably satisfactory to the Purchaser within one (1) Business Day of Company’s
receipt of request from the Purchaser, provided that Company’s failure to timely provide the acknowledgement shall not affect the
automatic amendments contemplated hereby.
(11)
REDEMPTIONS.
(a)
Mechanics. The Company shall deliver the applicable Event of Default Redemption Price to the Holder within three (3) Business
Days after the Company’s receipt of the Holder’s Event of Default Redemption Notice; provided that upon a Bankruptcy Event
of Default, the Company shall deliver the applicable Bankruptcy Event of Default Redemption Price in accordance with Section 4(c) (as
applicable, the “Event of Default Redemption Date”). If the Holder has submitted a Change of Control Redemption Notice
in accordance with Section 5(b), the Company shall deliver the applicable Change of Control Redemption Price to the Holder (i) concurrently
with the consummation of such Change of Control if such notice is received prior to the consummation of such Change of Control and (ii)
within three (3) Business Days after the Company’s receipt of such notice otherwise (such date, the “Change of Control
Redemption Date”). The Company shall deliver the applicable Note Amount being prepaid to the Holder on the applicable Optional
Prepayment Date. The Company shall pay the applicable Redemption Price to the Holder in cash by wire transfer of immediately available
funds pursuant to wire instructions provided by the Holder in writing to the Company on the applicable due date. In the event of a redemption
of less than all of the Note Amount of this Note, the Company shall promptly cause to be issued and delivered to the Holder a new Note
(in accordance with Section 18(d)) representing the outstanding Principal which has not been redeemed and any accrued Interest on such
Principal which shall be calculated as if no Redemption Notice has been delivered. In the event that the Company does not pay a Redemption
Price to the Holder within the time period required, at any time thereafter and until the Company pays such unpaid Redemption Price in
full, the Holder shall have the option, in lieu of redemption, to require the Company to promptly return to the Holder all or any portion
of this Note representing the Note Amount that was submitted for redemption and for which the applicable Redemption Price has not been
paid. Upon the Company’s receipt of such notice, (x) the applicable Redemption Notice shall be null and void with respect to such
Note Amount, and (y) the Company shall immediately return this Note, or issue a new Note (in accordance with Section 18(d)) to the Holder
representing such Note Amount to be redeemed.
(b)
Redemption by Other Holders. Upon the Company’s receipt of notice from any of the holders of the Other Notes for redemption
or repayment as a result of an event or occurrence substantially similar to the events or occurrences described in Section 4(b), Section
5(b) or Section 8 or pursuant to corresponding provisions set forth in the Other Notes (each, an “Other Redemption Notice”),
the Company shall immediately, but no later than one (1) Business Day of its receipt thereof, forward to the Holder by electronic mail
a copy of such notice. If the Company receives a Redemption Notice and one or more Other Redemption Notices, during the seven (7) Business
Day period beginning on and including the date which is three (3) Business Days prior to the Company’s receipt of the Holder’s
Redemption Notice and ending on and including the date which is three (3) Business Days after the Company’s receipt of the Holder’s
Redemption Notice and the Company is unable to redeem all principal, interest and other amounts designated in such Redemption Notice
and such Other Redemption Notices received during such seven (7) Business Day period, then the Company shall redeem, a pro rata amount
from the Holder and each holder of the Other Notes based on the Principal amount of this Note and the Other Notes submitted for redemption
pursuant to such Redemption Notice and such Other Redemption Notices received by the Company during such seven (7) Business Day period.
(c)
Insufficient Assets. If upon a Redemption Date, the assets of the Company are insufficient to pay the applicable Redemption Price,
the Company shall (i) take all appropriate action reasonably within its means to maximize the assets available for paying the applicable
Redemption Price, (ii) redeem out of all such assets available therefor on the applicable Redemption Date the maximum possible portion
of the applicable Redemption Price that it can redeem on such date, pro rata among the Holder and the holders of the Other Notes to be
redeemed in proportion to the aggregate Principal amount of this Note and the Other Notes outstanding on the applicable Redemption Date
and (iii) following the applicable Redemption Date, at any time and from time to time when additional assets of the Company become available
to pay the balance of the applicable Redemption Price of this Note and the Other Notes, the Company shall use such assets, at the end
of the then current fiscal quarter, to pay the balance of such Redemption Price of this Note and the Other Notes, or such portion thereof
for which assets are then available, on the basis set forth above at the applicable Redemption Price, and such assets will not be used
prior to the end of such fiscal quarter for any other purpose. Interest on the Principal amount of this Note and the Other Notes that
have not been redeemed shall continue to accrue until such time as the Company redeems this Note and the Other Notes. The Company shall
pay to the Holder the applicable Redemption Price without regard to the legal availability of funds unless expressly prohibited by applicable
law or unless the payment of the applicable Redemption Price could reasonably be expected to result in personal liability to the directors
of the Company.
(12)
VOTING RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law and as expressly provided
in this Note.
(13)
RANK. All payments due under this Note (a) shall rank pari passu with all Other Notes and (b) shall be senior to all other
Indebtedness of the Company and its Subsidiaries.
(14)
NEGATIVE COVENANTS. Except as noted below, until all of the Notes have been redeemed or otherwise satisfied in full in accordance
with their terms, the Company shall not, and the Company shall not permit any of its Subsidiaries without the prior written consent of
the Required Holders to, directly or indirectly by merger or otherwise:
(a)
while any Notes remain outstanding, incur or guarantee, assume or suffer to exist any Indebtedness, other than Permitted Indebtedness;
(b)
allow or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets
(including accounts and contract rights) owned by the Company or any of its Subsidiaries (collectively, “Liens”) other
than Permitted Liens;
(c)
redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part,
whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any Indebtedness (other
than this Note and the Other Notes), whether by way of payment in respect of principal of (or premium, if any) or interest on, such Indebtedness
if at the time such payment is due or is otherwise made or, after giving effect to such payment, an event constituting, or that with
the passage of time and without being cured would constitute, an Event of Default has occurred and is continuing;
(d)
redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part,
whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any Indebtedness (including,
without limitation Permitted Indebtedness other than this Note and the Other Notes), by way of payment in respect of principal of (or
premium, if any) such Indebtedness. For clarity, such restriction shall not preclude the payment of regularly scheduled interest payments
which may accrue under such Permitted Indebtedness;
(e)
redeem or repurchase any Equity Interest of the Company;
(f)
declare or pay any cash dividend or distribution on any Equity Interest of the Company or of its Subsidiaries other than wholly-owned
Subsidiaries;
(g)
make, any change in the nature of its business as described in the Company’s most recent Annual Report filed on Form 10-K with
the United States Securities and Exchange Commission (the “Commission”) or modify its corporate structure or purpose;
or
(h)
encumber, license or otherwise allow any Liens on any Intellectual Property Rights, including, without limitation, any claims for damage
by way of any past, present, or future infringement of any of the foregoing, in each case, other than Permitted Liens;
(i)
enter into, renew, extend or be a party to, any transaction or series of related transactions (including, without limitation, the purchase,
sale, lease, license, transfer or exchange of property or assets of any kind or the rendering of services of any kind) with any Affiliate,
except in the ordinary course of business in a manner and to an extent consistent with past practice and necessary or desirable for the
prudent operation of its business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable
in a comparable arm’s length transaction with a Person that is not an Affiliate thereof;
(j)
issue any Notes or issue any other securities that would cause a breach or default under the Notes;
(k)
amend its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially
and adversely affects any rights of the Purchasers;
(l)
enter into any transaction with any Affiliate of the Company which would be required to be disclosed in any public filing with the Commission,
unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of
the Company (even if less than a quorum otherwise required for board approval);
(m)
amend the Merger Agreement or the Loan Agreement by and between the Company and P2B, dated as of [●], 2024, the executed copy of
which is attached hereto as Exhibit A and Exhibit B, respectively; and
(n)
enter into any agreement with respect to any of the foregoing.
Notwithstanding
anything to the contrary in this Section 14, the consummation of the Business Combination pursuant to the Merger Agreement, as in effect
on the date hereof, shall not be deemed a violation of this Section 14.
(15)
AFFIRMATIVE COVENANTS. Until all of the Notes have been redeemed or otherwise satisfied in full in accordance with their terms,
the Company shall, and the Company shall cause each Subsidiary to, unless otherwise agreed to by the Required Holders, directly and indirectly:
(a)
maintain and preserve its existence, rights and privileges, and become or remain duly qualified and in good standing in each jurisdiction
in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary;
(b)
maintain and preserve all of its properties which are necessary or useful in the proper conduct of its business in good working order
and condition, ordinary wear and tear excepted, and comply at all times with the provisions of all leases to which it is a party as lessee
or under which it occupies property, so as to prevent any loss or forfeiture thereof or thereunder;
(c)
take all action necessary or advisable to maintain all of the Intellectual Property Rights that is necessary or material to the conduct
of its business in full force and effect;
(d)
maintain insurance with responsible and reputable insurance companies or associations (including, without limitation, comprehensive general
liability, hazard, rent and business interruption insurance) with respect to its properties (including all real properties leased or
owned by it) and business, in such amounts and covering such risks as is required by any governmental authority having jurisdiction with
respect thereto or as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated;
and
(e)
promptly, but in any event within one (1) Business Day, notify the Holder and the holders of the Other Notes in writing whenever an Event
of Default (an “Event of Default Notice”) occurs, and simultaneously with the delivery of such notice to the Holder
and the holders of the Other Notes, file a Current Report on Form 8-K with the Commission to state such fact.
(16)
VOTE TO ISSUE, OR CHANGE THE TERMS OF, NOTES. The affirmative vote at a meeting duly called for such purpose or the written consent
without a meeting of the Required Holders shall be required for any exchange, change or amendment or waiver of any provision to this
Note or any of the Other Notes. Any exchange, change, amendment or waiver by the Company and the Required Holders shall be binding on
the Holder of this Note and all holders of the Other Notes. The Holder hereby acknowledges and agrees that any action taken pursuant
to this Section may result in, or be perceived to result in, a disproportionate impact on the Holder compared to the impact of such action
on one or more holder(s) of Other Notes. This provision constitutes a separate right granted to each of the holders of Notes by the Company
and shall not in any way be construed as such holders acting in concert or as a group with respect to the purchase, disposition or voting
of securities or otherwise.
(17)
TRANSFER. This Note may be offered, sold, assigned or transferred by the Holder without the consent of the Company, subject only
to the provisions of Section 4.1 of the Securities Purchase Agreement.
(18)
REISSUANCE OF THIS NOTE.
(a)
Transfer. If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith
issue and deliver upon the order of the Holder a new Note (in accordance with Section 18(d) and subject to Section 3), registered as
the Holder may request, representing the outstanding Principal being transferred by the Holder and, if less than the entire outstanding
Principal is being transferred, a new Note (in accordance with Section 18(d)) to the Holder representing the outstanding Principal not
being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of
Section 3 following redemption of any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal
stated on the face of this Note.
(b)
Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder
to the Company in customary form (but without any obligation to post a surety or other bond) and, in the case of mutilation, upon surrender
and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note (in accordance with Section 18(d)) representing
the outstanding Principal.
(c)
Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal
office of the Company, for a new Note or Notes (in accordance with Section 18(d)) representing in the aggregate the outstanding Principal
of this Note, and each such new Note will represent such portion of such outstanding Principal as is designated by the Holder at the
time of such surrender.
(d)
Issuance of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note
(i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding
(or in the case of a new Note being issued pursuant to Section 18(a) or Section 18(c), the Principal designated by the Holder which,
when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the Principal
remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated
on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions as
this Note, and (v) shall represent accrued and unpaid Interest, if any, from the Issuance Date.
(19)
REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Note shall be cumulative
and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including
a decree of specific performance and/or other injunctive relief). No remedy contained herein shall be deemed a waiver of compliance with
the provisions giving rise to such remedy. Nothing herein shall limit the Holder’s right to pursue actual and consequential damages
for any failure by the Company to comply with the terms of this Note. The Company covenants to the Holder that there shall be no characterization
concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments,
redemption and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate.
The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to
all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any
bond or other security being required.
(20)
PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note 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 Note
or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings
affecting Company creditors’ rights and involving a claim under this Note, 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, but not limited to, attorneys’ fees and disbursements. The Company expressly acknowledges and agrees that no amounts
due under this Note shall be affected, or limited, by the fact that the purchase price paid for this Note was less than the original
Principal amount hereof.
(21)
CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly drafted by the Company and all the Purchasers and shall not be
construed against any Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part
of, or affect the interpretation of, this Note.
(22)
FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing and
signed by an authorized representative of the waiving party.
(23)
DISPUTE RESOLUTION. In the case of a dispute as to the determination of any Redemption Price, the Company shall pay the applicable
Redemption Price that is not disputed, and the Company shall submit the disputed determinations or arithmetic calculations via electronic
mail within one (1) Business Day of receipt, or deemed receipt, of the Redemption Notice or other event giving rise to such dispute,
as the case may be, to the Holder. If the Holder and the Company are unable to agree upon such determination or calculation within one
(1) Business Day of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within
one (1) Business Day submit via electronic mail the disputed arithmetic calculation of any Redemption Price to an independent, outside
accountant, selected by the Holder and approved by the Company, such approval not to be unreasonably withheld, conditioned or delayed.
The Company, at the Company’s expense, shall cause the accountant to perform the determinations or calculations and notify the
Company and the Holder of the results no later than five (5) Business Days from the time it receives the disputed determinations or calculations.
Such accountant’s determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.
(24)
NOTICES; PAYMENTS.
(a)
Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given
in accordance with Section 5.4 of the Securities Purchase Agreement. The Company shall provide the Holder with prompt written notice
of all actions taken pursuant to this Note, including in reasonable detail a description of such action and the reason therefor.
(b)
Payments. Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, such payment shall be
made in lawful money of the United States of America via wire transfer of immediately available funds to an account designated by the
Holder; provided, that the Holder, upon written notice to the Company, may elect to receive a payment of cash in lawful money
of the United States of America by a check drawn on the account of the Company and sent via overnight courier service to such Person
at such address as previously provided to the Company in writing (which address, in the case of each of the Purchasers, shall initially
be as set forth on the signature pages attached to the Securities Purchase Agreement). Whenever any amount expressed to be due by the
terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is a
Business Day.
(25)
CANCELLATION. After all Principal, any accrued Interest and any other amounts at any time owed on this Note have been paid in
full, this Note shall automatically be deemed canceled and shall not be reissued, sold or transferred.
(26)
WAIVER OF NOTICE. To the extent permitted by law, the Company hereby waives demand, notice, protest and all other demands and
notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Securities Purchase Agreement.
(27)
GOVERNING LAW; JURISDICTION; JURY TRIAL. This Note shall be governed by and construed and enforced in accordance with, and all
questions concerning the construction, validity, interpretation and performance of this Note 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 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. 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
on the Company’s signature page to the Securities Purchase 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 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 NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.
(28)
Severability. If any provision of this Note 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 Note so long as this Note as so modified continues
to express, without material change, the original intentions of the Company and the Holder 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 Company or the Holder or the practical realization of the benefits that would otherwise be conferred upon the Company
or the Holder. The Company and the Holder 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).
(29)
DISCLOSURE. Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the Company
has in good faith determined that the matters relating to such notice do not constitute material, nonpublic information relating to the
Company or its Subsidiaries, the Company shall contemporaneously with any such receipt or delivery publicly disclose such material, nonpublic
information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains material, nonpublic
information relating to the Company or its Subsidiaries, the Company so shall indicate to the Holder contemporaneously with delivery
of such notice, and in the absence of any such indication, the Holder shall be allowed to presume that all matters relating to such notice
do not constitute material, nonpublic information relating to the Company or its Subsidiaries.
(30)
USURY. This Note is subject to the express condition that at no time shall the Company be obligated or required to pay interest
hereunder at a rate or in an amount which could subject the Holder to either civil or criminal liability as a result of being in excess
of the maximum interest rate or amount which the Company is permitted by applicable law to contract or agree to pay. If by the terms
of this Note, the Company is at any time required or obligated to pay interest hereunder, including by way of an original issue discount,
at a rate or in an amount in excess of such maximum rate or amount, the rate or amount of interest under this Note shall be deemed to
be immediately reduced to such maximum rate or amount and the interest payable shall be computed at such maximum rate or be in such maximum
amount and all prior interest payments in excess of such maximum rate or amount shall be applied and shall be deemed to have been payments
in reduction of the principal balance of this Note.
(31)
CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:
(a)
“Affiliate” shall have the meaning ascribed to such term in Rule 405 of the Securities Act.
(b)
“Business Combination” shall mean the proposed merger pursuant to the Merger Agreement, in which Pharma Two B Ltd.,
a company organized under the laws of the State of Israel (“P2B”) is selling certain of its securities to the buyers
identified therein pursuant to the terms and subject to the conditions thereunder.
(c)
“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; provided, however, for clarification, commercial banks shall not
be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential
employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental
authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York,
New York generally are open for use by customers on such day.
(d)
“Change of Control” means any Fundamental Transaction other than (i) any reorganization, recapitalization or reclassification
of the 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 the holders of a majority 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 (ii) pursuant to a migratory merger effected solely for the purpose of changing
the jurisdiction of incorporation of the Company.
(e)
“Closing Date” shall have the meaning set forth in the Securities Purchase Agreement, which date is the date the Company
initially issued Notes pursuant to the terms of the Securities Purchase Agreement.
(f)
“Common Stock” means (i) the Company’s shares of common stock, par value $0.0001 per share, and (ii) any capital
stock into which such Common Stock shall be changed or any capital stock resulting from a reorganization, recapitalization or reclassification
of such Common Stock.
(g)
“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.
(h)
“Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into
or exercisable or exchangeable for shares of Common Stock.
(i)
“Equity Interests” means (a) all shares of capital stock (whether denominated as common capital stock or preferred
capital stock), equity interests, beneficial, partnership or membership interests, joint venture interests, participations or other ownership
or profit interests in or equivalents (regardless of how designated) of or in a Person (other than an individual), whether voting or
non-voting and (b) all securities convertible into or exchangeable for any of the foregoing and all warrants, Options or other rights
to purchase, subscribe for or otherwise acquire any of the foregoing, whether or not presently convertible, exchangeable or exercisable.
(j)
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
(k)
“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 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 Exchange Act) of at least 50% of the outstanding
shares of Common Stock, or (iv) consummate a stock 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 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 Exchange 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 Exchange 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 Subscription Date 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 stockholders of the Company to surrender their shares of Common Stock without approval of the stockholders of the Company or (C)
that the Company shall, 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.
(l)
“GAAP” means United States generally accepted accounting principles, consistently applied during the periods involved.
(m)
“Group” means a “group” as that term is used in Section 13(d) of the Exchange Act and as defined in Rule
13d-5 thereunder.
(n)
“Indebtedness” of any Person means, without duplication (i) all indebtedness for borrowed money, (ii) all obligations
issued, undertaken or assumed as the deferred purchase price of property or services, including (without limitation) “finance leases”
in accordance with GAAP (other than trade payables entered into in the ordinary course of business consistent with past practice), (iii)
all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (iv) 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, (v) 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), (vi) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, is classified
as a finance lease, (vii) all indebtedness referred to in clauses (i) through (vi) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, deed of trust, lien, pledge, charge, security
interest or other encumbrance of any nature whatsoever in or upon any property or assets (including accounts and contract rights) with
respect to any asset or property 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 (vii) all Contingent Obligations in respect of indebtedness or obligations of others
of the kinds referred to in clauses (i) through (vii) above.
(o)
“Intellectual Property Rights” shall have the meaning ascribed to such term in the Securities Purchase Agreement.
(p)
“Material Adverse Effect” shall have the meaning ascribed to such term in the Securities Purchase Agreement.
(q)
“Merger Agreement” shall mean the Agreement and Plan of Merger by and among P2B, [Pearl] Merger Sub., Inc., a Delaware
corporation, and the Company, dated as of [●], 2024.
(r)
“Options” means any rights, warrants or options to subscribe for or purchase (i) shares of Common Stock or (ii) Convertible
Securities.
(s)
“Permitted Indebtedness” means (i) Indebtedness evidenced by this Note and the Other Notes, (ii) trade payables incurred
in the ordinary course of business and consistent with past practice and (iii) unsecured Indebtedness incurred by the Company that is
made expressly subordinate in right of payment to the Indebtedness evidenced by this Note, as reflected in a written agreement acceptable
to the Required Holders and approved by the Required Holders in writing, and which Indebtedness (a) does not provide at any time for
the payment, prepayment, repayment, repurchase or defeasance, directly or indirectly, of any principal or premium, if any, thereon until
ninety-one (91) days after the Maturity Date or later and (b) includes terms and conditions acceptable to the Required Holders.
(t)
“Permitted Liens” means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by appropriate
proceedings for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising in the ordinary
course of business by operation of law with respect to a liability that is not yet due or delinquent, (iii) any Lien created by operation
of law, such as materialmen’s liens, mechanics’ liens and other similar liens, arising in the ordinary course of business
with respect to a liability that is not yet due or delinquent or that are being contested in good faith by appropriate proceedings, (iv)
Liens (A) upon or in any equipment acquired or held by the Company or any of its Subsidiaries to secure the purchase price of such equipment
or Indebtedness incurred solely for the purpose of financing the acquisition or lease of such equipment, or (B) existing on such equipment
at the time of its acquisition, provided that the Lien is confined solely to the property so acquired and improvements thereon, and the
proceeds of such equipment, (v) leases or subleases and licenses and sublicenses granted to others in the ordinary course of the Company’s
business, not interfering in any material respect with the business of the Company and its Subsidiaries taken as a whole, (vi) Liens
in favor of customs and revenue authorities arising as a matter of law to secure payments of custom duties in connection with the importation
of goods and (vii) Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Section
4(a)(ix).
(u)
“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.
(v)
“Purchaser” shall have the meaning ascribed to such term in the Securities Purchase Agreement.
(w)
“Redemption Dates” means, collectively, the Event of Default Redemption Dates and the Change of Control Redemption
Dates and the Optional Prepayment Date, as applicable, each of the foregoing, individually, a Redemption Date.
(x)
“Redemption Notices” means, collectively, the Event of Default Redemption Notices and the Change of Control Redemption
Notices and the Optional Prepayment Notice, each of the foregoing, individually, a Redemption Notice.
(y)
“Redemption Premium” means [125%].
(z)
“Redemption Prices” means, collectively, the Event of Default Redemption Prices and the Change of Control Redemption
Prices and the Note Amount being prepaid upon any Optional Prepayment, each of the foregoing, individually, a Redemption Price.
(aa)
“Related Fund” means, with respect to any Person, a fund or account managed by such Person or an Affiliate of such
Person.
(bb)
“Required Holders” means the holders of Notes representing at least [a majority] of the aggregate principal amount
of the Notes then outstanding.
(cc)
“SEC” means the United States Securities and Exchange Commission.
(dd)
“Securities Act” means the Securities Act of 1933, as amended.
(ee)
“Securities Purchase Agreement” means that certain securities purchase agreement dated as of the Subscription Date
by and among the Company and the investors listed on the signature pages attached thereto pursuant to which the Company issued the Notes,
as may be amended, amended and restated, supplemented or otherwise modified from time to time.
(ff)
“Subject Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.
(gg)
“Subscription Date” means [●], 2024.
(hh)
“Subsidiary” shall have the meaning ascribed to such term in the Securities Purchase Agreement.
(ii)
“Transaction Documents” shall have the meaning ascribed to such term in the Securities Purchase Agreement.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the Issuance Date set out above.
Hepion Pharmaceuticals, Inc. |
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|
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By: |
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Name: |
John
Cavan |
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Title: |
Interim
Chief Executive Officer and Chief Financial Officer |
|
EXHIBIT
A
MERGER
AGREEMENT
(see
attached)
EXHIBIT
B
LOAN
AGREEMENT
(see
attached)
Exhibit
10.1
SECURITIES
PURCHASE AGREEMENT
This
Securities Purchase Agreement (this “Agreement”) is dated as of July [●], 2024, between Hepion Pharmaceuticals,
Inc., a Delaware corporation (the “Company”) and each purchaser identified on the signature pages hereto (each, including
its successors and assigns, a “Purchaser” and collectively, the “Purchasers”).
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act (as defined below),
and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly,
desires to purchase from the Company, securities of the Company as more fully described in this Agreement; and
WHEREAS,
contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering that certain Registration
Rights Agreement, by and among the Company, P2B (as defined below) and the Purchasers (the “Registration Rights Agreement”),
pursuant to which the Company has agreed to provide certain registration rights with respect to the Registrable Securities (as defined
in the Registration Rights Agreement) under the 1933 Act and the rules and regulations promulgated thereunder, and applicable state securities
laws.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:
ARTICLE
I.
DEFINITIONS
1.1.
Definitions. In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined
herein have the meanings given to such terms in the Notes (as defined herein), and (b) the following terms have the meanings set forth
in this Section 1.1:
“Action”
shall have the meaning ascribed to such term in Section 3.1(j).
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Aggregate
Notes” means, collectively, the Notes.
“Board
of Directors” means the board of directors of the Company.
“Business
Combination” means the proposed merger pursuant to the Merger Agreement, in which Pharma Two B Ltd., a company organized under
the laws of the State of Israel (“P2B”) is selling certain of its securities to the buyers identified therein pursuant
to the terms and subject to the conditions thereunder.
“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; provided, however, for clarification, commercial banks shall not be deemed to be authorized
or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee”
or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority
so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York are generally
open for use by customers on such day.
“Company’s
Knowledge” means the actual knowledge of the Company’s Interim Chief Executive Officer and Chief Financial Officer, John
Cavan (including in his capacity as the Company’s principal financial and accounting officer), after reasonable inquiry.
“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section 2.1.
“Closing
Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties
thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s
obligations to deliver the Securities, in each case, have been satisfied or waived.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the common stock of the Company, par value $0.0001 per share, and any other class of securities into which such
securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is
at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Data
Privacy and Security Laws” shall have the meaning ascribed to such term in Section 3.1(hh).
“Disclosure
Time” means, (i) if this Agreement is signed on a day that is not a Trading Day or after 9:00 a.m. (New York City time) and
before midnight (New York City time) on any Trading Day, 9:01 a.m. (New York City time) on the Trading Day immediately following the
date hereof, and (ii) if this Agreement is signed between midnight (New York City time) and 9:00 a.m. (New York City time) on any Trading
Day, no later than 9:01 a.m. (New York City time) on the date hereof.
“Evaluation
Date” shall have the meaning ascribed to such term in Section 3.1(s).
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.
“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).
“Indebtedness”
shall have the meaning ascribed to such term in the Notes.
“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section 3.1(p).
“IT
Systems” shall have the meaning ascribed to such term in Section 3.1(hh).
“Legend
Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).
“Lien”
means any lien, mortgage, pledge, assignment, security interest, charge or encumbrance of any kind (including any agreement to give any
of the foregoing, any conditional sale or other title retention agreement, and any lease in the nature thereof) and any option, trust
or other preferential arrangement having the practical effect of any of the foregoing.
“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).
“Material
Permits” shall have the meaning ascribed to such term in Section 3.1(n).
“Maximum
Rate” shall have the meaning ascribed to such term in Section 5.17.
“Merger
Agreement” means the Agreement and Plan of Merger by and among P2B, [Pearl] Merger Sub., Inc., a Delaware corporation, and
the Company, dated as of [●], 2024.
“Notes”
means the Original Issue Discount Senior Unsecured Nonconvertible Notes due, subject to the terms therein, on the earlier of: (i) December
31, 2024, (ii) one Business Day after the closing of the Business Combination, and (iii) the date that the Business Combination is terminated
pursuant to the terms of the Merger Agreement, issued by the Company to the Purchasers hereunder, in the form of Exhibit A attached
hereto.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Personal
Data” shall have the meaning ascribed to such term in Section 3.1(hh).
“Principal
Amount” means, as to each Purchaser, the amounts set forth below such Purchaser’s signature block on the signature pages
hereto next to the heading “Principal Amount,” in United States Dollars, which shall equal such Purchaser’s Subscription
Amount multiplied by 1.16.
“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding,
such as a deposition), whether commenced or threatened.
“Processing”
shall have the meaning ascribed to such term in Section 3.1(hh).
“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).
“Required
Holders” means (I) prior to the Closing Date, each of the Purchasers and (II) on or after the Closing Date, holders of at least
a majority of the aggregate Principal Amount of Notes issued.
“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.
“Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect
as such Rule.
“SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(h).
“Securities”
means the Notes and the Shares.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Shares”
means the shares of Common Stock issuable pursuant to this Agreement.
“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be
deemed to include locating and/or borrowing shares of Common Stock).
“Standard
Settlement Period” shall have the meaning ascribed to such term in Section 4.1(c).
“Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for Notes and Shares purchased hereunder as specified
below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,”
in United States dollars and in immediately available funds. The aggregate Subscription Amount paid by all Purchasers hereunder shall
be $2,500,000.
“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, also include any direct or indirect
subsidiary of the Company formed or acquired after the date hereof. “Subsidiary” of any Person shall include any corporation,
limited or general partnership, limited liability company, trust, estate, association, joint venture or other business entity (a) the
accounts of which would be consolidated with those of such Person in such Person’s consolidated financial statements if such financial
statements were prepared in accordance with GAAP or (b) of which more than 50% of (i) the outstanding equity interests having (in the
absence of contingencies) ordinary voting power to elect a majority of the board of directors of such Person, (ii) in the case of a partnership
or limited liability company, the interest in the capital or profits of such partnership or limited liability company or (iii) in the
case of a trust, estate, association, joint venture or other entity, the beneficial interest in such trust, estate, association or other
entity business is, at the time of determination, owned or controlled directly or indirectly through one or more intermediaries, by such
Person.
“Trading
Day” means a day on which the principal Trading Market is open for trading.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock
Exchange, the OTCQB or the OTCQX (or any successors to any of the foregoing).
“Transaction
Documents” means this Agreement, the Notes and all exhibits and schedules thereto and hereto and any other documents or agreements
executed in connection with the transactions contemplated hereunder.
“Transfer
Agent” means Pacific Stock Transfer Company, the current transfer agent of the Company and any successor transfer agent of
the Company.
ARTICLE
II.
PURCHASE
AND SALE
2.1.
Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, the Company agrees to sell, and the
Purchasers, severally and not jointly, agree to purchase, up to an aggregate of $2,900,000 in principal amount of the Notes. Each Purchaser
shall deliver to the Company’s bank account specified in the Company’s wire instructions, as set forth in a letter addressed
to the Purchasers on the Company’s letterhead and executed by the Company’s Interim Chief Executive Officer and Chief Financial
Officer, via wire transfer or a certified check, immediately available funds equal to such Purchaser’s Subscription Amount as set
forth on the signature page hereto executed by such Purchaser and the Company shall deliver to each Purchaser its respective Note and
Shares, as determined pursuant to Section 2.2(a), and the Company and each Purchaser shall deliver the other items set forth in Section
2.2 at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall take place
remotely by electronic transfer of the Closing documentation.
2.2.
Deliveries.
(a)
On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:
(i)
this Agreement duly executed by the Company;
(ii)
a Note with a principal amount equal to such Purchaser’s Subscription Amount multiplied by 1.16, registered in the name of such
Purchaser;
(iii)
a copy of the duly executed loan agreement by and between the Company and P2B, dated the date hereof (the “Loan Agreement”);
(iv)
a copy of the duly executed Merger Agreement;
(v)
a copy of the duly executed Registration Rights Agreement,
(vi)
an amount of Shares equal to (i) [●]1 multiplied by (ii) such Purchaser’s Subscription Amount divided
by (iii) $2,500,000, registered in the name of such Purchaser;
(vii)
the Company shall have provided each Purchaser with the wire instructions of the Company, on Company letterhead and executed by the Interim
Chief Executive Officer and Chief Financial Officer;
(viii)
an officer’s certificate and legal opinion of the legal counsel of the Company, each in a form reasonably acceptable to such Purchaser;
and
(ix)
the Company shall have delivered to such Purchaser such other documents relating to the transactions contemplated by this Agreement as
such Purchaser or its counsel may reasonably request.
(b)
On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:
(i)
this Agreement duly executed by such Purchaser;
(ii)
a copy of the duly executed Registration Rights Agreement; and
(iii)
such Purchaser’s Subscription Amount by wire transfer to the account specified in writing by the Company.
2.3.
Closing Conditions.
(a)
The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:
(i)
the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality, in all respects)
on the Closing Date of the representations and warranties of the Purchasers contained herein (unless as of a specific date therein in
which case they shall be accurate in all material respects (or, to the extent representations or warranties are qualified by materiality,
in all respects) as of such date);
(ii)
all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been
performed; and
(iii)
the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.
(b)
The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:
(i)
the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse
Effect, in all respects) when made and on the Closing Date of the representations and warranties of the Company contained herein (unless
as of a specific date therein in which case they shall be accurate in all material respects or, to the extent representations or warranties
are qualified by materiality or Material Adverse Effect, in all respects) as of such date;
1NTD: 19.99% of
the total outstanding shares of Common Stock.
(ii)
all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;
(iii)
the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;
(iv)
there shall have been no Material Adverse Effect with respect to the Company;
(v)
submission of a listing application to the Nasdaq Capital Market regarding the issuance of the Shares in accordance with the terms of
the Transaction Documents, and notification from Nasdaq that the obligation to notify Nasdaq is completed; and
(vi)
from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s
principal Trading Market and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall
not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such
service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities
nor shall there have occurred any material outbreak or escalation of hostilities 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
such Purchaser, makes it impracticable or inadvisable to purchase the Securities at the Closing.
ARTICLE
III.
REPRESENTATIONS AND WARRANTIES
3.1.
Representations and Warranties of the Company. Except as set forth in the disclosure schedules (the “Disclosure Schedules”),
which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent
of the disclosure contained in the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations
and warranties to each Purchaser:
(a)
Subsidiaries. All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a). The Company
owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and
all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and
free of preemptive and similar rights to subscribe for or purchase securities.
(b)
Organization and Qualification. The Company and each of 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. 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, would
not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction
Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise)
of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in
any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material
Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking
to revoke, limit or curtail such power and authority or qualification.
(c)
Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it of
the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no
further action is required by the Company, the Board of Directors or the Company’s stockholders in connection herewith or therewith
other than in connection with the Required Approvals. This Agreement and each other Transaction Document to which it is a party has been
(or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will
constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as
limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally or (ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.
(d)
No Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to
which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby
do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles
of incorporation, bylaws or other organizational or charter documents, (ii) subject to the Required Approvals, 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, anti-dilution
or similar adjustments, 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 would not have or reasonably be expected to result in a Material Adverse Effect.
(e)
Filings, Consents and Approvals. Except as set forth on Schedule 3.1(e), the Company is not required to obtain any consent,
waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction
Documents, other than: (i) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Securities
and the listing of the Shares for trading thereon and (ii) the filing of Form D with the Commission and such filings as are required
to be made under applicable state securities laws (collectively, the “Required Approvals”).
(f)
Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company
other than restrictions on transfer provided for in the Transaction Documents or under federal or state securities laws. The Shares,
when issued in accordance with the terms of the Transaction Documents, will be validly issued, fully paid and nonassessable, free and
clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. The Company
has reserved from its duly authorized capital stock a number of shares of Common Stock for issuance of the Shares.
(g)
Capitalization. The Company has not issued any capital stock since its most recently filed periodic report under the Exchange
Act. Except as set forth on Schedule 3.1(g), (i) no Person has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by the Transaction Documents; (ii) the issuance and sale of the
Securities will not obligate the Company or any Subsidiary to issue shares of Common Stock or other securities to any Person (other than
the Purchasers); (iii) there are no outstanding securities or instruments of the Company or any Subsidiary with any provision that adjusts
the exercise, conversion, exchange or reset price of such security or instrument upon an issuance of securities by the Company or any
Subsidiary; and (iv) there are no outstanding securities or instruments of the Company or any Subsidiary that contain any redemption
or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any Subsidiary
is or may become bound to redeem a security of the Company or such Subsidiary. Except for the Company’s 2023 Omnibus Equity Incentive
Plan, the Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan
or agreement. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable,
have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation
of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder,
the Board of Directors or others is required for the issuance and sale of the Securities. There are no stockholders agreements, voting
agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the Company’s
Knowledge, between or among any of the Company’s stockholders.
(h)
SEC Reports; Financial Statements. Except as set forth on Schedule 3.1(h), 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 (or such shorter period as the Company was required by
law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference
therein, being collectively referred to herein as the “SEC Reports”) on a timely basis (except as set forth in the
SEC Reports) 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. 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 comply
in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto
as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise
specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries
as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.
(i)
Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
within the SEC Reports, except as set forth on Schedule 3.1(i), (i) the Company has not altered its method of accounting, (ii)
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 (iii) the Company has not issued any equity securities
to any officer, director or Affiliate, except pursuant to existing Company stock award plans. The Company does not have pending before
the Commission any request for confidential treatment of information (excluding redactions permitted by Item 6.01 of Regulation S-K).
(j)
Litigation. Except as set forth on Schedule 3.1(j), there is no action, suit, proceeding or investigation pending 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”) that (i) adversely
affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) would, if
there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. 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. To the Company’s Knowledge, there has not been,
and there is not pending or contemplated, any investigation by the Commission involving the Company or any current director or officer
of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement
filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.
(k)
Labor Relations. No labor dispute exists or, to the Company’s Knowledge, is imminent with respect to any of the employees
of the Company, which would reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’
employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither
the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. To Company’s Knowledge, no executive officer of the Company or any Subsidiary,
is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary
information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third
party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability
with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local
and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours,
except where the failure to be in compliance would not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(l)
Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that
has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor
has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound
(whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator
or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental
authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational
health and safety, product quality and safety and employment and labor matters, except in each case as would not have or reasonably be
expected to result in a Material Adverse Effect.
(m)
Environmental Laws. The Company and its Subsidiaries (i) are in compliance with all federal, state, local and foreign laws relating
to pollution or protection of human health or the environment (including ambient air, surface water, groundwater, 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 would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.
(n)
Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or 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.
(o)
Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them
and good and marketable 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 (i) Liens as do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for the payment
of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and, the payment of
which is neither 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.
(p)
Intellectual Property. The Company and its Subsidiaries exclusively own (free and clear of all liens, encumbrances and defects)
or possess a valid license or other lawful right to use all Intellectual Property Rights necessary, used or held for use to conduct its
business as presently conducted and as presently proposed to be conducted. To the Company’s Knowledge, each item of such Intellectual
Property Rights is valid and enforceable. To the Company’s Knowledge, each of the licenses (in-bound or out-bound) of Intellectual
Property Rights or other contracts (including settlement agreements) is valid and enforceable, and none of the Company or its Subsidiaries
and none of the counterparties to any such contract, is in default or breach thereunder or thereof. The conduct of the business of the
Company and its Subsidiaries does not infringe, misappropriate or otherwise violate or conflict with the Intellectual Property Rights
of others. To the Company’s Knowledge and its Subsidiaries, no third party is infringing, misappropriating or otherwise conflicting
with its Intellectual Property Rights. None of the Company or its Subsidiaries are aware of any facts or circumstances which might give
rise to any of the foregoing infringements, misappropriations or other conflicts, or claims, actions or proceedings. Each of the Company
and its Subsidiaries has taken reasonable measures to protect the secrecy, confidentiality and value of all of its Intellectual Property
Rights, as applicable, and no unauthorized disclosure of any information comprising any Intellectual Property Rights has occurred. All
present and former employees, consultants and independent contractors of each of the Company and its Subsidiaries that have been involved
in the development of any Intellectual Property Rights used in the business of the Company and its Subsidiaries have entered into written
agreements under which such Persons (A) agree to protect the trade secrets, know-how and other confidential information of the Company
and its Subsidiaries, as applicable, and (B) assign to one of the Company or its Subsidiaries, as applicable, all right, title and interest
in and to all Intellectual Property Rights created by such Person in the course of his, her or its employment or other engagement by
the Company or any of its Subsidiaries. For purposes of this Agreement, “Intellectual Property Rights” means all intellectual
property and proprietary rights, including all (i) trademarks, trade names, service marks, service names, domain names, and other designation
of origin, together with all goodwill associated therewith, (ii) original works of authorship and copyrights, (iii) patents and patent
applications, together with all divisionals, continuations, continuations-in-part, reissues and reexaminations thereof, including all
rights to file applications for patent, (iv) trade secrets, know-how and other confidential information, (v) software, including data,
databases and documentation therefor, and (vi) inventions, licenses, approvals and governmental authorizations.
(q)
Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including,
but not limited to, directors and officers insurance coverage at least equal to the aggregate Subscription Amount. 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.
(r)
Transactions with Affiliates and Employees. Except as set forth on Schedule 3.1(r), none of the officers or directors of
the Company or any Subsidiary and 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 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 (each a “Related Party”), 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 award plan of the Company.
(s)
Sarbanes-Oxley; Internal Accounting Controls. The Company and the Subsidiaries are in compliance in all material respects with
any and all applicable requirements of the Sarbanes-Oxley Act of 2002, as amended, that are effective as of the date hereof, 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. Except as set forth in the SEC Reports, 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 disclosure controls and procedures of the Company and the
Subsidiaries as of the end of the period covered by the 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) that have materially affected, or is reasonably likely to materially affect, the internal control over financial reporting of the
Company and its Subsidiaries.
(t)
Certain Fees. Except as set forth on Schedule 3.1(t), no brokerage or finder’s fees or commissions are or will be
payable by the Company or any Subsidiaries to any broker, financial advisor or consultant, finder, placement agent, investment banker,
bank or other Person with respect to the transactions contemplated by the Transaction Documents. To the Company’s Knowledge, the
Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for
fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.
(u)
Private Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no
registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated
hereby.
(v)
Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities,
will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration
under the Investment Company Act of 1940, as amended.
(w)
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 set forth on Schedule 3.1(w), 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. 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.
(x)
No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2,
neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers
or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities
to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of any
such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of
the securities of the Company are listed or designated.
(y)
Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income
and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii)
has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such
returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material
taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no
basis for any such claim.
(z)
No General Solicitation. Neither the Company nor any Person acting on behalf of the Company has offered or sold any of the Securities
by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Purchasers and
certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.
(aa)
Foreign Corrupt Practices. Neither the Company nor 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 FCPA.
(bb)
Accountants. The Company’s accounting firm (i) is a registered public accounting firm as required by the Exchange Act and
(ii) shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report for the fiscal
year ending December 31, 2024.
(cc)
Seniority. As of the Closing Date, no Indebtedness or other claim against the Company is senior to the Notes in right of payment
or security, whether with respect to interest or upon liquidation or dissolution, or otherwise, other than indebtedness secured by purchase
money security interests (which is senior only as to underlying assets covered thereby) and capital lease obligations (which is senior
only as to the property covered thereby). The Notes and all other obligations of the Company of any kind whatsoever under or in respect
of the Notes (the “Senior Obligations”) constitute senior unsubordinated obligations of the Company, other than any
obligations which have priority under applicable law.
(dd)
No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and the Company
is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s ability to perform any
of its obligations under any of the Transaction Documents.
(ee)
Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers
is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated
thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or
any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby
is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents to each Purchaser that the Company’s
decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company and its representatives.
(ff)
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).
(gg)
Equity Incentive Plans. Each stock option granted by the Company under the Company’s equity incentive plans was granted
(i) in accordance with the terms of the Company’s equity incentive plans 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 equity incentive plans has been backdated. The Company has not knowingly granted, and there
is no and has been no Company policy or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant
of stock options with, the release or other public announcement of material information regarding the Company or its Subsidiaries or
their financial results or prospects.
(hh)
IT Systems; Data Privacy and Security. The information technology and computer systems, including the software, firmware, hardware,
equipment, networks, data communication lines, interfaces, databases, storage media, websites, platforms and related systems, owned,
licensed or leased by the Company and its Subsidiaries (collectively, “IT Systems”) are sufficient in all material
respects for the conduct of each of the business of the Company and its Subsidiaries, do not contain any “viruses,” “worms,”
“time-bombs,” “key-locks,” or any other devices intentionally designed to disrupt or interfere with the operation
of any of the IT Systems; and during the last two (2) years, there have been no material failures, breakdowns, continued substandard
performance or other adverse events affecting any of the IT Systems. Each of the Company and its Subsidiaries has and maintains commercially
reasonable business continuity and disaster recovery plans, procedures and facilities appropriate for its business and has taken commercially
reasonable steps to safeguard the integrity and security of IT Systems, including all data stored therein. Each of the Company and its
Subsidiaries is, and during the last three (3) years has been, in compliance in all material respects with all Data Privacy and Security
Laws applicable to it. Each of the Company and its Subsidiaries has commercially reasonable security measures in place designed to protect
all Personal Data under its control or in its possession from unauthorized use, access, modification or destruction. There are no material
claims, actions or proceedings against or affecting any of the Company or its Subsidiaries pending, threatened in writing, relating to
or arising under Data Privacy and Security Laws. None of the Company nor its Subsidiaries has received any written notices from the Department
of Justice, U.S. Department of Education, Federal Trade Commission, or the Attorney General of any state, or any equivalent foreign governmental
authority, relating to possible violations of Data Privacy and Security Laws. For purposes of this Agreement, (i) “Data Privacy
and Security Laws” shall mean (a) all applicable laws relating to the Processing of Personal Data or otherwise relating to
privacy, data protection, data security, cyber security, breach notification or data localization, and (b) all published policies of
the Company and its Subsidiaries relating to the Processing of Personal Data or otherwise relating to privacy, data protection, data
security, cyber security, breach notification or data localization; (ii) “Processing” shall mean the collection, use,
storage, processing, recording, distribution, transfer, import, export, protection, disposal or disclosure or other activity regarding
or operations performed on data or information (whether electronically or in any other form or medium); and (iii) “Personal
Data” shall mean any information that, alone or in combination with other information held by the Company and its Subsidiaries,
identifies or could reasonably be associated with an individual, including any individual’s name, street address, telephone number,
e-mail address, photograph, social security number, driver’s license number, passport number, customer or account number, biometrics,
IP address, geolocation data or persistent device identifier, or any other information that is otherwise considered personal information,
personal data, protected health information by applicable Data Privacy and Security Laws.
(ii)
Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director,
officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).
(jj)
U.S. Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within
the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Purchaser’s
request.
(kk)
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.
(ll)
Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with
applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended,
applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”),
and no Action or Proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company
or any Subsidiary with respect to the Money Laundering Laws is pending or, to the Company’s Knowledge, or any Subsidiary, threatened.
(mm)
No Disqualification Events. With respect to the Securities to be offered and sold hereunder in reliance on Rule 506 under the
Securities Act, none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of
the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding voting equity
securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act)
connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person” and, together, “Issuer
Covered Persons”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii)
under the Securities Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2)
or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification
Event. The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(c), and has furnished to the
Purchasers a copy of any disclosures provided thereunder.
(nn)
Other Covered Persons. The Company is not aware of any person (other than any Issuer Covered Person) that has been or will be
paid (directly or indirectly) remuneration for solicitation of purchasers in connection with the sale of any Securities.
(oo)
Notice of Disqualification Events. The Company will notify the Purchasers in writing, prior to the Closing Date of (i) any Disqualification
Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification Event
relating to any Issuer Covered Person.
(pp)
Shell Company Status. The Company is not, and has never been, an issuer identified in, or subject to, Rule 144(i)(1) of the Securities
Act.
3.2.
Representations and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and
warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein, in which case
they shall be accurate as of such date):
(a)
Organization; Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited
liability company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents
and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance
by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate,
partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction Document to
which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof,
will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except
(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 or (iii) insofar as indemnification and contribution provisions may be limited
by applicable law.
(b)
Own Account. Such Purchaser understands that the Securities are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account and
not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable
state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable
state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the
distribution of such Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty
not limiting such Purchaser’s right to sell the Securities pursuant to a registration statement, or otherwise in compliance with
applicable federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.
(c)
Purchaser Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, an “accredited
investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), (a)(8), (a)(9), (a)(12) or (a)(13) under the Securities Act.
(d)
Experience of Such Purchaser. Such Purchaser, either alone or together with its representatives, (i) is knowledgeable with respect
to the Company and its subsidiaries, and their respective conditions (financial and otherwise), results of operations, businesses, properties,
assets, liabilities, plans, management, financing and prospects and (ii) has such knowledge and experience in financial and business
matters and in transactions of this type that it is capable of evaluating the merits and risks of the prospective investment in the Securities
and of making an informed investment decision and has so evaluated the merits and risks of such investment and without reliance upon
the Company, its subsidiaries or affiliates or any other person, has made its own analysis and decision to consummate such investment.
Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete
loss of such investment.
Such
Purchaser understands that that this is a speculative investment. As further disclosed in the Company’s Form 10-Q for the quarter
ended March 31, 2024, as filed with the Commission on May 21, 2024, the Company expects that it will need to raise a material amount
of additional capital in the imminent near-term to continue its operations, and that absent such near-term funding, it will likely run
out of available cash resources in the near-term. Such Purchaser understands that the Subscription Amount does not constitute a material
amount of necessary financing in order to continue the Company’s operations beyond the near term and that Company will need to
conduct further additional capital raises in order to continue as a going concern.
(e)
General Solicitation. Such Purchaser is not, to such Purchaser’s knowledge, purchasing the Securities as a result of any
advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media
or broadcast over television or radio or presented at any seminar or, to the knowledge of such Purchaser, any other general solicitation
or general advertisement.
(f)
Access to Information. Such Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including
all exhibits and schedules thereto) and the SEC Reports and has been afforded (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the
Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company and its financial condition,
results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that
is necessary to make an informed investment decision with respect to the investment.
Such
Purchaser acknowledges and understands that the Company may possess material nonpublic information regarding the Company not known to
the Purchaser that may impact the value of the Company. The Purchaser understands, based on its experience, the disadvantage to which
the Purchaser is subject due to the disparity of information between the Purchaser and the Company. Notwithstanding such disparity, the
Purchaser has deemed it appropriate to enter into this Agreement and to consummate the transactions contemplated hereunder.
(g)
Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has
not, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any
purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser
first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material
terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing,
in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of
such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion
of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement. Other
than to other Persons party to this Agreement or to such Purchaser’s representatives, including, without limitation, its officers,
directors, partners, legal and other advisors, employees, agents and Affiliates, such Purchaser has maintained the confidentiality of
all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding
the foregoing, 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 Purchaser (or its broker or other financial representative) to effect Short Sales or similar transactions
in the future.
The
Company acknowledges and agrees that the representations contained in this Section 3.2 shall not modify, amend or affect such Purchaser’s
right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties
contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement
or the consummation of the transactions contemplated hereby. Notwithstanding the foregoing, for the avoidance of doubt, nothing contained
herein shall constitute a representation or warranty, or preclude any actions, with respect to locating or borrowing shares in order
to effect Short Sales or similar transactions in the future.
ARTICLE
IV.
OTHER AGREEMENTS OF THE PARTIES
4.1.
Transfer Restrictions.
(a)
The Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in connection
with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion
of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the
Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and
shall have the rights and obligations of a Purchaser under this Agreement.
(b)
The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in substantially
the following form:
THIS
SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER
LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR
OTHER LOAN SECURED BY SUCH SECURITIES.
The
Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited investor”
as defined in Rule 501(a) under the Securities Act and, if required under the terms of such arrangement, such Purchaser may transfer
pledged or secured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company
and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no
notice shall be required of such pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities,
including, if the Securities are subject to registration, the preparation and filing of any required prospectus supplement under Rule
424(b)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of selling stockholders
thereunder.
(c)
Certificates evidencing the Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof): (i) while
a registration statement covering the resale of such security is effective under the Securities Act, (ii) following any sale of such
Shares pursuant to Rule 144, (iii) if such Shares are eligible for sale under Rule 144, without the volume or manner-of-sale restrictions
or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements
issued by the staff of the Commission). The Company shall cause its counsel, if permissible under applicable law, to issue a legal opinion
to the Transfer Agent or the Purchaser promptly if required by the Transfer Agent to effect the removal of the legend hereunder, or if
requested by a Purchaser, respectively. The Company agrees that at such time as such legend is no longer required under this Section
4.1(c), it will, no later than the earlier of (i) one (1) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement
Period following the delivery by a Purchaser to the Company or the Transfer Agent of a certificate representing Shares, as applicable,
issued with a restrictive legend (such date, the “Legend Removal Date”), deliver or cause to be delivered to such
Purchaser a certificate representing such shares that is free from all restrictive and other legends. The Company may not make any notation
on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4. Certificates
for Shares subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by crediting the account of
the Purchaser’s prime broker with the Depository Trust Company System as directed by such Purchaser. As used herein, “Standard
Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary
Trading Market with respect to the Common Stock as in effect on the date of delivery of a certificate representing Shares, as applicable,
issued with a restrictive legend.
(d)
Each Purchaser, severally and not jointly with the other Purchasers, agrees with the Company that such Purchaser will sell any Securities
pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or
an exemption therefrom, and that if Securities are sold pursuant to a registration statement, they will be sold in compliance with the
plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates representing Securities
as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding.
4.2.
Acknowledgment of Dilution. The Company acknowledges that the issuance of the Shares may result in dilution of the outstanding
shares of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its
obligations under the Transaction Documents, including, without limitation, its obligation to issue the Shares pursuant to the Transaction
Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the
effect of any such dilution or any claim the Company may have against any Purchaser and regardless of the dilutive effect that such issuance
may have on the ownership of the other stockholders of the Company.
4.3.
Securities Laws Disclosure; Publicity. The Company shall file a Current Report on Form 8-K, including the Transaction Documents
as exhibits thereto, with the Commission within the time required by the Exchange Act.
4.4.
Use of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder for [●] and as set forth
in the Loan Agreement and shall not use such proceeds (a) for the satisfaction of any portion of the Company’s debt (other than
payment of trade payables in the ordinary course of the Company’s business and prior practices); (b) for the redemption of any
Common Stock or Common Stock Equivalents; (c) for the settlement of any outstanding litigation; or (d) in violation of FCPA or OFAC regulations.
4.5.
Certain Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that
neither it, nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including
Short Sales, of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at
such time that the transactions contemplated by this Agreement are first publicly disclosed by the Company as described in Section 4.3
hereof. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated
by this Agreement are publicly disclosed by the Company such Purchaser will maintain the confidentiality of the existence and terms of
this transaction (other than as disclosed to its legal and other representatives).
4.6.
Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers at the Closing under
applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly
upon request of any Purchaser.
4.7.
Nasdaq Approvals. To the extent required under the applicable rules and regulations of the Nasdaq Stock Market, the Company shall,
as soon as practicable after the date hereof, seek approvals with respect to the Business Combination and the transactions contemplated
by the Securities Purchase Agreement by and among P2B and the buyers identified therein, dated as of the date hereof.
4.8.
Seniority. Notwithstanding the foregoing or anything else set forth in the Aggregate Notes, the Company agrees that the Company
may not incur or guarantee additional indebtedness at any time after the date hereof, whether such indebtedness and/or the liens securing
such indebtedness are senior, pari passu or junior to the Senior Obligations unless the new lender enters into a subordination
agreement acceptable to the Purchasers.
4.9.
Participation in Future Financing.
(a)
Upon any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents for cash consideration, indebtedness
or a combination of units hereof that occurs on or before the 18-month anniversary of the Closing Date (a “Subsequent Financing”),
each Purchaser shall have the right to participate in (a) any Subsequent Financing that occurs on or before [●], 2026, that is not
intended to be marketed as a “public offering” under the rules of Nasdaq, up to an amount equal to 30% of such financing,
and (b) any other Subsequent Financing up to an amount equal to 100% of such financing, in each case on the same terms, conditions and
price provided to other investors in the applicable Subsequent Financing. The maximum amount calculated with the applicable percentage
in the prior sentence is referred to as the “Participation Maximum.”
(b)
At least five (5) Trading Days prior to the closing of the Subsequent Financing, the Company shall deliver to each Purchaser a written
notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask such Purchaser
if it wants to review the details of such financing (such additional notice, a “Subsequent Financing Notice”). Upon
the request of a Purchaser, and only upon a request by such Purchaser, for a Subsequent Financing Notice, the Company shall promptly,
but no later than one (1) Trading Day after such request, deliver a Subsequent Financing Notice to such Purchaser. The Subsequent Financing
Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds intended to be raised
thereunder and the Person or Persons through or with whom such Subsequent Financing is proposed to be effected and shall include a term
sheet or similar document relating thereto as an attachment.
(c)
Any Purchaser desiring to participate in such Subsequent Financing must provide written notice to the Company by not later than 5:30
p.m. (New York City time) on the fifth (5th) Trading Day after all of the Purchasers have received the Pre-Notice that such Purchaser
is willing to participate in the Subsequent Financing, the amount of such Purchaser’s participation, and representing and warranting
that such Purchaser has such funds ready, willing, and available for investment on the terms set forth in the Subsequent Financing Notice.
If the Company receives no such notice from a Purchaser as of such fifth (5th) Trading Day, such Purchaser shall be deemed to have notified
the Company that it does not elect to participate.
(d)
If by 5:30 p.m. (New York City time) on the fifth (5th) Trading Day after all of the Purchasers have received the Pre-Notice, notifications
by the Purchasers of their willingness to participate in the Subsequent Financing (or to cause their designees to participate) is, in
the aggregate, less than the total amount of the Subsequent Financing, then the Company may effect the remaining portion of such Subsequent
Financing on the terms and with the Persons set forth in the Subsequent Financing Notice.
(e)
If by 5:30 p.m. (New York City time) on the fifth (5th) Trading Day after all of the Purchasers have received the Pre-Notice, the Company
receives responses to a Subsequent Financing Notice from Purchasers seeking to purchase more than the aggregate amount of the Participation
Maximum, each such Purchaser shall have the right to purchase its Pro Rata Portion (as defined below) of the Participation Maximum. “Pro
Rata Portion” means the ratio of (x) the Subscription Amount of Securities purchased on the Closing Date by a Purchaser participating
under this Section 4.9 and (y) the sum of the aggregate Subscription Amounts of Securities purchased on the Closing Date by all Purchasers
participating under this Section 4.9.
(f)
The Company must provide the Purchasers with a second Subsequent Financing Notice, and the Purchasers will again have the right of participation
set forth above in this Section 4.9, if the Subsequent Financing subject to the initial Subsequent Financing Notice is not consummated
for any reason on the terms set forth in such Subsequent Financing Notice within thirty (30) Trading Days after the date of the initial
Subsequent Financing Notice.
(g)
The Company and each Purchaser agree that if any Purchaser elects to participate in the Subsequent Financing, the transaction documents
related to the Subsequent Financing shall not include any term or provision whereby such Purchaser shall be required to agree to any
restrictions on trading as to any of the Securities purchased hereunder or be required to consent to any amendment to or termination
of, or grant any waiver, release or the like under or in connection with, this Agreement, without the prior written consent of such Purchaser.
(h)
Notwithstanding anything to the contrary in this Section 4.9 and unless otherwise agreed to by such Purchaser, the Company shall either
confirm in writing to such Purchaser that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly
disclose its intention to issue the securities in the Subsequent Financing, in either case in such a manner such that such Purchaser
will not be in possession of any material, non-public information, by the tenth (10th) Business Day following delivery of the Subsequent
Financing Notice. If by such tenth (10th) Business Day, no public disclosure regarding a transaction with respect to the Subsequent Financing
has been made, and no notice regarding the abandonment of such transaction has been received by such Purchaser, such transaction shall
be deemed to have been abandoned and such Purchaser shall not be deemed to be in possession of any material, non-public information with
respect to the Company or any of its Subsidiaries.
(i)
The Company and each Purchaser agree that the participation rights granted herein supersede and replace any and all pre-existing rights
granted to each such Purchaser to participate in any financing by the Company.
ARTICLE
V.
MISCELLANEOUS
5.1.
Termination. This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without
any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the
Closing has not been consummated on or before the fifth (5th) Trading Day following the date hereof, provided, however,
that no such termination will affect the right of any party to sue for any breach by any other party (or parties).
5.2.
Fees and Expenses. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees,
or broker’s commissions (other than for Persons engaged by any Purchaser) relating to or arising out of the transactions contemplated
hereby. The Company shall pay, and hold each Purchaser harmless against, any liability, loss or expense (including, without limitation,
reasonable attorney’s fees and out-of-pocket expenses) arising in connection with any claim relating to any such payment. Except
as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement; provided, however, that the Company shall pay the fees and expenses of its financial advisors
and expenses of legal counsel for the Purchasers in an aggregate amount not to exceed $235,000. The Company shall pay all Transfer Agent
fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company and
any exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of any Securities
to the Purchasers.
5.3.
Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding
of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written,
with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
5.4.
Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of: (a) the time of transmission, if such notice or communication is
delivered via facsimile at the facsimile number or email attachment at the email address as set forth on the signature pages attached
hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the time of transmission, if such
notice or communication is delivered via facsimile at the facsimile number or email attachment as set forth on the signature pages attached
hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd)
Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt
by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the
signature pages attached hereto.
5.5.
Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument
signed, in the case of an amendment, by the Company and the Required Holders (or, prior to the Closing, the Company and each Purchaser)
or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought, provided that if any amendment,
modification or waiver disproportionately and adversely impacts a Purchaser (or group of Purchasers), the consent of such disproportionately
impacted Purchaser (or group of Purchasers) shall also be required. No waiver of any default with respect to any provision, condition
or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver
of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder
in any manner impair the exercise of any such right. Any amendment effected in accordance with this Section 5.5 shall be binding upon
each Purchaser and holder of Securities and the Company.
5.6.
Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to
limit or affect any of the provisions hereof.
5.7.
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and
permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent
of each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom
such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the
transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”
5.8.
No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise
set forth in this Section 5.8.
5.9.
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents
shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal Proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto
or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively
in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of
any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Action or Proceeding, any claim that
it is not personally subject to the jurisdiction of any such court, that such Action or Proceeding is improper or is an inconvenient
venue for such Proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any
such Action or Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process
in any other manner permitted by law. If any party shall commence an Action or Proceeding to enforce any provisions of the Transaction
Documents, then, the prevailing party in such Action or Proceeding shall be reimbursed by the non-prevailing party for its reasonable
attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Action or Proceeding.
Notwithstanding the foregoing, each Purchaser may choose, at its election, Delaware as the governing law, jurisdiction and venue as set
forth on Purchaser’s signature block on the signature pages hereto.
5.10.
Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.
5.11.
Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one
and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party,
it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature
page was an original thereof.
5.12.
Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would
have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
5.13.
Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions
of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may
rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election
in whole or in part without prejudice to its future actions and rights.
5.14.
Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation),
or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to
the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also
pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.
5.15.
Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages,
each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction
Documents and hereby agree to waive and not to assert in any Action for specific performance of any such obligation the defense that
a remedy at law would be adequate.
5.16.
Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document
or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise
or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by
or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including,
without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such enforcement or setoff had not occurred.
5.17.
Usury. To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever
claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at
any time hereafter in force, in connection with any Action or Proceeding that may be brought by any Purchaser in order to enforce any
right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any Transaction Document,
it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments in the nature
of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”), and, without
limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums
in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such Maximum Rate. It is agreed
that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents is increased or decreased by
statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed by law will
be the Maximum Rate applicable to the Transaction Documents from the effective date thereof forward, unless such application is precluded
by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to any Purchaser
with respect to indebtedness evidenced by the Transaction Documents, such excess shall be applied by such Purchaser to the unpaid principal
balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at such Purchaser’s election.
5.18.
Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document
are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance
or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other
Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as
a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way
acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each
Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of
this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional
party in any Proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in its review and negotiation
of the Transaction Documents. The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the
convenience of the Company and not because it was required or requested to do so by any of the Purchasers. It is expressly understood
and agreed that each provision contained in this Agreement and in each other Transaction Document is between the Company and a Purchaser,
solely, and not between the Company and the Purchasers collectively and not between and among the Purchasers.
5.19.
Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts
have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts
are due and payable shall have been canceled.
5.20.
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business
Day.
5.21.
Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise
the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each
and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the
date of this Agreement.
5.22.
WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE
PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY
AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
(Signature
Pages Follow)
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
HEPION
PHARMACEUTICALS, inc. |
|
Address
for Notice: |
|
|
|
|
|
By: |
|
|
Email: |
[●] |
Name: |
John
Cavan |
|
Fax: |
[●] |
Title: |
Interim
Chief Executive Officer and Chief Financial Officer |
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|
|
With
a copy to (which shall not constitute notice):
Sheppard,
Mullin, Richter & Hampton LLP
[●]
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
[PURCHASER
SIGNATURE PAGES TO HEPA SECURITIES PURCHASE AGREEMENT]
IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories
as of the date first indicated above.
Name
of Purchaser: ____________________________________________________________________________
Signature
of Authorized Signatory of Purchaser: _____________________________________________________
Name
of Authorized Signatory: ___________________________________________________________________
Title
of Authorized Signatory: ____________________________________________________________________
Email
Address of Authorized Signatory: ____________________________________________________________
Address
for Notice to Purchaser:
Address
for Delivery of Securities to Purchaser (if not same as address for notice):
Subscription
Amount: $_____________
Principal
Amount of Notes: $_____________
Shares:
_______________
EIN
Number: _______________________
EXHIBIT
A
FORM
OF NOTE
(see
attached)
Exhibit
10.2
REGISTRATION
RIGHTS AGREEMENT
REGISTRATION
RIGHTS AGREEMENT (this “Agreement”), dated as of [●], 2024, by and among Pharma Two B Ltd, a corporation
incorporated in Israel, with headquarters located at 4 Oppenheimer Street, Rehovot, Israel 7670104 (the “Company”),
Hepion Pharmaceuticals, Inc., a Delaware corporation (“Hepion”) and the Buyers (as defined below).
WHEREAS:
A.
In connection with the Securities Purchase Agreement by and among the Company and each of the several buyers signatory thereto (each
such buyer, a “Company Buyer” and, collectively, the “Company Buyers”) of even date herewith (the
“Company Securities Purchase Agreement”), the Company has agreed, upon the terms and subject to the conditions of
the Company Securities Purchase Agreement, to issue and sell to each Company Buyer, of the following securities: (i) shares (the “Purchased
Shares”) of the Company’s ordinary shares, nominal value 1 NIS per share (the “Ordinary Shares”),
and/or pre-funded warrants (the “Pre-Funded Warrants”) to purchase Ordinary Shares (such underlying Ordinary Shares,
the “Pre-Funded Warrant Shares”) in accordance with the terms of the Pre-Funded Warrants and (ii) two (2) series of
warrants (the “Series A and Series B Warrants” and together with the Pre-Funded Warrants, the “Warrants”)
to purchase Ordinary Shares (such underlying Ordinary Shares, collectively, the “Series A and Series B Warrant Shares”
and together with the Pre-Funded Warrant Shares, the “Warrant Shares”) in accordance with the terms of the Series
A and Series B Warrants.
B.
In connection with the Securities Purchase Agreement by and among Hepion and each of the several buyers signatory thereto (each such
buyer, a “Hepion Buyer” and, collectively, the “Hepion Buyers” and collectively with the Company
Buyers and Advisor (as defined below), the “Buyers”) of even date herewith (the “Hepion Securities Purchase
Agreement” and together with the Company Securities Purchase Agreement, the “Securities Purchase Agreements”),
Hepion has agreed to issue and sell to the Hepion Buyers an aggregate of [●] shares of common stock of Hepion (the “Hepion
Shares”).1
C.
In connection with the Agreement and Plan of Merger, dated [●], 2024 (the “Merger Agreement”), by and among
the Company, [Pearl] Merger Sub, Inc., a Delaware corporation, and Hepion, Herpion will become a wholly owned, indirect subsidiary of
the Company, and the Hepion Shares shall convert to Ordinary Shares following the consummation of the transactions contemplated therein.
D.
In connection with the transactions contemplated above, the Company agreed to issue to Laidlaw & Company (UK) Ltd., as financial
advisor to the Company (the “Advisor”) warrants (the “Advisor Warrants”) to purchase [●] Ordinary
Shares (the “Advisor Warrant Shares”).
E.
In accordance with the terms of the Securities Purchase Agreements, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the
“1933 Act”), and applicable state securities laws.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company and each of the Buyers hereby agree as follows:
1.
Definitions.
Capitalized
terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Company Securities Purchase Agreement.
As used in this Agreement, the following terms shall have the following meanings:
(a)
“Business Day” means any day other than Saturday, Sunday or any other day on which commercial banks in the City of
New York are authorized or required by law to remain closed.
1
NTD: Please confirm timing of the issuance of the Hepion Shares. IF not issued until immediately prior to the merger, they cannot
be included on the F-4. Hepion Shares will be issued at signing of the SPA, and well before the merger closes, so can be included on
the F-4.
(b)
“effective” and “effectiveness” refer to a Remaining Registration Statement that has been declared
effective by the SEC and is available for the resale of the Remaining Registrable Securities required to be covered thereby.
(c)
“Effective Date” means the date that the Remaining Registration Statement has been declared effective by the SEC.
(d)
“Effectiveness Deadline” means the date which is the earlier of (x) (i) in the event that the Remaining Registration
Statement is not subject to a review by the SEC, 60 calendar days after the Effective Time or (ii) in the event that the Remaining Registration
Statement is subject to a review by the SEC or in the event that the Company is notified by the SEC to refile the Remaining Registration
Statement on Form F-1, 90 calendar days after the Effective Time and (y) the fifth (5th) Business Day after the date the Company is notified
(orally or in writing, whichever is earlier) by the SEC that such Registration Statement will not be reviewed or will not be subject
to further review; provided, however, that if the Effectiveness Deadline falls on a Saturday, Sunday or other day that the SEC is closed
for business, the Effectiveness Deadline shall be extended to the next Business Day on which the SEC is open for business.
(e)
“Effective Time” means the time at which, following the consummation of the Merger, the Ordinary Shares begin trading
on the trading market on which the Ordinary Shares are listed.
(f)
“Eligible Market” means the Principal Market, The New York Stock Exchange, Inc., the NYSE American, The Nasdaq Global
Select Market, The Nasdaq Global Market, OTC QB or OTC QX.
(g)
“Filing Deadline” means the date that is 30 calendar days after the Effective Time.
(h)
“Hepion Registrable Securities” means all the Hepion Shares, and any capital stock of Hepion issued or issuable with
respect to the Hepion Shares as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise.
(i)
“Initial Registrable Securities” means the Hepion Registrable Securities.
(j)
“Initial Registration Statement” means a registration statement or registration statements of the Company on Form
F-4 filed under the 1933 Act for the purpose of effecting the Merger.
(k)
“Investor” means a Buyer or any transferee or assignee thereof to whom a Buyer assigns its rights under this Agreement
and who agrees to become bound by the provisions of this Agreement in accordance with Section 9 and any transferee or assignee thereof
to whom a transferee or assignee assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement
in accordance with Section 9.
(l)
“Merger” means the proposed merger pursuant to the Merger Agreement, in which the Company is selling certain of its
securities to the buyers identified therein pursuant to the terms and subject to the conditions thereunder.
(m)
“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust,
an unincorporated organization and a government or any department or agency thereof.
(n)
“Pharma Two B Registrable Securities” means (i) the Purchased Shares issued; (ii) the maximum number of Warrant Shares
issued or issuable upon exercise of the Warrants without regard to any limitations on the exercise of the Warrants; (iii) the maximum
number of Advisor Warrant Shares issued or issuable upon exercise of the Advisor Warrants without regard to any limitations on the exercise
of the Advisor Warrants and (iv) any capital stock of the Company issued or issuable with respect to the Purchased Shares, the Warrant
Shares, the Warrants, the Advisor Warrant Shares or the Advisor Warrants, in each case, as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise, and without regard to any limitations on the exercise of the Warrants or the
Advisor Warrants, as applicable.
(o)
“Principal Market” means The Nasdaq Capital Market.
(p)
“register,” “registered,” and “registration” refer to a registration effected
by preparing and filing one or more Registration Statements (as defined below) in compliance with the 1933 Act and pursuant to Rule 415,
and the declaration or ordering of effectiveness of such Registration Statement(s) by the SEC.
(q)
“Registrable Securities” means collectively, the Initial Registrable Securities and the Remaining Registrable Securities.
(r)
“Registration Statements” means collectively, the Initial Registration Statement and the Remaining Registration Statement.
(s)
“Remaining Registrable Securities” means any Hepion Registrable Securities that were not covered by the Initial Registration
Statement declared effective by the SEC and the Pharma Two B Registrable Securities.
(t)
“Remaining Registration Statement” means a registration statement or registration statements of the Company filed
under the 1933 Act covering the resale of Remaining Registrable Securities.
(u)
“Required Holders” means the holders of at least a majority of the Registrable Securities then outstanding.
(v)
“Rule 415” means Rule 415 promulgated under the 1933 Act or any successor rule providing for offering securities on
a continuous or delayed basis.
(w)
“SEC” means the United States Securities and Exchange Commission.
(x)
“Trading Day” means any day on which the Ordinary Shares are traded on the Principal Market, or, if the Principal
Market is not the principal trading market for the Ordinary Shares on such day, then on the principal securities exchange or securities
market on which the Ordinary Shares are then traded.
2.
Registration.
(a)
Mandatory Registration.
(i)
The Company shall include all Initial Registrable Securities on the Initial Registration Statement filed for the purpose of effecting
the Merger, to the extent such Initial Registration Statement may be used to register such Initial Registrable Securities. If the Initial
Registration Statement is unavailable for any portion of such Initial Registrable Securities, the Company shall include that portion
of the Initial Registrable Securities that are available to be included on such Initial Registration Statement, on such Initial Registration
Statement, and the Company shall prepare, and, as soon as practicable following the Effective Time but in no event later than the Filing
Deadline, file with the SEC the Remaining Registration Statement on Form F-1 covering the resale of the Remaining Registrable Securities.
The Remaining Registration Statement shall contain (except if otherwise directed by the Required Holders) the “Plan of Distribution”
and “Selling Shareholders” sections in substantially the form attached hereto as Exhibit B. Notwithstanding
the foregoing, the Company shall have no obligation to include Remaining Registrable Securities for any investor that has not complied
with its obligations in Section 4(a). The Company shall use its reasonable best efforts to have the Remaining Registration Statement
declared effective by the SEC as soon as practicable following the Effective Time, but in no event later than the Effectiveness Deadline.
By 9:30 a.m. New York time on the second (2nd) Business Day following the Effective Date, the Company shall file with the
SEC in accordance with Rule 424 under the 1933 Act the final prospectus to be used in connection with sales pursuant to such Remaining
Registration Statement. In no event shall the Company include any securities other than Remaining Registrable Securities on any Remaining
Registration Statement without the prior written consent of the Required Holders.
(b)
Legal Counsel. Subject to Section 5 hereof, the Required Holders shall have the right to select one legal counsel at their own
expense to review and oversee any registration pursuant to this Section 2 (“Legal Counsel”), which shall be designated
by the Required Holders. The Company and Legal Counsel shall reasonably cooperate with each other in performing the Company’s obligations
under this Agreement.
(c)
Ineligibility for Form F-3. In the event that Form F-3 is not available for the registration of the resale of Remaining Registrable
Securities hereunder, the Company shall (i) register the resale of the Remaining Registrable Securities on Form F-1 or another appropriate
form reasonably acceptable to the Required Holders and (ii) undertake to register the Remaining Registrable Securities on Form F-3 as
soon as such form is available, provided that the Company shall maintain the effectiveness of the Remaining Registration Statement then
in effect until such time as a Remaining Registration Statement on Form F-3 covering the Remaining Registrable Securities has been declared
effective by the SEC.
(d)
Sufficient Number of Shares Registered. In the event the number of shares available under a Remaining Registration Statement filed
pursuant to Section 2(a) is insufficient to cover all of the Registrable Securities required to be covered by such Remaining Registration
Statement, the Company shall amend the applicable Remaining Registration Statement, or file a new Remaining Registration Statement (on
the short form available therefor, if applicable), or both, so as to cover the Remaining Registrable Securities as soon as practicable,
but in any event not later than fifteen (15) days after the necessity therefor arises. The Company shall use its reasonable best efforts
to cause such amendment and/or new Remaining Registration Statement to become effective as soon as practicable following the filing thereof.
(e)
Effect of Failure to File and Obtain and Maintain Effectiveness of Registration Statements. If (i) any of the Registration Statements
when declared effective fails to register the full amount of Registrable Securities required hereby (a “Registration Failure”),
(ii) the Remaining Registration Statement covering all of the Remaining Registrable Securities required to be covered pursuant to this
Agreement is (A) not filed with the SEC on or before the applicable Filing Deadline (a “Filing Failure”) or (B) not
declared effective by the SEC on or before the applicable Effectiveness Deadline, (an “Effectiveness Failure”) or
(iii) on any day after the applicable Effective Date sales of all of the Remaining Registrable Securities required to be included on
such Remaining Registration Statement cannot be made (other than during an Allowable Grace Period (as defined in Section 3(r)) pursuant
to such Remaining Registration Statement or otherwise (including, without limitation, because of the suspension of trading or any other
limitation imposed by an Eligible Market, a failure to keep such Remaining Registration Statement effective, a failure to disclose such
information as is necessary for sales to be made pursuant to such Remaining Registration Statement, a failure to register a sufficient
number of Ordinary Shares or a failure to maintain the listing of the Ordinary Shares) (a “Maintenance Failure”) then,
as partial relief for the damages to any holder by reason of any such delay in or reduction of its ability to sell the underlying Ordinary
Shares (which remedy shall not be exclusive of any other remedies available at law or in equity, including, without limitation, specific
performance), the Company shall pay to each holder of Remaining Registrable Securities relating to such Remaining Registration Statement
an amount in cash equal to two percent (2.0%) of the aggregate Purchase Price (as such term is defined in the Company Securities Purchase
Agreement) of such Investor’s Remaining Registrable Securities whether or not included in such Remaining Registration Statement
on each of the following dates: (i) the day of a Registration Failure and on each thirtieth Trading Day thereafter (pro-rated for periods
totaling less than thirty Trading Days) until such Registration Failure is cured, (ii) the day of a Filing Failure and on each thirtieth
Trading Day thereafter (pro-rated for periods totaling less than thirty Trading Days) until such Filing Failure is cured; (iii) the day
of an Effectiveness Failure and on each thirtieth Trading Day thereafter (pro-rated for periods totaling less than thirty Trading Days)
until such Effectiveness Failure is cured; and (iv) the initial day of a Maintenance Failure and on each thirtieth Trading Day thereafter
(pro-rated for periods totaling less than thirty Trading Days) until such Maintenance Failure is cured; provided, that aggregate amount
of all Registration Delay Payments to all holders shall not exceed $5,000 per Trading Day and ten percent (10%) of the aggregate Purchase
Price (and such reduced amount will be distributed pro rata amongst such holders based on the aggregate Purchase Price), and provided
further, that for purposes of this sentence only, “Trading Day” shall include only Trading Days on which the SEC’s
EDGAR system accepts filings. Notwithstanding anything to the contrary contained herein, no Registration Failure, Filing Failure, Effectiveness
Failure or Maintenance Failure shall continue to accrue Registration Delay Payments after the end of the Registration Period. For the
avoidance of doubt, in the event of a simultaneous occurrence of a Registration Failure, Filing Failure, Maintenance Failure or Effectiveness
Failure, the Company shall only be required to make Registration Delay Payments with respect to one such event. The payments to which
a holder shall be entitled pursuant to this Section 2(e) are referred to herein as “Registration Delay Payments.”
Registration Delay Payments shall be paid on the earlier of (I) the dates set forth above and (II) the third Business Day after the event
or failure giving rise to the Registration Delay Payments is cured. In the event the Company fails to make Registration Delay Payments
in a timely manner, such Registration Delay Payments shall bear interest at the rate of one and one-half percent (1.5%) per month (prorated
for partial months) until paid in full.
3.
Related Obligations. At such time as the Company
is obligated to file a Remaining Registration Statement with the SEC pursuant to Section 2(a), 2(c) or 2(d), the Company will use its
reasonable best efforts to effect the registration of the Remaining Registrable Securities in accordance with the intended method of
disposition thereof and, pursuant thereto, the Company shall have the following obligations:
(a)
The Company shall promptly prepare and file with the SEC a Remaining Registration Statement with respect to the Remaining Registrable
Securities and use its reasonable best efforts to cause such Remaining Registration Statement relating to the Remaining Registrable Securities
to become effective as soon as practicable after such filing (but in no event later than the Effectiveness Deadline). The Company shall
keep each Remaining Registration Statement effective pursuant to Rule 415 at all times until the earlier of (i) the date as of which
the Investors may sell all of the Remaining Registrable Securities covered by such Remaining Registration Statement without restriction
or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1) (or any successor thereto) promulgated
under the 1933 Act or (ii) the date on which the Investors shall have sold all of the Remaining Registrable Securities covered by such
Remaining Registration Statement (the “Registration Period”). The Company shall ensure that each Remaining Registration
Statement (including any amendments or supplements thereto and prospectuses contained therein) shall 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 (in the
case of prospectuses, in the light of the circumstances in which they were made) not misleading. The term “best efforts”
shall mean, among other things, that the Company shall submit to the SEC, within two (2) Business Days after the later of the date that
(i) the Company learns that no review of a particular Remaining Registration Statement will be made by the staff of the SEC or that the
staff has no further comments on a particular Remaining Registration Statement, as the case may be, and (ii) the approval of Legal Counsel
pursuant to Section 3(c) (which approval is promptly sought), a request for acceleration of effectiveness of such Remaining Registration
Statement to a time and date not later than two (2) Business Days after the submission of such request, unless the Company is directed
to a submit a request for acceleration of effectiveness of such Remaining Registration Statement to a later time and date by the SEC.
The Company shall respond in writing to comments made by the SEC in respect of a Remaining Registration Statement as soon as practicable,
but in no event later than fifteen (15) days after the receipt of comments by or notice from the SEC that an amendment is required in
order for a Remaining Registration Statement to be declared effective.
(b)
The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a Remaining
Registration Statement and the prospectus used in connection with such Remaining Registration Statement, which prospectus is to be filed
pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to keep such Remaining Registration Statement effective at all
times during the Registration Period, and, during such period, comply with the provisions of the 1933 Act with respect to the disposition
of all Remaining Registrable Securities of the Company covered by such Remaining Registration Statement until such time as all of such
Remaining Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or
sellers thereof as set forth in such Remaining Registration Statement. In the case of amendments and supplements to a Remaining Registration
Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section 3(b)) by reason of the Company
filing a report on Form 20-F or Form 6-K or any analogous report under the Securities Exchange Act of 1934, as amended (the “1934
Act”), the Company shall have incorporated such report by reference into such Remaining Registration Statement, if applicable,
or shall file such amendments or supplements with the SEC on the same day on which the 1934 Act report is filed which created the requirement
for the Company to amend or supplement such Remaining Registration Statement.
(c)
The Company shall (A) permit Legal Counsel to review and comment upon (i) a Remaining Registration Statement at least five (5) Business
Days prior to its filing with the SEC and (ii) all amendments and supplements to all Remaining Registration Statements (except for Annual
Reports on Form 20-F, Reports of Foreign Private issuer on Form 6-K, and any similar or successor reports) within a reasonable number
of days prior to their filing with the SEC, and (B) not file any Remaining Registration Statement or amendment or supplement thereto
in a form to which Legal Counsel reasonably objects. The Company shall not submit a request for acceleration of the effectiveness of
a Remaining Registration Statement or any amendment or supplement thereto without the prior approval of Legal Counsel, which consent
shall not be unreasonably withheld or delayed. The Company shall furnish to Legal Counsel, without charge, (i) copies of any correspondence
from the SEC or the staff of the SEC to the Company or its representatives relating to any Remaining Registration Statement, (ii) promptly
after the same is prepared and filed with the SEC, one copy of any Remaining Registration Statement and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated therein by reference, if requested by an Investor, and all exhibits and
(iii) upon the effectiveness of any Remaining Registration Statement, one copy of the prospectus included in such Remaining Registration
Statement and all amendments and supplements thereto; provided that any such item which is available on the EDGAR system (or successor
thereto) need not be furnished in physical form. The Company shall reasonably cooperate with Legal Counsel in performing the Company’s
obligations pursuant to this Section 3.
(d)
The Company shall furnish to each Investor whose Remaining Registrable Securities are included in any Remaining Registration Statement,
without charge, (i) promptly after the same is prepared and filed with the SEC, at least one copy of such Remaining Registration Statement
and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference, if requested
by Investor, all exhibits and each preliminary prospectus, (ii) upon the effectiveness of any Remaining Registration Statement, ten (10)
copies of the prospectus included in such Remaining Registration Statement and all amendments and supplements thereto (or such other
number of copies as such Investor may reasonably request) and (iii) such other documents, including copies of any preliminary or final
prospectus, as such Investor may reasonably request from time to time in order to facilitate the disposition of the Remaining Registrable
Securities owned by such Investor; provided that any such item which is available on the EDGAR system (or successor thereto) need not
be furnished in physical form.
(e)
The Company shall use its reasonable best efforts to (i) register and qualify, unless an exemption from registration and qualification
applies, the resale by Investors of the Remaining Registrable Securities covered by a Remaining Registration Statement under such other
securities or “blue sky” laws of all applicable jurisdictions in the United States, (ii) prepare and file in those jurisdictions
such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary
or advisable to qualify the Remaining Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall
not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(e), (y) subject itself to general taxation in any such jurisdiction, or (z) file
a general consent to service of process in any such jurisdiction. The Company shall promptly notify Legal Counsel and each Investor who
holds Remaining Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration
or qualification of any of the Remaining Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction
in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.
(f)
The Company shall notify Legal Counsel and each Investor in writing of the happening of any event, as promptly as practicable after becoming
aware of such event but in any event on the same Trading Day as such event, as a result of which the prospectus included in a Remaining
Registration Statement, as then in effect, includes an untrue statement of a material fact or omission 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 that in no event shall such notice contain any material, nonpublic information), and, subject to Section 3(r), promptly prepare
a supplement or amendment to such Remaining Registration Statement to correct such untrue statement or omission, and deliver ten (10)
copies of such supplement or amendment to Legal Counsel and each Investor (or such other number of copies as Legal Counsel or such Investor
may reasonably request); provided that any such item which is available on the EDGAR system (or successor thereto) need not be furnished
in physical form. The Company shall also promptly notify Legal Counsel and each Investor in writing (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and when a Remaining Registration Statement or any post-effective amendment has
become effective (notification of such effectiveness shall be delivered to Legal Counsel and each Investor by facsimile or email on the
same day of such effectiveness and by overnight mail), (ii) of any request by the SEC for amendments or supplements to a Remaining Registration
Statement or related prospectus or related information and (iii) of the Company’s reasonable determination that a post-effective
amendment to a Remaining Registration Statement would be appropriate. By 9:30 a.m. New York City time on the date following the date
any post-effective amendment has become effective, the Company shall file with the SEC in accordance with Rule 424 under the 1933 Act
the final prospectus to be used in connection with sales pursuant to such Remaining Registration Statement.
(g)
The Company shall use its reasonable best efforts to prevent the issuance of any stop order or other suspension of effectiveness of a
Remaining Registration Statement, or the suspension of the qualification of any of the Remaining Registrable Securities for sale in any
jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible
moment and to notify Legal Counsel and each Investor who holds Remaining Registrable Securities being sold of the issuance of such order
and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.
(h)
If any Investor is required under applicable securities laws to be described in the Remaining Registration Statement as an underwriter
or an Investor believes that it could reasonably be deemed to be an underwriter of Remaining Registrable Securities, at the reasonable
request of such Investor, the Company shall furnish to such Investor, on the date of the effectiveness of the Remaining Registration
Statement and thereafter from time to time on such dates as an Investor may reasonably request (and at Investor’s cost and expense)
(i) a letter, dated such date, from the Company’s independent certified public accountants in form and substance as is customarily
given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the Investors, and
(ii) an opinion, dated as of such date, of counsel representing the Company for purposes of such Remaining Registration Statement, in
form, scope and substance as is customarily given in an underwritten public offering, addressed to the Investors.
(i)
If any Investor is required under applicable securities laws to be described in the Remaining Registration Statement as an underwriter
or an Investor believes that it could reasonably be deemed to be an underwriter of Remaining Registrable Securities, the Company shall
make available for inspection by (i) such Investor, (ii) Legal Counsel and (iii) one firm of accountants or other agents retained by
the Investors (collectively, the “Inspectors”), all pertinent financial and other records, and pertinent corporate
documents and properties of the Company (collectively, the “Records”), as shall be reasonably deemed necessary by
each Inspector, and cause the Company’s officers, directors and employees to supply all information which any Inspector may reasonably
request; provided, however, that each Inspector shall agree to hold in strict confidence and shall not make any disclosure (except to
an Investor) or use of any Record or other information which the Company determines in good faith to be confidential, and of which determination
the Inspectors are so notified, unless (a) the disclosure of such Records is necessary to avoid or correct a misstatement or omission
in any Remaining Registration Statement or is otherwise required under the 1933 Act, (b) the release of such Records is ordered pursuant
to a final, non-appealable subpoena or order from a court or government body of competent jurisdiction, or (c) the information in such
Records has been made generally available to the public other than by disclosure in violation of this Agreement. Each Investor agrees
that it shall, upon learning that disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction
or through other means, give prompt notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed confidential. Nothing herein (or in any other confidentiality
agreement between the Company and any Investor) shall be deemed to limit the Investors’ ability to sell Remaining Registrable Securities
in a manner which is otherwise consistent with applicable laws and regulations.
(j)
The Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information
is necessary to avoid or correct a misstatement or omission in any Remaining Registration Statement, (iii) the release of such information
is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or
(iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any
other agreement. The Company agrees that it shall, upon learning that disclosure of such information concerning an Investor is sought
in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to such Investor and
allow such Investor, at the Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, such information.
(k)
The Company shall use its reasonable best efforts either to (i) cause all of the Remaining Registrable Securities covered by a Remaining
Registration Statement to be listed on each securities exchange on which securities of the same class or series issued by the Company
are then listed, if any, if the listing of such Remaining Registrable Securities is then permitted under the rules of such exchange or
(ii) secure the inclusion for quotation of all of the Remaining Registrable Securities on the Principal Market or (iii) if, despite the
Company’s reasonable best efforts, the Company is unsuccessful in satisfying the preceding clauses (i) and (ii), to secure the
inclusion for quotation on an Eligible Market for such Remaining Registrable Securities and, without limiting the generality of the foregoing,
to use its reasonable best efforts to arrange for at least two market makers to register with the Financial Industry Regulatory Authority,
Inc. as such with respect to such Remaining Registrable Securities. The Company shall pay all fees and expenses in connection with satisfying
its obligation under this Section 3(k).
(l)
The Company shall cooperate with the Investors who hold Remaining Registrable Securities being offered and, to the extent applicable,
facilitate the timely preparation and delivery of book-entry registrations representing the Remaining Registrable Securities to be offered
pursuant to a Remaining Registration Statement and enable such book-entry registrations to be in such denominations or amounts, as the
case may be, as the Investors may reasonably request and registered in such names as the Investors may request.
(m)
If requested by an Investor, the Company shall as soon as practicable (i) incorporate in a prospectus supplement or post-effective amendment
such information as an Investor reasonably requests to be included therein relating to the sale and distribution of Remaining Registrable
Securities, including, without limitation, information with respect to the number of Remaining Registrable Securities being offered or
sold, the purchase price being paid therefor and any other terms of the offering of the Remaining Registrable Securities to be sold in
such offering; (ii) make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters
to be incorporated in such prospectus supplement or post-effective amendment; and (iii) supplement or make amendments to any Remaining
Registration Statement if reasonably requested by an Investor holding any Remaining Registrable Securities.
(n)
The Company shall use its reasonable best efforts to cause the Remaining Registrable Securities covered by a Remaining Registration Statement
to be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition
of such Remaining Registrable Securities.
[(o)
The Company shall make generally available to its security holders as soon as practical, but not later than ninety (90) days after the
close of the period covered thereby, an earnings statement (in form complying with, and in the manner provided by, the provisions of
Rule 158 under the 1933 Act) covering a twelve-month period beginning not later than the first day of the Company’s fiscal quarter
next following the applicable Effective Date of a Remaining Registration Statement.]2
(p)
The Company shall otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC in connection
with any registration hereunder.
(q)
Within two (2) Business Days after a Remaining Registration Statement which covers Remaining Registrable Securities is declared effective
by the SEC, the Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Remaining
Registrable Securities (with copies to the Investors whose Remaining Registrable Securities are included in such Remaining Registration
Statement) confirmation that such Remaining Registration Statement has been declared effective by the SEC in the form attached hereto
as Exhibit A.
2
NTD: FPI are not required to do quarterly financials. P2B to advise if plan to do quarterly financials.
(r)
Notwithstanding anything to the contrary herein, at any time after the Effective Date, the Company may delay the disclosure of material,
non-public information concerning the Company the disclosure of which at the time is not, in the good faith opinion of the Board of Directors
of the Company and its counsel, in the best interest of the Company and, in the opinion of counsel to the Company, otherwise required
(a “Grace Period”); provided, that the Company shall promptly (i) notify the Investors in writing of the existence
of material, non-public information giving rise to a Grace Period (provided that in each notice the Company will not disclose the content
of such material, non-public information to the Investors) and the date on which the Grace Period will begin, and (ii) notify the Investors
in writing of the date on which the Grace Period ends; and, provided further, that no Grace Period shall exceed five (5) consecutive
days and during any three hundred sixty five (365) day period such Grace Periods shall not exceed an aggregate of twenty (20) days and
the first day of any Grace Period must be at least five (5) Trading Days after the last day of any prior Grace Period (each, an “Allowable
Grace Period”). For purposes of determining the length of a Grace Period above, the Grace Period shall begin on and include
the date the Investors receive the notice referred to in clause (i) and shall end on and include the later of the date the Investors
receive the notice referred to in clause (ii) and the date referred to in such notice. The provisions of Section 3(g) hereof shall not
be applicable during the period of any Allowable Grace Period. Upon expiration of the Grace Period, the Company shall again be bound
by the first sentence of Section 3(f) with respect to the information giving rise thereto unless such material, non-public information
is no longer applicable. Notwithstanding anything to the contrary, the Company shall cause its transfer agent to deliver unlegended Ordinary
Shares to a transferee of an Investor in accordance with the terms of the Company Securities Purchase Agreement or the Hepion Securities
Purchase Agreement, as applicable, in connection with any sale of Remaining Registrable Securities with respect to which an Investor
has entered into a contract for sale that would permit the delivery of unlegended Ordinary Shares, prior to the Investor’s receipt
of the notice of a Grace Period and for which the Investor has not yet settled.
(s)
Neither the Company nor any subsidiary or affiliate thereof shall identify any Investor as an underwriter in any public disclosure or
filing with the SEC, the Principal Market or any Eligible Market without the consent of the Investor, and any Investor being deemed an
underwriter by the SEC shall not relieve the Company of any obligations it has under this Agreement, the Company Securities Purchase
Agreement, Hepion Securities Purchase Agreement or any other Transaction Document (as defined in the Company Securities Purchase Agreement);
provided, however, that the foregoing shall not prohibit the Company from including the disclosure found in the “Plan of Distribution”
section attached hereto as Exhibit B in a Remaining Registration Statement.
(t)
Neither the Company nor any of its subsidiaries has entered, as of the date hereof, nor shall the Company or any of its subsidiaries,
on or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing
the rights granted to the Buyers in this Agreement or otherwise conflicts with the provisions hereof.
4.
Obligations of the Investors.
(a)
At least five (5) Business Days prior to the first anticipated filing date of a Remaining Registration Statement, the Company shall notify
each Investor in writing of the information the Company requires from each such Investor if such Investor elects to have any of such
Investor’s Remaining Registrable Securities included in such Remaining Registration Statement. It shall be a condition precedent
to the obligations of the Company to complete any registration pursuant to this Agreement with respect to the Remaining Registrable Securities
of a particular Investor that such Investor shall furnish to the Company such information regarding itself, the Remaining Registrable
Securities held by it and the intended method of disposition of the Remaining Registrable Securities held by it as shall be reasonably
required to effect and maintain the effectiveness of the registration of such Remaining Registrable Securities and shall execute such
documents in connection with such registration as the Company may reasonably request.
(b)
Each Investor, by such Investor’s acceptance of the Remaining Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of any Remaining Registration Statement hereunder, unless such
Investor has notified the Company in writing of such Investor’s election to exclude all of such Investor’s Remaining Registrable
Securities from such Remaining Registration Statement.
(c)
Each Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section
3(g) or the first sentence of Section 3(f), such Investor will immediately discontinue disposition of Remaining Registrable Securities
pursuant to any Remaining Registration Statement(s) covering such Remaining Registrable Securities until such Investor’s receipt
of copies of the supplemented or amended prospectus as contemplated by Section 3(g) or the first sentence of Section 3(f) or receipt
of notice that no supplement or amendment is required. Notwithstanding anything to the contrary, the Company shall cause its transfer
agent to deliver unlegended Ordinary Shares to a transferee of an Investor in accordance with the terms of the Company Securities Purchase
Agreement or the Hepion Securities Purchase Agreement, as applicable, in connection with any sale of Remaining Registrable Securities
with respect to which an Investor has entered into a contract for sale that would permit delivery of unlegended Ordinary Shares prior
to the Investor’s receipt of a notice from the Company of the happening of any event of the kind described in Section 3(g) or the
first sentence of Section 3(f) and for which the Investor has not yet settled.
(d)
Each Investor covenants and agrees that it will comply with the prospectus delivery requirements of the 1933 Act as applicable to it
or an exemption therefrom in connection with sales of Remaining Registrable Securities pursuant to the Remaining Registration Statement.
5.
Expenses of Registration.
All
reasonable expenses, other than underwriting discounts and commissions, incurred in connection with registrations, filings or qualifications
pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and accounting
fees, and fees and disbursements of counsel for the Company shall be paid by the Company.
6.
Indemnification.
In
the event any Remaining Registrable Securities are included in a Remaining Registration Statement under this Agreement:
(a)
To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend each Investor, the directors,
officers, partners, members, employees, agents, representatives of, and each Person, if any, who controls any Investor within the meaning
of the 1933 Act or the 1934 Act (each, an “Indemnified Person”), against any losses, claims (including causes of action,
suits or claims asserted directly by or between an Indemnitee and the Company), damages, liabilities, judgments, fines, penalties, charges,
costs, reasonable attorneys’ fees, amounts paid in settlement or expenses, joint or several (collectively, “Claims”),
incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the
foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened,
whether or not an indemnified party is or may be a party thereto (“Indemnified Damages”), to which any of them may
become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or
are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Remaining Registration Statement or any
post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other
“blue sky” laws of any jurisdiction in which Remaining Registrable Securities are offered, or the omission or alleged omission
to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement
or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the Effective Date of such Remaining
Registration Statement, or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof
or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements
made therein, in light of the circumstances under which the statements therein were made, not misleading, (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any
rule or regulation thereunder relating to the offer or sale of the Remaining Registrable Securities pursuant to a Remaining Registration
Statement or (iv) any violation of this Agreement (the matters in the foregoing clauses (i) through (iv) being, collectively, “Violations”).
Subject to Section 6(c), the Company shall reimburse the Indemnified Persons, promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not
apply to a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by such Indemnified Person expressly for use in connection with the preparation of the
Remaining Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made available by
the Company pursuant to Section 3(d); (ii) shall not apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be unreasonably withheld or delayed; and (iii) shall not apply
to amounts paid in settlement of any direct Claim by or between an Indemnitee and the Company. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Remaining
Registrable Securities by the Investors pursuant to Section 9.
(b)
In connection with any Remaining Registration Statement in which an Investor is participating, each such Investor agrees to severally
and not jointly indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company,
each of its directors, each of its officers who signs the Remaining Registration Statement and each Person, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Party”), against any Claim or Indemnified
Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified
Damages arise out of or are based upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs
in reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use in connection
with such Remaining Registration Statement; and, subject to Section 6(c), such Investor shall reimburse the Indemnified Party for any
legal or other expenses reasonably incurred by an Indemnified Party in connection with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in Section
7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such
Investor, which consent shall not be unreasonably withheld or delayed; provided, further, however, that the Investor shall be liable
under this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as
a result of the sale of Remaining Registrable Securities pursuant to such Remaining Registration Statement. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer
of the Remaining Registrable Securities by the Investors pursuant to Section 9.
(c)
Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action
or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall,
if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and, except in the case of a direct Claim, for which the remainder of this Section 6(c) shall
not apply, the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Person
or Indemnified Party shall have the right to retain its own counsel with the fees and expenses of not more than one counsel for all such
Indemnified Person or Indemnified Party to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the
Indemnified Person or Indemnified Party, as applicable, the representation by such counsel of the Indemnified Person or Indemnified Party,
as the case may be, and the indemnifying party would be inappropriate due to actual differing interests between such Indemnified Person
or Indemnified Party and any other party represented by such counsel in such proceeding. In the case of an Indemnified Person, legal
counsel referred to in the immediately preceding sentence shall be selected by the Investors holding at least a majority in interest
of the Remaining Registrable Securities included in the Remaining Registration Statement to which the Claim relates. The Indemnified
Party or Indemnified Person shall reasonably cooperate with the indemnifying party in connection with any negotiation or defense of any
such action or Claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action or Claim. The indemnifying party shall keep the Indemnified Party
or Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto.
No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent,
provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party
shall, without the prior written consent of the Indemnified Party or Indemnified Person, 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 Indemnified Party or Indemnified Person of a release from all liability in respect to such Claim or litigation and such settlement
shall not include any admission as to fault on the part of the Indemnified Party or Indemnified Person. Following indemnification as
provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person 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 indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying
party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying
party is prejudiced in its ability to defend such action by such lack of notice.
(d)
The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.
(e)
The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant
to the law.
7.
Contribution.
To
the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law;
provided, however, that: (i) no Person involved in the sale of Remaining Registrable Securities which Person is guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in connection with such sale shall be entitled to contribution
from any Person involved in such sale of Remaining Registrable Securities who was not guilty of fraudulent misrepresentation; and (ii)
contribution by any seller of Remaining Registrable Securities shall be limited in amount to the amount of net proceeds received by such
seller from the sale of such Remaining Registrable Securities pursuant to such Remaining Registration Statement.
8.
Reports Under the 1934 Act.
With
a view to making available to the Investors the benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or regulation
of the SEC that may at any time permit the Investors to sell securities of the Company to the public without registration (“Rule
144”), the Company agrees to:
(a)
make and keep public information available, as those terms are understood and defined in Rule 144;
(b)
file with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so long
as the Company remains subject to such requirements and the filing of such reports and other documents is required for the applicable
provisions of Rule 144; and
(c)
furnish to each Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a written statement by the
Company, if true, that it has complied with the reporting requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the
most recent annual or [quarterly/interim] report of the Company and such other reports and documents so filed by the Company and (iii)
such other information as may be reasonably requested to permit the Investors to sell such securities pursuant to Rule 144 without registration.
9.
Assignment of Registration Rights.
The
rights under this Agreement shall be automatically assignable by the Investors to any transferee of all or any portion of such Investor’s
Registrable Securities if: (i) the Investor agrees in writing with the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company within a reasonable time after such assignment; (ii) the Company is, within a reasonable time after
such transfer or assignment, furnished with written notice of (a) the name and address of such transferee or assignee, and (b) the securities
with respect to which such registration rights are being transferred or assigned; (iii) immediately following such transfer or assignment
the further disposition of such securities by the transferee or assignee is restricted under the 1933 Act or applicable state securities
laws; (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence the transferee
or assignee agrees in writing with the Company to be bound by all of the provisions contained herein; and (v) such transfer shall have
been made in accordance with the applicable requirements of the Company Securities Purchase Agreement or the Hepion Securities Purchase
Agreement, as applicable.
10.
Amendment of Registration Rights.
Provisions
of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of the Company and the Required Holders; provided that any such amendment or waiver
that complies with the foregoing but that disproportionately, materially and adversely affects the rights and obligations of any Investor
relative to the comparable rights and obligations of the other Investors shall require the prior written consent of such adversely affected
Investor. Any amendment or waiver effected in accordance with this Section 10 shall be binding upon each Investor and the Company. No
such amendment shall be effective to the extent that it applies to less than all of the holders of the Registrable Securities. No consideration
shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the
same consideration (other than the reimbursement of legal fees) also is offered to all of the parties to this Agreement.
11.
Miscellaneous.
(a)
A Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from such record owner of such
Registrable Securities.
(b)
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 delivery, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party), (iii) upon
delivery, when sent by electronic mail (provided that the sending party does not receive an automated rejection notice); or (iv) one
Business Day after deposit with a nationally recognized overnight delivery service, 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:
Pharma
Two B Ltd.
4
Oppenheimer Street
Rehovot,
Israel 7670104
Telephone:
+[●]
Attention:
[●]
E-mail:
[●]
With
a copy (for informational purposes only) to:
Meitar
| Law Offices
16
Abba Hillel Road
Ramat-Gan
5250608 Israel
Telephone:
+972-3-6103766
Attention:
[●]
E-mail:
[●]
If
to a Buyer, to its address, facsimile number or email address set forth on the Schedule of Buyers attached hereto, with copies to such
Buyer’s representatives as set forth on the Schedule of Buyers, or to such other address, facsimile number and/or email address
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 transmission containing
the time, date, recipient facsimile number or e-mail address and an image of the first page of such transmission or (C) provided by a
courier or overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally
recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.
(c)
Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.
(d)
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. Each party 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. 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. EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(e)
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).
(f)
This Agreement, the other Transaction Documents, the Company Securities Purchase Agreement, Hepion Securities Purchase Agreement and
the instruments referenced herein and therein constitute the entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein
and therein. This Agreement, the other Transaction Documents, the Company Securities Purchase Agreement, the Hepion Securities Purchase
Agreement and the instruments referenced herein and therein supersede all prior agreements and understandings among the parties hereto
with respect to the subject matter hereof and thereof.
(g)
Subject to the requirements of Section 9, this Agreement shall inure to the benefit of and be binding upon the permitted successors and
assigns of each of the parties hereto.
(h)
The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
(i)
This Agreement may be executed in identical counterparts, each of which shall be deemed an original but all of which shall constitute
one and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission
of a copy of this Agreement bearing the signature of the party so delivering this Agreement.
(j)
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.
(k)
All consents and other determinations required to be made by the Investors pursuant to this Agreement shall be made, unless otherwise
specified in this Agreement, by the Required Holders, determined as if all of the Warrants held by Investors then outstanding have been
exercised for Registrable Securities without regard to any limitations on exercise of the Warrants.
(l)
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.
(m)
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.
(n)
The obligations of each Investor hereunder are several and not joint with the obligations of any other Investor, and no provision of
this Agreement is intended to confer any obligations on any Investor vis-à-vis any other Investor. Nothing contained herein, and
no action taken by any Investor pursuant hereto, shall be deemed to constitute the Investors as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect
to such obligations or the transactions contemplated herein.
*
* * * * *
[Signature
Page Follows]
IN
WITNESS WHEREOF, each Buyer, Hepion and the Company have caused their respective signature page to this Registration Rights Agreement
to be duly executed as of the date first written above.
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COMPANY: |
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PHARMA
TWO B LTD |
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By: |
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Name: |
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Title: |
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[Signature
Page to Registration Rights Agreement]
IN
WITNESS WHEREOF, each Buyer, Hepion and the Company have caused their respective signature page to this Registration Rights Agreement
to be duly executed as of the date first written above.
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HEPION: |
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HEPION
PHARMACEUTICALS, INC. |
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By: |
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Name: |
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Title: |
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[Signature
Page to Registration Rights Agreement]
IN
WITNESS WHEREOF, each Buyer, Hepion and the Company have caused their respective signature page to this Registration Rights Agreement
to be duly executed as of the date first written above.
[Signature
Page to Registration Rights Agreement]
SCHEDULE
OF BUYERS
Buyer |
|
Buyer Address, Facsimile
Number and E-mail |
|
Buyer’s
Representative’s Address, Facsimile Number and E-Mail |
[●] |
|
[●] |
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[●] |
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EXHIBIT
A
FORM
OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[ ]
[Address]
[Address]
Telephone:
[ ]
Facsimile:
[ ]
Attention:
[ ]
E-mail:
[ ]
Ladies
and Gentlemen:
[We
are][I am] counsel to Pharma Two B Ltd, a corporation incorporated in Israel (the “Company”), and have represented
the Company in connection with that certain Securities Purchase Agreement, dated as of [●], 2024 (the “Company Securities
Purchase Agreement”), entered into by and among the Company and the buyers named therein (collectively, the “Holders”)
pursuant to which the Company issued to the Holders shares (“Purchased Shares”) of the Company’s ordinary shares,
[no par value] (the “Ordinary Shares”) and three series of warrants exercisable for Ordinary Shares (the “Warrants”).
In connection with the transactions contemplated in the Company Securities Purchase Agreement, the Company agreed to issue to Laidlaw
& Company (UK) Ltd., as financial advisor to the Company, warrants exercisable for Ordinary Shares (the “Advisor Warrants”).
The Company also has entered into a Registration Rights Agreement with the Holders (the “Registration Rights Agreement”)
pursuant to which the Company agreed, among other things, to register the resale of the Registrable Securities (as defined in the Registration
Rights Agreement), including the Purchased Shares and the Ordinary Shares issuable upon exercise of the Warrants under the Securities
Act of 1933, as amended (the “1933 Act”). In connection with the Company’s obligations under the Registration
Rights Agreement, on ____________ ___, 2024, the Company filed a Remaining Registration Statement on Form [F-1/F-3] (File No. 333-_____________)
(the “Remaining Registration Statement”) with the Securities and Exchange Commission (the “SEC”)
relating to the Remaining Registrable Securities which names each of the Holders as a selling shareholder thereunder.
In
connection with the foregoing, [we][I] advise you that a member of the SEC’s staff has advised [us][me] by telephone that the SEC
has entered an order declaring the Remaining Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS]
on [ENTER DATE OF EFFECTIVENESS] and [we][I] have no knowledge, after telephonic inquiry of a member of the SEC’s
staff, that any stop order suspending its effectiveness has been issued or that any proceedings for that purpose are pending before,
or threatened by, the SEC and the Remaining Registrable Securities are available for resale under the 1933 Act pursuant to the Remaining
Registration Statement.
This
letter shall serve as our standing instruction to you that the Ordinary Shares are freely transferable by the Holders pursuant to the
Registration Statement.
Very truly yours, |
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[ISSUER’S
COUNSEL] |
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By: |
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CC: |
[LIST
NAMES OF HOLDERS] |
EXHIBIT
B
SELLING
SHAREHOLDERS
The
ordinary shares being offered by the selling shareholders are those previously issued to the selling shareholders, and those issuable
to the selling shareholders, upon exercise of the warrants. For additional information regarding the issuances of those ordinary shares
and the warrants, see “Private Placement of Purchased Shares and Warrants” above. We are registering the ordinary shares
in order to permit the selling shareholders to offer the shares for resale from time to time. Except for the ownership of the ordinary
shares and the warrants, the selling shareholders have not had any material relationship with us within the past three years.
The
table below lists the selling shareholders and other information regarding the beneficial ownership of the ordinary shares by each of
the selling shareholders. The second column lists the number of ordinary shares beneficially owned by each selling shareholders, based
on its ownership of the ordinary shares and the warrants, as of ________, 202_, assuming exercise of the warrants held by the selling
shareholders on that date, without regard to any limitations on exercises.
The
third column lists the ordinary shares being offered by this prospectus by the selling shareholders.
In
accordance with the terms of a registration rights agreement with the selling shareholders, this prospectus generally covers the resale
of at least the sum of (i) the maximum number of ordinary shares issued and (ii) the maximum number of ordinary shares issuable upon
exercise of the related warrants, determined as if the outstanding warrants were exercised in full as of the trading day immediately
preceding the date this registration statement was initially filed with the SEC, each as of the trading day immediately preceding the
applicable date of determination and all subject to adjustment as provided in the registration right agreement, without regard to any
limitations on the exercise of the warrants. The fourth column assumes the sale of all of the shares offered by the selling shareholders
pursuant to this prospectus.
Under
the terms of the warrants, a selling shareholder may not exercise the warrants to the extent such exercise would cause such selling shareholder,
together with its affiliates, to beneficially own a number of ordinary shares which would exceed 4.99% (or 9.99% for certain selling
shareholders) of our then outstanding ordinary shares following such exercise, excluding for purposes of such determination ordinary
shares issuable upon exercise of the warrants which have not been exercised. The number of shares in the second column does not reflect
this limitation. The selling shareholders may sell all, some or none of their shares in this offering. See “Plan of Distribution.”
Name of Selling Shareholder | |
Number of Ordinary
Shares Owned Prior to
Offering | |
Maximum Number of Ordinary
Shares to be Sold Pursuant to this
Prospectus | |
Number of Ordinary
Shares Owned After
Offering |
| |
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PLAN
OF DISTRIBUTION
We
are registering the ordinary shares previously issued and upon exercise of the warrants to permit the resale of these ordinary shares
by the holders thereof and holders of the ordinary shares and warrants from time to time after the date of this prospectus. We will not
receive any of the proceeds from the sale by the selling shareholders of the ordinary shares. We will bear all fees and expenses incident
to our obligation to register the ordinary shares.
The
selling shareholders may sell all or a portion of the ordinary shares beneficially owned by them and offered hereby from time to time
directly or through one or more underwriters, broker-dealers or agents. If the ordinary shares are sold through underwriters or broker-dealers,
the selling shareholders will be responsible for underwriting discounts or commissions or agent’s commissions. The ordinary shares
may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined
at the time of sale, or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions,
● |
on
any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale; |
|
|
● |
in
the over-the-counter market; |
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● |
in
transactions otherwise than on these exchanges or systems or in the over-the-counter market; |
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● |
through
the writing of options, whether such options are listed on an options exchange or otherwise; |
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● |
ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
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● |
block
trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction; |
|
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● |
purchases
by a broker-dealer as principal and resale by the broker-dealer for its account; |
|
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● |
an
exchange distribution in accordance with the rules of the applicable exchange; |
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● |
privately
negotiated transactions; |
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● |
short
sales; |
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● |
sales
pursuant to Rule 144; |
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● |
broker-dealers
may agree with the selling securityholders to sell a specified number of such shares at a stipulated price per share; |
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● |
a
combination of any such methods of sale; and |
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● |
any
other method permitted pursuant to applicable law. |
If
the selling shareholders effect such transactions by selling ordinary shares to or through underwriters, broker-dealers or agents, such
underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling
shareholders or commissions from purchasers of the ordinary shares for whom they may act as agent or to whom they may sell as principal
(which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary
in the types of transactions involved). In connection with sales of the ordinary shares or otherwise, the selling shareholders may enter
into hedging transactions with broker-dealers, which may in turn engage in short sales of the ordinary shares in the course of hedging
in positions they assume. The selling shareholders may also sell ordinary shares short and ordinary shares covered by this prospectus
to close out short positions and to return borrowed shares in connection with such short sales. The selling shareholders may also loan
or pledge ordinary shares to broker-dealers that in turn may sell such shares.
The
selling shareholders may pledge or grant a security interest in some or all of the warrants or ordinary shares owned by them and, if
they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the ordinary shares
from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision
of the Securities Act of 1933, as amended, amending, if necessary, the list of selling shareholders to include the pledgee, transferee
or other successors in interest as selling shareholders under this prospectus. The selling shareholders also may transfer and donate
the ordinary shares in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the
selling beneficial owners for purposes of this prospectus.
The
selling shareholder and any broker-dealer participating in the distribution of the ordinary shares may be deemed to be “underwriters”
within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer
may be deemed to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the ordinary
shares is made, a prospectus supplement, if required, will be distributed which will set forth the aggregate amount of ordinary shares
being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions
and other terms constituting compensation from the selling shareholders and any discounts, commissions or concessions allowed or reallowed
or paid to broker-dealers.
Under
the securities laws of some states, the ordinary shares may be sold in such states only through registered or licensed brokers or dealers.
In addition, in some states the ordinary shares may not be sold unless such shares have been registered or qualified for sale in such
state or an exemption from registration or qualification is available and is complied with.
There
can be no assurance that any selling shareholder will sell any or all of the ordinary shares registered pursuant to the registration
statement, of which this prospectus forms a part.
The
selling shareholders and any other person participating in such distribution will be subject to applicable provisions of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder, including, without limitation, Regulation M of the Exchange
Act, which may limit the timing of purchases and sales of any of the ordinary shares by the selling shareholders and any other participating
person. Regulation M may also restrict the ability of any person engaged in the distribution of the ordinary shares to engage in market-making
activities with respect to the ordinary shares. All of the foregoing may affect the marketability of the ordinary shares and the ability
of any person or entity to engage in market-making activities with respect to the ordinary shares.
We
will pay all expenses of the registration of the ordinary shares pursuant to the registration rights agreement, estimated to be $[ ]
in total, including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance with state securities
or “blue sky” laws; provided, however, that a selling shareholder will pay all underwriting discounts and selling commissions,
if any. We will indemnify the selling shareholders against liabilities, including some liabilities under the Securities Act, in accordance
with the registration rights agreements, or the selling shareholders will be entitled to contribution. We may be indemnified by the selling
shareholders against civil liabilities, including liabilities under the Securities Act, that may arise from any written information furnished
to us by the selling shareholder specifically for use in this prospectus, in accordance with the related registration rights agreement,
or we may be entitled to contribution.
Once
sold under the registration statement, of which this prospectus forms a part, the ordinary shares will be freely tradable in the hands
of persons other than our affiliates.
Exhibit
10.3
FORM
OF SUPPORT AGREEMENT
This
Support Agreement (this “Agreement”) is made as of [●], 2024 by and among (i) Hepion Pharmaceuticals,
Inc., a Delaware corporation (“Hepion”), (ii) Pharma Two B Ltd., a company organized
under the laws of the State of Israel (the “Company”), and (iii) the undersigned shareholder (“Holder”)
of Hepion. Any capitalized term used but not defined in this Agreement will have the meaning ascribed to such term in the Merger Agreement.
WHEREAS,
on or about the date hereof, Hepion, the Company, and [Pearl Merger Sub], Inc., a Delaware corporation and an indirect subsidiary of
the Company (“Merger Sub”), have entered into that certain Agreement and Plan of Merger (the “Merger
Agreement”), pursuant to which Merger Sub will merge with and into Hepion, with the Hepion continuing as the surviving
entity and as an indirect subsidiary of the Company (the “Merger”), all upon the terms and subject to the conditions
set forth in the Merger Agreement and in accordance with the applicable provisions of the DGCL; and
WHEREAS,
as a condition to the willingness of the Company to enter into the Merger Agreement, and as an inducement and in consideration therefor,
and in view of the valuable consideration to be received by Holder thereunder, and the expenses and efforts to be undertaken by the Company
to consummate the Merger Transactions (as defined below), Hepion, the Company and Holder desire to enter into this Agreement in order
for Holder to provide certain assurances to the Company regarding the manner in which Holder is bound hereunder to vote any shares of
capital stock of the Company which Holder Beneficially Owns (the “Covered Shares”) during the period from and
including the date hereof through and including the date on which this Agreement is terminated in accordance with its terms (the “Voting
Period”) and the other matters set forth in this Agreement.
NOW,
THEREFORE, in consideration of the premises set forth above, and intending to be legally bound hereby, the parties hereby agree as
follows:
1. Covenant to
Vote in Favor of the Merger. Holder irrevocably agrees, with respect to all of the Covered Shares:
(a) during
the Voting Period, Holder hereby agrees that it, he or she shall (i) vote all Covered Shares Beneficially Owned by it, him or her in
favor of the Merger and the other transactions contemplated by the Merger Agreement (collectively, the “Merger Transactions”)
and each other proposal related to the Merger Transactions included on the agenda for the special meeting of the Hepion Stockholders
relating to the Merger Transactions, (ii) when such meeting of Hepion Stockholders is held, appear at such meeting or otherwise cause
such Covered Shares to be counted as present thereat for the purpose of establishing a quorum; and (iii) vote (or execute and return
an action by written consent), or cause to be voted at such meeting, or validly execute and return and cause such consent to be granted
with respect to, all of such Covered Shares against any action that would reasonably be expected to impede, interfere with, delay, postpone
or adversely affect the Merger or any of the other transactions contemplated by the Merger Agreement or result in a breach of any covenant,
representation or warranty or other obligation or agreement of Hepion under the Merger Agreement or any other agreement entered into
in connection with the Merger Transactions or result in any of the conditions set forth in Article IX of the Merger Agreement not being
fulfilled, result in a breach of any covenant, representation or warranty or other obligation or agreement of Holder contained in this
Agreement or change in any manner the dividend policy or capitalization of, including the voting rights of, any class of Equity Securities
of Hepion;
(b) not
to deposit, except as provided in this Agreement, any Covered Shares Beneficially Owned by Holder in a voting trust that would not be
subject to the terms of this Agreement in respect of such Covered Shares;
(c) except
as contemplated by the Merger Agreement or the Transaction Agreements, make, or in any manner participate in, directly or indirectly,
a “solicitation” of “proxies” or consents (as such terms are used in the rules of the SEC) or powers of attorney
or similar rights to vote, or seek to advise or influence any Person with respect to the voting of, any shares of Hepion capital stock
in connection with any vote or other action with respect to the Merger Transactions, other than to recommend that stockholders of Hepion
vote in favor of adoption of the Merger Agreement; and
(d) to
refrain from exercising any dissenters’ rights or rights of appraisal under applicable law at any time with respect to the Merger
Transactions, the Merger Agreement, and the other Transaction Agreements.
2.
Representations and Warranties of Holder. Holder hereby represents and warrants to the Company as follows:
(a) (i)
if Holder is not an individual, it is duly organized, validly existing and in good standing under the laws of the jurisdiction in which
it is organized, and such party has all necessary power and authority to execute, deliver and perform this Agreement and consummate the
transactions contemplated hereby; (ii) if Holder is an individual, Holder has full legal capacity, right and authority to execute
and deliver this Agreement and to perform his or her obligations hereunder;
(b) this
Agreement has been duly executed and delivered by Holder and, assuming due authorization, execution and delivery by the other parties
to this Agreement, this Agreement constitutes a legally valid and binding obligation of Holder, enforceable against Holder in accordance
with the terms hereof (subject to the Enforceability Exceptions);
(c) the
execution and delivery of this Agreement by Holder does not, and the performance by Holder of his, her or its obligations hereunder will
not, (i) if Holder is not an individual, conflict with or result in a violation of the organizational documents of Holder, or (ii) require
any consent or approval that has not been given or other action that has not been taken by any third party (including under any Contract
binding upon Holder or the Covered Shares), in each case, to the extent such consent, approval or other action would prevent, enjoin
or materially delay the performance by Holder of his, her or its obligations under this Agreement;
(d) there
are no Actions pending against Holder or, to the knowledge of Holder, threatened against Holder, before (or, in the case of threatened
Actions, that would be before) any arbitrator or any Governmental Authority, which in any manner challenges or seeks to prevent, enjoin
or materially delay the performance by Holder of its, his or her obligations under this Agreement;
(e) Holder
has not entered into, and shall not enter into, any agreement that would restrict, limit or interfere with the performance of Holder’s
obligations hereunder; and
(f) the
Covered Shares are the only shares of capital stock of Hepion owned of record or Beneficially Owned by Holder as of the date hereof,
and none of such Covered Shares is subject to any proxy, voting trust or other agreement or arrangement with respect to the voting of
such Covered Shares.
3. New
Securities. If, and as often as, (a) there are any changes in Hepion or the Equity Securities of Hepion by way of stock split,
stock dividend, combination or reclassification, or through merger, consolidation, reorganization, recapitalization or business combination,
or by any other similar means that result in Holder acquiring new Equity Securities of Hepion, (b) Holder purchases or otherwise acquires
beneficial ownership of any Equity Securities of Hepion after the date of this Agreement, or (c) Holder acquires the right to vote or
share in the voting of any Equity Securities of Hepion after the date of this Agreement (such other Equity Securities of Hepion, collectively
the “New Securities”), then, in each case, such New Securities acquired or purchased by Holder shall be subject
to the terms of this Agreement to the same extent as if they constituted Covered Securities owned by Holder as of the date hereof.
4.
Miscellaneous.
(a) Entire
Agreement; Amendment; Waiver. This Agreement and the other agreements referenced herein constitute the entire agreement
and understanding of the parties hereto in respect of the subject matter hereof and supersede all prior understandings, agreements, or
representations by or among the parties hereto, written or oral, to the extent they relate in any way to the subject matter hereof or
the transactions contemplated hereby, including, without limitation, with respect to Holder. This Agreement may not be changed, amended,
modified or waived as to any particular provision, except by a written instrument executed by Hepion, the Company and the other parties
charged with such change, amendment, modification or waiver, it being acknowledged and agreed that the Company’s execution of such
an instrument will not be required after any valid termination of the Merger Agreement. No failure or delay by a party in exercising
any right hereunder shall operate as a waiver thereof. No waivers of or exceptions to any term, condition, or provision of this Agreement,
in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision.
(b) Assignment;
Binding Effect. No party hereto may assign either this Agreement or any of its rights, interests or obligations hereunder, without
the prior written consent of the other parties. Any purported assignment in violation of this Section 4(b) shall be void and ineffectual
and shall not operate to transfer or assign any interest or title to the purported assignee. This Agreement shall be binding on Holder,
Hepion and the Company and their respective successors, heirs and permitted assigns or transferees.
(c) No
Third Party Beneficiaries. Nothing in this Agreement shall be construed to confer upon, or give to, any Person other than the parties
hereto any right, remedy or claim under or by reason of this Agreement or of any covenant, condition, stipulation, promise or agreement
hereof. All covenants, conditions, stipulations, promises and agreements contained in this Agreement shall be for the sole and exclusive
benefit of the parties hereto and their successors, heirs, personal representatives and permitted assigns or transferees.
(d) Severability.
This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the
validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable
term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to
such invalid or unenforceable provision as may be possible and be valid and enforceable.
(e) Governing
Law; Jurisdiction; Waiver of Jury Trial. All Actions or causes of action based upon, arising out of, or related to this
Agreement or the transactions contemplated hereby, shall be governed by, and construed in accordance with, the internal substantive Laws
of the State of Delaware applicable to contracts entered into and to be performed solely within such state, without giving effect to
principles or rules of conflict of laws to the extent such principles or rules would require or permit the application of Laws of another
jurisdiction. Any Action based upon, arising out of or related to this Agreement or the transactions contemplated hereby shall be brought
in the Delaware Court of Chancery, and if the Delaware Court of Chancery does not have or take jurisdiction over such Action, any other
federal or state courts located in the State of Delaware, and each of the Parties irrevocably submits to the exclusive jurisdiction of
each such court in any such Action, waives any objection it may now or hereafter have to personal jurisdiction, venue or to convenience
of forum, agrees that all claims in respect of the Action shall be heard and determined only in any such court, and agrees not to bring
any Action arising out of or relating to this Agreement or the transactions contemplated hereby in any other court. Nothing herein contained
shall be deemed to affect the right of any Party to serve process in any manner permitted by Law or to commence legal proceedings or
otherwise proceed against any other Party in any other jurisdiction, in each case, to enforce judgments obtained in any Action brought
pursuant to this Section 4(e). Each of the parties hereby irrevocably waives any and all right to trial by jury in any action based upon,
arising out of or related to this agreement or the transactions contemplated hereby.
(f) Notices.
Any notice, consent or request to be given in connection with any of the terms or provisions of this Agreement shall be in writing and
shall be sent or given in accordance with the terms of Section 11.02 of the Merger Agreement to the applicable party at its principal
place of business.
(g) Termination.
This Agreement shall terminate on the valid termination of the Merger Agreement in accordance with its terms. In the event of a valid
termination of the Merger Agreement in accordance with its terms, this Agreement shall be of no force and effect. No such termination
or reversion shall relieve Holder, Hepion or the Company from any liability resulting from a breach of this Agreement occurring prior
to such termination.
(h) Remedies.
Holder hereby agrees and acknowledges that Hepion and the Company, would be irreparably injured in the event of a breach by Holder of
its, his or her obligations under Section 1 or Section 2, as applicable, of this Agreement. Further, monetary damages would
not be an adequate remedy for any breach described in the foregoing sentence and the non-breaching party shall be entitled to an injunction,
specific performance or other equitable relief, in addition to any other remedy that such party may have in law or in equity, in the
event of any such breach (without providing any bond or other security in connection with any such remedy). Holder hereby agrees that
it will not allege, and hereby waives the defense, that Hepion or the Company, has an adequate remedy at law or that an award of specific
performance is not an appropriate remedy for any reason at law or equity.
(i) Definitions.
As used herein, (i) “Beneficially Own” has the meaning ascribed to it in Section 13(d) of the Securities Exchange
Act; (ii) “Transfer” means the (A) sale or assignment of, offer to sell, contract or agreement to sell, hypothecate,
pledge, grant of any option to purchase or otherwise dispose of or agreement to dispose of, in each case, directly or indirectly, or
establishment or increase of a put equivalent position or liquidation with respect to or decrease of a call equivalent position within
the meaning of Section 16 of the Exchange Act and the rules and regulations of the SEC promulgated thereunder with respect to any security,
(B) entry into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership
of, or interest in, any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise,
or (C) public announcement of any intention to effect any transaction specified in clause (A) or (B).
(j)
Interpretation. The titles and subtitles used in this Agreement are for convenience only and are not to be considered in construing
or interpreting this Agreement. In this Agreement, unless the context otherwise requires: (i) any pronoun used shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa;
(ii) the term “including” (and with correlative meaning “include”) shall be deemed in each case to be followed
by the words “without limitation”; (iii) the words “herein,” “hereto,” and “hereby”
and other words of similar import shall be deemed in each case to refer to this Agreement as a whole and not to any particular section
or other subdivision of this Agreement; and (iv) the term “or” means “and/or”. The parties have participated
jointly in the negotiation and drafting of this Agreement. Consequently, in the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.
(k) Further
Assurances. Each of the parties hereto agrees to execute and deliver hereafter any further document, agreement or instrument of assignment,
transfer or conveyance as may be necessary or desirable to effectuate the purposes hereof and as may be reasonably requested in writing
by another party hereto.
(l) Counterparts;
Facsimile. This Agreement may be executed in any number of counterparts, including by electronic signature (e.g., DocuSign), each
of which shall be an original but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart
of a signature page to this Agreement by electronic mail transmission of a “.pdf” or other similar data file shall be effective
as delivery of a manually executed counterpart to this Agreement. No party hereto or to any such agreement or instrument will raise the
use of electronic signature to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated
through the use of electronic transmission as a defense to the formation of a contract, and each such party forever waives any such defense,
except to the extent such defense related to lack of authenticity.
[Remainder
of Page Intentionally Left Blank;
Signature Page Follows]
IN
WITNESS WHEREOF, the parties have executed this Support Agreement as of the date first written above.
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HEPION PHARMACEUTICALS,
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PHARMA TWO B
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{Signature
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Holder: |
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__________
Hepion Common Stock
Address
for Notice:
Address:
Facsimile
No.:
Telephone
No.:
Email:
:
{Signature
Page to Stockholder Support Agreement}
Exhibit
10.4
Lock-Up
Agreement
[●],
2024
Ladies
and Gentlemen:
The
undersigned stockholder of Hepion or shareholder of the Company (as the case may be) (the “Shareholder”) understands
that: (i) Hepion Pharmaceuticals, Inc., a Delaware corporation (“Hepion”), has entered into an Agreement and
Plan of Merger, dated as of July [●], 2024 (the “Merger Agreement”), with Pharma Two B Ltd., an Israeli
limited company (the “Company”) and [Pearl Merger Sub, Inc.], a Delaware corporation and an indirect subsidiary
of the Company (“Merger Sub”), pursuant to which Merger Sub will be merged with and into Hepion (the “Merger”)
and the separate corporate existence of Merger Sub will cease and Hepion will continue as the surviving corporation and an indirect subsidiary
of the Company; and (ii) in connection with the Merger, stockholders of Hepion will receive ordinary shares of the Company, par value
NIS 1.00 (“Company Ordinary Shares”). Capitalized terms used but not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Merger Agreement.
As
a material inducement to the willingness of each of the Company and Hepion to enter into the Merger Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Shareholder hereby agrees that the Shareholder
will not, subject to the exceptions set forth in this letter agreement, without the prior written consent of the Company and during the
period commencing at the Effective Time and ending on the date that is 180 days after the Closing Date (the “Restricted Period”),
directly or indirectly (a) lend, grant, offer, pledge, encumber, sell, contract to sell, sell any option or contract to purchase from
Shareholder, purchase any option or contract to sell, grant any option, right or warrant to purchase from Shareholder, or otherwise transfer
or dispose of any Company Ordinary Shares, or any securities convertible into or exercisable or exchangeable for Company Ordinary Shares,
whether now owned or hereinafter acquired, including without limitation, Company Ordinary Shares or such other securities which may be
deemed to be beneficially owned by the Shareholder in accordance with the rules and regulations of the Securities and Exchange Commission
and securities of the Company that may be issued upon exercise of a share option or warrant (collectively, the “Shareholder’s
Shares”), (b) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences
of ownership of the Shareholder’s Shares, regardless of whether any such transaction described in clause (a) or (b) above is to
be settled by delivery of Company Ordinary Shares or such other securities, in cash or otherwise, in each case other than (i) transfers
of the Shareholder’s Shares as bona fide charitable contributions, gifts or donations, (ii) transfers or dispositions of
the Shareholder’s Shares to an immediate family member of the Shareholder or to any trust for the direct or indirect benefit of
the Shareholder or the immediate family of the Shareholder, (iii) transfers or dispositions of the Shareholder’s Shares by will,
other testamentary document or intestate succession to the legal representative, heir, beneficiary or a member of the immediate family
of the Shareholder, (iv) if the Shareholder is a partnership, limited liability company, corporation or other entity, transfers of the
Shareholder’s Shares to the shareholders, partners (general or limited), members, managers, other equity holders or affiliates
(within the meaning set forth in Rule 405 under the Securities Act of 1933, as amended), of the Shareholder, as applicable, or to the
estates of any such shareholders, partners, members, managers, other equity holders or affiliates, or to another corporation, partnership,
limited liability company or other entity that controls, is controlled by or is under common control with the Shareholder or with any
of the Shareholder’s partners, members, managers or other equity holders or affiliates (v) transfers that occur by operation of
law pursuant to a qualified domestic relations order or in connection with a divorce settlement, (vi) transfers or dispositions not involving
a change in beneficial ownership, and (vii) if the Shareholder is a trust, transfers or dispositions to any beneficiary of the Shareholder
or the estate of any such beneficiary; provided that, in each case, such transferee (each, a “Permitted Transferee”)
agrees in writing to be bound by the terms and conditions of this letter agreement, and either the Shareholder or the transferee provides
the Company with a copy of such letter agreement promptly upon consummation of any such transfer; and provided, further,
that in each case, no filing by any party (donor, donee, transferor or transferee) under the Exchange Act or other public announcement
shall report an overall reduction in shares held by the Shareholder together with such transferee on an aggregate basis (which fact shall
be referenced in footnotes to such filing or announcement) in connection with such transfer or distribution (other than filings made
in respect of involuntary transfers or dispositions or a filing on a Form 5, Schedule 13G or 13D (or 13D/A or 13G/A) made after the expiration
of the Restricted Period, so long as such required filing includes a reasonably detailed explanation of such transfer or distribution).
For purposes of this letter agreement, “immediate family” shall mean any relationship by blood, marriage or adoption, not
more remote than first cousin.
Anything
else herein notwithstanding, in the event that during the Restricted Period, the Board of Directors of the Company (following the Closing)
waives any prohibition on the transfer of the securities held by any record or beneficial holder(s) of the Company Ordinary Shares who
executed a lock-up agreement, which in the aggregate exceeds more than 1% of the Company’s total outstanding ordinary shares (determined
as of the date of such waiver), the Board of Directors of the Company (following the Closing) shall be deemed to have also waived, immediately
and irrevocably, for, on the same terms, the prohibitions set forth in this letter agreement that would otherwise have applied to such
Shareholder with respect to the same percentage of such Shareholder’s securities as the relative percentage of aggregate securities
held by such party(ies) receiving the waiver which are subject to such waiver. The Company shall promptly notify the Shareholder of any
applicable waiver and release of securities.
Notwithstanding
the restrictions imposed by this letter agreement, the Shareholder may (a) (A) exercise an option or warrant (including a net or cashless
exercise of such option or warrant) to purchase Company Ordinary Shares, and (B) transfer Company Ordinary Shares to cover tax withholding
obligations of the Shareholder in connection with any such option exercise, provided that, in the case of (A), the underlying Company
Ordinary Shares shall continue to be subject to the restrictions on transfer set forth in this letter agreement, (b) establish a trading
plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of Company Ordinary Shares, provided that such plan does not provide
for any transfers of Company Ordinary Shares during the Restricted Period, and (c) transfer or dispose of Company Ordinary Shares acquired
on the open market following the Closing Date, provided that, with respect to (a)(B) above, any filing under the Exchange Act, if required,
shall include a footnote disclosure explaining that such exercise and sale was to cover tax withholding obligations of such Shareholder,
and with respect to (b) above, no filing under the Exchange Act or other public announcement shall be required or shall be made voluntarily
in connection with the establishment of such a plan, provided that, for the avoidance of doubt, and except as aforesaid,
the underlying Company Ordinary Shares shall continue to be subject to the restrictions on transfer set forth in this letter agreement.
Notwithstanding
the foregoing, the undersigned may transfer or otherwise dispose of the undersigned’s Company Ordinary Shares (and the foregoing
restrictions shall not apply to such transfers or dispositions) with the prior written consent of the Board of Directors of the Company
(following the Closing) on behalf of the Company.
An
attempted transfer in violation of this letter agreement will be of no effect and null and void, regardless of whether the purported
transferee has any actual or constructive knowledge of the transfer restrictions set forth in this letter agreement, and will not be
recorded on the share transfer books of the Company. In order to ensure compliance with the restrictions referred to herein, the Shareholder
agrees and consents that the Company may issue appropriate “stop transfer” certificates or instructions with any duly appointed
transfer agent for the registration or transfer of the Company Ordinary Shares or other securities described herein. The Company and
any duly appointed transfer agent are hereby authorized to decline to make any transfer of such securities if such transfer would constitute
a violation or breach of this letter agreement. the Company may cause the legend set forth below, or a legend substantially equivalent
thereto, to be placed upon any certificate(s) or other documents or instruments (including book-entry positions, and statements in respect
thereof) evidencing ownership of the Shareholder’s Shares:
THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AND MAY ONLY BE TRANSFERRED IN COMPLIANCE WITH A LOCK-UP AGREEMENT, A COPY OF WHICH
IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.
The
Shareholder hereby represents and warrants that the Shareholder has full power and authority to enter into this letter agreement.
Upon
the release of any of the Shareholder’s Shares from this letter agreement, the Company will cooperate with the Shareholder to facilitate
the timely preparation and delivery of certificates (or book-entry positions) representing the Shareholder’s Shares without the
restrictive legend above or the withdrawal of any stop transfer instructions.
The
Shareholder understands that each of Hepion and the Company is relying upon this letter agreement in proceeding toward consummation of
the Merger. The Shareholder further understands that this letter agreement is irrevocable and is binding upon the Shareholder’s
heirs, legal representatives, successors and assigns.
This
letter agreement and any claim, controversy or dispute arising under or related to this letter agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without regard to the conflict of laws principles thereof.
The
Shareholder understands that if the Merger Agreement is terminated in accordance with its terms, the Shareholder will be released from
all obligations under this letter agreement.
This
letter agreement may be executed in any number of counterparts, including by electronic signature (e.g., DocuSign), each of which shall
be an original but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature
page to this letter agreement by electronic mail transmission of a “.pdf” or other similar data file shall be effective as
delivery of a manually executed counterpart to this letter agreement. No party hereto or to any such agreement or instrument will raise
the use of electronic signature to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated
through the use of electronic transmission as a defense to the formation of a contract, and each such party forever waives any such defense,
except to the extent such defense related to lack of authenticity.
[Signature
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Very
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[SIGNATURE
PAGE TO LOCK-UP AGREEMENT]
Acknowledged
and accepted: |
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Pharma
Two B Ltd. |
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[SIGNATURE
PAGE TO LOCK-UP AGREEMENT]
Exhibit
99.1
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_001.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_002.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_003.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_004.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_005.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_006.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_007.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_008.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_009.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_010.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_011.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_012.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_013.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_014.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_015.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_016.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_017.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_018.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_019.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_020.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_021.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_022.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_023.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_024.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_025.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_026.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_027.jpg)
![](https://www.sec.gov/Archives/edgar/data/1583771/000149315224028637/ex99-1_028.jpg)
Exhibit
99.2
Pharma
Two B Announces Plans to Go Public via Merger with Hepion Pharmaceuticals, Inc. and Concurrent $11.5 Million Private Placement
| ● | Pharma
Two B Ltd. (“Pharma Two B”) has entered into a merger agreement with Hepion Pharmaceuticals,
Inc. (“Hepion”) (Nasdaq: HEPA) |
| ● | Immediately
upon completion of the merger, current Pharma Two B equity-holders will own approximately
85% of the combined company and current Hepion equity-holders will own approximately
15% of the combined company, in each case on a pro forma basis, subject to certain adjustments
set forth in the merger agreement and prior to closing of the concurrent private financing |
| ● | Immediately
upon closing of the $11.5 million concurrent private financing, current Pharma Two B equity-holders
will own approximately 44.5% of the combined company, current Hepion equity-holders
will own approximately 7.8% of the combined company, and investors in the concurrent
private financing will own approximately 47.7% of the combined company, in each case on a
pro forma basis, subject to certain adjustments set forth in the merger agreement |
| ● | NDA
submission for P2B001, in development as a treatment for Parkinson’s disease, planned
for first half of 2026 |
| ● | Hepion
has entered into a purchase agreement with institutional investors for the sale of a $2.9
million Senior Unsecured Note ($600.0 Thousand of which was advanced to Pharma Two B) |
KIRYAT
ONO, ISRAEL and EDISON, N.J., July 22, 2024 (GLOBE NEWSWIRE) — Hepion Pharmaceuticals, Inc. (Nasdaq: HEPA), a clinical stage biopharmaceutical
company that has been developing a treatment for non-alcoholic steatohepatitis (“NASH”), hepatocellular carcinoma (“HCC”),
and other chronic liver diseases, today announced it has entered into a definitive merger agreement (the “Merger Agreement”)
with Pharma Two B Ltd., a late-clinical stage private Israeli company that is developing P2B001, an innovative combination product candidate
in development for the treatment of Parkinson’s Disease (“PD”). Under the Merger Agreement, Hepion will merge into
and become an indirectly wholly-owned subsidiary of Pharma Two B (the “Merger”). The combined company will continue to operate
under the “Pharma Two B” name and Pharma Two B has agreed to file a registration statement on Form F-4 (the “Form F-4”)
with the U.S. Securities and Exchange Commission (the “SEC”) to register the ordinary shares proposed to be issued (or reserved
for issuance) to Hepion’s equity-holders in the acquisition, and will also apply to list its ordinary shares on Nasdaq under
the ticker symbol “PHTB”.
“P2B001
offers a novel, easy-to-use therapeutic approach, that is designed to address the unmet need for an effective, safe, once-daily, no titration
required treatment with a lower incidence of excessive daytime sleepiness—a common side effect of currently available dopamine
agonist treatments in Parkinson’s disease patients” said Dan Teleman, Chief Executive Officer of Pharma Two B. “As
we advance P2B001’s development following the successful completion of our Phase 3 clinical trial, we believe it is the right time
to enter the public equity markets. Our company is in a stage that we believe meets the public market and investors’ expectations.
We are excited about Pharma Two B’s next growth phase, moving P2B001 towards an NDA submission targeted for the first half of 2026
and making this potential treatment available to patients,” he continued.
“Consistent
with our December 7, 2023 announcement, the Hepion Board of Directors conducted a review of multiple strategic alternatives to identify
paths to provide value to our stockholders. We believe the transaction we are announcing today with Pharma Two B Ltd. presents an excellent
opportunity for our shareholders to become a part of a company poised to file an NDA in a therapeutic area with a major unmet medical
need,” said John Brancaccio, Executive Chairman.
Hepion
has also announced a private placement of $2.9 million non-convertible senior notes to qualified institutional investors. The notes are
unsecured, interest-free, and were issued with an aggregate $400.0 thousand original issue discount, and mature at the earlier
of: (i) December 31, 2024; (ii) the closing of Merger; or (iii) the termination of Merger pursuant to terms of Merger Agreement. Hepion
also loaned $600.0 thousand of the proceeds to Pharma Two B through a non-convertible unsecured note that bears nominal interest and
matures on the same terms as the $2.9 million notes, but which will be forgiven and cancelled upon consummation of the Merger. In connection
with the purchase of the notes, the investors received 1,159,245 shares of Hepion common stock, or approximately 19.99% of Hepion’s
outstanding common stock immediately prior to the issuance.
In
support of the Merger, Pharma Two B has entered into a securities purchase agreement for an $11.5 million private placement of ordinary
shares (or pre-funded warrants in lieu thereof) and accompanying Series A warrants and Series B warrants with a syndicate of new and
existing institutional life science investors. The private placement is expected to close immediately after the closing of the Merger.
The Series A warrants will have a 5-year term, and an exercise price of $6.00 per ordinary share. The Series B warrants will have a 2.5-year
term, and an exercise price of $6.00 per ordinary share. The warrants will have customary anti-dilution adjustments as well as anti-dilution
price protection and share adjustment features, subject to a floor price of 20% of the initial exercise price per share, as well as a
cash true up feature, in each case subject to certain limitations. Pharma Two B has agreed to register for resale the shares (including
shares underlying the warrants) to be issued in the concurrent private financing.
The
securities offered and sold in the private placements by each of Hepion and Pharma Two B will not be registered under the Securities
Act of 1933, as amended (the “Securities Act”), or any state or other applicable jurisdiction’s securities laws, and
may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of
the Securities Act and applicable state or other jurisdictions’ securities laws.
Merger
Overview
Under
the terms of the Merger Agreement, the Merger is valued at an estimated pro-forma implied equity value of approximately $58.5 million.
At close, Pharma Two B expects up to $11.5 million of gross cash proceeds, and intends to use net proceeds to fund continuing growth
and expansion of its lead product candidate P2B001 and repay up to $2.9 million of Hepion’s senior unsecured notes to the extent
outstanding at closing of the Merger.
Following
the Merger, the combined company will continue to be led by Pharma Two B’s management, a highly experienced team in PD, supported
by top-tier scientific and clinical key opinion leaders and backed by a dedicated group of investors.
Additional
information about the Merger and the private placements will be provided in a Current Report on Form 8-K that will be filed by Hepion
with the SEC and will be available at www.sec.gov. The Merger is expected to close in the fourth quarter of 2024 and is subject to approval
by Hepion’s stockholders, regulatory approval, and other customary closing conditions.
Advisors
A.G.P./Alliance
Global Partners is serving as financial advisor to Hepion and Sheppard, Mullin, Richter & Hampton LLP is acting as U.S. legal advisor
to Hepion and Lipa Meir & Co.is acting as Israeli legal advisor to Hepion. Sullivan & Worcester LLP is serving as legal advisor
to A.G.P.
Laidlaw
& Company (UK) Ltd. is acting as financial advisor to Pharma Two B. and Meitar Law Offices and Goodwin Procter LLP are acting as
legal advisors to Pharma Two B.
About
Pharma Two B
Pharma
Two B is a private, late-stage pharmaceutical company. Pharma Two B’s mission is to improve patients’ quality of life by
developing innovative, value-added combination drugs for neurological disorders, with a clear unmet need, that are based on previously
approved oral drugs and that may offer meaningful clinical benefits, as well as improved safety and enhanced convenience. Pharma Two
B’s lead product is P2B001. For more information, please visit: www.pharma2b.com.
About
P2B001
P2B001
is an investigational, novel, fixed-dose, extended-release combination of pramipexole and rasagiline (0.6 mg/0.75 mg), both at low doses
that are not commercially available. Marketed pramipexole and rasagiline are currently indicated for the treatment of PD (as monotherapy
and adjunct therapy for early and more advanced patients). P2B001 is being developed for potential use as a first-line therapy for people
with PD. Extended release rasagiline is a new and proprietary formulation of rasagiline developed by Pharma Two B.
In
a Phase 3 clinical trial, P2B001 demonstrated that it provides benefits comparable with commercially used doses of marketed pramipexole-ER
(PramiER) while minimizing associated daytime sleep-related and dopaminergic side effects associated.
Pharma
Two B owns worldwide-granted patents for both pharmaceutical composition and method of treatment with P2B001.
About
Hepion Pharmaceuticals
Hepion’s
primary asset, Rencofilstat, is a potent inhibitor of cyclophilins, which are involved in many disease processes. Rencofilstat has been
shown to reduce liver fibrosis and hepatocellular carcinoma tumor burden in experimental disease models. In November 2021, the U.S. Food
and Drug Administration (“FDA”) granted Fast Track designation for rencofilstat for the treatment of NASH. That was followed
in June 2022 by the FDA’s granting of Orphan Drug designation to rencofilstat for the treatment of HCC.
In
April 2024, Hepion announced that it was winding down its ASCEND-NASH clinical trial. This trial
was designed as a Phase 2b, randomized, multi-center, double-blinded study with first patient screened in August 2022, to evaluate the
safety and efficacy of Rencofilstat dosed for 12 months, with a target enrollment of 336 subjects. Enrollment was paused in April 2023,
with 151 subjects randomized. To date, approximately 80 subjects have completed their Day 365 visits and are evaluable for both safety
and efficacy. An additional 40 subjects will provide significant safety data for evaluation. These patients will be added to Hepion’s
existing safety database. The data from this trial and all rights to Reconfilstat will belong to existing stockholders of Hepion and
to the extent that cash resources are available, Hepion will continue efforts to provide any value derived to its stockholders.
Forward-Looking
Statements
Certain
statements in this press release may be considered “forward-looking statements”. Forward-looking statements generally relate
to future events or Hepion’s or Pharma Two B’s future financial or operating performance. For example, statements regarding
Hepion and Pharma Two B’s expectations with respect to the Merger, including the timing of closing thereof and pro forma ownership
of the combined company, the concurrent financing, the cash runway of the combined company; planned timing of New Drug Application (“NDA”)
submission, P2B001 potential as a treatment for PD and label expansion, projected net revenues, and related matters, as well as all other
statements other than statements of historical fact included in this press release, are forward-looking statements. When used in this
press release, words such as “anticipate,” “believe,” “continue,” “could,” “estimate,”
“expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,”
“predict,” “project,” “should,” “would” and similar expressions, as they relate to Hepion
or Pharma Two B, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well
as assumptions made by, and information currently available to, Hepion’s and Pharma Two B’s management. Actual results could
differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in Hepion’s
filings with the SEC. Most of these factors are outside the control of Hepion and/or Pharma Two B and are difficult to predict. In addition
to factors disclosed in Hepion’s filings with the SEC, the following factors, among others, could cause actual results and the
timing of events to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:
the risk that the Merger may not be completed in a timely manner or at all, which may adversely affect the price of the securities of
Hepion; the inability to meet the closing conditions to the Merger, including the failure of Pharma Two B to meet Nasdaq initial listing
standards in connection with the consummation of the Merger; costs related to the Merger and the failure to realize anticipated benefits
of the Merger or to realize estimated pro forma results with respect thereto as well as other risks associated with biopharmaceutical
companies generally, including the risks of filing an NDA, obtaining regulatory approval for any product candidates, commercialization
of any approved product, including P2B001 for PD, as well as the total addressable market and potential for success of P2B001, the presentation
of financial information in U.S. GAAP, completion of a PCAOB audit of U.S. GAAP financials, as well as other risks that will be set forth
in more detail in the registration statement on Form F-4 (which will include a proxy statement/prospectus), when filed with the SEC.
The forward-looking statements are based upon management’s beliefs and assumptions; and other risks and uncertainties to be identified
on Form F-4 (when available) relating to the Merger, including those under “Risk Factors” therein, and in other filings with
the SEC made by Hepion. Each of Hepion and Pharma Two B undertake no obligation to update these statements for revisions or changes after
the date of press release, except as required by law.
No
Offer or Solicitation
This
press release does not constitute an offer to sell or a solicitation of an offer to buy, or the solicitation of any vote or approval
in any jurisdiction in connection with the proposed Merger or any related transactions, nor shall there be any sale, issuance or transfer
of securities in any jurisdiction where, or to any person to whom, such offer, solicitation or sale may be unlawful. Any offering of
securities or solicitation of votes regarding the proposed transaction will be made only by means of a proxy statement/prospectus that
complies with applicable rules and regulations promulgated under the Securities Act, and the Securities Exchange Act of 1934, as amended,
or pursuant to an exemption from the Securities Act or in a transaction not subject to the registration requirements of the Securities
Act.
Additional
Information and Where to Find It
In
connection with the proposed Merger, Pharma Two B intends to file the Form F-4 with the SEC, which will include a preliminary prospectus
with respect to its securities to be issued in connection with the Merger, and a preliminary proxy statement with respect to Hepion’s
stockholder meeting at which Hepion’s stockholders will be asked to vote on the proposed Merger and related matters. Each of Hepion
and Pharma Two B urge investors, stockholders, and other interested persons to read, when available, the Form F-4, including the proxy
statement/prospectus, any amendments thereto, and any other documents filed with the SEC, before making any voting or investment decision
because these documents will contain important information about the proposed Merger. After the Form F-4 has been filed and declared
effective, Pharma Two B and Hepion will mail the definitive proxy statement/prospectus to stockholders of Hepion as of a record date
to be established for voting on the Merger. Hepion’s stockholders will also be able to obtain a copy of such documents, without
charge, by directing a request to: Executive Chairman at info@hepionpharma.com.
Participants
in the Solicitation
Pharma
Two B and Hepion and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies
from Hepion’s stockholders in connection with the proposed Merger. Information about Hepion’s directors and executive officers
and their ownership of Hepion’s securities is set forth in Hepion’s filings with the SEC. To the extent that holdings of
Hepion’s securities have changed since the amounts printed in Hepion’s Annual Report on Form 10-K/A, such changes have been
or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC. A list of the names of such directors and executive
officers and information regarding their interests in the Merger will be contained in the proxy statement/prospectus when available.
You may obtain free copies of these documents as described in the preceding paragraph.
Contact
Information
Hepion
Pharmaceuticals
732-902-4000
info@hepionpharma.com
Pharma
Two B Ltd.
Dan
Teleman, CEO
Email:
dan@pharma2b.com
www.pharma2b.com
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Hepion Pharmaceuticals (PK) (USOTC:CTRVP)
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De Juil 2024 à Août 2024
Hepion Pharmaceuticals (PK) (USOTC:CTRVP)
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