{"url_path":"/sec/adil/8-k/2026-06-11/item-1-01","section_key":"item-1-01","section_title":"Item 1.01 Entry into a Material Definitive Agreement.**","topic":"sec","document":{"doc_type":"8-K","doc_date":"2026-06-11","source_url":"https://www.sec.gov/Archives/edgar/data/1513525/0001213900-26-067711-index.html","accession_number":"0001213900-26-067711","cik":"0001513525","ticker":"ADIL","issuer_name":"ADIAL PHARMACEUTICALS, INC.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1513525/0001213900-26-067711-index.html","primary_entity_key":"0001513525","primary_entity_name":"ADIAL PHARMACEUTICALS, INC."},"word_count":4659,"has_tables":true,"body_markdown":"**Item 1.01 - Entry into a Material Definitive Agreement.**\n\n \n\n**Agreement and Plan of Merger**\n\n \n\nOn June 11, 2026, Adial Pharmaceuticals, Inc.,\na Delaware corporation (the “**Company**” or “**Adial**”), acquired Azora Therapeutics, Inc.,\na Delaware corporation (“**Azora**”), in accordance with the terms of the Agreement and Plan of Merger, dated June\n11, 2026 (the “**Merger Agreement**”), by and among the Company, Adial Merger Sub, Inc., a Delaware corporation\nand a wholly owned subsidiary of the Company (“**First Merger Sub**”), Adial Second Merger Sub, LLC, a Delaware\nlimited liability company and wholly owned subsidiary of the Company (“**Second Merger Sub**”), and Azora. Pursuant\nto the Merger Agreement, First Merger Sub merged with and into Azora, pursuant to which Azora was the surviving corporation and became\na wholly owned subsidiary of the Company (the “**First Merger**” and the effective time of the First Merger, the\n“**First Effective Time**”). Immediately following the First Merger, Azora merged with and into Second Merger Sub,\npursuant to which Second Merger Sub was the surviving entity and a wholly owned subsidiary of the Company (together with the First Merger,\nthe “**Merger**”). The Merger is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes.\n\n \n\nUnder the terms of the Merger Agreement, upon\nthe consummation of the Merger (the “**Merger Closing**”), in exchange for the outstanding shares of capital stock\nof Azora immediately prior to the effective time of the First Merger, the Company issued to the stockholders of Azora an aggregate of\n(i) 437,474 shares of its Common Stock, par value $0.001 per share (the “**Common Stock**”), and (ii) 12,930.617\nshares of its Series A Non-Voting Convertible Preferred Stock, par value $0.001 per share (the “**Series A Preferred Stock**”)\n(as described below), each share of which is convertible into 1,000 shares of Common Stock, subject to certain conditions described below.\n\n \n\nReference is made to the discussion of the Series\nA Preferred Stock in Item 5.03 of this Current Report on Form 8-K (this “**Current Report**”), which is incorporated\ninto this Item 1.01 by reference.\n\n \n\nShares of Common Stock held by the holders thereof\nimmediately prior to the First Effective Time remain outstanding and unaffected by the Merger. Immediately following the consummation\nof the Merger, but prior to giving effect to the Financing (as defined below) and the Azora Note Exchange (as defined below), assuming\nthe conversion of all of the shares of Series A Preferred Stock issued pursuant to the Merger Agreement into shares of Common Stock (without\ngiving effect to any beneficial ownership limitations), pre-Merger equityholders of the Company hold approximately 13.1% of the issued\nand outstanding shares of Common Stock and former equityholders of Azora hold approximately 86.9% of the issued and outstanding shares\nof Common Stock, on a fully diluted basis.\n\n \n\nPursuant to the terms of the Merger Agreement,\neach option to purchase Azora common stock that was outstanding immediately prior to the First Effective Time was assumed by the Company\nand was converted into an option to purchase shares of Common Stock (collectively, the “**Assumed Options**”).\nNo portion of the Assumed Options will be exercisable unless and until the Assumed Option Exercise Proposal (as defined below) is approved\nby the Company’s stockholders. Once exercisable, the Assumed Options will be exercisable for an aggregate of 1,177,782 shares of\nCommon Stock.\n\n \n\n1\n\n \n\n \n\nPursuant to the Merger Agreement, the Purchase\nAgreement (as defined below) and the Exchange Agreements (as defined below), the Company has agreed to hold a stockholders’ meeting\nto submit the following matters to its stockholders for their consideration (i) the approval, in accordance with certain of the rules\nof the Nasdaq Stock Market, LLC (“**Nasdaq**”) of the conversion of the Series A Preferred Stock into shares of\nCommon Stock (the “**Conversion Proposal**”); (ii) the approval in accordance with certain of the rules of Nasdaq\nof the exercise of the Assumed Options (the “**Assumed Option Exercise Proposal**”); (iii) the approval in accordance\nwith certain of the rules of Nasdaq of the exercise of the pre-funded warrants to purchase up to an aggregate of 11,780,948 shares of\nCommon Stock (collectively, the “**Initial Closing Pre-Funded Warrants**”) issued to the PIPE Investors (as defined\nbelow) and the Azora Noteholders (as defined below) at the initial closing of the Financing and Note Exchange into shares of Common Stock\n(the “**Initial Closing Proposal**”); (iv) the approval in accordance with certain of the rules of Nasdaq of the\nexercise of the pre-funded warrants to purchase up to an aggregate of 11,780,948 shares of Common Stock (the “**Milestone Pre-Funded\nWarrants**”) and common warrants to purchase up to 11,780,948 shares of Common Stock (collectively, the “**Milestone\nIncentive Warrants**” and, together with the Initial Closing Pre-Funded Warrants and the Milestone Pre-Funded Warrants, the\n“**Warrants**”) that may be issued to PIPE Investors and the Azora Noteholders at the milestone closings pursuant\nto the terms of the Purchase Agreement and the Note Exchange Agreements, respectively, if any, into shares of Common Stock (the “**Milestone\nClosing Proposal**”); (v) the approval of a “change of control” under Nasdaq Listing Rules 5110 and 5635(b) (the\n“**Change in Control Proposal**”); (vi) if deemed necessary or appropriate, the amendment of the Company’s\ncertificate of incorporation to authorize sufficient shares of Common Stock for the conversion of the Series A Preferred Stock and exercise\nof the Assumed Options issued pursuant to the Merger Agreement and the exercise of the Warrants to the PIPE Investors and the Azora Noteholders\npursuant to the Purchase Agreement and Note Exchange Agreements (the “**Charter Amendment Proposal**” and, together\nwith the Conversion Proposal and the Change in Control Proposal, the “**Company Stockholder Matters**”); (vii)\nto the extent deemed necessary, the amendment of the Company’s certificate of incorporation to effectuate a reverse stock split\nof all outstanding shares of Common Stock at a reverse stock split ratio to be reasonably determined by the Company for the purpose of\nmaintaining compliance with Nasdaq listing standards; and (viii) the approval of a new 2026 Equity Incentive Plan of the Company, which\nwill provide for new awards for a number of shares of Common Stock not exceeding 10% of the fully diluted shares of capital stock of\nthe Company outstanding immediately after the Financing, and subject to approval by the board of directors of the Company (the “Board”),\nand which will include an annual increase pursuant to an “evergreen” provision providing for an annual increase of up to\n5% of the total number of fully diluted shares of capital stock of the Company outstanding as of the day prior to such increase, and\nthe approval of a new 2026 Employee Stock Purchase Plan, with a total pool of shares of Common Stock not exceeding 1% of the fully diluted\nshares of capital stock of the Company outstanding immediately after the Financing, and which shall include an annual increase pursuant\nto an “evergreen” provision providing for an annual increase of up to 1% of the total number of fully diluted shares of capital\nstock of the Company outstanding as of the day prior to such increase (matters contemplated in items (i) to (viii) collectively, the\n“**Meeting Proposals**”); and (ix) to make such other changes as may be mutually agreed by the Company and Azora.\nIn connection with these matters, the Company intends to file with the Securities and Exchange Commission (the “**SEC**”)\na proxy statement and other relevant materials.\n\n \n\nThe Board unanimously approved the Merger Agreement\nand the related transactions and agreements, and the consummation of the Merger did not require the approval of the Company’s stockholders.\n\n \n\nThe foregoing description of the Merger and the\nMerger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement,\na copy of which is filed as Exhibit 2.1 to this Current Report and is incorporated herein by reference.\n\n \n\nThe issuance of the shares of Common Stock and\nPreferred Stock issued to Azora stockholders pursuant to the Merger Agreement was exempt from registration pursuant to Section 4(a)(2)\nof the Securities Act of 1933, as amended (the “**Securities Act**”), promulgated thereunder, as a transaction\nby an issuer not involving a public offering.\n\n \n\nThe Merger Agreement has been included as an\nexhibit to this Current Report to provide investors and security holders with information regarding its terms. It is not intended to\nprovide any other factual information about the Company or Azora. The Merger Agreement contains representations, warranties and covenants\nthat the Company and Azora made to each other as of specific dates. The assertions embodied in those representations, warranties and\ncovenants were made solely for purposes of the Merger Agreement between the Company and Azora, and may be subject to important qualifications\nand limitations agreed to by the Company and Azora in connection with negotiating its terms, including being qualified by confidential\ndisclosures exchanged between the parties in connection with the execution of the Merger Agreement. Moreover, the representations and\nwarranties may be subject to a contractual standard of materiality that may be different from what may be viewed as material to investors\nor securityholders, or may have been used for the purpose of allocating risk between the Company, on the one hand, and Azora on the other\nhand, rather than establishing matters as facts. Moreover, information concerning the subject matter of the representations and warranties\nmay change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s\npublic disclosures. For the foregoing reasons, no person should rely on the representations and warranties as statements of factual information\nat the time they were made or otherwise.\n\n \n\n2\n\n \n\n \n\n**Support Agreements**\n\n \n\nIn connection with the execution of the Merger\nAgreement, the Company and Azora entered into stockholder support agreements (the “**Support Agreements**”) with\ncertain of the Company’s officers and directors (solely in their capacity as stockholders). The Support Agreements provide that, among other things, each of the parties thereto has agreed to\nvote or cause to be voted all of the shares of Common Stock owned by such stockholder in favor of the Meeting Proposals at the Company\nstockholders’ meeting to be held in connection therewith, subject to and in accordance with the terms of the Support Agreements.\n\n \n\nThe foregoing description of the Support Agreements\ndoes not purport to be complete and is qualified in its entirety by reference to the form of the Support Agreement, which is provided\nas Exhibit D to the Merger Agreement, a copy of which is filed as Exhibit 2.1 to this Current Report and incorporated herein by reference.\n\n \n\n**Lock-up Agreements**\n\n \n\nConcurrently and in connection with the execution\nof the Merger Agreement, certain of the officers, directors and stockholders of Azora as of immediately prior to the Merger, and certain\nof the directors and officers of the Company as of immediately prior to the Merger entered into lock-up agreements (the “**Lock-up\nAgreements**”) with the Company and Azora, pursuant to which each such officer, director and stockholder will be subject\nto a 180-day lockup on the sale or transfer of shares of Common Stock, or any securities convertible, exercisable or exchangeable for\nCommon Stock, held by each such officer, director or stockholder at the Merger Closing (other than in accordance with the terms of the\nMerger Agreement).\n\n \n\nIn addition to the foregoing, the Certificate\nof Designation of Preferences, Rights and Limitations of the Series A Preferred Stock (the “**Certificate of Designation**”)\ncontains additional lock up restrictions with respect to the shares of Series A Preferred Stock issued to Azora stockholders as consideration\nin the Merger and the shares of Common Stock issuable upon conversion thereof, which restrictions are discussed in further detail below.\n\n \n\nThe foregoing description of the Lock-up Agreements\ndoes not purport to be complete and is qualified in its entirety by reference to the form of the Lock-up Agreement, which is provided\nas Exhibit B to the Merger Agreement, a copy of which is filed as Exhibit 2.1 to this Current Report and incorporated herein by reference.\n\n \n\n**The Financing**\n\n \n\nOn June 11, 2026, in connection with and as a\ncondition to closing of the Merger, the Company entered into a Securities Purchase Agreement (the “**Purchase Agreement**”)\nwith the purchasers named therein (the “**PIPE Investors**”), pursuant to which the Company agreed to issue and\nsell to the PIPE Investors, in a private placement transaction, (i) at the initial closing (the “**Initial Closing**”)\nInitial Closing Pre-Funded Warrants to purchase an aggregate of 9,749,345 shares of Common Stock, at a price of $2.7489 per Initial Closing\nPre-Funded Warrant (the “**Purchase Price**”), for an aggregate purchase price of $26.8 million; and (ii) at one\nor more subsequent closings (each, a “**Milestone Closing**”), Milestone Pre-Funded Warrants to purchase up to\n9,749,345 an aggregate of shares of Common Stock and Milestone Incentive Warrants to purchase up to an aggregate of 9,749,345 shares\nof Common Stock, at a combined price equal to the Purchase Price per Milestone Pre-Funded Warrant and Milestone Incentive Warrant, for\nan aggregate purchase price of up to $26.8 million (collectively, the “**Financing**”).\n\n \n\nThe Initial Closing is expected to close on or\nabout June 12, 2026. The net proceeds to the Company from the Initial Closing is expected to be approximately $25.3 million, after\ndeducting placement agent fees and the payment of other offering expenses associated with the Financing that were payable by the Company.\n\n \n\nPursuant to the Purchase Agreement, upon achievement\nof either of the following events (each, a “**Milestone Event**), the Company shall provide written notice to each of\nthe PIPE Investors of such Milestone Event (the “**Milestone Event Notice**” and the date the Milestone Closing\nNotice is delivered, the “**Milestone Event Notice Date**”):\n\n \n\n1.the Company’s public announcement,\nvia a press release on a nationally recognized news wire or the filing of a Current Report\non Form 8-K with the SEC, that the first human has been dosed with AT177 in a Phase 1 clinical\ntrial (in an SAD/MAD study)or acceptance of the IND (meaning 30 days past IND submission\nwith no clinical hold); or\n\n \n\n3\n\n \n\n \n\n2.the achievement of a VWAP per share of\nthe Common Stock equal to or greater than 400% of the Purchase Price (subject to appropriate,\nproportional adjustment for any stock splits or combinations of the Common Stock occurring\nafter the date of the Agreement) measured during any 10 consecutive Trading Days during any\n30 Trading Day period.\n\n \n\nRegardless of whether a Milestone Event has occurred,\neach PIPE Investor shall have the right to complete one or more additional purchases of Milestone Pre-funded Warrants and Milestone Incentive\nWarrants at additional closings (each such additional closing, a “**Milestone Closing**”) at any time following\nthe Initial Closing Date and prior to the date that is 30 calendar days following the Milestone Event Notice. Pursuant to the Purchase\nAgreement (the “**Milestone Funding Period Expiration**”), at a Milestone Closing, the Company agreed to sell,\nand each such participating PIPE Investor, severally and not jointly, has the right, but not the obligation to purchase, a number of\nMilestone Pre-funded Warrants and Milestone Incentive Warrants (collectively, the “**Milestone Warrants**”) based\non the pro rata amount of their investment in the Initial Closing; provided, however, that in the event a PIPE Investor exercises, prior\nto such PIPE Investor completing a Milestone Closing, any of the Initial Closing Pre-funded Warrants for shares of Common Stock, such\nPIPE Investor will only be eligible to participate in a Milestone Closing to purchase that percentage of Milestone Warrants that is equal\nto the quotient obtained by dividing (i) the number of such PIPE Investor’s Initial Closing Pre-funded Warrants that remain unexercised\nand held by the PIPE Investor by (ii) the total number of such PIPE Investor’s Initial Closing Prefunded Warrants.\n\n \n\nEach Initial Closing Pre-Funded Warrant and each\nMilestone Pre-Funded Warrant (collectively, the “**Pre-Funded Warrants**”) will have an exercise price per share\nof Common Stock equal to $0.001, will never expire until fully exercised, and, subject to receipt of stockholder approval of the Financing\nInitial Closing Proposal and Financing Milestone Closing Proposal, as applicable, and certain beneficial ownership limitations and other\nlimitations, will be immediately exercisable from the date of stockholder approval for one share of Common Stock. The Milestone Incentive\nWarrants will have an exercise price per share of Common Stock equal to the Purchase Price, will expire five years from the date of issuance,\nand, subject to receipt of stockholder approval of the Financing Initial Closing Proposal and Financing Milestone Closing Proposal, as\napplicable, and certain beneficial ownership limitations and other limitations, will be immediately exercisable from their date of stockholder\napproval for one share of Common Stock.\n\n \n\nThe Warrants may not be exercised by the holders\nthereof unless and until the Company receives stockholder approval of the Financing Initial Closing Proposal and Financing Milestone\nClosing Proposal, as applicable to the respective Warrants. The Company is prohibited from effecting an exercise of any Warrants to the\nextent that such exercise would result in the number of shares of Common Stock beneficially owned by such holder and its affiliates exceeding\n4.99% (or 9.99% or up to 19.99%, at election of the holder) of the total number of shares of Common Stock outstanding immediately after\ngiving effect to the exercise (the “Beneficial Ownership Limitation”), which percentage may be increased or decreased at\nthe holder’s election, not to exceed 19.99%. Any increase to the Beneficial Ownership Limitation will not be effective until the\n61st day after such notice is delivered to the Company.\n\n \n\nPursuant to the Purchase Agreement, subject to\ncertain exceptions, from the Initial Closing Date until the date that is ten business days following the later of (i) the Milestone Funding\nPeriod Expiration (or, if earlier, the date on which all PIPE Investors have (x) closed their Milestone Closing or (y) have lost their\nright to participate in a Milestone Closing) and (ii) provided that a resale registration statement covering the shares of Common Stock\nunderlying the Initial Closing Pre-funded Warrants is effective, the Shareholder Approval Date (as defined in the Form of Pre-funded\nWarrant), the Company shall not, without the prior written consent of the PIPE Investors holding a majority of the then-outstanding Pre-funded\nWarrants, issue shares of Common Stock or common stock equivalents at a price per share of Common Stock that is less than $4.25.\n\n \n\nWendy Young, who was appointed as a director\nof the Company in connection with the Merger, as discussed in further detail in Item 5.02 below, is participating in the Financing and\nagreed to purchase Initial Closing Pre-Funded Warrants to purchase 36,378 shares of Common Stock for an aggregate purchase price of\n$100,000 at the Initial Closing.\n\n \n\nLucid Capital Markets, LLC (“Lucid”)\nserved as the Company’s exclusive placement agent in connection with the Financing pursuant to an engagement agreement (the “**Engagement\nAgreement**”), dated April 23, 2026 and amended on June 11, 2026, entered into between the Company and Lucid, pursuant to\nwhich Lucid is entitled to receive (i) a cash fee equal to 5.0% of the aggregate gross proceeds of the Initial Closing of the Financing,\nprovided that Lucid is only entitled to receive a cash fee equal to 2.5% of the aggregate gross proceeds raised from certain investors.\n\n \n\nThe issuance of the Warrants to the PIPE Investors\nwill be exempt from registration pursuant to Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public\noffering.\n\n \n\nThe foregoing summary of the Purchase Agreement,\nthe Pre-Funded Warrants to be issued to the PIPE Investors and the Milestone Incentive Warrants to the issued to the PIPE Investors does\nnot purport to be complete and is qualified in its entirety by reference to the full text of the forms of the Purchase Agreement, Pre-Funded\nWarrant (Financing) and Common Warrant (Financing), copies of which are filed as Exhibits 10.2, 4.1 and 4.2 to this Current Report, and\nare incorporated by reference herein. \n\n \n\n4\n\n \n\n \n\n**Azora Note Exchange**\n\n \n\nPursuant to the terms of the Merger Agreement,\nupon the Merger Closing, the Company agreed to guaranty the payment of $5.5 million in principal amount of amended and restated convertible\npromissory notes issued by Azora (the “**Azora Notes***”*) to certain individuals (collectively, the “**Azora\nNoteholders**”). On June 11, 2026, the Company entered into exchange agreements (the “**Exchange Agreements**”)\nwith the Azora Noteholders to extinguish the payment guarantee and retire the Azora Notes in exchange for Initial Closing Pre-Funded\nWarrants to purchase an aggregate of 2,031,603 shares of Common Stock (the “**Azora Note Exchange**”). As a result\nof the Azora Note Exchange, all such Azora Notes have been deemed to be repaid in full and all outstanding obligations thereunder have\nbeen extinguished.\n\n \n\nPursuant to the Exchange Agreements, the Azora\nNoteholders are entitled to participate in Milestone Closings to purchase Milestone Pre-Funded Warrants to purchase up to an aggregate\nof 2,031,603 shares of Common Stock and Milestone Incentive Warrants to purchase up to an aggregate of 2,031,603 shares of Common Stock,\nat a combined price equal to the Purchase Price, on substantially the same terms as the PIPE Investors under the Purchase Agreement.\n\n \n\nThe issuance of the Warrants to the Azora Noteholders\nin accordance with the Exchange Agreements was, and to the extent not issued, will be, exempt from registration pursuant to Section 4(a)(2)\nof the Securities Act as a transaction by an issuer not involving a public offering.\n\n \n\nThe foregoing description of the Exchange Agreements,\nthe Pre-Funded Warrants issued to the Azora Noteholders and the Milestone Incentive Warrants to the issued to the Azora Noteholders does\nnot purport to be complete and is qualified in its entirety by reference to the full text of the forms of Exchange Agreement, Pre-Funded\nWarrant (Note Exchange) and Common Warrant (Note Exchange), copies of which are filed as Exhibits 10.2, 4.3 and 4.4 to this Current Report,\nand are incorporated by reference herein.\n\n \n\nFollowing the consummation of the Initial Closing\nof the Financing, the consummation of the Azora Note Exchange and the consummation of the Merger, assuming the full exercise of the Initial\nClosing Pre-Funded Warrants issued to the Azora Noteholders in the Azora Note Exchange into shares of Common Stock and the full exercise\nof the Initial Closing Pre-Funded Warrants issued to the Pipe Investors at the Initial Closing of the Financing into shares of Common\nStock, and further assuming the conversion of all shares of Series A Preferred Stock issued to Azora stockholders pursuant to the Merger\nAgreement into shares of Common Stock (in each case, without giving effect to any beneficial ownership limitations), pre-Merger equityholders\nof the Company will hold approximately 7.7% of the issued and outstanding shares of Common Stock, former equityholders of Azora will\nhold approximately 51.0% of the issued and outstanding shares of Common Stock, former Noteholders of Azora will hold approximately 7.1%\nof the issued and outstanding shares of Common Stock, and the PIPE Investors will hold approximately 34.2% of the issued and outstanding\nshares of Common Stock, on a fully diluted basis.\n\n \n\n**Registration Rights Agreement**\n\n \n\nIn connection with the closing of the Merger,\nFinancing and Note Exchange, and as a condition to closing of the Merger, on June 11, 2026, the Company entered into a Registration Rights\nAgreement (the “**Registration Rights Agreement**”) with the several investors signatory thereto. Pursuant to the\nRegistration Rights Agreement, the Company agreed, as promptly as practicable following the Initial Closing (and in any event within\n80 days following the Initial Closing Date), to prepare and file with the SEC, a registration statement on Form S-3 (or, if Form S-3\nis not then available to the Company, on such form of registration statement as is then available) (the “**Initial Registration\nStatement**”) to register for resale of the shares of Common Stock issued pursuant to the Merger Agreement, the shares of\nCommon Stock issuable upon conversion of the shares of Series A Preferred Stock issued pursuant the Merger Agreement, the shares of Common\nStock issuable upon exercise of the Initial Closing Pre-Funded Warrants and any other Warrants that will be issued to the PIPE Investors\npursuant to the Purchase Agreement and the Azora Noteholders pursuant to the Note Exchange Agreements prior to filing such registration\nstatement. Additionally, following the date on which the purchase price paid by investors and Azora Noteholders in connection with all\nMilestone Closings for which the underlying shares have not yet be registered equals $5,000,000 in the aggregate (the “**Initial\nMilestone Registration Trigger Date**”), and thereafter, following the date on which the aggregate purchase price paid by\nthe investors and Azora Noteholders in connection with all additional Milestone Closings after the Initial Milestone Registration Trigger\nDate, for which the underlying shares have not yet be registered equals or exceeds $3,000,000 in the aggregate (together with the Initial\nMilestone Registration Trigger Date, each a “**Milestone Registration Trigger Date**”), the Company agreed, as\npromptly as practicable following the applicable Milestone Registration Trigger Date (and in any event within 30 days following such\nMilestone Registration Trigger Date), to prepare and file with the SEC, an additional registration statement on Form S-3 (or, if Form\nS-3 is not then available to the Company, on such form of registration statement as is then available) (each such additional registration\nstatement, a “**Milestone Registration Statement**”) to register for resale all shares of Common Stock underlying\nthe Warrants issued pursuant to such applicable Milestone Closings not already registered. The Company further agreed to use its reasonable\nbest efforts to have (i) the Initial Registration Statement declared effective by (a) no later than 120 calendar days following the earlier\nof the initial filing date of the Initial Registration Statement or the applicable filing deadline, if the SEC notifies the Company that\nit will not review the Initial Registration Statement and (b) no later than the 150th calendar day following the initial filing\ndeadline of the Initial Registration Statement or the applicable filing deadline, if the SEC notifies the Company that it will review\nthe Initial Registration Statement; and (ii) each Milestone Registration Statement declared effective by no later than the earlier of\n(a) the 60th calendar day following the earlier of the initial filing date of the Milestone Registration Statement or the applicable\nfiling deadline, if the SEC notifies the Company that it will review the Milestone Registration Statement and (b) the 5th\nbusiness day after the SEC notifies the Company that it will not review the Milestone Registration Statement or that it is not subject\nto further review.\n\n \n\n5\n\n \n\n \n\nIf a registration statement required to be filed\nby the Company with the SEC pursuant to the Registration Rights Agreement has not been filed with the SEC by the applicable filing deadline\nor declared effective by the SEC by the applicable effectiveness deadline, or after any such registration statement has been declared\neffective by the SEC sales cannot be made pursuant to such registration statement for any reason (subject to limited exceptions), then\nthe Company will be required to make pro rata payments to each investor then holding registrable securities covered by such registration\nstatement, as liquidated damages and not as a penalty, in an amount equal to 1.0% of the aggregate amount paid pursuant to the Purchase\nAgreement by such investor for such registrable securities then held by such investor for each 30-day period or pro rata for any portion\nthereof during which the failure continues, not to exceed 5.0% of the aggregate purchase price paid by such investors.\n\n \n\nThe Company has also agreed to, among other things,\nindemnify the signatories to the Registration Rights Agreement, their officers, directors, members, employees, partners, managers, stockholders,\naffiliates, investment advisors and agents under the registration statement from certain liabilities and pay all fees and expenses (excluding\nany legal fees of the selling holder(s), and any underwriting discounts and selling commissions) incident to the Company’s obligations\nunder the Registration Rights Agreement.\n\n \n\nThe foregoing summary of the Registration Rights\nAgreement does not purport to be complete and is qualified in its entirety by reference to the full text of the form of Registration\nRights Agreement, a copy of which is filed as Exhibit 10.3 to this Current Report, and is incorporated by reference herein."}