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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): September
28, 2023
AULT ALLIANCE,
INC.
(Exact name of registrant as specified in its charter)
Delaware |
|
001-12711 |
|
94-1721931 |
(State or other jurisdiction of
incorporation or organization) |
|
(Commission File Number) |
|
(I.R.S. Employer Identification No.) |
11411 Southern Highlands Parkway, Suite 240,
Las Vegas, NV 89141
(Address of principal executive offices) (Zip Code)
(949) 444-5464
(Registrant's telephone number, including area
code)
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, $0.001 par value |
|
AULT |
|
NYSE American |
13.00% Series D Cumulative Redeemable Perpetual Preferred Stock, par value $0.001 per share |
|
AULT PRD |
|
NYSE American |
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. |
On September 27, 2023
(the “Effective Date”), Ault Alliance, Inc. (the “Company”) entered into a securities exchange agreement
(the “Exchange Agreement”) with an institutional investor (the “Investor”) pursuant to which the
Investor agreed to acquire, and the Company agreed to issue and sell in a registered direct offering to the Investor (the “Offering”),
a $2.2 million principal face amount convertible promissory note (the “Note”), subject to customary closing conditions.
As described in more detail below, subject to the satisfaction of the conditions in the Exchange Agreement, the Company may issue and
sell to the Investor up to an additional $3.3 million aggregate principal face amount of notes.
The Note is being issued
in exchange for a term note in the principal face amount of $2,200,000 (the “Term Note”), which we sold to the Investor
on September 8, 2023 for a purchase price of $2,000,000. The Note will not be issued pursuant to an indenture. The Note is convertible
at any time after NYSE approval of the Supplemental Listing Application into shares of Class A common stock, par value $0.001 per share
(the “Common Stock”) of the Company (the “Conversion Shares”).
The Company may not issue
Conversion Shares to the extent such issuances would result in an aggregate number of shares of Common Stock exceeding 19.99% of the total
shares of Common Stock issued and outstanding as of the Effective Date (the “NYSE Limit”), in accordance with the rules
and regulations of The NYSE American (the “Exchange”) unless the Company first obtains stockholder approval (the “Stockholder
Approval”). Pursuant to the Exchange Agreement and if required by the Exchange, the Company agreed to file a proxy statement
to obtain the Stockholder Approval on or before February 29, 2024.
At any time on or prior to the three month anniversary
of the date when the Note is no longer outstanding (either through conversion, repayment or a combination thereof), the Investor has the
right to require the Company to issue and sell to the Investor up to an additional $3.3 million aggregate principal face amount of
Notes for a purchase price of $3.0 million (reflecting a 10% original issue discount) (the “Subsequent Note Offering”).
If the Investor elects to enter into a Subsequent Note Offering, the Company and the Investor will enter into a new securities purchase
agreement with a new note, which will be substantially similar to the Exchange Agreement and Note.
Description of the Note
The Note has a principal
face amount of $2,200,000 and bears no interest (unless an event of default occurs) as it was issued in exchange for the Term Note, which
contained an original issuance discount. The Note will mature on the earlier of (i) September 28, 2024 or (ii) one month after the date
when no more Conversion Shares may be issued by the Company because of the NYSE Limit (such date, the “Exchange Cap Acceleration
Date”), provided, however, that the Exchange Cap Acceleration Date shall not apply so long as (A) we are seeking the Stockholder
Approval and (B) we are in compliance with all filing and meeting deadlines in connection with the Stockholder Approval, provided further,
however that in the event Stockholder Approval is obtained after the Exchange Cap Acceleration Date but prior to one month thereafter,
the maturity date shall remain September 28, 2024.
The Note is convertible
at any time after NYSE approval of the Supplemental Listing Application into shares of Common Stock at a conversion price equal to 90%
of the lowest volume weighted average price of the Common Stock during the five consecutive trading days prior to the date of conversion.
The Notes contain standard
and customary events of default including, but not limited to, failure to make payments when due under the Note, failure to comply with
certain covenants contained in the Note, or bankruptcy or insolvency of the Company. The Company may, at its option, redeem the Note,
in whole or in part, at a price equal to 115% of the principal amount of the Note to be redeemed plus accrued and unpaid interest to the
date of redemption.
Description of the Offering
The Offering closed on
September 28, 2023. The Offering was made pursuant to the Company’s (i) shelf registration statement on Form S-3 (File No. 333-260618)
filed with the Securities and Exchange Commission (“SEC”) on October 29, 2021 and declared effective by the SEC on
November 12, 2021and (ii) a prospectus supplement filed by the Company with the SEC on September 28, 2023, which also relates to the offer
and sale of the Note and Conversion Shares.
This Current Report on
Form 8-K shall not constitute an offer to sell or the solicitation of any offer to buy the Conversion Shares, nor shall there be any offer,
solicitation or sale of the Conversion Shares in any state in which such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of such state.
The Exchange Agreement
contains customary representations, warranties and agreements by the Company, obligations of the parties, termination provisions and closing
conditions. The representations, warranties and covenants contained in the Exchange Agreement were made only for purposes of such agreement
and as of specific dates, were solely for the benefit of the parties to such agreement, and may be subject to limitations agreed upon
by the contracting parties.
The foregoing descriptions
of the terms of the Note and the Exchange Agreement do not purport to be complete and are subject to, and qualified in their entirety
by reference to, the Form of Note and Exchange Agreement which are annexed here as Exhibits 4.1 and 10.1 and are
incorporated herein by reference.
The legal opinion of
Olshan Frome Wolosky LLP, counsel to the Company, relating to the legality of the issuance and sale of the Note and Conversion Shares,
is filed as Exhibit 5.1 hereto.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of
a Registrant. |
The disclosure required by this Item and
included in Item 1.01 of this Current Report is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
AULT ALLIANCE, INC. |
|
|
|
|
|
|
|
Dated: September 28, 2023 |
/s/ Henry Nisser
|
|
|
Henry Nisser |
|
|
President and General Counsel |
|
-4-
Exhibit 4.1
ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS
OF THIS NOTE, INCLUDING SECTIONS 3(c)(iii) AND 20(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES
ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii) OF THIS NOTE.
Ault Alliance, Inc.
Convertible
Note
Issuance Date: September 28, 2023 |
Original Principal Amount: U.S. $2,200,000.00 |
FOR VALUE RECEIVED, Ault Alliance,
Inc., a Delaware corporation (the “Company”), hereby promises to pay to the order of Walleye Opportunities Master Fund
Ltd or its registered assigns (“Holder”) the amount set forth above as the Original Principal Amount (as reduced pursuant
to the terms hereof pursuant to redemption, conversion or otherwise, the “Principal”) when due, whether upon the Maturity
Date, or upon acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and, upon the occurrence and during
the continuation of an Event of Default (as defined below), to pay interest (“Interest”) on any outstanding Principal
at the applicable Default Rate (as defined below), until the same becomes due and payable, whether upon the Maturity Date or upon acceleration,
conversion, redemption or otherwise (in each case in accordance with the terms hereof). This Convertible Note (including all convertible
notes issued in exchange, transfer or replacement hereof, this “Note”) is issued pursuant to (i) the Securities Exchange
Agreement dated as of September 27, 2023, by and between the Company and the investor (the “Buyer”) referred to therein,
as amended from time to time (the “Securities Exchange Agreement”), (ii) the Company’s registration statement
on Form S-3 (Commission File No. 333-260618) (the “Registration Statement”) and (iii) the Company’s prospectus
supplement dated as of September 28, 2023. Certain capitalized terms used herein are defined in Section 33.
1. PAYMENTS
OF PRINCIPAL. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding Principal,
accrued and unpaid Interest and accrued and unpaid Late Charges (as defined in Section 26(c)) on such Principal and Interest. Other than
as specifically permitted by this Note, the Company may not prepay any portion of the outstanding Principal, accrued and unpaid Interest
or accrued and unpaid Late Charges on Principal and Interest, if any.
2. DEFAULT
RATE. This Note has been issued with an original issue discount and no Interest shall accrue hereunder unless and until an Event of
Default (as defined below) has occurred. From and after the occurrence and during the continuance of any Event of Default, Interest shall
accrue hereunder at a rate of eighteen percent (18.0%) per annum (the “Default Rate”) and shall be computed on the
basis of a 360-day year and twelve 30-day months, shall compound each calendar month and shall be payable in arrears on the first Trading
Day in the calendar month following the calendar month in which Interest accrues hereunder (each, an “Interest Date”).
3. CONVERSION
OF NOTE. At any time after the SLAP has been approval by the Principal Market, this Note shall be convertible into validly issued,
fully paid and non-assessable shares of Common Stock (as defined below), on the terms and conditions set forth in this Section 3.
(a) Conversion
Right. Subject to the provisions of Section 3(d), at any time or times on or after the SLAP has been approval by the Principal Market,
the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into validly issued,
fully paid and non-assessable shares of Common Stock in accordance with Section 3(c), at the Conversion Rate (as defined below). The Company
shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction
of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company
shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including, without limitation, fees and expenses
of the Transfer Agent (as defined below)) that may be payable with respect to the issuance and delivery of Common Stock upon conversion
of any Conversion Amount.
(b) Conversion
Rate. The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to Section 3(a) shall be determined
by dividing (x) such Conversion Amount by (y) the Conversion Price (the “Conversion Rate”).
(i) “Conversion
Amount” means the sum of (A) the portion of the Principal of this Note to be converted, redeemed or otherwise with respect to
which this determination is being made, (B) accrued and unpaid Interest with respect to such Principal of this Note, (D) accrued and unpaid
Late Charges with respect to such Principal of this Note and Interest, and (E) any other unpaid amounts pursuant to the Transaction Documents,
if any.
(ii) “Conversion
Price” means, as of any Conversion Date or other date of determination, 90% of the lowest VWAP of the Common Stock during the
five (5) consecutive Trading Day period ending and including the Trading Day immediately preceding the delivery or deemed delivery of
the applicable Conversion Notice.
(c) Mechanics
of Conversion.
(i) Optional
Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion Date”), the
Holder shall deliver (whether via electronic mail or otherwise), for receipt on or prior to 11:59 p.m., New York time, on such date, a
copy of an executed notice of conversion in the form attached hereto as Exhibit I (each, a “Conversion Notice”)
to the Company. If required by Section 3(c)(iii), within two (2) Trading Days following a conversion of this Note as aforesaid, the Holder
shall surrender this Note to a nationally recognized overnight delivery service for delivery to the Company (or an indemnification undertaking
with respect to this Note in the case of its loss, theft or destruction as contemplated by Section 20(b)). On or before the first (1st)
Trading Day following the date of receipt of a Conversion Notice, the Company shall transmit by electronic mail an acknowledgment, in
the form attached hereto as Exhibit II, of confirmation of receipt of such Conversion Notice and representation as to whether such
shares of Common Stock may then be resold pursuant to Rule 144 or an effective and available registration statement (each, an “Acknowledgement”)
to the Holder and the Company’s transfer agent (the “Transfer Agent”) which confirmation shall constitute an
instruction to the Transfer Agent to process such Conversion Notice in accordance with the terms herein. On or before the second (2nd)
Trading Day following the date on which the Company has received a Conversion Notice (or such earlier date as required pursuant to the
1934 Act or other applicable law, rule or regulation for the settlement of a trade initiated on the applicable Conversion Date of such
shares of Common Stock issuable pursuant to such Conversion Notice) (the “Share Delivery Deadline”), the Company shall
(1) provided that the Transfer Agent is participating in The Depository Trust Company’s (“DTC”) Fast Automated
Securities Transfer Program (“FAST”), credit such aggregate number of shares of Common Stock to which the Holder shall
be entitled pursuant to such conversion to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal
at Custodian system or (2) if the Transfer Agent is not participating in FAST, upon the request of the Holder, issue and deliver (via
reputable overnight courier) to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder
or its designee, for the number of shares of Common Stock to which the Holder shall be entitled pursuant to such conversion. If this Note
is physically surrendered for conversion pursuant to Section 3(c)(iii) and the outstanding Principal of this Note is greater than the
Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than two
(2) Business Days after receipt of this Note and at its own expense, issue and deliver to the Holder (or its designee) a new Note (in
accordance with Section 20(d)) representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares
of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares
of Common Stock on the Conversion Date. Notwithstanding anything to the contrary contained in this Note, so long as the Registration Statement
is effective, the Company shall cause the Transfer Agent to deliver unlegended shares of Common Stock to the Holder (or its designee)
in connection with any sale of Conversion Shares (as defined in the Share Exchange Agreement) with respect to which the Holder has entered
into a contract for sale, and delivered a copy of the prospectus included as part of the Registration Statement to the extent applicable,
and for which the Holder has not yet settled.
(ii) Company’s
Failure to Timely Convert. If the Company shall fail, for any reason or for no reason, on or prior to the applicable Share Delivery
Deadline, to issue and deliver to the Holder (or its designee) a certificate for the number of shares of Common Stock to which the Holder
is entitled and register such shares of Common Stock on the Company’s share register or, if the Transfer Agent is participating
in FAST, to credit the balance account of the Holder or the Holder’s designee with DTC for such number of shares of Common Stock
to which the Holder is entitled upon the Holder’s conversion of this Note (as the case may be) (a “Conversion Failure”),
then, in addition to all other remedies available to the Holder, (1) the Company shall pay in cash to the Holder on each day after such
Share Delivery Deadline that the issuance of such shares of Common Stock is not timely effected an amount equal to 1% of the product of
(A) the sum of the number of shares of Common Stock not issued to the Holder on or prior to the Share Delivery Deadline and to which the
Holder is entitled, multiplied by (B) any trading price of the Common Stock selected by the Holder in writing as in effect at any time
during the period beginning on the applicable Conversion Date and ending on the applicable Share Delivery Deadline and (2) the Holder,
upon written notice to the Company, may void its Conversion Notice with respect to, and retain or have returned (as the case may be) any
portion of this Note that has not been converted pursuant to such Conversion Notice, provided that the voiding of a Conversion Notice
shall not affect the Company’s obligations to make any payments which have accrued prior to the date of such notice pursuant to
this Section 3(c)(ii) or otherwise. In addition to the foregoing, if on or prior to the Share Delivery Deadline the Company shall fail
to issue and deliver to the Holder (or its designee) a certificate and register such shares of Common Stock on the Company’s share
register or, if the Transfer Agent is participating in FAST, the Transfer Agent shall fail to credit the balance account of the Holder
or the Holder’s designee with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s
conversion hereunder, and if after such Share Delivery Deadline the Holder acquires (in an open market transaction, stock loan or otherwise)
shares of Common Stock corresponding to all or any portion of the number of shares of Common Stock issuable upon such conversion that
the Holder is entitled to receive from the Company and has not received from the Company in connection with such Conversion Failure (a
“Buy-In”), then, in addition to all other remedies available to the Holder, the Company shall, within five (5) Business
Days after receipt of the Holder’s request and in the Holder’s discretion, either: (I) pay cash to the Holder in an amount
equal to the Holder’s total purchase price (including brokerage commissions, stock loan costs and other out-of-pocket expenses,
if any) for the shares of Common Stock so acquired (including, without limitation, by any other Person in respect, or on behalf, of the
Holder) (the “Buy-In Price”), at which point the Company’s obligation to so issue and deliver such certificate
(and to issue such shares of Common Stock) or credit the balance account of such Holder or such Holder’s designee, as applicable,
with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder (as the
case may be) (and to issue such shares of Common Stock) shall terminate, or (II) promptly honor its obligation to so issue and deliver
to the Holder a certificate or certificates representing such shares of Common Stock or credit the balance account of such Holder or such
Holder’s designee, as applicable, with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s
conversion hereunder (as the case may be) and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over
the product of (x) such number of shares of Common Stock multiplied by (y) the lowest Closing Sale Price of the Common Stock on any Trading
Day during the period commencing on the date of the applicable Conversion Notice and ending on the date of such issuance and payment under
this clause (II) (the “Buy-In Payment Amount”). Nothing shall limit the Holder’s right to pursue any other remedies
available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief
with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock (or to electronically deliver
such shares of Common Stock) upon the conversion of this Note as required pursuant to the terms hereof.
(iii) 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 Note 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 Registered
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 hereunder) notwithstanding notice to the contrary. A Registered Note may be assigned,
transferred or sold in whole or in part only by registration of such assignment or sale on the Register. Upon its receipt of a written
request to assign, transfer or sell all or part of any Registered Note by the holder thereof, 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 20, provided that if the Company
does not so record an assignment, transfer or sale (as the case may be) of all or part of any Registered Note within two (2) Business
Days of such a request, then the Register shall be automatically deemed updated to reflect such assignment, transfer or sale (as the case
may be). Notwithstanding anything to the contrary set forth in this Section 3, following conversion of any portion of this Note in
accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the full
Conversion Amount represented by this Note is being converted (in which event this Note shall be delivered to the Company following conversion
thereof as contemplated by Section 3(c)(i)) or (B) the Holder has provided the Company with prior written notice (which notice may be
included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. The Holder and the Company shall
maintain records showing the Principal, Interest and Late Charges converted and/or paid (as the case may be) and the dates of such conversions,
and/or payments (as the case may be) or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not
to require physical surrender of this Note upon conversion. If the Company does not update the Register to record such Principal, Interest
and Late Charges converted and/or paid (as the case may be) and the dates of such conversions, and/or payments (as the case may be) within
two (2) Business Days of such occurrence, then the Register shall be automatically deemed updated to reflect such occurrence.
(iv) Disputes.
In the event of a dispute as to the number of shares of Common Stock issuable to the Holder in connection with a conversion of this Note,
the Company shall issue to the Holder the number of shares of Common Stock not in dispute and resolve such dispute in accordance with
Section 25.
(d) Limitations
on Conversions.
(i) Beneficial
Ownership. The Company shall not effect the conversion of any portion of this Note, and the Holder shall not have the right to convert
any portion of this Note pursuant to the terms and conditions of this Note and any such conversion shall be null and void and treated
as if never made, to the extent that after giving effect to such conversion, the Holder together with the other Attribution Parties collectively
would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the shares of Common Stock outstanding immediately
after giving effect to such conversion. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially
owned by the Holder and the other Attribution Parties shall include the number of shares of Common Stock held by the Holder and all other
Attribution Parties plus the number of shares of Common Stock issuable upon conversion of this Note with respect to which the determination
of such sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (A) conversion of the remaining,
nonconverted portion of this Note beneficially owned by the Holder or any of the other Attribution Parties and (B) exercise or conversion
of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any convertible notes
or convertible preferred stock or warrants) beneficially owned by the Holder or any other Attribution Party subject to a limitation on
conversion or exercise analogous to the limitation contained in this Section 3(d)(i). For purposes of this Section 3(d)(i), beneficial
ownership shall be calculated in accordance with Section 13(d) of the 1934 Act. For purposes of determining the number of outstanding
shares of Common Stock the Holder may acquire upon the conversion of this Note without exceeding the Maximum Percentage, the Holder may
rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with the SEC, as the case may be, (y) a more recent public
announcement by the Company or (z) any other written notice by the Company or the Transfer Agent, if any, setting forth the number of
shares of Common Stock outstanding (the “Reported Outstanding Share Number”). If the Company receives a Conversion
Notice from the Holder at a time
when the actual number of outstanding shares of Common Stock is less than the Reported Outstanding Share
Number, the Company shall notify the Holder in writing of the number of shares of Common Stock then outstanding and, to the extent that
such Conversion Notice would otherwise cause the Holder’s beneficial ownership, as determined pursuant to this Section 3(d)(i),
to exceed the Maximum Percentage, the Holder must notify the Company of a reduced number of shares of Common Stock to be purchased pursuant
to such Conversion Notice. For any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1)
Business Day confirm orally and in writing or by electronic mail to the Holder the number of shares of Common Stock then outstanding.
In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of
securities of the Company, including this Note, by the Holder and any other Attribution Party since the date as of which the Reported
Outstanding Share Number was reported. In the event that the issuance of shares of Common Stock to the Holder upon conversion of this
Note results in the Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum
Percentage of the number of outstanding shares of Common Stock (as determined under Section 13(d) of the 1934 Act), the number of shares
so issued by which the Holder’s and the other Attribution Parties’ aggregate beneficial ownership exceeds the Maximum Percentage
(the “Excess Shares”) shall be deemed null and void and shall be cancelled ab initio, and the Holder shall not have
the power to vote or to transfer the Excess Shares. Upon delivery of a written notice to the Company, the Holder may from time to time
increase (with such increase not effective until the sixty-first (61st) day after delivery of such notice) or decrease the
Maximum Percentage to any other percentage not in excess of 9.99% as specified in such notice; provided that any such increase in the
Maximum Percentage will not be effective until the sixty-first (61st) day after such notice is delivered to the Company. For
purposes of clarity, the shares of Common Stock issuable pursuant to the terms of this Note in excess of the Maximum Percentage shall
not be deemed to be beneficially owned by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the
1934 Act. No prior inability to convert this Note pursuant to this paragraph shall have any effect on the applicability of the provisions
of this paragraph with respect to any subsequent determination of convertibility. The provisions of this paragraph shall be construed
and implemented in a manner otherwise than in strict conformity with the terms of this Section 3(d)(i) to the extent necessary to correct
this paragraph (or any portion of this paragraph) which may be defective or inconsistent with the intended beneficial ownership limitation
contained in this Section 3(d)(i) or to make changes or supplements necessary or desirable to properly give effect to such limitation.
The limitation contained in this paragraph may not be waived and shall apply to a successor holder of this Note.
(ii) Principal
Market Regulation The Company shall not issue any shares of Common Stock upon conversion of this Note or otherwise pursuant to the
terms of this Note if the issuance of such shares of Common Stock would exceed the aggregate number of shares of Common Stock which the
Company may issue upon conversion of the Note or otherwise pursuant to the terms of this Note without breaching the Company’s obligations
under the rules or regulations of the Principal Market (the number of shares which may be issued without violating such rules and regulations,
including rules related to the aggregate of offerings under NASDAQ Listing Rule 5635(d), the “Exchange Cap”), except
that such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders as required by the applicable
rules of the Principal Market for issuances of shares of Common Stock in excess of such amount or (B) obtains a written opinion from counsel
to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the Holder.
4. RIGHTS
UPON EVENT OF DEFAULT.
(a) Event
of Default. Each of the following events shall constitute an “Event of Default” and each of the events in clauses
(v), (vi) and (vii) shall constitute a “Bankruptcy Event of Default”:
(i) the
effectiveness of the Registration Statement lapses for any reason (including, without limitation, the issuance of a stop order) or such
Registration Statement (or the prospectus supplement) is unavailable for the issuance of Conversion Shares, and such lapse or unavailability
continues for a period of ten (10) consecutive days or for more than an aggregate of fifteen (15) days in any 365-day period;
(ii) the
suspension from trading or the failure of the Common Stock to be trading or listed (as applicable) on an Eligible Market for a period
of seven (7) consecutive Trading Days;
(iii) the
Company’s (A) failure to cure a Conversion Failure by delivery of the required number of shares of Common Stock within five (5)
Trading Days after the applicable Conversion Date or (B) notice, written or oral, to any holder of the Note, including, without limitation,
by way of public announcement or through any of its agents, at any time, of its intention not to comply, as required, with a request for
conversion of the Note into shares of Common Stock that is requested in accordance with the provisions of the Note, other than pursuant
to Section 3(d);
(iv) the
Company’s failure to pay to the Holder any amount of Principal, Interest, Late Charges or other amounts when and as due under this
Note (including, without limitation, the Company’s failure to pay any redemption payments or amounts hereunder) or any other Transaction
Document (as defined in the Securities Exchange Agreement) or any other agreement, document, certificate or other instrument delivered
in connection with the transactions contemplated hereby and thereby, except, in the case of a failure to pay Interest and Late Charges
when and as due, in which case only if such failure remains uncured for a period of at least five (5) Trading Days;
(v) bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by or against
the Company or any Subsidiary and, if instituted against the Company or any Subsidiary by a third party, shall not be dismissed within
thirty (30) days of their initiation;
(vi) the
commencement by the Company or any Subsidiary of a voluntary case or proceeding under any applicable federal, state or foreign bankruptcy,
insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent
by it to the entry of a decree, order, judgment or other similar document in respect of the Company or any Subsidiary in an involuntary
case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable federal, state or foreign law, or the consent by it to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Company or any Subsidiary or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors,
or the execution of a composition of debts, or the occurrence of any other similar federal, state or foreign proceeding, or the admission
by it in writing of its inability to pay its debts generally as they become due, the taking of corporate action by the Company or any
Subsidiary in furtherance of any such action or the taking of any action by any Person to commence a Uniform Commercial Code foreclosure
sale or any other similar action under federal, state or foreign law;
(vii) the
entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any Subsidiary of a voluntary
or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar
law or (ii) a decree, order, judgment or other similar document adjudging the Company or any Subsidiary as bankrupt or insolvent, or approving
as properly filed a petition seeking liquidation, reorganization, arrangement, adjustment or composition of or in respect of the Company
or any Subsidiary under any applicable federal, state or foreign law or (iii) a decree, order, judgment or other similar document appointing
a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any
substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree, order,
judgment or other similar document or any such other decree, order, judgment or other similar document unstayed and in effect for a period
of thirty (30) consecutive days;
(viii) other
than as specifically set forth in another clause of this Section 4(a), the Company breaches any representation or warranty, in any material
respect (other than representations or warranties subject to material adverse effect or materiality, which may not be breached in any
respect) or any 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 that is curable, only if such breach remains uncured for a period of five (5) consecutive Trading Days;
(ix) a
materially false or inaccurate certification by the Company as to whether any Event of Default has occurred;
(x) any
material breach or failure in any respect by the Company to comply with any provision of Section 15 of this Note; or
(xi) any
Material Adverse Effect (as defined in the Securities Exchange Agreement) occurs.
(b) Notice
of an Event of Default; Redemption Right. Upon the occurrence of an Event of Default with respect to this Note, the Company shall
within one (1) Business Day of its discovery of such Event of Default deliver written notice thereof via electronic mail and overnight
courier (with next day delivery specified) (an “Event of Default Notice”) to the Holder. At any time after the earlier
of the Holder’s receipt of an Event of Default Notice and the Holder becoming aware of an Event of Default, the Holder may require
the Company to redeem (regardless of whether such Event of Default has been cured) 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 redeem. Each portion of this Note subject to redemption by the Company
pursuant to this Section 4(b) shall be redeemed by the Company at a price equal to the greater of (i) the product of (A) the Conversion
Amount to be redeemed multiplied by (B) the Redemption Premium and (ii) the product of (X) the Conversion Rate with respect to the Conversion
Amount in effect at such time as the Holder delivers an Event of Default Redemption Notice multiplied by (Y) the product of (1) the Redemption
Premium multiplied by (2) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date
immediately preceding such Event of Default and ending on the date the Company makes the entire payment required to be made under this
Section 4(b) (the “Event of Default Redemption Price”). Redemptions required by this Section 4(b) shall be made in
accordance with the provisions of Section 13. To the extent redemptions required by this Section 4(b) are deemed or determined by a court
of competent jurisdiction to be prepayments of this Note by the Company, such redemptions shall be deemed to be voluntary prepayments.
Notwithstanding anything to the contrary in this Section 3(e), but subject to Section 3(d), until the Event of Default Redemption Price
(together with any Late Charges thereon) is paid in full, the Conversion Amount submitted for redemption under this Section 4(b) (together
with any Late Charges thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant to the terms of this Note.
In the event of the Company’s redemption of any portion of this 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 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. Any redemption upon an Event of Default shall not constitute an election of remedies by the Holder,
and all other rights and remedies of the Holder shall be preserved.
(c) Mandatory
Redemption upon Bankruptcy Event of Default. Notwithstanding anything to the contrary herein, and notwithstanding any conversion that
is then required or in process, 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 (i) all outstanding Principal, accrued and unpaid Interest and accrued
and unpaid Late Charges on such Principal and Interest, multiplied by (ii) the Redemption Premium, in addition to any and all other amounts
due hereunder, without the requirement for any notice or demand or other action by the Holder or any other person or entity, 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, any right to conversion, and any right to payment of the Event of Default Redemption Price or any other Redemption Price,
as applicable.
5. RIGHTS
UPON FUNDAMENTAL TRANSACTION.
(a) Assumption.
The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity assumes in writing all
of the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions of this Section
5(a) pursuant to written agreements in form and substance satisfactory to the Holder and approved by the Holder prior to such Fundamental
Transaction, including an agreement to deliver to the holder of the Note in exchange for such Note a security of the Successor Entity
evidenced by a written instrument substantially similar in form and substance to the Note, including, without limitation, having a principal
amount and interest rate equal to the principal amounts then outstanding and the interest rates of the Note held by such holder, having
similar conversion rights as the Note satisfactory to the Holder and (ii) the Successor Entity (including its Parent Entity) is a
publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible Market. Upon the occurrence of any Fundamental
Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction,
the provisions of this Note and the other Transaction Documents referring to the “Company” shall refer instead to the Successor
Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Note
and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein. Upon consummation
of a Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be issued upon conversion
or redemption of this Note at any time after the consummation of such Fundamental Transaction, in lieu of the shares of Common Stock (or
other securities, cash, assets or other property (except such items still issuable under Sections 6 and 17, which shall continue to be
receivable thereafter)) issuable upon the conversion or redemption of the Note prior to such Fundamental Transaction, such shares of the
publicly traded common stock (or their equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been
entitled to receive upon the happening of such Fundamental Transaction had this Note been converted immediately prior to such Fundamental
Transaction (without regard to any limitations on the conversion of this Note), as adjusted in accordance with the provisions of this
Note. Notwithstanding the foregoing, the Holder may elect, at its sole option, by delivery of written notice to the Company to waive this
Section 5(a) to permit the Fundamental Transaction without the assumption of this Note. The provisions of this Section 5 shall apply similarly
and equally to successive Fundamental Transactions and shall be applied without regard to any limitations on the conversion of this Note.
(b) Notice
of a Change of Control; Redemption Right. No sooner than twenty (20) Trading Days nor later than ten (10) Trading Days prior to the
consummation of a Change of Control (the “Change of Control Date”), but not prior to the public announcement of such
Change of Control, the Company shall deliver written notice thereof via electronic mail and overnight courier to the Holder (a “Change
of Control Notice”). At any time during the period beginning after the Holder’s receipt of a Change of Control Notice
or the Holder becoming aware of a Change of Control if a Change of Control Notice is not delivered to the Holder in accordance with the
immediately preceding sentence (as applicable) and ending on twenty (20) Trading Days after the later of (A) the date of consummation
of such Change of Control or (B) the date of receipt of such Change of Control Notice or (C) the date of the announcement of such Change
of Control, the Holder may require the Company to redeem 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 Conversion Amount
the Holder is electing to redeem. The portion of this Note subject to redemption pursuant to this Section 5 shall be redeemed by the Company
in cash at a price equal to the greatest of (i) the product of (w) the Change of Control Redemption Premium multiplied by (y) the Conversion
Amount being redeemed, (ii) the product of (x) the Change of Control Redemption Premium multiplied by (y) the product of (A) the Conversion
Amount being redeemed multiplied by (B) the quotient determined by dividing (I) the greatest Closing Sale Price of the shares of Common
Stock during the period beginning on the date immediately preceding the earlier to occur of (1) the consummation of the applicable Change
of Control and (2) the public announcement of such Change of Control and ending on the date the Holder delivers the Change of Control
Redemption Notice by (II) the Conversion Price then in effect and (iii) the product of (y) the Change of Control Redemption Premium multiplied
by (z) the product of (A) the Conversion Amount being redeemed multiplied by (B) the quotient of (I) the aggregate cash consideration
and the aggregate cash value of any non-cash consideration per share of Common Stock to be paid to the holders of the shares of Common
Stock upon consummation of such Change of Control (any such non-cash
consideration constituting publicly-traded securities shall be valued
at the highest of the Closing Sale Price of such securities as of the Trading Day immediately prior to the consummation of such Change
of Control, the Closing Sale Price of such securities on the Trading Day immediately following the public announcement of such proposed
Change of Control and the Closing Sale Price of such securities on the Trading Day immediately prior to the public announcement of such
proposed Change of Control) divided by (II) the Conversion Price then in effect (the “Change of Control Redemption Price”).
Redemptions required by this Section 5 shall be made in accordance with the provisions of Section 13 and shall have priority to payments
to stockholders in connection with such 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 this Note by the Company, such redemptions shall be deemed to be voluntary prepayments.
Notwithstanding anything to the contrary in this Section 5, but subject to Section 3(d), until the Change of Control Redemption Price
(together with any Late Charges thereon) is paid in full, the Conversion Amount submitted for redemption under this Section 5(b) (together
with any Late Charges thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant to Section 3. In the event
of the Company’s redemption of any portion of this 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. Accordingly, any redemption premium due under this Section 5(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.
6. RIGHTS
UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS.
(a) Purchase
Rights. In addition to any adjustments pursuant to Sections 7 or 17 below, if at any time the Company grants, issues or sells any
Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to all or substantially all
of the record holders of any class of Common Stock, excluding the Excluded Transactions (the “Purchase Rights”), then
the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder
could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without
taking into account any limitations or restrictions on the convertibility of this Note and assuming for such purpose that the Note was
converted at the Conversion Price as of the applicable record date) immediately prior to the date on which a record is taken for the grant,
issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common
Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that to the extent that
the Holder’s right to participate in any such Purchase Right would result in the Holder and the other Attribution Parties exceeding
the Maximum Percentage, then the Holder shall not be entitled to participate in such Purchase Right to the extent of the Maximum Percentage
(and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Purchase Right (and beneficial ownership)
to the extent of any such excess) and such Purchase Right to such extent shall be held in abeyance (and, if such Purchase Right has an
expiration date, maturity date or other similar provision, such term shall be extended by such number of days held in abeyance, if applicable)
for the benefit of the Holder until such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution
Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such right (and any Purchase Right granted,
issued or sold on such initial Purchase Right or on any subsequent Purchase Right held similarly in abeyance (and, if such Purchase Right
has an expiration date, maturity date or other similar provision, such term shall be extended by such number of days held in abeyance,
if applicable)) to the same extent as if there had been no such limitation).
(b) Other
Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental
Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or
in exchange for shares of Common Stock (excluding the Spin-Off Transaction) (a “Corporate Event”), the Company shall
make appropriate provision to ensure that the Holder will thereafter have the right to receive upon conversion of this Note, at the Holder’s
option (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the Holder
would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the
consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this Note)
or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets received by the
holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts as the Holder would have
been entitled to receive had this Note initially been issued with conversion rights for the form of such consideration (as opposed to
shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion Rate. Provision made pursuant to
the preceding sentence shall be in a form and substance satisfactory to the Holder. The provisions of this Section 6 shall apply similarly
and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion or redemption of this
Note.
7. [Intentionally
Omitted].
8. REDEMPTIONS AT THE
COMPANY’S ELECTION.
(a) Company
Optional Redemption. At any time the Company shall have the right to redeem all, or any part, of the Conversion Amount then remaining
under this Note (each, a “Company Optional Redemption Amount”) on the Company Optional Redemption Date (each as defined
below) (each, a “Company Optional Redemption”). The portion of this Note subject to redemption pursuant to this Section
8(a) shall be redeemed by the Company in cash at a price (each, a “Company Optional Redemption Price”) equal to 115%
of the greater of (i) the Conversion Amount being redeemed as of the Company Optional Redemption Date and (ii) the product of (1) the
Conversion Rate with respect to the Conversion Amount being redeemed as of the Company Optional Redemption Date multiplied by (2) the
greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date immediately preceding such
Company Optional Redemption Notice Date and ending on the Trading Day immediately prior to the date the Company makes the entire payment
required to be made under this Section 8(a). The Company may exercise its right to require redemption under this Section 8(a) by delivering
a written notice thereof by electronic mail and overnight courier to the holder of the Note (the “Company Optional Redemption
Notice” and the date the holder of the Note received such notice is referred to as the “Company Optional Redemption
Notice Date”). The Company may deliver only one Company Optional Redemption Notice hereunder in any given twenty (20) Trading
Day period and each Company Optional Redemption Notice shall be irrevocable. The Company Optional Redemption Notice shall (x) state the
date on which the Company Optional Redemption shall occur (the “Company Optional Redemption Date”) which date shall
not be less than thirty (30) Trading Days nor more than one hundred (100) Trading Days following the Company Optional Redemption Notice
Date, and (y) state the aggregate Conversion Amount of the Note which is being redeemed in such Company Optional Redemption from the Holder
pursuant to this Section 8(a) on the Company Optional Redemption Date. All Conversion Amounts converted by the Holder after the Company
Optional Redemption Notice Date shall reduce the Company Optional Redemption Amount of this Note required to be redeemed on the Company
Optional Redemption Date. Redemptions made pursuant to this Section 8(a) shall be made in accordance with Section 13. In the event of
the Company’s redemption of any portion of this Note under this Section 8(a), 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 due under this Section 8(a) 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. For the avoidance of doubt, the Company shall have no right to effect a Company Optional Redemption if any Event of Default
has occurred and continuing, but any Event of Default shall have no effect upon the Holder’s right to convert this Note in its discretion.
9. [Intentionally
Omitted].
10. [Intentionally
Omitted].
11. NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation (as defined in the
Securities Exchange Agreement), Bylaws (as defined in the Securities Exchange Agreement) 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. Without limiting the generality
of the foregoing or any other provision of this Note or the other Transaction Documents, the Company (a) shall not increase the par
value of any shares of Common Stock receivable upon conversion of this Note above the Conversion Price then in effect, and (b) shall
take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock upon the conversion of this Note.
12. RESERVATION
OF AUTHORIZED SHARES.
(a) Reservation.
So long as the Note remains outstanding, the Company shall at all times reserve at least 100% of the number of shares of Common Stock
as shall from time to time be necessary to effect the conversion of the Note then outstanding (without regard to any limitations on conversions
and assuming such Note remains outstanding until the Maturity Date) at the Conversion Price then in effect (the “Required Reserve
Amount”).
(b) Insufficient
Authorized Shares. If, notwithstanding Section 12(a), and not in limitation thereof, at any time while the Note remains outstanding
the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve
for issuance upon conversion of the Note at least a number of shares of Common Stock equal to the Required Reserve Amount (an “Authorized
Share Failure”), then the Company shall immediately take all action necessary to increase the Company’s authorized shares
of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Note then outstanding. Without
limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure,
but in no event later than ninety (90) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of
its stockholders for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting,
the Company shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders’ approval
of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve
such proposal. In the event that the Company is prohibited from issuing shares of Common Stock pursuant to the terms of this Note due
to the failure by the Company to have sufficient shares of Common Stock available out of the authorized but unissued shares of Common
Stock (such unavailable number of shares of Common Stock, the “Authorized Failure Shares”), in lieu of delivering such
Authorized Failure Shares to the Holder, the Company shall pay cash in exchange for the redemption of such portion of the Conversion Amount
convertible into such Authorized Failure Shares at a price equal to the sum of (i) the product of (x) such number of Authorized Failure
Shares and (y) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date the Holder
delivers the applicable Conversion Notice with respect to such Authorized Failure Shares to the Company and ending on the date of such
issuance and payment under this Section 12(a); and (ii) to the extent the Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of Authorized Failure Shares, any brokerage commissions and
other out-of-pocket expenses, if any, of the Holder incurred in connection therewith. Nothing contained in Section 12(a) or this Section
12(b) shall limit any obligations of the Company under any provision of the Securities Exchange Agreement.
13. REDEMPTIONS.
(a) Mechanics.
The Company shall deliver the applicable Event of Default Redemption Price to the Holder in cash within five (5) Business Days after the
Company’s receipt of the Holder’s Event of Default Redemption Notice. 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 in cash
concurrently with the consummation of such Change of Control if such notice is received prior to the consummation of such Change of Control
and within five (5) Business Days after the Company’s receipt of such notice otherwise. The Company shall deliver the applicable
Company Optional Redemption Price to the Holder in cash on the applicable Company Optional Redemption Date. Notwithstanding anything herein
to the contrary, in connection with any redemption hereunder at a time the Holder is entitled to receive a cash payment under any of the
other Transaction Documents, at the option of the Holder delivered in writing to the Company, the applicable Redemption Price hereunder
shall be increased by the amount of such cash payment owed to the Holder under such other Transaction Document and, upon payment in full
or conversion in accordance herewith, shall satisfy the Company’s payment obligation under such other Transaction Document. In the
event of a redemption of less than all of the Conversion Amount of this Note, the Company shall promptly cause to be issued and delivered
to the Holder a new Note (in accordance with Section 20(d)) representing the outstanding Principal which has not been redeemed. In the
event that the Company does not pay the applicable 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 Conversion Amount that was submitted for redemption
and for which the applicable Redemption Price (together with any Late Charges thereon) 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 Conversion Amount and (y) the Company
shall immediately return this Note, or issue a new Note (in accordance with Section 20(d)), to the Holder, and in each case the principal
amount of this Note or such new Note (as the case may be) shall be increased by an amount equal to the difference between (1) the applicable
Redemption Price (as the case may be, and as adjusted pursuant to this Section 13, if applicable) minus (2) the Principal portion of the
Conversion Amount submitted for redemption. The Holder’s delivery of a notice voiding a Redemption Notice and exercise of its rights
following such notice shall not affect the Company’s obligations to make any payments of Late Charges which have accrued prior to
the date of such notice with respect to the Conversion Amount subject to such notice.
14. VOTING
RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law (including, without limitation,
Title 8 of the Delaware General Corporation Law) and as expressly provided in this Note.
15. [Intentionally
Omitted].
16. [Intentionally
Omitted].
17. [Intentionally
Omitted].
18. AMENDING
THE TERMS OF THIS NOTE. Except for Section 3(d), which may not be amended, modified or waived by the parties hereto, the prior written
consent of the Holder shall be required for any amendment, modification or waiver to this Note. Any amendment, modification or waiver
so approved shall be binding upon all existing and future holders of this Note.
19. TRANSFER.
This Note and any shares of Common Stock issued upon conversion of 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 2(g) of the Securities Exchange Agreement.
20. 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 20(d)), 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 20(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(c)(iii) following conversion
or 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 (as to which a written certification and the indemnification contemplated below shall suffice as such evidence),
and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary and reasonable
form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder
a new Note (in accordance with Section 20(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 20(d) and in principal amounts of at least $1,000) 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 Note. 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 20(a) or Section 20(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 and Late Charges on the Principal and Interest of this Note, from the Issuance Date.
21. REMEDIES,
CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Note shall be cumulative and in
addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including a decree
of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual and
consequential damages for any failure by the Company to comply with the terms of this Note. No failure on the part of the Holder to exercise,
and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise
by the Holder of any right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or
remedy. In addition, the exercise of any right or remedy of the Holder at law or equity or under this Note or any of the documents shall
not be deemed to be an election of Holder’s rights or remedies under such documents or at law or equity. 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, conversion 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 specific performance and/or temporary, preliminary
and permanent injunctive or other equitable relief from any court of competent jurisdiction in any such case without the necessity of
proving actual damages and without posting a bond or other security. The Company shall provide all information and documentation to the
Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of
this Note (including, without limitation, compliance with Section 7).
22. 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, without limitation, 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.
23. CONSTRUCTION;
HEADINGS. This Note shall be deemed to be jointly drafted by the Company and the initial Holder and shall not be construed against
any such 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. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine,
feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include”
and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,”
“hereunder,” “hereof” and words of like import refer to this entire Note instead of just the provision in which
they are found. Unless expressly indicated otherwise, all section references are to sections of this Note. Terms used in this Note and
not otherwise defined herein, but defined in the other Transaction Documents, shall have the meanings ascribed to such terms on the Closing
Date in such other Transaction Documents unless otherwise consented to in writing by the Holder.
24. 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. Notwithstanding the foregoing, nothing contained in this Section 24 shall permit any waiver of any
provision of Section 3(d).
25. DISPUTE
RESOLUTION.
(a) Submission
to Dispute Resolution.
(i) In
the case of a dispute relating to a Closing Bid Price, a Closing Sale Price, a Conversion Price, a VWAP or a fair market value or the
arithmetic calculation of a Conversion Rate, or the applicable Redemption Price (as the case may be) (including, without limitation, a
dispute relating to the determination of any of the foregoing), the Company or the Holder (as the case may be) shall submit the dispute
to the other party via electronic mail (A) if by the Company, within two (2) Business Days after the occurrence of the circumstances giving
rise to such dispute or (B) if by the Holder at any time after the Holder learned of the circumstances giving rise to such dispute. If
the Holder and the Company are unable to promptly resolve such dispute relating to such Closing Bid Price, such Closing Sale Price, such
Conversion Price, such VWAP or such fair market value, or the arithmetic calculation of such Conversion Rate or such applicable Redemption
Price (as the case may be), at any time after the second (2nd) Business Day following such initial notice by the Company or
the Holder (as the case may be) of such dispute to the Company or the Holder (as the case may be), then the Holder may, at its sole option,
select an independent, reputable investment bank to resolve such dispute.
(ii) The
Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered in accordance
with the first sentence of this Section 25 and (B) written documentation supporting its position with respect to such dispute, in each
case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following the date on which the Holder
selected such investment bank (the “Dispute Submission Deadline”) (the documents referred to in the immediately preceding
clauses (A) and (B) are collectively referred to herein as the “Required Dispute Documentation”) (it being understood
and agreed that if either the Holder or the Company fails to so deliver all of the Required Dispute Documentation by the Dispute Submission
Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer be entitled to (and hereby waives
its right to) deliver or submit any written documentation or other support to such investment bank with respect to such dispute and such
investment bank shall resolve such dispute based solely on the Required Dispute Documentation that was delivered to such investment bank
prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by both the Company and the Holder or otherwise requested
by such investment bank, neither the Company nor the Holder shall be entitled to deliver or submit any written documentation or other
support to such investment bank in connection with such dispute (other than the Required Dispute Documentation).
(iii) The
Company and the Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company and the Holder
of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline. The fees and expenses of
such investment bank shall be borne solely by the Company, and such investment bank’s resolution of such dispute shall be final
and binding upon all parties absent manifest error.
(b) Miscellaneous.
The Company expressly acknowledges and agrees that (i) this Section 25 constitutes an agreement to arbitrate between the Company and the
Holder (and constitutes an arbitration agreement) under § 7501, et seq. of the New York Civil Practice Law and Rules (“CPLR”)
and that the Holder is authorized to apply for an order to compel arbitration pursuant to CPLR § 7503(a) in order to compel compliance
with this Section 25, (ii) the terms of this Note and each other applicable Transaction Document shall serve as the basis for the selected
investment bank’s resolution of the applicable dispute, such investment bank shall be entitled (and is hereby expressly authorized)
to make all findings, determinations and the like that such investment bank determines are required to be made by such investment bank
in connection with its resolution of such dispute and in resolving such dispute such investment bank shall apply such findings, determinations
and the like to the terms of this Note and any other applicable Transaction Documents, (iii) the Holder (and only the Holder), in its
sole discretion, shall have the right to submit any dispute described in this Section 25 to any state or federal court sitting in The
City of New York, Borough of Manhattan in lieu of utilizing the procedures set forth in this Section 25 and (iv) nothing in this Section
25 shall limit the Holder from obtaining any injunctive relief or other equitable remedies (including, without limitation, with respect
to any matters described in this Section 25).
26. NOTICES;
CURRENCY; 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 9(f) of the Securities Exchange 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. Without limiting the generality
of the foregoing, the Company will give written notice to the Holder at least ten (10) days prior to the date on which the Company closes
its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any grant, issuances,
or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property to holders of shares
of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided
in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the
Holder.
(b) Currency.
All dollar amounts referred to in this Note are in United States Dollars (“U.S. Dollars”), and all amounts owing under
this Note shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar
equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation
to any amount of currency to be converted into U.S. Dollars pursuant to this Note, the U.S. Dollar exchange rate as published in the Wall
Street Journal on the relevant date of calculation (it being understood and agreed that where an amount is calculated with reference to,
or over, a period of time, the date of calculation shall be the final date of such period of time).
(c) Payments.
Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, unless otherwise expressly set forth herein,
such payment shall be made in lawful money of the United States of America by a certified 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 the Buyer, shall initially be as set forth in the Securities Exchange Agreement), provided that the Holder may elect to receive
a payment of cash via wire transfer of immediately available funds by providing the Company with prior written notice setting out such
request and the Holder’s wire transfer instructions. 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. Any amount of Principal
or other amounts due under the Transaction Documents which is not paid when due shall result in a late charge being incurred and payable
by the Company in an amount equal to interest on such amount at the rate of eighteen percent (18%) per annum from the date such amount
was due until the same is paid in full (“Late Charge”).
27. CANCELLATION.
After all Principal, accrued Interest, Late Charges and other amounts at any time owed on this Note have been paid in full, this Note
shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.
28. WAIVER
OF NOTICE. To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest and all other
demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Securities Exchange
Agreement.
29. GOVERNING
LAW. This Note shall be 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 Delaware, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of Delaware. Except as otherwise required by Section 25 above, the Company hereby
irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan,
for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted
by law. Nothing contained herein (i) 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 or to enforce a judgment or
other court ruling in favor of the Holder or (ii) shall limit, or shall be deemed or construed to limit, any provision of Section 25.
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.
30. JUDGMENT
CURRENCY.
(a) If
for the purpose of obtaining or enforcing judgment against the Company in any court in any jurisdiction it becomes necessary to convert
into any other currency (such other currency being hereinafter in this Section 30 referred to as the “Judgment Currency”)
an amount due in U.S. dollars under this Note, the conversion shall be made at the Exchange Rate prevailing on the Trading Day immediately
preceding:
(i) the
date actual payment of the amount due, in the case of any proceeding in the courts of New York or in the courts of any other jurisdiction
that will give effect to such conversion being made on such date: or
(ii) the
date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as of which
such conversion is made pursuant to this Section 30(a)(ii) being hereinafter referred to as the “Judgment Conversion Date”).
(b) If
in the case of any proceeding in the court of any jurisdiction referred to in Section 30(a)(ii) above, there is a change in the Exchange
Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable party shall pay
such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the Exchange Rate
prevailing on the date of payment, will produce the amount of US dollars which could have been purchased with the amount of Judgment Currency
stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion Date.
(c) Any
amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being obtained
for any other amounts due under or in respect of this Note.
31. 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 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).
32. MAXIMUM
PAYMENTS. Without limiting Section 9(d) of the Securities Exchange Agreement, nothing contained herein shall be deemed to establish
or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that
the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of
such maximum shall be credited against amounts owed by the Company to the Holder and thus refunded to the Company.
33. CERTAIN
DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:
(a) “1934
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(b) “Affiliate”
means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control
with, such Person, it being understood for purposes of this definition that “control” of a Person means the power directly
or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors of such Person or direct
or cause the direction of the management and policies of such Person whether by contract or otherwise.
(c) “Attribution
Parties” means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder funds
or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly managed or advised by the Holder’s
investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder or any of the foregoing,
(iii) any Person acting or who could be deemed to be acting as a Group together with the Holder or any of the foregoing and (iv) any other
Persons whose beneficial ownership of the Company’s Common Stock would or could be aggregated with the Holder’s and the other
Attribution Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose of the foregoing is to subject collectively
the Holder and all other Attribution Parties to the Maximum Percentage.
(d) “Bloomberg”
means Bloomberg, L.P.
(e) “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 generally are open for use by customers on such day.
(f) “Change
of Control” means any Fundamental Transaction other than (i) any merger of the Company or any of its, direct or indirect, wholly-owned
Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization or reclassification of the shares of
Common Stock in which holders of the Company’s voting power immediately prior to such reorganization, recapitalization or reclassification
continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly,
are, in all material respects, the holders of the voting power of the surviving entity (or entities with the authority or voting power to
elect the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities) after such reorganization,
recapitalization or reclassification, or (iii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction
of incorporation of the Company or any of its Subsidiaries.
(g) “Change
of Control Redemption Premium” means 125%.
(h) “Closing
Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price and
last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market
begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price (as the case may
be) then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg,
or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid price or
last trade price, respectively, of such security on the principal securities exchange or trading market where such security is listed
or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of
such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing
bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices,
respectively, of any market makers for such security as reported in The Pink Open Market (or a similar organization or agency succeeding
to its functions of reporting prices). If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular
date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price (as the case may be) of such security on such date
shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree
upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 25. All
such determinations shall be appropriately adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other
similar transactions during such period.
(i) “Closing
Date” shall have the meaning set forth in the Securities Exchange Agreement, which date is the date the Company initially issued
the Note pursuant to the terms of the Securities Exchange Agreement.
(j) “Common
Stock” shall have the meaning set forth in the Securities Exchange Agreement.
(k) “Convertible
Securities” means any stock or other security (other than Options) that is at any time and under any circumstances, directly
or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any shares
of Common Stock.
(l) “Eligible
Market” means The New York Stock Exchange, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market
or the Principal Market.
(m) “Excluded
Transactions” means the dividend or other distribution of the equity interests of any direct or indirect Subsidiary of the Company
and any corporate restructurings, reorganizations and other transactions completed in connection with the foregoing.
(n) “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 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock
or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off
or scheme of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire,
either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated
as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or
party to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock
such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50%
of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the Company shall,
directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, allow any Subject
Entity individually or the Subject Entities in the aggregate to be or become the “beneficial owner” (as defined in Rule 13d-3
under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender, tender offer, exchange,
reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization, recapitalization, spin-off,
scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner whatsoever, of either (x) at least
50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock, (y) at least 50% of the aggregate ordinary
voting power represented by issued and outstanding Common Stock not held by all such Subject Entities as of the date of this Note 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) 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.
(o) “Group”
means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.
(p) “Maturity
Date” shall mean the earlier of (i) September 28, 2024 or (ii) one (1) month after the date when no more Conversion Shares may
be issued by the Company because of the Exchange Cap (such date, the “Exchange Cap Acceleration Date”), provided, however,
that this clause (ii) shall not apply so long as (A) the Company is seeking Stockholder Consent (as defined in the Securities Exchange
Agreement) and (B) the Company is in compliance with all filing and meeting deadlines in connection with the Stockholder Consent pursuant
to Section 4(r) of the Securities Exchange Agreement, provided further, however that in the event that in the event that Stockholder Consent
is obtained after the Exchange Cap Acceleration Date but prior to one (1) month thereafter, the Maturity Date shall remain September 28,
2024.
(q) “Options”
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
(r) “Parent
Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent
equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent
Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.
(s) “Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,
any other entity or a government or any department or agency thereof.
(t) “Principal
Market” means the NYSE American.
(u) “Redemption
Notices” means, collectively, the Event of Default Redemption Notices, the Company Optional Redemption Notices and the Change
of Control Redemption Notices, and each of the foregoing, individually, a “Redemption Notice.”
(v) “Redemption
Premium” means 125%.
(w) “Redemption
Prices” means, collectively, Event of Default Redemption Prices, the Change of Control Redemption Prices and the Company Optional
Redemption Prices, and each of the foregoing, individually, a “Redemption Price.”
(x) “SEC”
means the United States Securities and Exchange Commission or the successor thereto.
(y) “SLAP”
shall have the meaning set forth in the Securities Exchange Agreement.
(z) “Subject
Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.
(aa) “Subsidiaries”
shall have the meaning set forth in the Securities Exchange Agreement.
(bb) “Successor Entity”
means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving any Fundamental Transaction
or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been entered into.
(cc) “Trading Day”
means, as applicable, (x) with respect to all price or trading volume determinations relating to the Common Stock, any day on which the
Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock,
then on the principal securities exchange or securities market on which the Common Stock is then traded, provided that “Trading
Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours
or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange
or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00
p.m., New York time) unless such day is otherwise designated as a Trading Day in writing by the Holder or (y) with respect to all determinations
other than price determinations relating to the Common Stock, any day on which The New York Stock Exchange (or any successor thereto)
is open for trading of securities.
(dd) “VWAP”
means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or, if the
Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market
on which such security is then traded), during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time,
as reported by Bloomberg through its “VAP” function (set to 09:30 start time and 16:00 end time) or, if the foregoing does
not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for
such security during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time, as reported by Bloomberg,
or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest Closing
Bid Price and the lowest closing ask price of any of the market makers for such security as reported in The Pink Open Market (or a similar
organization or agency succeeding to its functions of reporting prices). If the VWAP cannot be calculated for such security on such date
on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the Company
and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall
be resolved in accordance with the procedures in Section 25. All such determinations shall be appropriately adjusted for any stock dividend,
stock split, stock combination, recapitalization or other similar transaction during such period.
34. DISCLOSURE.
Upon delivery by the Company to the Holder (or receipt by the Company from the Holder) 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, non-public
information relating to the Company or any of its Subsidiaries, the Company shall on or prior to 9:00 am, New York city time on the Business
Day immediately following such notice delivery date, publicly disclose such material, non-public information on a Current Report on Form
8-K or otherwise. In the event that the Company believes that a notice contains material, non-public information relating to the Company
or any of its Subsidiaries, the Company so shall indicate to the Holder explicitly in writing in such notice (or immediately upon receipt
of notice from the Holder, as applicable), and in the absence of any such written indication in such notice (or notification from the
Company immediately upon receipt of notice from the Holder), the Holder shall be entitled to presume that information contained in the
notice does not constitute material, non-public information relating to the Company or any of its Subsidiaries. Nothing contained in this
Section 34 shall limit any obligations of the Company, or any rights of the Holder, under Section 4(i) of the Securities Exchange Agreement.
35. ABSENCE
OF TRADING AND DISCLOSURE RESTRICTIONS. The Company acknowledges and agrees that the Holder is not a fiduciary or agent of the Company
and that the Holder shall have no obligation to (a) maintain the confidentiality of any information provided by the Company or (b) refrain
from trading any securities while in possession of such information in the absence of a written non-disclosure agreement signed by an
officer of the Holder that explicitly provides for such confidentiality and trading restrictions. In the absence of such an executed,
written non-disclosure agreement, the Company acknowledges that the Holder may freely trade in any securities issued by the Company, may
possess and use any information provided by the Company in connection with such trading activity, and may disclose any such information
to any third party.
[signature page follows]
IN WITNESS WHEREOF, the Company has caused
this Note to be duly executed as of the Issuance Date set out above.
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AULT ALLIANCE, INC. |
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By: |
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Name: William B. Horne |
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Title: Chief Executive Officer |
| Convertible
Note - Signature Page | |
EXHIBIT I
AULT ALLIANCE, INC.
CONVERSION NOTICE
Reference is made to the Convertible Note
(the “Note”) issued to the undersigned by Ault Alliance, Inc., a Delaware corporation (the “Company”).
In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the Note) of
the Note indicated below into shares of common stock, no par value per share (the “Common Stock”), of the Company,
as of the date specified below. Capitalized terms not defined herein shall have the meaning as set forth in the Note.
Date of Conversion: |
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Aggregate Principal to be converted: |
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Aggregate accrued and unpaid Interest
and accrued and unpaid Late Charges with respect to such portion of the Aggregate Principal and such Aggregate Interest to be converted: |
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AGGREGATE CONVERSION AMOUNT
TO BE CONVERTED: |
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Please confirm the following information:
Number
of shares of Common Stock to be issued: |
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Please issue the Common Stock into which the Note
is being converted to Holder, or for its benefit, as follows:
| ¨ | Check here if requesting delivery as a certificate to the following name and to the following address: |
¨ Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows: |
DTC Participant: |
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DTC Number: |
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Account Number: |
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Date: _____________ __,
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Name of Registered Holder |
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E-mail Address:
Exhibit II
ACKNOWLEDGMENT
The Company hereby (a) acknowledges this
Conversion Notice, (b) certifies that the above indicated number of shares of Common Stock are eligible to be resold by the Holder and
(c) hereby directs _________________ to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent
Instructions dated _____________, 20__ from the Company and acknowledged and agreed to by ________________________.
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AULT ALLIANCE, INC. |
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By: |
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Name: William B. Horne |
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Title: Chief Executive Officer |
Exhibit 5.1
Ault Alliance, Inc.
11411 Southern Highlands Parkway, Suite 240
Las Vegas, Nevada 89141
Re: |
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Registration Statement on Form S-3 (Registration No. 333-260618) |
Ladies and Gentlemen:
We have acted as counsel to
Ault Alliance, Inc., a Delaware corporation (the “Company”), in connection with (a) the offering of $2,200,000 in principal
amount of a convertible promissory note (the “Note”) to an investor and the offering of up to 2,115,811 shares of the Company’s
Class A common stock, par value $0.001 per share (the “Common Stock”), issuable upon conversion of the Note (the “Shares”),
to be issued pursuant to that Securities Exchange Agreement (the “Securities Exchange Agreement”) described in the Prospectus
Supplement (as defined herein), pursuant to a Registration Statement on Form S-3 (File No. 333-260618) (the “Registration Statement”)
filed with the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “Act”),
and declared effective by the SEC on November 12, 2021, and the related prospectus dated therein (the “Prospectus”), as supplemented
by the prospectus supplement dated September 28, 2023 pursuant to Rule 424(b) promulgated under the Act (the “Prospectus Supplement”).
For purposes of this opinion,
we have examined such documents and reviewed such questions of law as we have considered necessary and appropriate for the purposes of
our opinion set forth below. In rendering our opinion, we have assumed the authenticity of all documents submitted to us as originals,
the genuineness of all signatures and the conformity to authentic originals of all documents submitted to us as copies. We have also assumed
the legal capacity for all purposes relevant hereto of all natural persons and, with respect to all parties to agreements or instruments
relevant hereto other than the Company, that such parties had the requisite power and authority (corporate or otherwise) to execute, deliver
and perform such agreements or instruments, that such agreements or instruments have been duly authorized by all requisite action (corporate
or otherwise), executed and delivered by such parties and that such agreements or instruments are the valid, binding and enforceable obligations
of such parties. As to questions of fact material to our opinions, we have relied upon certificates of officers of the Company and of
public officials.
Based upon and subject to
the foregoing, we are of the opinion that (a) the Note, when executed, issued and delivered, against payment in full therefor, as contemplated
in the Registration Statement, the Prospectus Supplement and the Securities Exchange Agreement, will be a valid and legally binding obligation
of the Company, enforceable against the Company in accordance with its terms and (b) the Shares, when issued and delivered in accordance
with the terms of the Note, will be validly issued, fully paid and non-assessable. The opinion expressed in clause (a) above is qualified
by, and is subject to, and we render no opinion with respect to, the following limitations and exceptions to the enforceability of the
Note: (i) such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights
generally and by general equitable principles (regardless of whether enforceability is considered in a proceeding in equity or at law),
(ii) enforceability of any indemnification or contribution provision may be limited under the federal and state securities laws, (iii)
that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and
to the discretion of the court before which any proceeding therefor may be brought, (iv) the effect of general principles of equity and
similar principles, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, public policy
and unconscionability, and the possible unavailability of specific performance, injunctive relief, or other equitable remedies, regardless
of whether considered in a proceeding in equity or at law, (v) the effect of laws relating to usury or permissible rates of interest for
loans, forbearances or the use of money, (vi) public policy limitations, (vii) the qualification that enforceability may be limited by
a refusal to recognize a purported waiver of any statutory right, (viii) generally applicable rules of law that forum selection clauses
in contracts are not necessarily binding on the courts in the forum selected, (ix) general rules of law that may render an entire agreement
unenforceable if any unenforceable provision thereof is essential to the agreed upon exchange, (x) the qualification that a provision
permitting modification of an agreement or waiver of rights or remedies under an agreement only in writing may not be enforceable, (xi)
the qualification that provisions purporting to require that waivers be in writing may not be enforceable to the extent that the conduct
of the parties evidences a contrary course of dealing, (xii) the qualification that provisions requiring the payment of fees, expenses
and costs may be limited, and (xiii) whether a state court of the State of New York or otherwise or a federal court of the United States
would give effect to the choice of Delaware law provided for in the Note.
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September 28, 2023
Page 2
We hereby consent to the filing
of this opinion as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on September 28, 2023, which is incorporated
by reference in the Registration Statement and the Prospectus, and to the reference to this firm under the heading “Legal Matters”
in the Prospectus Supplement and the Prospectus. In giving such consent, we do not hereby concede that we are within the category of persons
whose consent is required under Section 7 of the Act, or the rules and regulations of the SEC thereunder.
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Very truly yours,
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/s/ Olshan Frome Wolosky LLP |
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OLSHAN FROME WOLOSKY LLP |
Exhibit 10.1
SECURITIES EXCHANGE
AGREEMENT
This SECURITIES EXCHANGE
AGREEMENT (the “Agreement”), dated as of September 27, 2023, is by and between Ault Alliance, Inc., a Delaware
corporation with offices located at 11411 Southern Highlands Parkway, Suite 240, Las Vegas, NV 89141 (the “Company”),
and Walleye Opportunities Master Fund Ltd. (the “Buyer”).
RECITALS
A. On
September 8, 2023, the Company issued to the Buyer a term note in the principal amount of $2,200,000 (the “Old Note”),
which Old Note is outstanding as of the date of this Agreement.
B. Subject
to the satisfaction of the conditions set forth herein, the Company and the Buyer desire to enter into a transaction wherein the Company
shall issue the Buyer a new Convertible Promissory Note in the principal amount of $2,200,000, substantially in the form attached hereto
as Exhibit A (the “New Note”), in exchange for the Old Note.
C. The
New Note shall be convertible into shares of Common Stock (as defined below) (the shares of Common Stock issuable pursuant to the terms
of the New Note, including, without limitation, upon conversion or otherwise, collectively, the “Conversion Shares”
and together with the New Note, the “Securities”), in accordance with the terms of the New Note.
D. The
Company and the Buyer is executing and delivering this Agreement with respect to the Securities in reliance upon the effective registration
statement on Form S-3 (Commission File No. 333-260618) (as amended, the “Registration Statement”) filed by the Company
with the United States Securities and Exchange Commission (the “SEC”) pursuant to the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder (collectively, the “1933 Act”), for the registration of the Securities,
as such Registration Statement may be amended and supplemented from time to time (including pursuant to Rule 462(b) of the 1933 Act),
including all documents filed as part thereof or incorporated by reference therein, and including all information deemed to be a part
thereof at the time of effectiveness pursuant to Rule 430B of the 1933 Act, and the prospectus supplement (the “Prospectus Supplement”)
complying with Rule 424(b) of the 1933 Act that is delivered by the Company to the Buyer in connection with the execution and delivery
of this Agreement, including the documents incorporated by reference therein, and that is filed with the SEC.
AGREEMENT
NOW, THEREFORE, in consideration
of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and each Buyer hereby agree as follows:
1. EXCHANGE
OF OLD NOTE FOR NEW NOTE.
(a) Exchange
of Old Note for New Note. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company
shall issue and sell to the Buyer, and the Buyer agrees to purchase from the Company on the Closing Date (as defined below) the New Note
in exchange for the cancellation and retirement of the Old Note.
(b) Closing.
The closing (the “Closing”) of the exchange of the Old Note for the New Note shall occur at the offices of the Company.
The date and time of the Closing (the “Closing Date”) shall be 4:00 p.m., New York time, on the first (1st) Business
Day on which the conditions to the Closing set forth in Sections 6 and 7 below are satisfied or waived (or such other date as is mutually
agreed to by the Company and the Buyer). As used herein “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 generally are open for use by customers on such day.
(c) Purchase
Price. The purchase price for the New Note (the “Purchase Price”) shall be $2,200,000.
(d) Form
of Payment. On the Closing Date, (i) the Buyer shall pay the Purchase Price to the Company for the New Note by delivery of the Old
Note for cancellation and (ii) the Company shall deliver to the Buyer the New Note duly executed on behalf of the Company and registered
in the name of the Buyer or its designee.
2. BUYER’S
REPRESENTATIONS AND WARRANTIES.
The Buyer represents and warrants
to the Company that, as of the date hereof and as of the Closing Date:
(a) Organization;
Authority. The Buyer is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its
organization with the requisite power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents
(as defined below) to which it is a party and otherwise to carry out its obligations hereunder and thereunder.
(b) No
Public Sale or Distribution. The Buyer (i) is acquiring the New Note and (ii) upon conversion of the New Note will acquire the Conversion
Shares issuable upon conversion thereof, in each case, for its own account and not with a view towards, or for resale in connection with,
the public sale or distribution thereof in violation of applicable securities laws, except pursuant to sales registered or exempted under
the 1933 Act; provided, however, by making the representations herein, such Buyer does not agree, or make any representation or warranty,
to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time
in accordance with or pursuant to a registration statement or an exemption from registration under the 1933 Act. Such Buyer does not
presently have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities in violation
of applicable securities laws. For purposes of this Agreement, “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.
(c) [Intentionally
Omitted]
(d) [Intentionally
Omitted]
(e) Information.
The Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company
and materials relating to the offer and sale of the Securities that have been requested by the Buyer. The Buyer and its advisors, if
any, have had (i) the opportunity to review the Transaction Documents and the SEC Documents (as defined below) and has been afforded
the opportunity to ask such questions of the Company 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. Neither such inquiries nor any other due diligence investigations conducted by the Buyer or its advisors,
if any, or its representatives shall modify, amend or affect the Buyer’s right to rely on the Company’s representations and
warranties contained herein. The Buyer understands that its investment in the Securities involves a high degree of risk. The Buyer acknowledges
that it can bear the economic risk and complete loss of its investment in the Securities and has such knowledge and experience in financial
or business matters that it is capable of evaluating the merits and risks of the investment contemplated hereby. The Buyer did not learn
of the investment in the Securities as a result of any general solicitation or general advertising. The Buyer has sought such accounting,
legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.
The Buyer is not relying upon, and has not relied upon, any statement, representation or warranty made by any person, except for statements,
representations and warranties contained in this Agreement, in making its investment or decision to invest in the Company.
(f) No
Governmental Review. The Buyer understands that no United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in
the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.
(g) Ownership
of Old Note. The Buyer owns and holds, beneficially and of record, the entire right, title, and
interest in and to the Old Note free and clear of all rights and liens (other than pledges or security interests (x) arising by operation
of applicable securities laws and (y) that the Buyer may have created in favor of a prime broker under and in accordance with its prime
brokerage agreement with such broker). The Buyer has full power and authority to transfer and dispose of the Old Note to the Company
free and clear of any right or lien. Other than the transactions contemplated by this Agreement, there is no outstanding, plan, pending
proposal, or other right of any person or entity to acquire all or any part of the Old Note and corresponding deduction of the face amount
of the Old Note.
(i) Validity;
Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of the Buyer and shall constitute
the legal, valid and binding obligations of the Buyer enforceable against the Buyer in accordance with its terms, except as such enforceability
may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
(j) No
Conflicts. The execution, delivery and performance by the Buyer of this Agreement and the consummation by the Buyer of the transactions
contemplated hereby will not (i) result in a violation of the organizational documents of the Buyer, or (ii) conflict with, or constitute
a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Buyer is a party, or (iii) result in
a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to the Buyer,
except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which could not, individually
or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Buyer to perform its obligations
hereunder.
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
The Company represents and
warrants to the Buyer that, as of the date hereof and as of the Closing Date:
(a) Organization
and Qualification. Each of the Company and each of its Subsidiaries are entities duly organized and validly existing and in good
standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authority to own their properties
and to carry on their business as now being conducted and as presently proposed to be conducted. Each of the Company and each of its
Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership
of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to
be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect (as defined below). As used
in this Agreement, “Material Adverse Effect” means any material adverse effect on (i) the business, properties, assets,
liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of the Company and its Subsidiaries,
taken as a whole, (ii) the transactions contemplated hereby or in any of the other Transaction Documents or any other agreements or instruments
to be entered into in connection herewith or therewith or (iii) the authority or ability of the Company or any of its Subsidiaries to
perform any of their respective obligations under any of the Transaction Documents. Other than the Persons (as defined below) set forth
on Schedule 3(a), the Company has no Subsidiaries. “Subsidiaries” means any Person in which the Company,
directly or indirectly, (I) owns any of the outstanding capital stock or holds any equity or similar interest of such Person or (II)
controls or operates all or any part of the business, operations or administration of such Person, and each of the foregoing, is individually
referred to herein as a “Subsidiary.”
(b) Authorization;
Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations under this Agreement
and the other Transaction Documents and to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery
of this Agreement and the other Transaction Documents by the Company, and the consummation by the Company of the transactions contemplated
hereby (including, without limitation, the issuance of the New Note and the reservation for issuance and issuance of the Conversion Shares
issuable upon conversion of the New Note) have been duly authorized by the Company’s board of directors and (other than (i) any
filings as may be required by any state securities agencies, (ii) the filing of a Supplemental Listing Application (“SLAP”)
with, and approval by, the Principal Market (as defined below) of the SLAP and (iii) approval by the Company’s stockholders of
the Transaction Documents to issue such number of Conversion Shares in excess of 19.99% of the total shares of Common Stock issued and
outstanding as of the Date of this Agreement, in accordance with the rules and regulations of the Principal Market) (clauses (i),
(ii) and (iii) collectively, the “Required Filings”) no further filing, consent or authorization is required
by the Company, its boards of directors or stockholders or other governing body. This Agreement has been, and the other Transaction Documents
to which it is a party will, prior to the Closing, have been, duly executed and delivered by the Company, and each constitutes the legal,
valid and binding obligations of the Company, enforceable against the Company in accordance with its respective terms, except as such
enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as
rights to indemnification and to contribution may be limited by federal or state securities law. “Transaction Documents”
means, collectively, this Agreement, the New Note, the Irrevocable Transfer Agent Instructions (as defined below) and each of the other
agreements and instruments entered into or delivered by any of the parties hereto in connection with the transactions contemplated hereby
and thereby, as may be amended from time to time.
(c) Issuance
of Securities. The issuance of the Securities is duly authorized and when issued and delivered in accordance
with the terms of the Transaction Documents, shall be validly issued, fully paid and non-assessable and free from all preemptive or similar
rights, mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security interests and other
encumbrances (collectively “Liens”) with respect to the issuance thereof. As of the Closing Date, the Company shall
have reserved from its duly authorized capital stock not less than 100% of the maximum number of Conversion Shares issuable upon conversion
of the New Note (without taking into account any limitations on the conversion of the New Note set forth therein). Upon conversion in
accordance with the New Note, the Conversion Shares, when issued, will be validly issued, fully paid and nonassessable and free from all
preemptive or similar rights or Liens with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder
of Common Stock.
(d) No
Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the New Note, the Conversion Shares
and the reservation for issuance of the Conversion Shares) will not (i) result in a violation of the Certificate of Incorporation (as
defined below) (including, without limitation, any certificate of designation contained therein), Bylaws (as defined below) or other
organizational documents of the Company, or any capital stock or other securities of the Company, (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a default) in any respect under, or give to others any rights
of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including, without limitation,
foreign, federal and state securities laws and regulations and the rules and regulations of The NYSE American (the “Principal
Market”) and including all applicable foreign, federal and state laws, rules and regulations) applicable to the Company or
any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected assuming,
with respect to clauses (ii) and (iii) above, the making of the Required Filings and except in the case of clauses (ii)
and (iii) above, for such breaches, violations or conflicts as would not reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect.
(e) Consents.
Neither the Company nor any Subsidiary is required to obtain any consent from, authorization or order of, or make any filing or registration
with (other than the Required Filings), any Governmental Entity (as defined below) or any regulatory or self-regulatory agency or any
other Person in order for it to execute, deliver or perform any of its respective obligations under or contemplated by the Transaction
Documents, in each case, in accordance with the terms hereof or thereof. Other than the Required Filings, all consents, authorizations,
orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been or will be obtained
or effected on or prior to the Closing Date, and the Company is not aware of any facts or circumstances which might prevent the Company
from obtaining or effecting any of the registration, application or filings contemplated by the Transaction Documents. Except as set
forth in the SEC Documents (as hereinafter defined), the Company is not in violation of the requirements of the Principal Market and
has no knowledge of any facts or circumstances which could reasonably lead to delisting or suspension of the Common Stock in the foreseeable
future. “Governmental Entity” means any nation, state, county, city, town, village, district, or other political jurisdiction
of any nature, federal, state, local, municipal, foreign, or other government, governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and any court or other tribunal), multi-national organization
or body; or body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature or instrumentality of any of the foregoing, including any entity or enterprise owned or controlled by
a government or a public international organization or any of the foregoing.
(f) Acknowledgment
Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that the Buyer is acting solely in the capacity
of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby and
that the Buyer is not (i) an officer or director of the Company or any of its Subsidiaries, (ii) an “affiliate” (as defined
in Rule 144 or Rule 144A promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”))
of the Company or any of its Subsidiaries or (iii) to its knowledge, a “beneficial owner” of more than 10% of the shares
of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “1934 Act”)).
The Company further acknowledges that the Buyer is not acting as a financial advisor or fiduciary of the Company with respect to the
Transaction Documents and the transactions contemplated hereby, and any advice given by the Buyer or any of its representatives or agents
in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to the Buyer’s
purchase of the Securities. The Company further represents to the Buyer that the Company’s decision to enter into the Transaction
Documents has been based solely on the independent evaluation by the Company and its representatives.
(g) No
General Solicitation; Placement Agent’s Fees. The Company shall be responsible for the payment of any placement agent’s
fees, financial advisory fees, or brokers’ commissions (other than for Persons engaged by any Buyer or its investment advisor)
relating to or arising out of the transactions contemplated hereby, including, without limitation, placement agent fees payable to Spartan
Capital Securities, LLC, as placement agent (the “Placement Agent”) in connection with the sale of the Securities
and such fees and expenses disclosed on Schedule 3(g). The Company shall pay, and hold the Buyer harmless against, any liability,
loss or expense (including, without limitation, attorney’s fees and out-of-pocket expenses) arising in connection with any such
claim. The Company acknowledges that it has engaged the Placement Agent in connection with the sale of the Securities. Other than the
Placement Agent, and except as disclosed on Schedule 3(g), neither the Company nor any of its Subsidiaries has engaged any placement
agent or other agent in connection with the offer or sale of the Securities.
(h) [Intentionally
Omitted]
(i) Dilutive
Effect. The Company understands and acknowledges that the number of Conversion Shares will increase in certain circumstances. The
Company further acknowledges that its obligation to issue the Conversion Shares pursuant to the terms of the New Note in accordance with
this Agreement and the New Note is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership
interests of other stockholders of the Company.
(j) Application
of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action, if any, in order
to render inapplicable any control share acquisition, interested stockholder, business combination, poison pill (including, without limitation,
any distribution under a rights agreement), stockholder rights plan or other similar anti-takeover provision under the Certificate of
Incorporation, Bylaws or other organizational documents or the laws of the jurisdiction of its incorporation or otherwise which is or
could become applicable to the Buyer as a result of the transactions contemplated by this Agreement, including, without limitation, the
Company’s issuance of the Securities and the Buyer’s ownership of the Securities. The Company and its board of directors
have taken all necessary action, if any, in order to render inapplicable any stockholder rights plan or similar arrangement relating
to accumulations of beneficial ownership of shares of Common Stock or a change in control of the Company or any of its Subsidiaries.
(k) SEC
Documents; Financial Statements. Except as set forth on Schedule 3(k), during the one (1) year prior to the date hereof, the
Company has timely filed all reports, schedules, forms, proxy statements, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date hereof and all exhibits
and appendices included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein
being hereinafter referred to as the “SEC Documents”). The Company has delivered or has made available to the Buyer
or its representatives true, correct and complete copies of each of the SEC Documents not available on the EDGAR system. As of their
respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations
of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the
SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of their respective
dates, the financial statements of the Company included in the SEC Documents complied in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect thereto as in effect as of the time of filing. Such financial
statements have been prepared in accordance with generally accepted accounting principles (“GAAP”), consistently applied,
during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the
case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and
cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments which will
not be material, either individually or in the aggregate). The reserves, if any, established by the Company or the lack of reserves,
if applicable, are reasonable based upon facts and circumstances known by the Company on the date hereof and there are no loss contingencies
that are required to be accrued by the Statement of Financial Accounting Standard No. 5 of the Financial Accounting Standards Board which
are not provided for by the Company in its financial statements or otherwise. No other information provided by or on behalf of the Company
to the Buyer which is not included in the SEC Documents (including, without limitation, information referred to in Section 2(e)
of this Agreement or in the disclosure schedules to this Agreement) contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements therein not misleading, in the light of the circumstance under which they
are or were made. The Company is not currently contemplating to amend or restate any of the financial statements (including, without
limitation, any notes or any letter of the independent accountants of the Company with respect thereto) included in the SEC Documents
(the “Financial Statements”), nor is the Company currently aware of facts or circumstances which would require the
Company to amend or restate any of the Financial Statements, in each case, in order for any of the Financials Statements to be in compliance
with GAAP and the rules and regulations of the SEC. The Company has not been informed by its independent accountants that they recommend
that the Company amend or restate any of the Financial Statements or that there is any need for the Company to amend or restate any of
the Financial Statements.
(l) Absence
of Certain Changes. Other than as disclosed in the SEC Documents, since the date of the Company’s most recent audited financial
statements contained in a Form 10-K, there has been no material adverse change and no material adverse development in the business, assets,
liabilities, properties, operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any
of its Subsidiaries. Except as disclosed in the SEC Documents, since the date of the Company’s most recent audited financial statements
contained in a Form 10-K, neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets,
individually or in the aggregate, outside of the ordinary course of business or (iii) made any capital expenditures, individually or
in the aggregate, outside of the ordinary course of business. Neither the Company nor any of its Subsidiaries has taken any steps to
seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding
up, nor does the Company or any Subsidiary have any knowledge or reason to believe that any of their respective creditors intend to initiate
involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so. The Company and
its Subsidiaries, on a consolidated basis, are not as of the date hereof, and after giving effect to the transactions contemplated hereby
to occur at the Closing, will not be Insolvent (as defined below). For purposes of this Section 3(l), “Insolvent”
means, with respect to the Company and its Subsidiaries, on a consolidated basis, (A) the present fair saleable value of the Company’s
and its Subsidiaries’ assets is less than the amount required to pay the Company’s and its Subsidiaries’ total indebtedness,
(B) the Company and its Subsidiaries are unable to pay their debts and liabilities, subordinated, contingent or otherwise, as such debts
and liabilities become absolute and matured or (C) the Company and its Subsidiaries intend to incur or believe that they will incur debts
that would be beyond their ability to pay as such debts mature. Neither the Company nor any of its Subsidiaries has engaged in any business
or in any transaction, and is not about to engage in any business or in any transaction, for which the Company’s or such Subsidiary’s
remaining assets constitute unreasonably small capital with which to conduct the business in which it is engaged as such business is
now conducted and is proposed to be conducted.
(m) No
Undisclosed Events, Liabilities, Developments or Circumstances. Except as set forth on Schedule 3(m), no event, liability,
development or circumstance has occurred or exists, or is reasonably expected to exist or occur with respect to the Company, any of its
Subsidiaries or any of their respective businesses, properties, liabilities, prospects, operations (including results thereof) or condition
(financial or otherwise), that (i) would be required to be disclosed by the Company under applicable securities laws on a registration
statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly
announced, (ii) could have a material adverse effect on the Buyer’s investment hereunder or (iii) could have a Material Adverse
Effect.
(n) Conduct
of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of any term of or in default under
its Certificate of Incorporation, any certificate of designation, preferences or rights of any other outstanding series of preferred
stock of the Company or any of its Subsidiaries or Bylaws or their organizational charter, certificate of formation, memorandum of association,
articles of association, Articles of Incorporation or Articles of Incorporation or bylaws, respectively. Neither the Company nor any
of its Subsidiaries is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the
Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct its business in violation of any
of the foregoing, except in all cases for possible violations which could not, individually or in the aggregate, have a Material Adverse
Effect. Without limiting the generality of the foregoing, except as set forth on Schedule 3(n), the Company is not in violation
of any of the rules, regulations or requirements of the Principal Market and has no knowledge of any facts or circumstances that could
reasonably lead to delisting or suspension of the Common Stock by the Principal Market in the foreseeable future. During the two years
prior to the date hereof, (i) the Common Stock has been listed or designated for quotation on the Principal Market, (ii) trading in the
Common Stock has not been suspended by the SEC or the Principal Market and (iii) except as set forth in the SEC Documents, the Company
has received no communication, written or oral, from the SEC or the Principal Market regarding the suspension or delisting of the Common
Stock from the Principal Market. The Company and each of its Subsidiaries possess all certificates, authorizations and permits issued
by the appropriate regulatory authorities necessary to conduct their respective businesses, except where the failure to possess such
certificates, authorizations or permits would not have, individually or in the aggregate, a Material Adverse Effect, and neither the
Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate,
authorization or permit. There is no agreement, commitment, judgment, injunction, order or decree binding upon the Company or any of
its Subsidiaries or to which the Company or any of its Subsidiaries is a party which has or would reasonably be expected to have the
effect of prohibiting or materially impairing any business practice of the Company or any of its Subsidiaries, any acquisition of property
by the Company or any of its Subsidiaries or the conduct of business by the Company or any of its Subsidiaries as currently conducted
other than such effects, individually or in the aggregate, which have not had and would not reasonably be expected to have a Material
Adverse Effect on the Company or any of its Subsidiaries.
(o) Foreign
Corrupt Practices. Neither the Company nor any director, officer, agent, employee, nor any other
person acting for or on behalf of the Company (individually and collectively, a “Company Affiliate”) have violated
the U.S. Foreign Corrupt Practices Act (the “FCPA”) or any other applicable anti-bribery or anti-corruption laws,
nor has any Company Affiliate offered, paid, promised to pay, or authorized the payment of any money, or offered, given, promised to
give, or authorized the giving of anything of value, to any officer, employee or any other person acting in an official capacity for
any Governmental Entity to any political party or official thereof or to any candidate for political office (individually and collectively,
a “Government Official”) or to any person under circumstances where such Company Affiliate knew or was aware of a
high probability that all or a portion of such money or thing of value would be offered, given or promised, directly or indirectly, to
any Government Official, for the purpose of:
(i) (A)
influencing any act or decision of such Government Official in his/her official capacity, (B) inducing such Government Official to do
or omit to do any act in violation of his/her lawful duty, (C) securing any improper advantage, or (D) inducing such Government Official
to influence or affect any act or decision of any Governmental Entity, or
(ii) assisting
the Company or its Subsidiaries in obtaining or retaining business for or with, or directing business to, the Company or its Subsidiaries.
(p) Sarbanes-Oxley
Act. The Company and each Subsidiary is in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002,
as amended, and any and all applicable rules and regulations promulgated by the SEC thereunder.
(q) Transactions
With Affiliates. Since September 1, 2021, except as disclosed in the SEC Documents, no current or former employee, partner, director,
officer or stockholder (direct or indirect) of the Company or its Subsidiaries, or any associate, or, to the knowledge of the Company,
any affiliate of any thereof, or any relative with a relationship no more remote than first cousin of any of the foregoing, is presently,
or has been, (i) a party to any transaction with the Company or its Subsidiaries (including any contract, agreement or other arrangement
providing for the furnishing of services by, or rental of real or personal property from, or otherwise requiring payments to, any such
director, officer or stockholder or such associate or affiliate or relative Subsidiaries (other than for ordinary course services as
employees, officers or directors of the Company or any of its Subsidiaries)) or (ii) the direct or indirect owner of an interest in any
corporation, firm, association or business organization which is a competitor, supplier or customer of the Company or its Subsidiaries
(except for a passive investment (direct or indirect) in less than 5% of the common stock of a company whose securities are traded on
or quoted through an Eligible Market (as hereinafter defined)), nor does any such Person receive income from any source other than the
Company or its Subsidiaries which relates to the business of the Company or its Subsidiaries or should properly accrue to the Company
or its Subsidiaries. No employee, officer, stockholder or director of the Company or any of its Subsidiaries or member of his or her
immediate family is indebted to the Company or its Subsidiaries, as the case may be, nor is the Company or any of its Subsidiaries indebted
(or committed to make loans or extend or guarantee credit) to any of them, other than (i) for payment of salary for services rendered,
(ii) reimbursement for reasonable expenses incurred on behalf of the Company, and (iii) for other standard employee benefits made generally
available to all employees or executives (including stock option agreements outstanding under any stock option plan approved by the Board
of Directors of the Company).
(r) Equity
Capitalization.
(i) Definitions:
(A) “Common
Stock” means (x) the Company’s shares of Class A common stock, $0.001 par value per share, and (y) any capital stock
into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(B) “Class
B Common Stock” means (x) the Company’s shares of Class B common stock, $0.001 par value per share, and (y) any capital
stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(B) “Preferred
Stock” means (x) the Company’s blank check preferred stock, $0.001 par value per share, the terms of which may be designated
by the board of directors of the Company in a certificate of designations and (y) any capital stock into which such preferred stock shall
have been changed or any share capital resulting from a reclassification of such preferred stock (other than a conversion of such preferred
stock into Common Stock in accordance with the terms of such certificate of designations).
(ii) Authorized
and Outstanding Capital Stock. As of the date hereof, the authorized capital stock of the Company consists of (A) 500,000,000 shares
of Common Stock, of which, 10,584,349 are issued and outstanding and 71,410 shares are reserved for issuance pursuant to Convertible Securities
(as defined below) (other than the New Note) exercisable or exchangeable for, or convertible into, shares of Common Stock, (B) 25,000,000
shares of Class B Common Stock, of which, none are issued and outstanding and none are reserved for issuance pursuant to Convertible Securities
exercisable or exchangeable for, or convertible into, shares of Class B Common Stock, and (C) (I) 1,000,000 shares of Series A Convertible
Preferred Stock, 7,040 of which are issued and outstanding, (II) 500,000 shares of Series B Convertible Preferred Stock, 125,000 of which
are issued and outstanding, (III) 2,000,000 shares of Series D Cumulative Redeemable Perpetual Preferred Stock, 425,197 of which are issued
and outstanding, (IV) 83,000 shares of Series E Convertible Preferred Stock, none which are issued and outstanding, (V) 1,000 shares of
Series F Convertible Preferred Stock, none which are issued and outstanding, (VI) 16,000 shares of Series G Convertible Preferred Stock,
none which are issued and outstanding, and (VII) 21,400,000 shares of undesignated Preferred Stock, none of which is issued and outstanding.
No shares of Common Stock are held in the treasury of the Company. “Convertible Securities” means any capital stock
or other security of the Company that is at any time and under any circumstances directly or indirectly convertible into, exercisable
or exchangeable for, or which otherwise entitles the holder thereof to acquire, any capital stock or other security of the Company (including,
without limitation, Common Stock).
(iii) Valid
Issuance; Available Shares; Affiliates. All of such outstanding shares are duly authorized and have been, or upon issuance will be,
validly issued and are fully paid and nonassessable. Schedule 3(r)(iii) sets forth the number of shares of Common Stock that are
(A) reserved for issuance pursuant to Convertible Securities (as defined below) (other than the New Note) and (B) that are, as of the
date hereof, owned by Persons who are “affiliates” (as defined in Rule 405 of the 1933 Act and calculated based on the assumption
that only officers, directors and holders of at least 10% of the Company’s issued and outstanding Common Stock are “affiliates”
without conceding that any such Persons are “affiliates” for purposes of federal securities laws) of the Company or any of
its Subsidiaries. To the Company’s knowledge, other than as set forth on Schedule 3(r)(iii), no Person beneficially owns
10% or more of the Company’s issued and outstanding shares of Common Stock (calculated based on the assumption that all Convertible
Securities (as defined below), whether or not presently exercisable or convertible, have been fully exercised or converted (as
the case may be) taking account of any limitations on exercise or conversion (including “blockers”) contained therein without
conceding that such identified Person is a 10% stockholder for purposes of federal securities laws).
(iv) Existing
Securities; Obligations. Except as disclosed in the SEC Documents: (A) none of the Company’s shares, interests or capital stock
is subject to preemptive rights or any other similar rights or Liens suffered or permitted by the Company; (B) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any shares, interests or capital stock of the Company, or contracts, commitments,
understandings or arrangements by which the Company is or may become bound to issue additional shares, interests or capital stock of the
Company or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into, or exercisable or exchangeable for, any shares, interests or capital stock of the Company; (C) there are no
agreements or arrangements under which the Company is obligated to register the sale of any of their securities under the 1933 Act; (D)
there are no outstanding securities or instruments of the Company which contain any redemption or similar provisions, and there are no
contracts, commitments, understandings or arrangements by which the Company is or may become bound to redeem a security of the Company;
(E) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the
Securities; and (F) the Company has no stock appreciation rights or “phantom stock” plans or agreements or any similar plan
or agreement.
(v) Organizational
Documents. The Company has furnished to the Buyer true, correct and complete copies of the Company’s Certificate of Incorporation,
as amended and as in effect on the date hereof (the “Certificate of Incorporation”), and the Company’s bylaws,
as amended and as in effect on the date hereof (the “Bylaws”), and the terms of all Convertible Securities and the
material rights of the holders thereof in respect thereto.
(s) [Intentionally
Omitted]
(t) Litigation.
There is no action, suit, arbitration, proceeding, inquiry or investigation before or by the Principal Market, any court, public board,
other Governmental Entity, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting
the Company, the Common Stock or any of the Company’s officers or directors, whether of a civil or criminal nature or otherwise,
in their capacities as such, except as set forth in Schedule 3(t). No director, officer or employee of the Company or any of its
subsidiaries has willfully violated 18 U.S.C. §1519 or engaged in spoliation in reasonable anticipation of litigation. Without limitation
of the foregoing, there has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by
the SEC involving the Company or any current or former director or officer of the Company. The SEC has not issued any stop order or other
order suspending the effectiveness of any registration statement filed by the Company under the 1933 Act or the 1934 Act. After reasonable
inquiry of its employees, the Company is not aware of any fact which might result in or form the basis for any such action, suit, arbitration,
investigation, inquiry or other proceeding. Except as set forth in the SEC Documents, the Company is not subject to any order, writ,
judgment, injunction, decree, determination or award of any Governmental Entity.
(u) Insurance.
The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any insurance coverage sought or applied for,
and neither the Company nor any such Subsidiary has any reason to believe that it will be unable to renew its existing insurance coverage
as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at
a cost that would not have a Material Adverse Effect.
(v) [Intentionally
Omitted]
(w) Title.
(i) Real
Property. Each of the Company and its Subsidiaries holds good title to all real property, leases in real property, facilities or other
interests in real property owned or held by the Company or any of its Subsidiaries (the “Real Property”) owned by the
Company or any of its Subsidiaries (as applicable). Except as set forth in the SEC Documents, the Real Property is free and clear of all
Liens and is not subject to any rights of way, building use restrictions, exceptions, variances, reservations, or limitations of any nature
except for (a) Liens for current taxes not yet due and (b) zoning laws and other land use restrictions that do not impair the present
or anticipated use of the property subject thereto. Any Real Property held under lease by the Company or any of its Subsidiaries are held
by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company or any of its Subsidiaries.
(ii) Fixtures
and Equipment. Each of the Company and its Subsidiaries (as applicable) has good title to, or a valid leasehold interest in, the tangible
personal property, equipment, improvements, fixtures, and other personal property and appurtenances that are used by the Company or its
Subsidiary in connection with the conduct of its business (the “Fixtures and Equipment”). The Fixtures and Equipment
are structurally sound, are in good operating condition and repair, are adequate for the uses to which they are being put, are not in
need of maintenance or repairs except for ordinary, routine maintenance and repairs and are sufficient for the conduct of the Company’s
and/or its Subsidiaries’ businesses (as applicable) in the manner as conducted prior to the Closing.
(x) [Intentionally
Omitted]
(y) [Intentionally
Omitted]
(z) Subsidiary
Rights. Other than as disclosed on Schedule 3(z), the Company or one of its Subsidiaries has the unrestricted right to vote,
and (subject to limitations imposed by applicable law) to receive dividends and distributions on, all capital securities of its Subsidiaries
as owned by the Company or such Subsidiary.
(aa) Tax Status.
The Company and each of its Subsidiaries (i) has timely made or filed all foreign, federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject, (ii) has timely paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being
contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent
to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due
by the taxing authority of any jurisdiction, and the officers of the Company and its Subsidiaries know of no basis for any such claim.
The Company is not operated in such a manner as to qualify as a passive foreign investment company, as defined in Section 1297 of the
Internal Revenue Code of 1986, as amended (the “Code”). The net operating loss carryforwards (“NOLs”)
for United States federal income tax purposes of the consolidated group of which the Company is the common parent, if any, shall not
be adversely effected by the transactions contemplated hereby. The transactions contemplated hereby do not constitute an “ownership
change” within the meaning of Section 382 of the Code, thereby preserving the Company’s ability to utilize such NOLs.
(bb) Internal Accounting
and Disclosure Controls. The Company and each of its Subsidiaries maintains internal control over financial reporting (as such term
is defined in Rule 13a-15(f) under the 1934 Act) that is effective to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles,
including that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions
are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset and liability accountability,
(iii) access to assets or incurrence of liabilities is permitted only in accordance with management’s general or specific authorization
and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals
and appropriate action is taken with respect to any difference. Except as set forth in the SEC Documents, the Company maintains disclosure
controls and procedures (as such term is defined in Rule 13a-15(e) under the 1934 Act) that are effective in ensuring that information
required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is recorded, processed, summarized
and reported, within the time periods specified in the rules and forms of the SEC, including, without limitation, controls and procedures
designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act
is accumulated and communicated to the Company’s management, including its principal executive officer or officers and its principal
financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure. Neither the Company nor any of
its Subsidiaries has received any notice or correspondence from any accountant, Governmental Entity or other Person relating to any potential
material weakness or significant deficiency in any part of the internal controls over financial reporting of the Company or any of its
Subsidiaries.
(cc) Off Balance Sheet
Arrangements. There is no transaction, arrangement, or other relationship between the Company or any of its Subsidiaries and an unconsolidated
or other off balance sheet entity that is required to be disclosed by the Company in its 1934 Act filings and is not so disclosed or
that otherwise could be reasonably likely to have a Material Adverse Effect.
(dd) Investment Company
Status. The Company is not, and upon consummation of the sale of the Securities will not be, an “investment company,”
an affiliate of an “investment company,” a company controlled by an “investment company” or an “affiliated
person” of, or “promoter” or “principal underwriter” for, an “investment company” as such terms
are defined in the Investment Company Act of 1940, as amended.
(ee) Acknowledgement
Regarding Buyer’s Trading Activity. It is understood and acknowledged by the Company that (i) following the public disclosure
of the transactions contemplated by the Transaction Documents, in accordance with the terms thereof, the Buyer has not been asked by
the Company or any of its Subsidiaries to agree, nor has any Buyer agreed with the Company or any of its Subsidiaries, to desist from
effecting any transactions in or with respect to (including, without limitation, purchasing or selling, long and/or short) any securities
of the Company, or “derivative” securities based on securities issued by the Company or to hold any of the Securities for
any specified term; (ii) the Buyer, and counterparties in “derivative” transactions to which the Buyer is a party, directly
or indirectly, presently may have a “short” position in the Common Stock which was established prior to the Buyer’s
knowledge of the transactions contemplated by the Transaction Documents; (iii) the Buyer shall not be deemed to have any affiliation
with or control over any arm’s length counterparty in any “derivative” transaction; and (iv) the Buyer may rely on
the Company’s obligation to timely deliver shares of Common Stock upon conversion of the Securities as and when required pursuant
to the Transaction Documents for purposes of effecting trading in the Common Stock of the Company. The Company further understands and
acknowledges that following the public disclosure of the transactions contemplated by the Transaction Documents pursuant to the Press
Release (as defined below) the Buyer may engage in hedging and/or trading activities (including, without limitation, the location and/or
reservation of borrowable shares of Common Stock) at various times during the period that the Securities are outstanding, including,
without limitation, during the periods that the value and/or number of the Conversion Shares deliverable with respect to the Securities
are being determined and such hedging and/or trading activities (including, without limitation, the location and/or reservation of borrowable
shares of Common Stock), if any, can reduce the value of the existing stockholders’ equity interest in the Company both at and
after the time the hedging and/or trading activities are being conducted. The Company acknowledges that such aforementioned hedging and/or
trading activities do not constitute a breach of this Agreement, the New Note, or any other Transaction Document or any of the documents
executed in connection herewith or therewith.
(ff) Manipulation
of Price. Neither the Company nor any of its Subsidiaries has, and, to the knowledge of the Company, no Person acting on their behalf
has, directly or indirectly, (i) taken any action designed to cause or to result in the stabilization or manipulation of the price of
any security of the Company or any of its Subsidiaries to facilitate the sale or resale of any of the Securities, (ii) sold, bid for,
purchased, or paid any compensation for soliciting purchases of, any of the Securities, (iii) paid or agreed to pay to any Person any
compensation for soliciting another to purchase any other securities of the Company or any of its Subsidiaries or (iv) paid or agreed
to pay any Person for research services with respect to any securities of the Company or any of its Subsidiaries.
(gg) U.S.
Real Property Holding Corporation. Neither the Company nor any of its Subsidiaries is, or has ever been, and so long as any of the
Securities are held by the Buyer, shall become, a U.S. real property holding corporation within the meaning of Section 897 of the
Code, and the Company and each Subsidiary shall so certify upon the Buyer’s request.
(hh) [Intentionally
Omitted]
(ii) Transfer
Taxes. On the Closing Date, all stock transfer or other taxes (other than income or similar taxes) which are required to be paid
in connection with the issuance, sale and transfer of the Securities to be sold to the Buyer hereunder will be, or will have been, fully
paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.
(jj) Bank
Holding Company Act. Neither the Company nor any of its Subsidiaries is subject to the Bank Holding Company Act of 1956, as amended
(the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”).
Neither the Company nor any of its Subsidiaries or affiliates owns or controls, directly or indirectly, five percent (5%) or more of
the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or any entity
that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or affiliates exercises
a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the
Federal Reserve.
(kk) [Intentionally Omitted]
(ll) Illegal
or Unauthorized Payments; Political Contributions. Neither the Company nor any of its Subsidiaries nor, to the best of the Company’s
knowledge (after reasonable inquiry of its officers and directors), any of the officers, directors, employees, agents or other representatives
of the Company or any of its Subsidiaries or any other business entity or enterprise with which the Company or any Subsidiary is or has
been affiliated or associated, has, directly or indirectly, made or authorized any payment, contribution or gift of money, property,
or services, whether or not in contravention of applicable law, (i) as a kickback or bribe to any Person or (ii) to any political organization,
or the holder of or any aspirant to any elective or appointive public office except for personal political contributions not involving
the direct or indirect use of funds of the Company or any of its Subsidiaries.
(mm) Money
Laundering. The Company and its Subsidiaries are in compliance with, and have not previously violated, the USA Patriot Act of 2001
and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, without limitation, the laws, regulations
and Executive Orders and sanctions programs administered by the U.S. Office of Foreign Assets Control, including, but not limited, to
(i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in 31 CFR, Subtitle B,
Chapter V.
(nn) Management.
Except as set forth in the SEC Documents, during the past five year period, no current or former officer or director or, to the knowledge
of the Company, no current ten percent (10%) or greater stockholder of the Company or any of its Subsidiaries has been the subject of:
(i) a
petition under bankruptcy laws or any other insolvency or moratorium law or the appointment by a court of a receiver, fiscal agent or
similar officer for such Person, or any partnership in which such person was a general partner at or within two years before the filing
of such petition or such appointment, or any corporation or business association of which such person was an executive officer at or within
two years before the time of the filing of such petition or such appointment;
(ii) a
conviction in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations that do not relate
to driving while intoxicated or driving under the influence);
(iii) any
order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining any such person from, or otherwise limiting, the following activities:
(1) Acting
as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction
merchant, any other person regulated by the United States Commodity Futures Trading Commission or an associated person of any of the foregoing,
or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment
company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with
such activity;
(2) Engaging
in any particular type of business practice; or
(3) Engaging
in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of securities
laws or commodities laws;
(iv) any
order, judgment or decree, not subsequently reversed, suspended or vacated, of any authority barring, suspending or otherwise limiting
for more than sixty (60) days the right of any such person to engage in any activity described in the preceding sub paragraph, or to be
associated with persons engaged in any such activity;
(v) a
finding by a court of competent jurisdiction in a civil action or by the SEC or other authority to have violated any securities law, regulation
or decree and the judgment in such civil action or finding by the SEC or any other authority has not been subsequently reversed, suspended
or vacated; or
(vi) a
finding by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal
commodities law, and the judgment in such civil action or finding has not been subsequently reversed, suspended or vacated.
(oo) Stock
Option Plans. Each stock option granted by the Company
was granted (i) in accordance with the terms of the applicable stock option plan of the Company and (ii) with an exercise price at least
equal to the fair market value of the Common Stock on the date such stock option would be considered granted under GAAP and applicable
law. No stock option granted under the Company’s stock option plan has been backdated. The Company has not knowingly granted, and
there is no and has been no policy or practice of the Company to knowingly grant, stock options prior to, or otherwise knowingly coordinate
the grant of stock options with, the release or other public announcement of material information regarding the Company or its Subsidiaries
or their financial results or prospects.
(pp) No
Disagreements with Accountants and Lawyers. There are
no material disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the Company and
the accountants and lawyers formerly or presently employed by the Company and the Company is current with respect to any fees owed to
its accountants and lawyers which could affect the Company’s ability to perform any of its obligations under any of the Transaction
Documents. In addition, on or prior to the date hereof, the Company had discussions with its accountants about its financial statements
previously filed with the SEC. Based on those discussions, the Company has no reason to believe that it will need to restate any such
financial statements or any part thereof.
(qq) Other
Covered Persons. The Company is not aware of any Person (other than the Placement Agent) that
has been or will be paid (directly or indirectly) remuneration for solicitation of the Buyer or potential purchasers in connection with
the sale of the Securities.
(rr) Public
Utility Holding Act. None of the Company nor any of its Subsidiaries is a “holding company,” or an “affiliate”
of a “holding company,” as such terms are defined in the Public Utility Holding Act of 2005.
(ss) Federal
Power Act. None of the Company nor any of its Subsidiaries is subject to regulation as a “public utility” under the Federal
Power Act, as amended.
(tt) Disclosure.
The Company confirms that neither it nor any other Person acting on its behalf has provided the Buyer or its agents or counsel with any
information that constitutes or could reasonably be expected to constitute material, non-public information concerning the Company or
any of its Subsidiaries, other than the existence of the transactions contemplated by this Agreement and the other Transaction Documents.
The Company understands and confirms that the Buyer will rely on the foregoing representations in effecting transactions in securities
of the Company. All disclosure provided to the Buyer regarding the Company and its Subsidiaries, their businesses and the transactions
contemplated hereby, including the schedules to this Agreement, furnished by or on behalf of the Company or any of its Subsidiaries is
true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to
make the statements made therein, in the light of the circumstances under which they were made, not misleading. The Company acknowledges
and agrees that no Buyer makes or has made any representations or warranties with respect to the transactions contemplated hereby other
than those specifically set forth in Section 2.
(uu) Compliance with
Registration Requirements. The Registration Statement has become effective under the 1933 Act. The Company has complied, to the SEC’s
satisfaction with all requests of the SEC for additional or supplemental information, if any. No stop order suspending the effectiveness
of the Registration Statement is in effect and no proceedings for such purpose have been instituted or, to the knowledge of the Company,
are pending or contemplated or threatened by the SEC. At the time the Registration Statement and the Company’s most recent Annual
Report on Form 10-K for periods after December 31, 2022 was filed with the SEC, the Company met the then-applicable requirements for use
of Form S-3 under the 1933 Act. The documents incorporated or deemed to be incorporated by reference in the Registration Statement, at
the time they were or hereafter are filed with the SEC, or became effective under the 1934 Act, as the case may be, complied and will
comply with in all material respects with the requirements of the 1934 Act.
(vv) Prospectus Supplement
Disclosure. The Prospectus Supplement when filed complied in all material respects with the 1933 Act. Each of the Registration Statement
and any post-effective amendment thereto, at the time it became or becomes effective, complied and will comply in all material respects
with the 1933 Act, and did not, and at any Closing Date will not, contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectus Supplement (including any
prospectus wrapper), as of its date, did not, and at any Closing Date, will not, contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made,
not misleading. There are no contracts or other documents required to be described in the Prospectus Supplement or to be filed as an exhibit
to the Registration Statement which have not been described or filed as required. No event, liability, development or circumstance has
occurred or exists, or is reasonably expected to exist or occur with respect to the Company, any of its Subsidiaries or any of their respective
businesses, properties, liabilities, prospects, operations (including results thereof) or condition (financial or otherwise), that (i)
would be required to be disclosed by the Company under applicable securities laws on a registration statement on Form S-3 filed with the
SEC relating to an issuance and sale by the Company of any shares of Common Stock and which has not been publicly announced, (ii) could
have a material adverse effect on the Buyer’s investment hereunder or (iii) could have a Material Adverse Effect.
4. COVENANTS.
(a) Best
Efforts. The Buyer shall use its best efforts to timely satisfy each of the covenants hereunder and conditions to be satisfied by
it as provided in Section 6 of this Agreement. The Company shall use its best efforts to timely satisfy each of the covenants hereunder
and conditions to be satisfied by it as provided in Section 7 of this Agreement.
(b) Blue
Sky. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary in
order to obtain an exemption for, or to, qualify the Securities for sale to the Buyer at the Closing pursuant to this Agreement under
applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification),
and shall provide evidence of any such action so taken to the Buyer on or prior to the Closing Date. Without limiting any other obligation
of the Company under this Agreement, the Company shall timely make all filings and reports relating to the offer and sale of the Securities
required under all applicable securities laws (including, without limitation, all applicable federal securities laws and all applicable
“Blue Sky” laws), and the Company shall comply with all applicable foreign, federal, state and local laws, statutes, rules,
regulations and the like relating to the offering and sale of the Securities to the Buyer.
(c) Reporting
Status. Until the date on which the Buyer shall have sold all of the Securities (the “Reporting Period”), the
Company shall timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate
its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would
no longer require or otherwise permit such termination.
(d) Use
of Proceeds. The Company will use the proceeds from the sale of the Securities for working capital and general corporate purposes.
(e) Financial
Information. The Company agrees to send the following to the Buyer during the Reporting Period (i) unless the following are filed
with the SEC through EDGAR and are available to the public through the EDGAR system, within one (1) Business Day after the filing thereof
with the SEC, a copy of its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, any interim reports or any consolidated balance
sheets, income statements, stockholders’ equity statements and/or cash flow statements for any period other than annual, any Current
Reports on Form 8-K and any registration statements (other than on Form S-8) or amendments filed pursuant to the 1933 Act, (ii) unless
the following are either filed with the SEC through EDGAR or are otherwise widely disseminated via a recognized news release service
(such as PR Newswire), on the same day as the release thereof, e-mail copies of all press releases issued by the Company or any of its
Subsidiaries and (iii) unless the following are filed with the SEC through EDGAR, copies of any notices and other information made available
or given to the stockholders of the Company generally, contemporaneously with the making available or giving thereof to the stockholders.
(f) Listing.
The Company shall promptly secure the listing or designation for quotation (as the case may be) of all of the Conversion Shares upon
each national securities exchange and automated quotation system, if any, upon which the Common Stock is then listed or designated for
quotation (as the case may be) (subject to official notice of issuance) and shall maintain such listing or designation for quotation
(as the case may be) of all Conversion Shares from time to time issuable under the terms of the Transaction Documents on such national
securities exchange or automated quotation system. The Company shall maintain the Common Stock’s listing or authorization for quotation
(as the case may be) on the Principal Market, The New York Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market or the
Nasdaq Global Select Market (each, an “Eligible Market”). Neither the Company nor any of its Subsidiaries shall take
any action which could be reasonably expected to result in the delisting or suspension of the Common Stock on an Eligible Market. The
Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(f).
(g) Fees.
Each party to this Agreement shall bear its own expenses in connection with the Transaction Documents and the sale of the Securities
to the Buyer.
(h) Pledge
of Securities. Notwithstanding anything to the contrary contained in this Agreement, the Company acknowledges and agrees that the
Securities may be pledged by the Buyer in connection with a bona fide margin agreement or other loan or financing arrangement that is
secured by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder,
and the Buyer, in effecting a pledge of Securities, shall not be required to provide the Company with any notice thereof or otherwise
make any delivery to the Company pursuant to this Agreement or any other Transaction Document. The Company hereby agrees to execute and
deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such
pledgee by the Buyer.
(i) Disclosure
of Transactions and Other Material Information.
(i) Disclosure
of Transaction. The Company shall, on or before 9:00 a.m., New York time, on the first (1st) Business Day after the date of this
Agreement, issue a press release (the “Press Release”) reasonably acceptable to the Buyer disclosing all the material
terms of the transactions contemplated by the Transaction Documents. On or before 9:00 a.m., New York time, on the first (1st)
Business Day after the date of this Agreement, the Company shall file a Current Report on Form 8-K describing all the material terms of
the transactions contemplated by the Transaction Documents in the form required by the 1934 Act and attaching all the material Transaction
Documents (the “8-K Filing”). From and after the filing of the 8-K Filing, the Company shall have disclosed all material,
non-public information (if any) provided to the Buyer by the Company or any of its Subsidiaries or any of their respective officers, directors,
employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon the filing
of the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether
written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, affiliates, employees or
agents, on the one hand, and the Buyer or any of its affiliates, on the other hand, shall terminate.
(ii) Limitations
on Disclosure. Other than as required under the Transaction Documents (but subject to any other disclosure obligations of the Company
with respect thereto), the Company shall not, and the Company shall cause each of its Subsidiaries and each of its and their respective
officers, directors, employees and agents not to, provide the Buyer with any material, non-public information regarding the Company or
any of its Subsidiaries from and after the date hereof unless prior thereto the Buyer shall have consented in writing to the receipt of
such information and agreed with the Company to keep such information confidential. If any material, non-public information is required
to be provided by the Company or any of its Subsidiaries to the Buyer pursuant to the Transaction Documents, the Company shall obtain
the Buyer’s prior written consent prior to providing such information to the Buyer, and if the Buyer fails to provide such written
consent, the Company shall not be deemed to be in breach of any of the Transaction Documents as a result of the failure to provide such
information. To the extent that the Company delivers any material, non-public information to the Buyer without the Buyer’s prior
written consent in breach of the foregoing sentence, the Company hereby covenants and agrees that the Buyer shall not have any duty of
confidentiality with respect to, or a duty not to trade on the basis of, such material, non-public information, provided that the Buyer
shall remain subject to applicable law. Subject to the foregoing, neither the Company, its Subsidiaries nor the Buyer shall issue any
press releases or any other public statements with respect to the transactions contemplated hereby, except the Press Release; provided,
however, the Company shall be entitled, without the prior approval of the Buyer, to make any press release or other public disclosure
with respect to such transactions (i) in substantial conformity with the 8-K Filing and (ii) as is required by applicable law and regulations
(provided that in the case of clause (i) above, the Buyer shall be consulted by the Company in connection with any such press release
or other public disclosure prior to its release). Without the prior written consent of the Buyer (which may be granted or withheld in
the Buyer’s sole discretion), the Company shall not (and shall cause each of its Subsidiaries and affiliates to not) disclose the
name of the Buyer in any filing, announcement, release or otherwise, except in the 8-K Filing and as otherwise may be required by applicable
law or regulations. Notwithstanding anything contained in this Agreement to the contrary and without implication that the contrary would
otherwise be true, the Company expressly acknowledges and agrees that the Buyer shall not have (unless expressly agreed to by the Buyer
after the date hereof in a written definitive and binding agreement executed by the Company and the Buyer), any duty of confidentiality
with respect to, or a duty not to trade on the basis of, any material, non-public information regarding the Company or any of its Subsidiaries.
(j) Reservation
of Shares. So long as any of the New Note remains outstanding, the Company shall take all action necessary to at all times have authorized,
and reserved for the purpose of issuance, no less than 100% of the maximum number of Conversion Shares (assuming for purposes hereof
that any such conversion shall not take into account any limitations on the conversion of the New Note as set forth therein) (the “Required
Reserve Amount”); provided that at no time shall the number of shares of Common Stock reserved pursuant to this Section 4(j)
be reduced other than in connection with any conversion and/or redemption of the New Note. If at any time the number of shares of Common
Stock authorized and reserved for issuance is not sufficient to meet the Required Reserve Amount, the Company will promptly take all
corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation, calling a special meeting
of stockholders to authorize additional shares to meet the Company’s obligations pursuant to the Transaction Documents, in the
case of an insufficient number of authorized shares, obtain stockholder approval of an increase in such authorized number of shares,
and voting the management shares of the Company in favor of an increase in the authorized shares of the Company to ensure that the number
of authorized shares is sufficient to meet the Required Reserve Amount.
(k) Conduct
of Business. The business of the Company and its Subsidiaries shall not be conducted in violation of any law, ordinance or regulation
of any Governmental Entity, except where such violations would not reasonably be expected to result, either individually or in the aggregate,
in a Material Adverse Effect.
(l) Additional
Investment Right. At any time on or prior to the three month anniversary of the date when the New Note is no longer outstanding (either
through conversion, repayment or a combination thereof) (the “AIR Period”), the Buyer shall have the right to purchase
an additional convertible note, up to $3 million in principal (with a 10% original issue discount), on the same terms as the New Note,
pursuant to a securities purchase agreement and form of convertible note substantially the same as these Transaction Documents (the “Additional
Investment Right”). The Company and the Buyer shall utilize their best efforts to execute new documents for the Additional
Investment Right within ten (10) Business Days after the Buyer provides written notice to the Company during the AIR Period of its election
to exercise the Additional Investment Right and the amount of the Additional Investment Right.
(m) Dilutive
Issuances. For so long as the New Note remains outstanding, the Company shall not, in any manner, enter into or affect any Dilutive
Issuance (as defined in the New Note) if the effect of such Dilutive Issuance is to cause the Company to be required to issue upon conversion
of the New Note any shares of Common Stock in excess of that number of shares of Common Stock which the Company may issue upon conversion
of the New Note without breaching the Company’s obligations under the rules or regulations of the Principal Market.
(n) Passive
Foreign Investment Company. The Company shall conduct its business, and shall cause its Subsidiaries to conduct their respective
businesses, in such a manner as will ensure that the Company will not be deemed to constitute a passive foreign investment company within
the meaning of Section 1297 of the Code.
(o) Corporate
Existence. So long as any Buyer beneficially owns the New Note, the Company shall not be party to any Fundamental Transaction (as
defined in the New Note) unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth
in the New Note.
(p) Conversion
Procedures. The form of Conversion Notice (as defined in the New Note) included in the New Note sets forth the totality of the procedures
required of the Buyer in order to convert the New Note. The Company shall honor conversions of the New Note and shall deliver the Conversion
Shares in accordance with the terms, conditions and time periods set forth in the New Note.
(q) Regulation
M. The Company will not take any action prohibited by Regulation M under the 1934 Act, in connection with the distribution of the
Securities contemplated hereby.
(r) Stockholder
Approval. The Company shall either (x) if the Company shall have obtained the prior written consent
of the requisite stockholders (the “Stockholder Consent”) to obtain the Stockholder Approval (as defined below), inform
the stockholders of the Company of the receipt of the Stockholder Consent by preparing and filing with the SEC, as promptly as practicable
after the date hereof, but prior to the sixtieth (60th) calendar day after the Closing Date (or, if such filing is delayed by a court
or regulatory agency, in no event later than 120 calendar days after the Closing), an information statement with respect thereto or (y)
provide each stockholder entitled to vote at a special meeting of stockholders of the Company (the “Stockholder Meeting”),
which shall be promptly called and held not later than February 29, 2024 (the “Stockholder Meeting Deadline”), a proxy
statement. The proxy statement, if any, shall solicit each of the Company’s stockholder’s affirmative vote at the Stockholder
Meeting for approval of resolutions (“Stockholder Resolutions”) providing for the approval of the issuance of all
of the Securities in compliance with the rules and regulations of the Principal Market (without regard to any limitations on conversion
set forth in the New Note) (such affirmative approval being referred to herein as the “Stockholder Approval”, and
the date such Stockholder Approval is obtained, the “Stockholder Approval Date”), and the Company shall use its reasonable
best efforts to solicit its stockholders’ approval of such resolutions and to cause the Board of Directors of the Company to recommend
to the stockholders that they approve such resolutions. The Company shall be obligated to seek to obtain the Stockholder Approval by
the Stockholder Meeting Deadline.
5. REGISTER;
TRANSFER AGENT INSTRUCTIONS; LEGEND.
(a) Register.
The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice
to each holder of Securities), a register for the New Note in which the Company shall record the name and address of the Person in whose
name the New Note has been issued (including the name and address of each transferee), the principal amount of the New Note held by such
Person and the number of Conversion Shares issuable pursuant to the terms of the New Note. The Company shall keep the register open and
available at all times during business hours for inspection of the Buyer or its legal representatives.
(b) Transfer
Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent and any subsequent transfer agent (as
applicable, the “Transfer Agent”) in a form acceptable to the Buyer (the “Irrevocable Transfer Agent Instructions”)
to issue certificates or credit shares to the applicable balance accounts at The Depository Trust Company (“DTC”),
registered in the name of the Buyer or its respective nominee(s), for the Conversion Shares in such amounts as specified from time to
time by the Buyer to the Company upon conversion of the New Note. The Company represents and warrants that no instruction other than
the Irrevocable Transfer Agent Instructions referred to in this Section 5(b), and stop transfer instructions to give effect to Section
2(g) hereof, will be given by the Company to its transfer agent with respect to the Securities, and that the Securities shall otherwise
be freely transferable on the books and records of the Company, as applicable, to the extent provided in this Agreement and the other
Transaction Documents. If the Buyer effects a sale, assignment or transfer of the Securities in accordance with Section 2(g), the Company
shall permit the transfer and shall promptly instruct its transfer agent to issue one or more certificates or credit shares to the applicable
balance accounts at DTC in such name and in such denominations as specified by the Buyer to effect such sale, transfer or assignment.
In the event that such sale, assignment or transfer involves Conversion Shares sold, assigned or transferred pursuant to an effective
registration statement or in compliance with Rule 144, the transfer agent shall issue such shares to the Buyer, assignee or transferee
(as the case may be) without any restrictive legend in accordance with Section 5(d) below. The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to the Buyer. Accordingly, the Company acknowledges that the remedy at
law for a breach of its obligations under this Section 5(b) will be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Section 5(b), that the Buyer shall be entitled, in addition to all other available
remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of
showing economic loss and without any bond or other security being required. Any fees (with respect to the transfer agent, counsel to
the Company or otherwise) associated with the removal of any legends on any of the Securities shall be borne by the Company.
(c) FAST
Compliance. While the New Note remains outstanding, the Company shall maintain a transfer agent that participates in FAST.
6. CONDITIONS
TO THE COMPANY’S OBLIGATION TO SELL.
(a) The
obligation of the Company hereunder to issue and sell the New Note to the Buyer at the Closing is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions, provided that these conditions are for the Company’s sole benefit
and may be waived by the Company at any time in its sole discretion by providing the Buyer with prior written notice thereof:
(i) The
Buyer shall have executed each of the other Transaction Documents to which it is a party and delivered the same to the Company.
(ii) The
Buyer shall have delivered to the Company the Purchase Price (by delivery of the Old Note for cancellation) for the New Note being purchased
by the Buyer at the Closing.
(iii) The
representations and warranties of the Buyer shall be true and correct in all material respects as of the date when made and as of the
Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which
shall be true and correct as of such specific date), and the Buyer shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Buyer at or
prior to the Closing Date.
7. CONDITIONS
TO THE BUYER’S OBLIGATION TO PURCHASE.
(a) The
obligation of the Buyer hereunder to purchase the New Note at the Closing is subject to the satisfaction, at or before the Closing Date,
of each of the following conditions, provided that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer
at any time in its sole discretion by providing the Company with prior written notice thereof:
(i) The
Company shall have duly executed and delivered to the Buyer each of the Transaction Documents to which it is a party and the Company shall
have duly executed and delivered to the Buyer the New Note being purchased by the Buyer at the Closing pursuant to this Agreement.
(ii) The
Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company in Delaware issued
by the Delaware Secretary of State as of a date within ten (10) days of the Closing Date.
(iii) The
Company shall have delivered to the Buyer a certificate, in the form acceptable to the Buyer, executed by the Secretary of the Company
dated as of the Closing Date as to (i) the resolutions consistent with Section 3(b) as adopted by the Company’s board of directors
in a form reasonably acceptable to the Buyer, (ii) the Articles of Incorporation of the Company and (iii) the Bylaws of the Company,
each as in effect at the Closing.
(iv) Each
and every representation and warranty of the Company shall be true and correct as of the date when made and as of the Closing Date as
though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and
correct as of such specific date) and the Company shall have performed, satisfied and complied in all respects with the covenants, agreements
and conditions required to be performed, satisfied or complied with by the Company at or prior to the Closing Date. Such Buyer shall have
received a certificate, duly executed by the Chief Executive Officer of the Company, dated as of the Closing Date, to the foregoing effect
and as to such other matters as may be reasonably requested by the Buyer in the form acceptable to the Buyer.
(v) The
Common Stock (A) shall be designated for quotation or listed (as applicable) on the Principal Market and (B) shall not have been suspended,
as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC or the
Principal Market have been threatened, as of the Closing Date, in writing by the SEC or the Principal Market.
(vi) No
statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by
any court or Governmental Entity of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by
the Transaction Documents.
(vii) Since
the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would have or result in a Material
Adverse Effect.
(viii) The
Company shall within ten (10) Business Days of Closing utilized its best efforts to have obtained approval of the Principal Market to
list or designate for quotation (as the case may be) the Conversion Shares.
(ix) The
Company shall have delivered to the Buyer such other documents, instruments or certificates relating to the transactions contemplated
by this Agreement as the Buyer or its counsel may reasonably request.
8. TERMINATION.
In the event that the Closing
shall not have occurred within five (5) days of the date hereof, then the Buyer shall have the right to terminate its obligations under
this Agreement at any time on or after the close of business on such date without liability of the Buyer to the Company; provided, however,
the right to terminate this Agreement under this Section 8 shall not be available to the Buyer if the failure of the transactions
contemplated by this Agreement to have been consummated by such date is the result of the Buyer’s breach of this Agreement. Nothing
contained in this Section 8 shall be deemed to release any party from any liability for any breach by such party of the terms and
provisions of this Agreement or the other Transaction Documents or to impair the right of any party to compel specific performance by
any other party of its obligations under this Agreement or the other Transaction Documents.
9. MISCELLANEOUS.
(a) Governing
Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement
shall be governed by the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision
or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of Delaware. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts
sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or under
any of the other Transaction Documents or with any transaction contemplated hereby or thereby, and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.
Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding
by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the Buyer from
bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations
to the Buyer or to enforce a judgment or other court ruling in favor of the Buyer. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT
IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION
DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY
OR THEREBY.
(b) Counterparts.
This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature
is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature
page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed)
with the same force and effect as if such signature page were an original thereof.
(c) Headings;
Gender. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation
of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine,
neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words
of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,”
“hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in
which they are found.
(d) Severability;
Maximum Payment Amounts. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable
by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended
to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall
not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express,
without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity
or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations
of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor
in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of
which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s). Notwithstanding anything to the contrary
contained in this Agreement or any other Transaction Document (and without implication that the following is required or applicable),
it is the intention of the parties that in no event shall amounts and value paid by the Company, or payable to or received by the Buyer,
under the Transaction Documents (including without limitation, any amounts that would be characterized as “interest” under
applicable law) exceed amounts permitted under any applicable law. Accordingly, if any obligation to pay, payment made to the Buyer,
or collection by the Buyer pursuant the Transaction Documents is finally judicially determined to be contrary to any such applicable
law, such obligation to pay, payment or collection shall be deemed to have been made by mutual mistake of the Buyer and the Company and
such amount shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may
be, as would not be so prohibited by the applicable law. Such adjustment shall be effected, to the extent necessary, by reducing or refunding,
at the option of the Buyer, the amount of interest or any other amounts which would constitute unlawful amounts required to be paid or
actually paid to the Buyer under the Transaction Documents. For greater certainty, to the extent that any interest, charges, fees, expenses
or other amounts required to be paid to or received by the Buyer under any of the Transaction Documents or related thereto are held to
be within the meaning of “interest” or another applicable term to otherwise be violative of applicable law, such amounts
shall be pro-rated over the period of time to which they relate.
(e) Entire
Agreement; Amendments. This Agreement, the other Transaction Documents and the schedules and exhibits attached hereto and thereto
and the instruments referenced herein and therein supersede all other prior oral or written agreements between the Buyer, the Company,
their affiliates and Persons acting on their behalf, including, without limitation, any transactions by the Buyer with respect to the
New Note or the Securities, and the other matters contained herein and therein, and this Agreement, the other Transaction Documents,
the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein contain the entire understanding
of the parties solely with respect to the matters covered herein and therein; provided, however, nothing contained in this Agreement
or any other Transaction Document shall (or shall be deemed to) (i) have any effect on any agreements the Buyer has entered into with,
or any instruments the Buyer has received from, the Company or any of its Subsidiaries prior to the date hereof with respect to any prior
investment made by the Buyer in the Company or (ii) waive, alter, modify or amend in any respect any obligations of the Company or any
of its Subsidiaries, or any rights of or benefits to the Buyer or any other Person, in any agreement entered into prior to the date hereof
between or among the Company and/or any of its Subsidiaries and the Buyer, or any instruments the Buyer received from the Company and/or
any of its Subsidiaries prior to the date hereof, and all such agreements and instruments shall continue in full force and effect. Except
as specifically set forth herein or therein, neither the Company nor the Buyer makes any representation, warranty, covenant or undertaking
with respect to such matters. For clarification purposes, the Recitals are part of this Agreement. No provision of this Agreement may
be amended other than by an instrument in writing signed by the Company and the Buyer. No waiver shall be effective unless it is in writing
and signed by an authorized representative of the waiving party. As a material inducement for the Buyer to enter into this Agreement,
the Company expressly acknowledges and agrees that (x) no due diligence or other investigation or inquiry conducted by the Buyer, any
of its advisors or any of its representatives shall affect the Buyer’s right to rely on, or shall modify or qualify in any manner
or be an exception to any of, the Company’s representations and warranties contained in this Agreement or any other Transaction
Document and (y) unless a provision of this Agreement or any other Transaction Document is expressly preceded by the phrase “except
as disclosed in the SEC Documents,” nothing contained in any of the SEC Documents shall affect the Buyer’s right to rely
on, or shall modify or qualify in any manner or be an exception to any of, the Company’s representations and warranties contained
in this Agreement or any other Transaction Document.
(f) Notices.
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by electronic
mail (provided that such sent email is kept on file (whether electronically or otherwise) by the sending party and the sending party
does not receive an automatically generated message from the recipient’s email server that such e-mail could not be delivered to
such recipient); or (iii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each
case, properly addressed to the party to receive the same. The mailing addresses and e-mail addresses for such communications shall be:
If to the Company:
Ault Alliance, Inc.
11411 Southern Highlands Parkway, Suite 240
Las Vegas, NV 89141
Attention: William B. Horne, Chief Executive Officer
E-Mail:
With a copy (for informational purposes only) to:
Ault Alliance, Inc.
100 Park Avenue, Suite 1658
New York, NY 10017
Attention: Henry Nisser, President and General Counsel
E-Mail:
If to the Buyer:
c/o Walleye Capital LLC
2800 Niagara Lane North
Plymouth, MN 55447
Attn: Roger Masi
E-Mail:
or to such other mailing address and/or e-mail
address and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party
five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated by the sender’s e-mail containing the time, date and
recipient’s e-mail or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by
e-mail or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.
(g) Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns,
including any purchasers of any of the New Note. The Company shall not assign this Agreement or any rights or obligations hereunder without
the prior written consent of the Buyer, including, without limitation, by way of a Fundamental Transaction (as defined in the New Note)
(unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the New Note). The
Buyer may assign some or all of its rights hereunder in connection with any transfer of any of its Securities without the consent of
the Company, in which event such assignee shall be deemed to be a Buyer hereunder with respect to such assigned rights.
(h) No
Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, other than the Indemnitees
referred to in Section 9(k).
(i) Survival.
The representations, warranties, agreements and covenants shall survive the Closing.
(j) Further
Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
(k) Indemnification.
In consideration of the Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder and
in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect, indemnify
and hold harmless the Buyer and each holder of any Securities and all of their stockholders, partners, members, officers, directors,
employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses
in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred
by any Indemnitee as a result of, or arising out of, or relating to (i) any misrepresentation or breach of any representation or warranty
made by the Company in any of the Transaction Documents, (ii) any breach of any covenant, agreement or obligation of the Company contained
in any of the Transaction Documents or (iii) any cause of action, suit, proceeding or claim brought or made against such Indemnitee by
a third party (including for these purposes a derivative action brought on behalf of the Company or any Subsidiary) or which otherwise
involves such Indemnitee that arises out of or results from (A) the execution, delivery, performance or enforcement of any of the Transaction
Documents, (B) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance
of the Securities, or (C) the status of the Buyer or holder of the Securities either as an investor in the Company pursuant to the transactions
contemplated by the Transaction Documents or as a party to this Agreement (including, without limitation, as a party in interest or otherwise
in any action or proceeding for injunctive or other equitable relief). To the extent that the foregoing undertaking by the Company may
be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
(l) Construction.
The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules
of strict construction will be applied against any party. No specific representation or warranty shall limit the generality or applicability
of a more general representation or warranty. Each and every reference to share prices, shares of Common Stock and any other numbers
in this Agreement that relate to the Common Stock shall be automatically adjusted for any stock splits, stock dividends, stock combinations,
recapitalizations or other similar transactions that occur with respect to the Common Stock after the date of this Agreement. Notwithstanding
anything in this Agreement to the contrary, for the avoidance of doubt, nothing contained herein shall constitute a representation or
warranty against, or a prohibition of, any actions with respect to the borrowing of, arrangement to borrow, identification of the availability
of, and/or securing of, securities of the Company in order for the Buyer (or its broker or other financial representative) to effect
short sales or similar transactions in the future.
(m) Remedies.
The Buyer and in the event of assignment by Buyer of its rights and obligations hereunder, each holder of Securities, shall have all
rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted at any time
under any other agreement or contract and all of the rights which such holders have under any law. Any Person having any rights under
any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to
recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. The remedies
provided in this Agreement and the other Transaction Documents shall be cumulative and in addition to all other remedies available under
this Agreement and the other Transaction Documents, at law or in equity (including a decree of specific performance and/or other injunctive
relief).
(n) Withdrawal
Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents,
whenever the Buyer 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 the Buyer 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.
(o) Payment
Set Aside; Currency. To the extent that the Company makes a payment or payments to the Buyer hereunder or pursuant to any of the
other Transaction Documents or the Buyer enforces or exercises its rights hereunder or thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver
or any other Person under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall
be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.
Unless otherwise expressly indicated, all dollar amounts referred to in this Agreement and the other Transaction Documents are in United
States Dollars (“U.S. Dollars”), and all amounts owing under this Agreement and all other Transaction Documents shall
be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar equivalent amount
in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to any amount
of currency to be converted into U.S. Dollars pursuant to this Agreement, the U.S. Dollar exchange rate as published in the Wall Street
Journal on the relevant date of calculation.
(p) Judgment
Currency.
(i) If
for the purpose of obtaining or enforcing judgment against the Company in connection with this Agreement or any other Transaction Document
in any court in any jurisdiction it becomes necessary to convert into any other currency (such other currency being hereinafter in this
Section 9(p) referred to as the “Judgment Currency”) an amount due in US Dollars under this Agreement, the conversion
shall be made at the Exchange Rate prevailing on the Trading Day immediately preceding:
(1) the
date actual payment of the amount due, in the case of any proceeding in the courts of New York or in the courts of any other jurisdiction
that will give effect to such conversion being made on such date: or
(2) the
date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as of which
such conversion is made pursuant to this Section 9(p)(i)(2) being hereinafter referred to as the “Judgment Conversion Date”).
(ii) If
in the case of any proceeding in the court of any jurisdiction referred to in Section 9(p)(i)(2) above, there is a change in the
Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable party shall
pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the Exchange Rate
prevailing on the date of payment, will produce the amount of US Dollars which could have been purchased with the amount of Judgment Currency
stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion Date.
(iii) Any
amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being obtained
for any other amounts due under or in respect of this Agreement or any other Transaction Document.
[signature pages follow]
IN WITNESS WHEREOF,
the Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written
above.
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COMPANY: |
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Ault Alliance, Inc. |
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By: |
/s/ William B. Horne |
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Name: William B. Horne |
|
|
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Title: Chief Executive Officer |
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IN WITNESS WHEREOF,
the Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written
above.
|
BUYER: |
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Walleye Opportunities Master Fund Ltd. |
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By: |
/s/ William England |
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Name: William England |
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Title: Chief Executive Officer of the Manager |
|
v3.23.3
Cover
|
Sep. 28, 2023 |
Document Type |
8-K
|
Amendment Flag |
false
|
Document Period End Date |
Sep. 28, 2023
|
Entity File Number |
001-12711
|
Entity Registrant Name |
AULT ALLIANCE,
INC.
|
Entity Central Index Key |
0000896493
|
Entity Tax Identification Number |
94-1721931
|
Entity Incorporation, State or Country Code |
DE
|
Entity Address, Address Line One |
11411 Southern Highlands Parkway
|
Entity Address, Address Line Two |
Suite 240
|
Entity Address, City or Town |
Las Vegas
|
Entity Address, State or Province |
NV
|
Entity Address, Postal Zip Code |
89141
|
City Area Code |
(949)
|
Local Phone Number |
444-5464
|
Written Communications |
false
|
Soliciting Material |
false
|
Pre-commencement Tender Offer |
false
|
Pre-commencement Issuer Tender Offer |
false
|
Entity Emerging Growth Company |
false
|
Common Stock, $0.001 par value |
|
Title of 12(b) Security |
Common Stock, $0.001 par value
|
Trading Symbol |
AULT
|
Security Exchange Name |
NYSE
|
13.00% Series D Cumulative Redeemable Perpetual Preferred Stock, par value $0.001 per share |
|
Title of 12(b) Security |
13.00% Series D Cumulative Redeemable Perpetual Preferred Stock, par value $0.001 per share
|
Trading Symbol |
AULT PRD
|
Security Exchange Name |
NYSE
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Ault Alliance (AMEX:AULT-D)
Historical Stock Chart
From Jun 2024 to Jul 2024
Ault Alliance (AMEX:AULT-D)
Historical Stock Chart
From Jul 2023 to Jul 2024