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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): November 17, 2023 (November 16,
2023)
__________________________
Volcon, Inc.
(Exact Name of Registrant as Specified in its Charter)
__________________________
Delaware |
001-40867 |
84-4882689 |
(State or Other Jurisdiction
of Incorporation) |
(Commission
File Number) |
(I.R.S. Employer
Identification Number) |
3121
Eagles Nest Street, Suite 120
Round Rock, TX 78665
(Address of principal executive offices and zip
code)
(512) 400-4271
(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 (see General
Instruction A.2. below):
☐
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-14(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, par value $0.00001 per share |
|
VLCN |
|
NASDAQ |
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. |
Public Offering
On November 16, 2023, Volcon,
Inc. (the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”) with Aegis Capital
Corp. (the “Underwriter”), in connection with a firm commitment underwritten public offering (the “Offering”)
of (i) 3,326,042 common units (“Common Units”), each consisting of one share of common stock of the Company (“common
stock”), 0.35 of a warrant to purchase one share of common stock at an exercise price of $0.55 per share (or 130% of the price of
each Common Unit sold in the Offering) or pursuant to an alternative cashless exercise option (described below), which warrant will expire
on the five-year anniversary of the original issuance date (the “Series A Warrants”) and 0.35 of a warrant to purchase one
share of common stock at an exercise price of $0.84 per share (or 200% of the price of each Common Unit sold in the Offering), which warrant
will expire on the five-year anniversary of the original issuance date (the “Series B Warrants” and together with the Series
A Warrants, the “Warrants”); and (ii) 39,531,100 pre-funded units (the “Pre-funded Units” and together with the
Common Units, the “Units”), each consisting of one pre-funded warrant to purchase one share of common stock (the “Pre-funded
Warrants”), 0.35 of a Series A Warrant and 0.35 of a Series B Warrant. The purchase price of each Common Unit was $0.42, and the
purchase price of each Pre-Funded Unit was $0.41999 (which is equal to the public offering price per Common Unit to be sold in the Offering
minus $0.00001). The Pre-Funded Warrants are immediately exercisable and may be exercised at any time until all of the Pre-Funded
Warrants are exercised in full.
In addition, the Company granted
the Underwriter a 45-day option to purchase additional 6,428,571 shares of common stock and/or Pre-Funded Warrants, representing up to
15% of the number of common stock and Pre-Funded Warrants sold in the Offering, and/or additional 2,250,000 Series A Warrants representing
up to 15% of the Series A Warrants sold in the Offering, and/or additional 2,250,000 Series B Warrants representing up to 15% of the Series
B Warrants sold in the Offering solely to cover over-allotments, if any.
Under the alternate cashless
exercise option of the Series A Warrants, beginning on the date of the Warrant Stockholder Approval (described below), the holder of the
Series A Warrant, has the right to receive an aggregate number of shares equal to three times the aggregate number of shares of common
stock that would be issuable upon a cash exercise of the Series A Warrant. In addition, beginning on the date of the Warrant Stockholder
Approval, the Warrants will contain a reset of the exercise price to a price equal to the lesser of (i) the then-current exercise price
and (ii) lowest volume weighted average price for the five trading days immediately preceding and immediately following the date we effect
a reverse stock split in the future with a proportionate adjustment to the number of shares underlying the Warrants. Finally, with certain
exceptions, the Series B Warrants provide for an adjustment to the exercise price and, subject to Warrant Stockholder Approval, to the
number of shares underlying the Series B Warrant, upon our issuance of our common stock or common stock equivalents at a price per share
that is less than the then-current exercise price of the Series B Warrant.
The alternative cashless exercise
option included in the Series A Warrants and the other adjustment provisions in the Warrants described above will be available only upon
receipt of such stockholder approval as may be required by the applicable rules and regulations of the Nasdaq Capital Market to permit
the alternate cashless exercise of the Series A Warrants and the other adjustment provisions described above included in the Warrants
(the “Warrant Stockholder Approval”). In the event that the Company is unable to obtain the Warrant Stockholder Approval,
the Series A Warrants will not be exercisable using the alternative cashless exercise option and certain of the other adjustment provisions
described above included in the Warrants will not be effective.
The
Offering closed on November 17, 2023. An aggregate of 3,326,042 Common Units (which includes 3,326,042 shares of common stock) and 39,531,100
Pre-Funded Units (which includes 39,531,100 Pre-Funded Warrants) were sold in the Offering. On November 17, 2023, the Underwriter partially
exercised its over-allotment option with respect to 842,575 Series A Warrants and Series B Warrants. The aggregate gross proceeds to the
Company were approximately $18.0 million, before deducting underwriting discounts and other estimated expenses payable by the Company.
The
Offering was made pursuant to an effective registration statement on Form S-1 (File No. 333-274800) and the preliminary prospectus
contained therein, which was filed by the Company with the Securities and Exchange Commission on September 29, 2023, amended on November
8, 2023, and declared effective on November 15, 2023. A final prospectus relating to the Offering was filed with the SEC on
November 17, 2023. The Company intends to use the net proceeds from the Offering for general corporate purposes.
Under
the terms of the Underwriting Agreement, the Underwriter received an underwriting discount of 8.0% to the public offering price for the
Units. In addition, the Company agreed to (a) pay a non-accountable expense allowance to the Underwriter equal to 1.0% of the gross proceeds
received in this Offering and (b) to reimburse the Underwriter for certain out-of-pocket expenses, including, but not limited to, up to
$100,000 for reasonable legal fees and disbursements for the Underwriter’s counsel.
The
Underwriting Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing,
indemnification obligations of the Company and the Underwriter, including for liabilities under the Securities Act of 1933, as amended,
other obligations of the parties and termination provisions.
The foregoing description
of the Underwriting Agreement, Pre-funded Warrant, Series A Warrant and Series B Warrant is not complete and is qualified in its entirety
by reference to the full text of such agreements, copies of which are filed as Exhibits 1.1, 4.1, 4.2, and 4.3 and are incorporated by
reference herein.
Note Amendment
On November 17, 2023, the
Company entered into an amendment agreement (the “Amendment”) with Empery Asset Master, LTD, Empery Tax Efficient, LP
and Empery Debt Opportunity Fund, LP (collectively, the “Holders”), the holders of certain convertible notes and warrants.
Pursuant to the Amendment, among other items, the Holders agreed to amend certain provisions in the notes and warrants to allow the Company
more flexibility with respect to the issuance of future securities related the Offering discussed above, and the Company agreed to add
in the notes additional operational covenants.
The foregoing description
of the Amendment, the amended note, and the amended warrant is not complete and is qualified in its entirety by reference to the full
text of such agreements, copies of which are filed as Exhibits 10.1, 4.4, and 4.5 and are incorporated by reference herein.
In connection with the Offering,
on November 17, 2023, the Company issued a press release announcing the closing of the Offering. A copy of the press release is attached
hereto as Exhibit 99.1 and is incorporated herein by reference.
(d) Exhibits
SIGNATURES
Pursuant to the requirements of
the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
Volcon, Inc. |
|
(Registrant) |
|
|
Date: November 20, 2023 |
/s/ Greg Endo |
|
Greg Endo
Chief Financial Officer |
Exhibit 1.1
Underwriting
Agreement
November 16, 2023
Aegis Capital Corp.
c/o Aegis Capital Corp.
1345 Avenue of the Americas,
27th Floor
New York, NY 10105
Ladies and Gentlemen:
Volcon, Inc., a Delaware corporation (the “Company”),
agrees, subject to the terms and conditions in this agreement (this “Agreement”), to issue and sell to Aegis
Capital Corp. (the “Underwriter”) (i) an aggregate of 42,857,142 common units (“Common Units”),
each consisting of one share of common stock (the “Firm Shares”), par value $0.00001 per share, of the Company
(the “Common Stock”), 0.35 of a series A warrant to purchase one share of Common Stock (“Series
A Warrants”) and 0.35 of a series B warrant (“Series B Warrants”) to purchase one share of Common
Stock (collectively, the “Warrants”) and/or (ii) an aggregate of 42,857,142 pre-funded units (“Pre-funded
Units”) consisting of one pre-funded warrant to purchase one share of Common Stock (the “Pre-funded Warrants”),
0.35 of a Series A Warrant and 0.35 of a Series B Warrant. The Common Units and Pre-funded Units to be sold by the Company to the Underwriter
are called the “Firm Securities.” At the option of the Underwriter, the Company agrees, subject to the terms
and conditions herein, to issue and sell additional Option Securities (as defined herein). The Firm Securities and the Option Securities
are herein referred to collectively as the “Offered Securities”. The number of Offered Securities to be purchased
by the Underwriter is set forth opposite its name in Schedule I hereto.
Definitions
“Affiliate” has the meaning set forth in
Rule 405 under the Securities Act.
“Applicable Time” means 8:00 p.m. ET on the
date hereof.
“Bona Fide Electronic Road Show” means a
“bona fide electronic road show” (as defined in Rule 433(h)(5) under the Securities Act) that the Company has made available
without restriction by “graphic means” (as defined in Rule 405 under the Securities Act) to any person.
“Business day” means a day on which the Nasdaq
is open for trading and on which banks in New York are open for business and not permitted by law or executive order to be closed.
“Commission” means the United States Securities
and Exchange Commission.
“Emerging Growth Company” means an
“emerging growth company” (as defined in Section 2(a) of the Securities Act).
“Exchange Act” means the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Final Prospectus” means the prospectus in
the form first filed with the Commission pursuant to and within the time limits described in Rule 424(b) under the Securities Act.
“Free Writing Prospectus” has the meaning
set forth in Rule 405 under the Securities Act.
“Investment Company Act” means the Investment
Company Act of 1940, as amended, and the rules and regulations promulgated thereunder.
“Issuer Free Writing Prospectus” means an
“issuer free writing prospectus” (as defined in Rule 433(h)(1) under the Securities Act).
“Preliminary Prospectus” means any preliminary
prospectus included in the Registration Statement prior to the time at which the Commission declared the Registration Statement effective.
“Pricing Disclosure Package” means the Pricing
Prospectus collectively with the documents and pricing information set forth in Schedule II hereto.
“Pricing Prospectus” means the Preliminary
Prospectus included in the Registration Statement at the time at which the Commission declared the Registration Statement effective.
“Prospectus Delivery Period” means such period
of time after the first date of the public offering of the Offered Securities as in the opinion of counsel for the Underwriter a prospectus
relating to the Offered Securities is required by law to be delivered (or required to be delivered but for Rule 172 under the Securities
Act) in connection with sales of the Offered Securities by the Underwriter or dealer.
“Registration Statement” means (a) the registration
statement on Form S-1 (File No. 333-274800), including a prospectus, registering the offer and sale of the Offered Securities under the
Securities Act as amended at the time the Commission declared it effective, including, the filings incorporated by reference therein,
each of the exhibits, financial statements and schedules thereto, (b) any Rule 430A Information, and (c) any Rule 462(b) Registration
Statement.
“Rule 430A Information” means the information
deemed, pursuant to Rule 430A under the Securities Act, to be part of the Registration Statement at the time the Commission declared the
Registration Statement effective.
“Rule 462(b) Registration Statement” means
an abbreviated registration statement to register the offer and sale of additional shares of Common Stock pursuant to Rule 462(b) under
the Securities Act.
“Sarbanes-Oxley Act” means the Sarbanes-Oxley
Act of 2002, as amended, and the rules and regulations promulgated thereunder.
“Securities Act” means the Securities Act
of 1933, as amended, and the rules and regulations promulgated thereunder.
“Testing-the-Waters Communication” means
any oral or Written Communication with potential investors undertaken in reliance on Section 5(d) of under the Securities Act.
“Written Communication” has the meaning set
forth in Rule 405 under the Securities Act.
“Written Testing-the-Waters Communications”
means any Testing-the-Waters Communication that is a Written Communication.
1.
Representations and Warranties of the Company.
The Company hereby represents and warrants
to, and agrees with, the Underwriter that:
(a)
Registration Statement.
(i)
The Company has prepared and filed the Registration Statement with the Commission under the Securities Act. The Commission has
declared the Registration Statement effective under the Securities Act and the Company has not as of the date of this Agreement filed
a post-effective amendment to the Registration Statement. The Commission has not issued any order suspending the effectiveness of the
Registration Statement or any order preventing or suspending the use of the Registration Statement, the Final Prospectus, any Preliminary
Prospectus, any Issuer Free Writing Prospectus or any Testing-the-Waters Communication, and no proceedings for such purpose or pursuant
to Section 8A of the Securities Act have been initiated, are pending before or, to the Company’s knowledge, threatened by the Commission.
(ii)
The Registration Statement, at the time it became effective, did not contain, and any post-effective amendment thereto, as of the
effective date of such amendment, 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; provided that the Company makes no representation
or warranty with respect to any statements or omissions made in reliance upon and in conformity with information relating to the Underwriter
furnished to the Company in writing by the Underwriter expressly for use in the Registration Statement (including any post-effective amendment
thereto), the Pricing Disclosure Package, the Final Prospectus (including any amendments or supplements thereto), any Preliminary Prospectus,
any Issuer Free Writing Prospectus or any Testing-the-Waters Communication, it being understood and agreed that the only such information
furnished by the Underwriter consists of the information described in Section 8(c) hereof (collectively, the “Underwriter
Information”).
(iii)
Each of the Registration Statement and any post-effective amendment thereto, at the time it became effective and at the date hereof,
complied and will comply in all material respects with the Securities Act.
(b)
Pricing Disclosure Package. The Pricing Disclosure Package, as of the Applicable Time, did not, and as of the Closing Date
(as defined below) and as of any Additional Closing Date (as defined below), as the case may be, 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; provided that the Company makes no representation or warranty with respect to any statements
or omissions made in reliance upon and in conformity with the Underwriter Information.
(c)
Final Prospectus.
(i)
Each of the Final Prospectus and any amendments or supplements thereto, as of its date, as of the time it is filed with the Commission
pursuant to Rule 424(b) under the Securities Act, as of the Closing Date and as of any Additional Closing Date, as the case may be, 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; provided that the Company makes no representation
or warranty with respect to any statements or omissions made in reliance upon and in conformity with the Underwriter Information.
(ii)
Each of the Final Prospectus and any amendments or supplements thereto, at the time it is filed with the Commission pursuant to
Rule 424(b) under the Securities Act, as of the Closing Date and as of any Additional Closing Date, as the case may be, will comply in
all material respects with the Securities Act.
(d)
Preliminary Prospectuses.
(i)
Each Preliminary Prospectus, as of the time it was filed with the Commission pursuant to Rule 424(a) under the Securities Act,
if any, did 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; provided that the Company makes no representation
or warranty with respect to any statements or omissions made in reliance upon and in conformity with the Underwriter Information.
(ii)
Each Preliminary Prospectus, at the time it was filed with the Commission pursuant to Rule 424(a) under the Securities Act, if
any, complied in all material respects with the Securities Act.
(e)
Issuer Free Writing Prospectuses.
(i)
Each Issuer Free Writing Prospectus, when considered together with the Preliminary Prospectus accompanying, or delivered prior
to the delivery of, such Issuer Free Writing Prospectus, did not, as of the date of such Issuer Free Writing Prospectus, and will not,
as of the Closing Date and as of any Additional Closing Date, as the case may be, 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; provided that the Company makes no representation or warranty with respect to any statements or omissions made
in reliance upon and in conformity with the Underwriter Information.
(ii)
Each Issuer Free Writing Prospectus, at the time of filing with the Commission, complied or will comply in all material respects
with the Securities Act.
(iii)
The Company has filed, or will file, with the Commission, within the time period specified in Rule 433(d) under the Securities
Act, any Free Writing Prospectus it is required to file pursuant to Rule 433(d) under the Securities Act. The Company has made available
any Bona Fide Electronic Road Show used by it in compliance with Rule 433(d)(8)(ii) under the Securities Act such that no filing of any
“road show” (as defined in Rule 433(h) under the Securities Act) (“Road Show”) is required in connection
with the offering of the Offered Securities.
(iv)
Except for the Issuer Free Writing Prospectuses, if any, set forth in Schedule II hereto and electronic road shows, if any, each
furnished to the Underwriter before first use, the Company has not used, authorized the use of, referred to or participated in the planning
for use of, and will not, without the prior consent of the Underwriter, use, authorize the use of, refer to or participate in the planning
for use of, any Free Writing Prospectus.
(f)
Testing-the-Waters Communications.
(i)
The Company has not (x) alone engaged in any Testing-the-Waters Communication and (y) authorized anyone to engage in Testing-the-Waters
Communications.
(g)
No Other Disclosure Materials. Other than the Registration Statement, the Pricing Disclosure Package, and the Final Prospectus,
the Company (including its agents other than the Underwriter, as to which no representation or warranty is given) has not, directly or
indirectly, distributed, prepared, used, authorized, approved or referred to, and will not distribute, prepare, use, authorize, approve
or refer to, any offering material in connection with the offering and sale of the Offered Securities.
(h)
Ineligible Issuer. At the time of filing of the registration statement on Form S-1 (File No. 333-274800) registering the
offer and sale of the Offered Securities submitted to the Commission on September 29, 2023 and any amendment thereto and at the date hereof,
the Company was not and is not an “ineligible issuer” (as defined in Rule 405 under the Securities Act).
(i)
Emerging Growth Company. From the time of the initial confidential submission of the registration statement relating to
the Offered Securities to the Commission (or, if earlier, the first date on which the Company engaged directly or through any person authorized
to act on its behalf in any Testing-the-Waters Communication) through the date hereof, the Company has been and is an Emerging Growth
Company.
(j)
Due Authorization. The Company has full right, power and authority to execute and deliver this Agreement and to perform
its obligations hereunder; and all action required to be taken for the due and proper authorization, execution and delivery by it of this
Agreement, and the consummation by it of the transactions contemplated hereby and thereby has been duly and validly taken.
(k)
Underwriting Agreement. This Agreement has been duly authorized, executed and delivered by the Company and each, assuming
the due authorization, execution and delivery by the other parties hereto, constitutes a valid and legally binding agreement of the Company,
enforceable in accordance with its terms, except as (i) the enforcement hereof may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable
principles (whether considered in a proceeding at law or in equity) relating to enforceability and (ii) rights to indemnification and
contribution hereunder may be limited by applicable law and public policy considerations.
(l)
No Material Adverse Change. Except as otherwise disclosed in the Registration Statement, the Pricing Disclosure Package
and the Final Prospectus (in each case exclusive of any amendment or supplement thereto), since the date of the most recent financial
statements included in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus: (i) there has been no material
adverse change, or any development that could result in a material adverse change, in or affecting the condition (financial or otherwise),
earnings, business, properties, management, financial position, stockholders’ equity, or results of operations, whether or not arising
from transactions in the ordinary course of business, of the Company and its subsidiaries, considered as one entity; (ii) there has been
no change in the capital stock (other than (A) the issuance of shares of Common Stock upon the exercise or settlement (including any “net”
or “cashless” exercises or settlements) of stock options, restricted share units or warrants described as outstanding, (B)
the grant of options and awards under existing equity incentive plans, or (C) the repurchase of shares of Common Stock by the Company,
which were issued pursuant to the early exercise of stock options by option holders and are subject to repurchase by the Company, in each
case, as described in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus), or material change in the
short-term debt or long-term debt of the Company or any of its subsidiaries, considered as one entity; and (iii) the Company and its subsidiaries,
considered as one entity, have not incurred any material liability or obligation, indirect, direct or contingent (whether or not in the
ordinary course of business); nor entered into any transaction or agreement (whether or not in the ordinary course of business) that is
material to the Company and its subsidiaries, considered as one entity; and (iv) there has been no dividend or distribution of any kind
declared, set aside for payment, paid or made by the Company or, except for dividends paid to the Company or other subsidiaries of the
Company, any of its subsidiaries on any class of capital stock or repurchase or redemption by the Company or any of its subsidiaries of
any class of capital stock.
(m)
Organization and Good Standing of the Company and its Subsidiaries. The Company and each of its subsidiaries have been duly
organized and are validly existing and in good standing under the laws of their respective jurisdictions of organization, are duly qualified
to do business and are in good standing in each jurisdiction in which their respective ownership or lease of property or the conduct of
their respective businesses requires such qualification, and have all power and authority (corporate and other) necessary to own, lease
or hold their respective properties and to conduct the businesses in which they are engaged as described in the Registration Statement,
the Pricing Disclosure Package and the Final Prospectus, except where the failure to be in good standing, to be so qualified or to have
such power or authority could not, individually or in the aggregate, have a material adverse effect on the condition (financial or otherwise),
earnings, business, properties, management, financial position, stockholders’ equity, or results of operations of the Company and
its subsidiaries, considered as one entity, or adversely affect the performance by the Company of its obligations under this Agreement
(a “Material Adverse Effect”).
(n)
Capitalization. The capitalization of the Company is as set forth in the Registration Statement, the Pricing Disclosure
Package and the Final Prospectus All of the outstanding shares of capital stock of the Company have been duly authorized and validly issued
and are fully paid and non-assessable. The Offered Securities have been duly authorized and, when issued and paid for as contemplated
herein, will be validly issued, fully paid and non-assessable; the holders thereof are not and will not be subject to personal liability
by reason of being such holders; the Offered Securities are not and will not be subject to the preemptive rights of any holders of any
security of the Company or similar contractual rights granted by the Company; and all corporate action required to be taken for the authorization,
issuance and sale of the Offered Securities have been duly and validly taken. None of the outstanding shares of capital stock of the Company
were issued in violation of any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase securities
of the Company. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus, there are
no authorized or outstanding options, warrants, preemptive rights, rights of first refusal or other rights to acquire, or instruments
convertible into or exchangeable or exercisable for, any shares of capital stock of, or other equity interest in, the Company or any of
its subsidiaries. All of the outstanding shares of capital stock of, or other equity interest in, each of the Company’s subsidiaries
(i) have been duly authorized and validly issued, (ii) are fully paid and non-assessable (except as such non-assessability may be affected
by Sections 18-303, 18-607 and 18-803 of the Delaware Limited Liability Company Act) and (iii) are owned by the Company, directly or through
the Company’s subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, charge, claim or restriction
on voting or transfer (collectively, “Liens”).
(o)
Stock Plans. With respect to the stock options (the “Stock Options”) granted pursuant to the stock-based
compensation plans of the Company and its subsidiaries (the “Company Stock Plans”), (i) each Stock Option intended
to qualify as an “incentive stock option” under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”),
so qualifies, (ii) each grant of a Stock Option was duly authorized by all necessary corporate action, including, as applicable, approval
by the board of directors of the Company (or a duly constituted and authorized committee thereof) and any required stockholder approval
by the necessary number of votes or written consents, and the award agreement governing such grant (if any), to the Company’s knowledge,
was duly executed and delivered by each party thereto, (iii) each such grant was made in all material respects in accordance with the
terms of the Company Stock Plans, and (iv) each such grant was properly accounted for in accordance with generally accepted accounting
principles as applied in the United States (“GAAP”) in the financial statements (including the related notes)
of the Company.
(p)
No Violation or Default. Neither the Company nor any of its subsidiaries is: (i) in violation of its charter, by-laws or
similar organizational documents; (ii) in default, and no event has occurred that, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any term, covenant, condition or other obligation contained in any indenture,
mortgage, deed of trust, loan agreement, contract, undertaking or other agreement or instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound or to which any property, right or asset of the Company or any
of its subsidiaries is subject; or (iii) in violation of any law or statute applicable to the Company or any of its subsidiaries or any
judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority having jurisdiction over the Company
or any of its subsidiaries, or any of their respective properties or assets, except, in the case of clauses (ii) and (iii) above, for
any such default or violation that would not, individually or in the aggregate, have a Material Adverse Effect.
(q)
No Conflicts. None of (i) the execution, delivery and performance of this Agreement by the Company, (ii) the issuance, sale
and delivery of the Firm Securities or the Option Securities, (iii) the application of the proceeds of the offering as described under
“Use of Proceeds” in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus, or (iv) the consummation
of the transactions contemplated herein will: (x) result in any violation of the terms or provisions of the charter, by-laws or similar
organizational documents of the Company or any of its subsidiaries; (y) conflict with, result in a breach or violation of, or require
the approval of stockholders, members or partners or any approval or consent of any persons under, any of the terms or provisions of,
constitute a default under, result in the termination, modification, or acceleration of, or result in the creation or imposition of any
lien, charge or encumbrance upon any property, right or asset of the Company or any of its subsidiaries pursuant to, any indenture, mortgage,
deed of trust, loan agreement, note agreement, contract, undertaking or other agreement, obligation, condition, covenant or instrument
to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any
property, right or asset of the Company or any of its subsidiaries is subject; or (z) result in the violation of any law, statute, judgment,
order, rule, decree or regulation applicable to the Company or any of its subsidiaries of any court, arbitrator, governmental or regulatory
authority, agency or body having jurisdiction over the Company or any of its subsidiaries or any of their respective properties or assets.
(r)
No Consents Required. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus,
no consent, approval, authorization, order, filing, registration, license or qualification of or with any court, arbitrator, or governmental
or regulatory authority, agency, or body is required for (i) the execution, delivery and performance by the Company of this Agreement;
(ii) the issuance, sale and delivery of the Firm Securities and the Option Securities; or (iii) the consummation of the transactions contemplated
herein, except for such consents, approvals, authorizations, orders, filings, registrations or qualifications as (x) have already been
obtained or made and are still in full force and effect, (y) may be required by FINRA, and (z) may be required under applicable state
securities laws in connection with the purchase, distribution and resale of the Firm Securities and the Option Securities by the Underwriter.
(s)
Independent Accountants. MaloneBailey, LLP, which expressed its opinion with respect to the financial statements (which
term as used in this Agreement includes the related notes thereto) and supporting schedules included in the Registration Statement, the
Pricing Disclosure Package and the Final Prospectus, is an independent registered public accounting firm with respect to the Company and
its subsidiaries within the meaning of the rules and regulations of the Commission and the Public Company Accounting Oversight Board and
as required by the Securities Act.
(t)
Financial Statements and Other Financial Data. The financial statements (including the related notes thereto), together
with the supporting schedules, included in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus comply
in all material respects with the applicable requirements of the Securities Act and present fairly the consolidated financial position
of the entities to which they relate as of and at the dates indicated and the results of their operations and cash flows for the periods
specified. Such financial statements, notes and schedules have been prepared in conformity with GAAP applied on a consistent basis throughout
the periods involved, except as may be expressly stated in the notes thereto. The financial data set forth in the Registration Statement,
the Pricing Disclosure Package and the Final Prospectus under the captions “Capitalization” present fairly the information
set forth therein on a basis consistent with that of the audited financial statements included in the Registration Statement, the Pricing
Disclosure Package and the Final Prospectus.
(u)
Statistical and Market-Related Data. The statistical and market-related data included in the Registration Statement, the
Pricing Disclosure Package and the Final Prospectus are based on or derived from sources that the Company reasonably believes to be accurate
and reliable in all material respects.
(v)
Forward-Looking Statements. No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act) included in the Registration Statement, the Pricing Disclosure Package or the Final Prospectus has been made
or reaffirmed without a reasonable basis or has been disclosed other than in good faith.
(w)
Legal Proceedings. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus,
(i) there are no legal, governmental or regulatory investigations, actions, demands, claims, suits, arbitrations, inquiries or proceedings
(collectively, “Actions”) pending to which the Company or any of its subsidiaries is or may be a party or to
which any property, right or asset of the Company or any of its subsidiaries is or may be the subject that, individually or in the aggregate,
if determined adversely to the Company or any of its subsidiaries, could have a Material Adverse Effect; and (ii) to the knowledge of
the Company, no such Actions are threatened or contemplated by any governmental or regulatory authority or by others.
(x)
Labor Disputes. No labor disturbance by or dispute with the employees of the Company or any of its subsidiaries exists or,
to the knowledge of the Company, is threatened or contemplated that could, individually or in the aggregate, have a Material Adverse Effect.
(y)
Intellectual Property Rights. (i) The Company and its subsidiaries own or have the right to use all patents, patent applications,
trademarks, service marks, trade names, and other source indicators and registrations and applications for registration thereof, domain
name registrations, copyrights and registrations and applications for registration thereof, technology and know-how, trade secrets, and
all other intellectual property and related proprietary rights (collectively, “Intellectual Property Rights”)
necessary to conduct their respective businesses; (ii) other than as disclosed in the Prospectus, neither the Company nor any of its subsidiaries
has received any notice of infringement, misappropriation or other conflict with (and neither the Company nor any of its subsidiaries
is otherwise aware of any infringement, misappropriation or other conflict with) the Intellectual Property Rights of any other person,
except for such infringement, misappropriation or other conflict as could not have a Material Adverse Effect; and (iii) to the knowledge
of the Company, the Intellectual Property Rights of the Company and its subsidiaries are not being infringed, misappropriated or otherwise
violated by any person.
(z)
Licenses and Permits. (i) The Company and its subsidiaries possess such valid and current certificates, authorizations,
approvals, licenses and permits (collectively, “Authorizations”) issued by, and have made all declarations,
amendments, supplements and filings with, the appropriate state, federal or foreign regulatory agencies or bodies necessary to own, lease
and operate their respective properties and to conduct their respective businesses as set forth in the Registration Statement, the Pricing
Disclosure Package and the Final Prospectus; (ii) all such Authorizations are valid and in full force and effect and the Company and its
subsidiaries are in compliance with the terms and conditions of all such Authorizations; and (iii) neither the Company nor any of its
subsidiaries has received notice of any revocation, termination or modification of, or non-compliance with, any such Authorization or
has any reason to believe that any such Authorization will not be renewed in the ordinary course, except where, in the case of clauses
(i), (ii) and (iii), the failure to possess, make or obtain such Authorizations (by possession, declaration or filing) could not, individually
or in the aggregate, have a Material Adverse Effect.
(aa)
Title to Property. Neither the Company nor any of its subsidiaries own any real property. The Company and its subsidiaries
have good and marketable title in fee simple to, or have valid and enforceable rights to lease or otherwise use, all items of personal
property (other than with respect to Intellectual Property Rights, which is addressed exclusively in Section 1(y)) that are material to
the respective businesses of the Company and its subsidiaries, in each case, free and clear of all liens, encumbrances, claims, and defects
and imperfections of title, except such liens, encumbrances, claims, defects and imperfections as (i) are disclosed in the Registration
Statement, the Pricing Disclosure Package and the Final Prospectus, or (ii) do not materially affect the value of such property and do
not materially interfere with the use made or proposed to be made of such property by the Company and its subsidiaries. The Company and
its subsidiaries have good and marketable title in fee simple to, or have valid and enforceable rights to lease or otherwise use, all
items of real and personal property that are material to the respective businesses of the Company and its subsidiaries, in each case,
free and clear of all liens, encumbrances, claims and defects and imperfections of title, except such liens, encumbrances, claims, defects
and imperfections as (i) are disclosed in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus, or (ii)
do not materially affect the value of such property and do not materially interfere with the use made or proposed to be made of such property
by the Company and its subsidiaries. All items of real and personal property held under lease by the Company and its subsidiaries are
held under valid, subsisting and enforceable leases, with such exceptions as do not materially interfere with the use made or proposed
to be made of such property by the Company and its subsidiaries.
(bb)
Taxes. The Company and each of its subsidiaries have filed all federal, state, local and foreign tax returns required to
be filed through the date hereof or have timely requested extensions thereof and have paid all taxes required to be paid thereon (except
as currently being contested in good faith and for which reserves required by GAAP have been created in the financial statements of the
Company). The charges, accruals and reserves in respect of any income and other tax liability in the financial statements of the Company
referred to in Section 1(t) are adequate, in accordance with GAAP principles, to meet any assessments for any taxes of the Company accruing
through the end of the last period specified in such financial statements.
(cc)
Investment Company Act. Neither the Company nor any of its subsidiaries is or, after giving effect to the offer and sale
of the Firm Securities and the Option Securities and the application of the proceeds therefrom as described under “Use of Proceeds”
in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus, will be required to register as an “investment
company” (as defined in the Investment Company Act).
(dd)
Insurance. The Company and its subsidiaries are insured by recognized, financially sound institutions in such amounts, with
such deductibles and covering such losses and risks as the Company reasonably believes to be adequate for the conduct of their respective
businesses and the value of their respective properties and as is prudent and customary for companies engaged in similar businesses in
similar industries. All insurance policies and fidelity or surety bonds insuring the Company and its subsidiaries or their respective
businesses, assets, employees, officers and directors are in full force and effect; the Company and its subsidiaries are in compliance
with the terms of such policies in all material respects; neither the Company nor any of its subsidiaries has received notice from any
insurer or agent of such insurer that capital improvements or other expenditures are required to be made in order to continue such insurance;
and neither the Company nor any of its subsidiaries has been refused any insurance coverage sought or applied for. There are no claims
by the Company or any of its subsidiaries under any such policy as to which any insurer is denying liability or defending under a reservation
of rights clause; and neither the Company nor any of its subsidiaries has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that could not have a Material Adverse Effect.
(ee)
No Stabilization or Manipulation. None of the Company, its Affiliates or any person acting on its or any of their behalf
(other than the Underwriter, as to which no representation or warranty is given) has taken, directly or indirectly, any action designed
to or that has constituted or that could reasonably be expected to cause or result in the stabilization or manipulation of the price of
any securities of the Company. The Company acknowledges that the Underwriter may engage in passive market making transactions in the Common
Stock on the Nasdaq Capital Market (the “Exchange”) in accordance with Regulation M under the Exchange Act (“Regulation
M”).
(ff)
Compliance with the Sarbanes-Oxley Act. The Company and, to the knowledge of the Company, its officers and directors, in
their capacities as such, are and have been in compliance with all applicable provisions of the Sarbanes-Oxley Act.
(gg)
Accounting Controls. The Company and its subsidiaries maintain systems of “internal control over financial reporting”
(as defined in Rule 13a-15(f) of the Exchange Act) that comply with the requirements of the Exchange Act and have been designed by, or
under the supervision of, their principal executive and principal financial officers, or persons performing similar functions, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with GAAP. The Company and its subsidiaries maintain internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access
to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
Other than as disclosed in the Registration Statement, the Company’s internal control over financial reporting is effective and
the Company is not aware of any other material weaknesses in its internal control over financial reporting (whether or not remediated).
Since the date of the most recent balance sheet included in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus,
(x) the Company’s auditors and the audit committee of the board of directors of the Company have not been advised of (A) any new
significant deficiencies or material weaknesses in the design or operation of the internal control over financial reporting of the Company
and its subsidiaries which could adversely affect the Company’s ability to record, process, summarize, and report financial data;
or (B) any fraud, whether or not material, that involves management or other employees who have a role in the internal control over financial
reporting of the Company or its subsidiaries; and (y) there have been no significant changes in the internal control over financial reporting
of the Company or its subsidiaries or in other factors that could significantly affect, such internal control over financial reporting,
including any corrective actions with regard to significant deficiencies or material weaknesses, since the respective dates as of which
information is given in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus.
(hh)
Disclosure Controls and Procedures. The Company and its subsidiaries have established and maintain disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) that are designed to comply with the requirements of the
Exchange Act; such disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company
and its subsidiaries in the reports they file or submit under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the Commission’s rules and forms, including controls and procedures designed to ensure that such information
is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure.
Except as disclosed in the Registration Statement or Final Prospectus, such disclosure controls and procedures are effective to perform
the functions for which they were established.
(ii)
Margin Rules. Neither the issuance, sale and delivery of the Firm Securities and the Option Securities nor the application
of the proceeds thereof by the Company, in each case, as described in the Registration Statement, the Pricing Disclosure Package and the
Final Prospectus, will violate Regulation T, U or X of the Board of Governors of the Federal Reserve System or any other regulation of
such Board of Governors.
(jj)
Compliance with Environmental Laws. The Company and each of its subsidiaries (i) are, and at all times prior hereto were,
in compliance with all Environmental Laws (as defined below) applicable to such entity, which compliance includes, without limitation,
obtaining, maintaining and complying with all permits and authorizations and approvals required by Environmental Laws to conduct their
respective businesses; and (ii) have not received notice or otherwise have knowledge of any actual or alleged violation of Environmental
Laws, or of any actual or potential liability for or other obligation concerning the presence, disposal or release of hazardous or toxic
substances or wastes, pollutants or contaminants. And, except as described in the Registration Statement, the Pricing Disclosure Package
and the Final Prospectus, (x) there are no proceedings that are pending, or known to be contemplated, against the Company or any of its
subsidiaries under Environmental Laws, other than such proceedings regarding which it is reasonably believed that no monetary sanctions
of $100,000 or more will be imposed; (y) none of the Company or any of its subsidiaries is aware of any issues regarding compliance with
Environmental Laws, including any pending or proposed Environmental Laws, or liabilities or other obligations under Environmental Laws
or concerning hazardous or toxic substances or wastes, pollutants or contaminants, that could reasonably be expected to have a material
effect on the capital expenditures, earnings or competitive position of the Company and its subsidiaries; and (z) none of the Company
or any of its subsidiaries anticipates material capital expenditures relating to Environmental Laws.
As used herein, the term “Environmental
Laws” means any laws, regulations, ordinances, rules, orders, judgments, decrees, permits or other legal requirements of
any governmental authority, including, without limitation, any international, foreign, national, state, provincial, regional, or local
authority, relating to pollution, the protection of human health or safety, the environment, or natural resources, or to the use, handling,
storage, manufacturing, transportation, treatment, discharge, disposal or release of hazardous or toxic substances or wastes, pollutants
or contaminants.
(kk)
ERISA.
Each “employee benefit plan”
(within the meaning of Section 3(3) of the Employee Retirement Security Act of 1974, as amended (“ERISA”)) for
which the Company or any member of its “Controlled Group” (defined as any organization which is a member of a controlled group
of corporations within the meaning of Section 414 of the Code) would have any liability (each, a “Plan”) (i)
complies in form with the requirements of all applicable statutes, rules and regulations including ERISA and the Code, and has been maintained
and administered in substantial compliance with its terms and with the requirements of all applicable statutes, rules and regulations
including ERISA and the Code; (ii) with respect to each Plan subject to Title IV of ERISA or Section 302 of ERISA or Section 412 and 430
of the Code (A) no “reportable event” (within the meaning of Section 4043(c) of ERISA) has occurred or is reasonably expected
to occur, (B) no failure to satisfy the minimum funding standard (within the meaning of Section 302 of ERISA or Section 412 and 430 of
the Code), whether or not waived, has occurred or is reasonably expected to occur, (C) the fair market value of the assets under each
Plan (excluding for these purposes accrued but unpaid contributions) exceeds the present value of all benefits accrued under such Plan
(determined based on those assumptions used to fund such Plan) and (D) neither the Company or any member of its Controlled Group has incurred,
or reasonably expects to incur, any liability under Title IV of ERISA (other than contributions to the Plan or premiums to the Pension
Benefit Guaranty Corporation in the ordinary course and without default) in respect of a Plan (including a “multiemployer plan”,
within the meaning of Section 4001(a)(3) of ERISA); (iii) each Plan that is intended to be qualified under Section 401(a) of the Code
is so qualified and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification; and
(iv) no prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred with respect to any
Plan excluding transactions to which a statutory or administrative prohibited transaction exemption applies.
(ll)
Related Party Transactions. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Final
Prospectus, no relationship, direct or indirect, exists between or among the Company or any of its subsidiaries, on the one hand, and
the directors, officers, stockholders, other Affiliates, customers or suppliers of the Company or any of its subsidiaries, on the other
hand, that would be required by the Securities Act to be described in the Registration Statement, the Pricing Disclosure Package and the
Final Prospectus.
(mm)
No Unlawful Contributions or Other Payments. Neither the Company nor any of its subsidiaries nor, to the knowledge of the
Company, any director, officer, agent, employee, Affiliate or other person associated with or acting on behalf of the Company or any of
its subsidiaries has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating
to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government or regulatory official
or employee; (iii) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment; or (iv) violated or is in violation
of any provision of (y) the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “FCPA”),
or (z) any non-U.S. anti-bribery or anti-corruption statute or regulation. The Company and its subsidiaries have instituted and maintain
and enforce policies and procedures designed to promote and ensure compliance with all applicable anti-bribery and anti-corruption laws.
(nn)
Compliance with Anti-Money Laundering Laws. The operations of the Company and its subsidiaries are and have been conducted
at all times in compliance with all applicable financial recordkeeping and reporting requirements, including those of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, the applicable anti-money laundering statutes of all jurisdictions where the Company
or any of its subsidiaries conduct business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines
issued, administered or enforced by any governmental agency (collectively, the “Anti-Money Laundering Laws”);
and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company
or any of its subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
(oo)
Compliance with OFAC. Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any director,
officer, agent, employee or Affiliate of the Company or any of its subsidiaries is an individual or entity (an “OFAC Person”),
or is owned or controlled by an OFAC Person, that is currently the subject or target of any sanctions administered or enforced by the
U.S. government (including, without limitation, the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”)
or the U.S. Department of State and including, without limitation, the designation as a “specially designated national” or
“blocked person”), the United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant
sanctions authority (collectively, “Sanctions”), nor is the Company or any of its subsidiaries located, organized
or resident in a country or territory that is the subject or the target of Sanctions, including, without limitation, Crimea, Cuba, Iran,
North Korea, Sudan and Syria (each, a “Sanctioned Country”); and the Company will not directly or indirectly
use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner
or other OFAC Person (i) to fund or facilitate any activities of or business with any OFAC Person that, at the time of such funding or
facilitation, is the subject or the target of Sanctions, (ii) to fund or facilitate any activities or business in any Sanctioned Country
or (iii) in any other manner that will result in a violation by any OFAC Person (including any OFAC Person participating in the transaction,
whether as underwriter, advisor, investor or otherwise) of Sanctions. Since the Company’s inception, the Company and its subsidiaries
have not knowingly engaged in and are not now knowingly engaged in any dealings or transactions with any OFAC Person that at the time
of the dealing or transaction is or was the subject or the target of Sanctions or with any Sanctioned Country.
(pp)
No Registration Rights. Except as described in the Registration Statement, the Pricing Disclosure Package and the Final
Prospectus, there are no contracts, agreements or understandings between the Company or any of its subsidiaries, on the one hand, and
any person, on the other hand, granting such person any rights to require the Company or any of its subsidiaries to file a registration
statement under the Securities Act with respect to any securities of the Company or any of its subsidiaries owned or to be owned by such
person or to require the Company or any of its subsidiaries to include such securities in any securities to be registered pursuant to
any registration statement to be filed by the Company or any of its subsidiaries under the Securities Act.
(qq)
Subsidiaries. The Company does not own or control, directly or indirectly, any corporation, association or other entity
other than the subsidiaries listed in Exhibit 21 to the Registration Statement. The subsidiaries of the Company listed in Schedule III
hereto are the only “significant subsidiaries” (as defined under Rule 1.02(w) of Regulation S-X under the Securities Act)
of the Company (the “Significant Subsidiaries”).
(rr)
No Restrictions on Subsidiaries. No subsidiary of the Company is currently prohibited, directly or indirectly, from paying
any dividends to the Company, from making any other distribution on such subsidiary’s capital stock or similar ownership interest,
from repaying to the Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary’s
properties or assets to the Company or any other subsidiary of the Company.
(ss)
No Broker’s Fees. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Final
Prospectus, neither the Company nor any of its subsidiaries is a party to any contract, agreement or understanding with any person (other
than this Agreement) that would give rise to a valid claim against any of them or the Underwriter for a brokerage commission, finder’s
fee or like payment in connection with the offering and sale of the Firm Securities or the Option Securities.
(tt)
Exchange Listing. Subject to notice of issuance, the Offered Securities have been approved for listing on the Exchange.
(uu)
Shareholder Approval. The Company shall hold a special meeting of shareholders (which may also be at the annual meeting
of shareholders) at the earliest practicable date after the date hereof, but in no event later than 75 days after the Closing Date for
the purpose of obtaining Shareholder Approval (as defined below), if required to effect the purpose thereof, with the recommendation of
the Company’s Board of Directors that such proposal be approved, and the Company shall solicit proxies from its shareholders in
connection therewith in the same manner as all other management proposals in such proxy statement and all management-appointed proxyholders
shall vote their proxies in favor of such proposal. The Company shall use its reasonable best efforts to obtain such Shareholder Approval,
and officers, directors and shareholders subject to the Lock-Up Agreement shall cast their proxies in favor of such proposal. If the Company
does not obtain Shareholder Approval at the first meeting, the Company shall call a meeting every four (4) months thereafter to seek Shareholder
Approval until the earlier of the date Shareholder Approval is obtained or the Common Warrants are no longer outstanding. “Shareholder
Approval” has the meaning set forth in the Warrants.
Any certificate signed by an officer of the Company
and delivered to the Underwriter or to counsel for the Underwriter shall be deemed to be a representation and warranty by the Company
to the Underwriter as to the matters set forth therein.
2.
Representations and Warranties of the Underwriter.
The Underwriter represents and warrants
to, and agrees with, the Company:
(a)
No Testing-the-Waters Communications. The Underwriter has not (i) alone engaged in any Testing-the-Waters Communication
and (ii) authorized anyone to engage in Testing-the-Waters Communications. The Underwriter has not distributed, or authorized anyone else
to distribute, any Written Testing-the-Waters Communications.
3.
Purchase and Resale.
(a)
Agreements to Sell and Purchase. On the basis of the representations, warranties and covenants herein and subject to the
conditions herein and any adjustments made in accordance with Section 3(c) and 13 hereof,
(i)
The Company agrees to issue and sell the Firm Securities to the Underwriter; and
(ii)
The Underwriter agrees to purchase from the Company the number of Firm Securities set forth opposite the Underwriter’s name
in Schedule I hereto, subject to such adjustments as the Underwriter in its sole discretion shall make to eliminate any sales or purchases
of fractional Offered Securities.
(iii)
The purchase price per Common Unit to be paid by the Underwriter to the Company shall be $0.39 per Common Unit (92% of the per
Common Unit public offering price) and the purchase for one Pre-funded Unit shall be $0.3864 (or 92% of the public offering price for
one Pre-funded Unit less $0.001) (the “Purchase Price”). Each Pre-funded Warrant shall entitle the holder to
purchase one share of Common Stock at an exercise price of $0.001 per share of Common Stock until such time as the Pre-funded Warrants
are exercised in full, subject to adjustment as provided in the Pre-funded Warrant. The Firm Securities are to be offered initially to
the public at the offering price set forth on the cover page of the Final Prospectus.
(iv)
Payment for the Firm Securities (the “Firm Securities Payment”) shall be made by wire transfer in immediately
available funds to the accounts specified by the Company to the Underwriter at the offices of Kaufman & Canoles, P.C. at 10:00 a.m.,
ET, on November 17, 2023 or at such other place on the same or such other date and time, not later than the fifth business day thereafter,
as the Underwriter and the Company may agree upon in writing (the “Closing Date”). The Firm Securities Payment
shall be made against delivery of the Firm Securities to be purchased on the Closing Date to the Underwriter with any transfer taxes,
stamp duties and other similar taxes payable in connection with the sale of the Firm Securities duly paid by the Company.
(b)
Over-Allotment Option. On the basis of the representations, warranties and covenants herein and subject to the conditions
herein,
(i)
the Underwriter shall have the option (the “Over-Allotment Option”) to purchase, in the aggregate, up
to 6,428,571 additional Common Shares and/or Pre-funded Warrants to purchase Common Shares, representing 15.0% of the aggregate Common
Units and Pre-funded Units sold in the offering from the Company (the “Option Shares” or “Option
Pre-funded Warrants,” as applicable) and/or up to 2,250,000 additional Series A Warrants to purchase an aggregate of an
additional 2,250,000 Common Shares and/or 2,250,000 additional Series B Warrants to purchase an aggregate of an additional 2,250,000 Common
Shares, each representing 15.0% of the aggregate Common Units and Pre-funded Units sold in the offering from the Company (the “Option
Warrants”). The purchase price to be paid per Option Share or Option Pre-funded Warrant shall be equal to the price per
Unit set forth in Section 3(a) hereof and the purchase price to be paid per full Option Warrant shall be equal to $0.01. The Over-allotment
Option is, at the Underwriter’s sole discretion, for Option Shares and Option Warrants together, Option Pre-funded Warrants and
Option Warrants together, solely Option Shares, solely Option Pre-funded Warrants, solely Option Warrants, or any combination thereof
(each, an “Option Security” and collectively, the “Option Securities”);
(ii)
upon an exercise of the Over-Allotment Option and subject to the terms and conditions herein, the Company agrees to issue and sell
the Option Securities to the Underwriter;
(iii)
The Underwriter may exercise the Over-Allotment Option at any time in whole, or from time to time in part, on or before the forty-fifth
(45th) day following the date of the Final Prospectus, by written notice from the Underwriter to the Company (the “Over-Allotment
Exercise Notice”). The Underwriter must give the Over-Allotment Exercise Notice to the Company at least two business days
prior to the Closing Date or the applicable Additional Closing Date, as the case may be. The Underwriter may cancel any exercise of the
Over-Allotment Option at any time prior to the Closing Date or the applicable Additional Closing Date, as the case may be, by giving written
notice of such cancellation to the Company.
(iv)
The Over-Allotment Exercise Notice shall set forth:
(A)
the aggregate number of Option Securities as to which the Over-Allotment Option is being exercised;
(B)
the purchase price for the Option Securities;
(C)
the names and denominations in which the Option Securities are to be registered; and
(D)
the applicable Additional Closing Date, which may be the same date and time as the Closing Date but shall not be earlier than the
Closing Date nor later than the tenth (10th) full business day after the date of the Over-Allotment Exercise Notice.
(v)
Payment for the Option Securities (the “Option Securities Payment”) shall be made by wire transfer in
immediately available funds to the accounts specified by the Company to the Underwriter at the offices of Kaufman & Canoles, P.C.
at 10:00 a.m. ET on the date specified in the corresponding Over-Allotment Exercise Notice, or at such other place on the same or such
other date and time, not later than the fifth business day thereafter, as the Underwriter and the Company may agree upon in writing (an
“Additional Closing Date”). The Option Securities Payment shall be made against delivery to the Underwriter
of the Option Securities to be purchased on any Additional Closing Date, with any transfer taxes, stamp duties and other similar taxes
payable in connection with the sale of the Option Securities duly paid by the Company.
(c)
Public Offering. The Company understands that the Underwriter intends to make a public offering of the Offered Securities
as soon after the effectiveness of this Agreement as in the judgment of the Underwriter is advisable, and initially to offer the Offered
Securities on the terms set forth in the Final Prospectus. The Company acknowledges and agrees that the Underwriter may offer and sell
Offered Securities to or through any Affiliate of the Underwriter.
4.
Covenants of the Company. The Company hereby covenants and agrees with each Underwriter as follows:
(a)
Filings with the Commission. The Company will:
(i)
prepare and file the Final Prospectus (in a form approved by the Underwriter and containing the Rule 430A Information) with the
Commission in accordance with and within the time periods specified by Rules 424(b) and 430A under the Securities Act;
(ii)
file any Issuer Free Writing Prospectus with the Commission to the extent required by Rule 433 under the Securities Act; and
(iii)
file with the Commission such reports as may be required by Rule 463 under the Securities Act.
(b)
Notice to the Underwriter. The Company will advise the Underwriter promptly, and confirm such advice in writing:
(i)
when the Registration Statement has become effective;
(ii)
when the Final Prospectus has been filed with the Commission;
(iii)
when any amendment to the Registration Statement has been filed or becomes effective;
(iv)
when any Rule 462(b) Registration Statement has been filed with the Commission;
(v)
when any supplement to the Final Prospectus, any Issuer Free Writing Prospectus, any Written Testing-the-Waters Communication or
any amendment to the Final Prospectus has been filed or distributed;
(vi)
of (x) any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Final
Prospectus, (y) the receipt of any comments from the Commission relating to the Registration Statement or (z) any other request by the
Commission for any additional information, including, but not limited to, any request for information concerning any Testing-the-Waters
Communication;
(vii)
of (x) the issuance by the Commission of any order suspending the effectiveness of the Registration Statement or preventing or
suspending the use of the Registration Statement, the Pricing Disclosure Package, the Final Prospectus, any Preliminary Prospectus, any
Issuer Free Writing Prospectus or any Written Testing-the-Waters Communication or (y) the initiation or, to the knowledge of the Company,
threatening of any proceeding for that purpose or pursuant to Section 8A of the Securities Act;
(viii)
of the occurrence of any event or development within the Prospectus Delivery Period as a result of which, the Final Prospectus,
the Pricing Disclosure Package, any Issuer Free Writing Prospectus or any Written Testing-the-Waters Communication as then amended or
supplemented would include 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 existing when the Final Prospectus, the Pricing Disclosure Package, any such Issuer Free Writing
Prospectus or any such Written Testing-the-Waters Communication is delivered to a purchaser, not misleading;
(ix)
of the issuance by any governmental or regulatory authority or any order preventing or suspending the use of any of the Registration
Statement, the Pricing Disclosure Package, the Final Prospectus, any Preliminary Prospectus, any Issuer Free Writing Prospectus or any
Testing-the-Waters Communication or the initiation or threatening for that purpose; and
(x)
of the receipt by the Company of any notice with respect to any suspension of the qualification of the Offered Securities for offer
and sale in any jurisdiction or the initiation or, to the knowledge of the Company, threatening of any proceeding for such purpose.
(c)
Reserved.
(d)
Ongoing Compliance.
(i)
If during the Prospectus Delivery Period:
(A)
any event or development shall occur or condition shall exist as a result of which the Final Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein,
in the light of the circumstances existing when the Final Prospectus is delivered to a purchaser, not misleading, the Company will, as
soon as reasonably possible, notify the Underwriter thereof and forthwith prepare and, subject to Section 4(e) hereof, file with the Commission
and furnish, at its own expense, to the Underwriter and to such dealers as the Underwriter may designate such amendments or supplements
to the Final Prospectus as may be necessary so that the statements in the Final Prospectus as so amended or supplemented will not, in
the light of the circumstances existing when the Final Prospectus is delivered to a purchaser, be misleading; or
(B)
it is necessary to amend or supplement the Final Prospectus to comply with applicable law, the Company will, as soon as reasonably
possible, notify the Underwriter thereof and forthwith prepare and, subject to Section 4(e) hereof,
file with the Commission and furnish, at its own expense, to the Underwriter and to such dealers as the Underwriter may designate such
amendments or supplements to the Final Prospectus as may be necessary so that the Final Prospectus will comply with applicable law; and
(ii)
if at any time prior to the Closing Date or any Additional Closing Date, as the case may be:
(A)
any event or development shall occur or condition shall exist as a result of which the Pricing Disclosure Package as then amended
or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances existing when the Pricing Disclosure Package is delivered to a purchaser, not misleading,
the Company will immediately notify the Underwriter thereof and forthwith prepare and, subject to Section 4(e) hereof, file with the Commission
(to the extent required) and furnish, at its own expense, to the Underwriter and to such dealers as the Underwriter may designate such
amendments or supplements to the Pricing Disclosure Package as may be necessary so that the statements in the Pricing Disclosure Package
as so amended or supplemented will not, in the light of the circumstances existing when the Pricing Disclosure Package is delivered to
a purchaser, be misleading; or
(B)
it is necessary to amend or supplement the Pricing Disclosure Package to comply with applicable law, the Company will immediately
notify the Underwriter thereof and forthwith prepare and, subject to Section 4(e) hereof, file with the Commission (to the extent required)
and furnish, at its own expense, to the Underwriter and to such dealers as the Underwriter may designate such amendments or supplements
to the Pricing Disclosure Package as may be necessary so that the Pricing Disclosure Package will comply with applicable law.
(e)
Amendments, Supplements and Issuer Free Writing Prospectuses. Before (i) using, authorizing, approving, referring to, distributing
or filing any Issuer Free Writing Prospectus, (ii) filing (x) any Rule 462(b) Registration Statement or (y) any amendment or supplement
to the Registration Statement or the Final Prospectus, or (iii) distributing any amendment or supplement to the Pricing Disclosure Package
or the Final Prospectus, the Company will furnish to the Underwriter and counsel for the Underwriter a copy of the proposed Issuer Free
Writing Prospectus, Rule 462(b) Registration Statement or other amendment or supplement for review and will not use, authorize, refer
to, distribute or file any such Issuer Free Writing Prospectus or Rule 462(b) Registration Statement, or file or distribute any such proposed
amendment or supplement (A) to which the Underwriter objects in a timely manner and (B) which is not in compliance with the Securities
Act. The Company will, pursuant to reasonable procedures developed in good faith, retain copies of each Issuer Free Writing Prospectus
that is not filed with the Commission in accordance with Rule 433 under the Securities Act.
(f)
Delivery of Copies. The Company will, upon request of the Underwriter, deliver, without charge, (i) to the Underwriter,
three signed copies of the Registration Statement as originally filed and each amendment thereto, in each case, including all exhibits
and consents filed therewith; and (ii) to each Underwriter (A) a conformed copy of the Registration Statement as originally filed and
each amendment thereto (without exhibits and consents) and (B) during the Prospectus Delivery Period, as many copies of the Final Prospectus
(including all amendments and supplements thereto and each Issuer Free Writing Prospectus) as the Underwriter may reasonably request.
(g)
Emerging Growth Company Status. The Company will promptly notify the Underwriter if the Company ceases to be an Emerging
Growth Company at any time prior to the later of (i) completion of the distribution of the Offered Securities within the meaning of the
Securities Act and (ii) completion of the Lock-Up Period (as defined in Exhibit A).
(h)
Blue Sky Compliance. The Company will use its best efforts, with the Underwriter’s cooperation, if necessary, to qualify
or register (or to obtain exemptions from qualifying or registering) the Offered Securities for offer and sale under the securities or
Blue Sky laws of such jurisdictions as the Underwriter shall reasonably request and will use its reasonable best efforts, with the Underwriter’s
cooperation, if necessary, to continue such qualifications, registrations and exemptions in effect so long as required for the distribution
of the Offered Securities; provided that the Company shall not be required to (i) qualify as a foreign corporation or other entity
or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent
to service of process in any such jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it is not otherwise so
subject.
(i)
Earning Statement. The Company will make generally available to its security holders and the Underwriter as soon as practicable
an earning statement that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 under the Securities Act covering
a period of at least 12 months beginning with the first fiscal quarter of the Company occurring after the “effective date”
(as defined in Rule 158 under the Securities Act) of the Registration Statement; provided that the Company will be deemed to have
furnished such statement to its security holders and the Underwriter to the extent it is filed on the Commission’s Electronic Data
Gathering, Analysis and Retrieval system (“EDGAR”).
(j)
Use of Proceeds. The Company shall apply the net proceeds from the sale of the Firm Securities and the Option Securities
in the manner described under the caption “Use of Proceeds” in the Registration Statement, the Pricing Disclosure Package
and the Final Prospectus.
(k)
Clear Market.
(i)
For a period of 180 days after the date of the Closing Date (the “Lock-Up Period”), the Company will
not (x) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, or file with the Commission a registration
statement under the Securities Act relating to, any Common Stock or any securities convertible into or exercisable or exchangeable for
Common Stock, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing, or (y) enter into any swap or
other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Common Stock or any such other
securities, whether any such transaction described in clause (x) or (y) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise, without the prior written consent of the Underwriter.
(ii)
The restrictions contained in Section 4(k)(i) hereof shall not apply to: (A) the Offered Securities, (B) any warrants to be issued
by the Company in connection with the Offering or Common Stock issued under Company Stock Plans or warrants issued by the Company, in
each case, described as outstanding in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus, (C) any options
and other awards granted under a Company Stock Plan as described in the Registration Statement, the Pricing Disclosure Package and the
Final Prospectus, (D) the filing by the Company of any registration statement on Form S-8 or a successor form thereto relating to a Company
Stock Plan described in the Registration Statement, the Pricing Disclosure Package and the Final Prospectus and (E) Common Stock or other
securities issued in connection with a transaction with an unaffiliated third party that includes a bona fide commercial relationship
(including joint ventures, marketing or distribution arrangements, collaboration agreements or intellectual property license agreements)
or any acquisition of assets or acquisition; (x) the recipient of any such Common Stock or other securities issued or granted pursuant
to clauses (B), (C)) and (E) during the Lock-Up Period shall enter into an agreement substantially in the form of Exhibit A hereto.
(iii)
If the Underwriter, in its sole discretion, agrees to release or waive the restrictions set forth in any Lock-Up Agreement and
provides the Company with notice of the impending release or waiver substantially in the form of Exhibit B hereto at least three business
days before the effective date of the release or waiver, then the Company agrees to announce the impending release or waiver by a press
release substantially in the form of Exhibit C hereto through a major news service at least two business days before the effective date
of the release or waiver.
(l)
No Stabilization or Manipulation. None of the Company, its Affiliates or any person acting on its or any of their behalf
(other than the Underwriter, as to which no covenant is given) will take, directly or indirectly, any action designed to or that constitutes
or that could reasonably be expected to cause or result in the stabilization or manipulation of the price of any securities of the Company.
The Company acknowledges that the Underwriter may engage in passive market making transactions in the Common Stock on the Exchange in
accordance with Regulation M.
(m)
Investment Company Act. The Company shall not invest, or otherwise use the proceeds received by the Company from the sale
of the Firm Securities or the Option Securities in such a manner as would require the Company or any of its subsidiaries to register as
an “investment company” (as defined in the Investment Company Act) under the Investment Company Act.
(n)
Transfer Agent. For the period of two years from the date of this Agreement, the Company shall engage and maintain, at its
expense, a registrar and transfer agent for the Common Stock.
(o)
Reports. For the period of two years from the date of this Agreement, the Company will furnish to the Underwriter, as soon
as they are available, copies of all reports or other communications (financial or other) furnished to holders of the Offered Securities,
and copies of any reports and financial statements furnished to or filed with the Commission or any national securities exchange or automatic
quotation system; provided that the Company will be deemed to have furnished such reports and financial statements to the Underwriter
to the extent they are filed on EDGAR.
(p)
Right of First Refusal. The Company agrees that, if, for the period beginning on the Closing Date of this offering and ending
thirty-six (36) months from the Closing Date of the offering, the Company or any of its subsidiaries: (i) decides to finance or refinance
any indebtedness, the Underwriter (or any affiliate designated by the Underwriter) shall have the right to act as sole book-runner, sole
manager, sole placement agent or sole agent with respect to such financing or refinancing; or (ii) decides to raise funds by means of
a public offering (including at-the-market facility) or a private placement or any other capital raising financing of equity, equity-linked
or debt securities, the Underwriter (or any affiliate designated by the Underwriter) shall have the right to act as sole book-running
manager, sole underwriter or sole placement agent for such financing. Notwithstanding the foregoing sentence, the Company shall be permitted
to file with the Commission at any time a shelf registration statement so long as any financing made pursuant to such shelf registration
statement complies with the other requirements of the foregoing sentence. If the Underwriter or one of its affiliates decides to accept
such engagement, the agreement governing such engagement (each a “Subsequent Transaction Agreement”) will contain,
among other things, provisions for customary fees for transactions of similar size and nature, but in no event will the fees be less than
those outlined herein, and the provisions of this Agreement, including indemnification, which are appropriate for such transaction. Notwithstanding
the foregoing, the decision to accept the Company’s engagement under this Section 4(p) shall be made by the Underwriter or one of
its affiliates, by a written notice to the Company, within ten (10) days of the receipt of the Company’s notification of its financing
needs, which notice shall include a detailed term sheet. Underwriter’s decision to exercise its right of first refusal shall be
specific to such proposed transaction and term sheet.
5.
Covenants of the Underwriter. The Underwriter hereby covenants and agrees with the Company as follows:
(a)
Underwriter Free Writing Prospectus. The Underwriter has not used, authorized the use of, referred to or participated in
the planning for use of, and will not use, authorize the use of, refer to or participate in the planning for use of, any Free Writing
Prospectus (which term includes use of any written information furnished to the Commission by the Company and not incorporated by reference
into the Registration Statement and any press release issued by the Company) other than (i) a Free Writing Prospectus that contains no
“issuer information” filed or required to be filed pursuant to Rule 433(d) under the Securities Act (“Issuer Information”)
that was not included in the Pricing Prospectus or a previously filed Issuer Free Writing Prospectus, (ii) any Issuer Free Writing Prospectus
listed in Schedule II hereto or prepared pursuant to Section 1(e)(iv) or Section 4(e) hereof (including any electronic road show), or
(iii) any Free Writing Prospectus prepared by the Underwriter and approved by the Company in advance in writing.
(b)
Section 8A Proceedings. The Underwriter is not subject to any pending proceeding under Section 8A of the Securities Act
with respect to the offering of the Offered Securities and will promptly notify the Company if any such proceeding against it is initiated
during the Prospectus Delivery Period.
6.
Payment of Expenses.
(a)
Company Expenses. The Company hereby agrees to pay on the Closing Date all expenses incident to the performance of the obligations
of the Company under this Agreement including, but not limited to: (a) all filing fees and expenses relating to the registration of the
Offered Securities with the Commission; (b) all filing fees and expenses associated with the review of the offering of the Offered Securities
by FINRA; (c) all fees and expenses relating to the listing of the Offered Securities on the Exchange (to the extent relevant) and on
such other stock exchanges as the Company and the Underwriter together determine; (d) all fees, expenses and disbursements relating to
background checks of the Company’s officers and directors; (e) all fees, expenses and disbursements relating to the registration
or qualification of the Offered Securities as the Underwriter may reasonably designate; (f) all fees, expenses and disbursements relating
to the registration, qualification or exemption of the Securities under the securities laws of such foreign jurisdictions as the Underwriter
may reasonably designate; (g) the costs of all mailing and printing of the underwriting documents, the Registration Statement, Pricing
Disclosure Package, the Final Prospectus, any Preliminary Prospectus, any Issuer Free Writing Prospectus or any Testing-the-Waters Communication
and all amendments, supplements and exhibits thereto as the Underwriter may reasonably deem necessary; (h) the costs and expenses of the
public relations firm referred to in the engagement letter between the Company and the Underwriter; (i) the costs of preparing, printing
and delivering certificates representing the Offered Securities; (j) fees and expenses of the transfer agent for the shares of Common
Stock; (k) stock transfer and/or stamp taxes, if any, payable upon the transfer of securities from the Company to the Underwriter; (l)
the fees and expenses of the Company’s accountants; (m) the “road show” expenses and the reasonable fees, expenses and
disbursements of the Company’s legal counsel and other agents and representatives and fees and expenses of the Underwriter’s
counsel. The total amount payable pursuant to (d) and (m) to the Underwriter shall not to exceed $100,000. The Underwriter may deduct
from the net proceeds of the offering payable to the Company on the Closing Date the expenses set forth herein to be paid by the Company
to the Underwriter. Except as provided for in this Agreement, the Underwriter shall bear the costs and expenses incurred by them in connection
with the sale of the Offered Securities and the transactions contemplated thereby.
(b)
Non-accountable Expenses. On the Closing Date, the Company shall pay to the Underwriter, by deduction from the net proceeds
of the Offering a non-accountable expense allowance equal to one percent (1.0%) of the gross proceeds received by the Company from the
sale of the Closing Units), provided, however, that in the event that the Offering is terminated, the Company agrees to reimburse the
Underwriter pursuant to Section 11 hereof.
(c)
Underwriter Expenses. Except to the extent otherwise provided in this Section 6 or Section 8 hereof, the Underwriter will
pay all of their own costs and expenses, including the fees and expenses of their counsel, any stock transfer taxes on resale of any of
the Offered Securities held by them, and any advertising expenses connected with any offers they may make.
(d)
Company Reimbursement. The provisions of this Section 6 shall not affect any agreement that the Company may make for the
sharing of such costs and expenses.
7.
Conditions of the Obligations of the Underwriter. The obligations of the Underwriter to purchase the Firm Securities as
provided herein on the Closing Date or the Option Securities as provided herein on any Additional Closing Date, as the case may be, shall
be subject to the timely performance by the Company of its covenants and other obligations hereunder, and to each of the following additional
conditions:
(a)
Registration Compliance; No Stop Order.
(i)
The Registration Statement and any post-effective amendment thereto shall have become effective, no stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment thereto shall be in effect, and no proceeding for such purpose or pursuant
to Section 8A of the Securities Act shall be pending before or threatened by the Commission.
(ii)
The Company shall have filed the Final Prospectus and each Issuer Free Writing Prospectus with the Commission in accordance with
and within the time periods prescribed by Section 4(a) hereof.
(iii)
The Company shall have (A) disclosed to the Underwriter all requests by the Commission for additional information relating to the
offer and sale of the Offered Securities and (B) complied with such requests to the reasonable satisfaction of the Underwriter.
(b)
Representations and Warranties. The representations and warranties of the Company contained herein shall be true and correct
on the date hereof and on and as of the Closing Date or any Additional Closing Date, as the case may be; and the statements of the Company
and its officers made in any certificates delivered pursuant to this Agreement shall be true and correct on and as of the Closing Date
or any Additional Closing Date, as the case may be.
(c)
Accountants’ Comfort Letters. On the date of this Agreement and on the Closing Date or any Additional Closing Date,
as the case may be, MaloneBailey, LLP shall have furnished to the Underwriter, at the request of the Company, letters, dated the respective
dates of delivery thereof and addressed to the Underwriter, in form and substance reasonably satisfactory to the Underwriter, containing
statements and information of the type customarily included in accountants’ “comfort letters” to underwriters with respect
to the financial statements and certain financial information contained in each of the Registration Statement, the Pricing Disclosure
Package and the Final Prospectus; provided that the letter delivered on the Closing Date or any Additional Closing Date, as the
case may be, shall use a “cut-off” date no more than two business days prior to the Closing Date or such Additional Closing
Date, as the case may be.
(d)
Reserved.
(e)
No Material Adverse Change. No event or condition of a type described in Section 1(l) hereof shall have occurred or shall
exist, which event or condition is not described in each of the Pricing Disclosure Package and the Final Prospectus (in each case, exclusive
of any amendment or supplement thereto), the effect of which in the judgment of the Underwriter makes it impracticable or inadvisable
to proceed with the offering, sale or delivery of the Offered Securities on the Closing Date or any Additional Closing Date, as the case
may be, in the manner and on the terms contemplated by this Agreement, the Pricing Disclosure Package and the Final Prospectus (in each
case, exclusive of any amendment or supplement thereto).
(f)
Opinion and Negative Assurance Letter of Counsel to the Company. ArentFox Schiff LLP, counsel to the Company, shall have
furnished to the Underwriter, at the request of the Company, its (i) written opinion, addressed to the Underwriter and dated the Closing
Date or any Additional Closing Date, as the case may be, and (ii) negative assurance letter, addressed to the Underwriter and dated the
Closing Date or any Additional Closing Date, as the case may be, in each case, substantially in the form attached hereto as Exhibit E.
(g)
Officer’s Certificate. The Underwriter shall have received on and as of the Closing Date or any Additional Closing
Date, as the case may be, a certificate of an executive officer of the Company who has specific knowledge of the Company’s financial
matters and is satisfactory to the Underwriter, (i) confirming that such officer has carefully reviewed the Registration Statement, the
Pricing Disclosure Package, the Final Prospectus, each Issuer Free Writing Prospectus and each Written Testing-the-Waters Communication
and, to the knowledge of such officer, the representations set forth in Sections 1(a)(ii), 1(b), 1(c)(i), 1(d)(i), 1(e)(i), 1(f)(i) and
1(i) hereof are true and correct on and as of the Closing Date or any Additional Closing Date, as the case may be; (ii) to the effect
set forth in clause (i) of Section 1(l) and Section 7(a) hereof; and (iii) confirming that all of the other representations and warranties
of the Company in this Agreement are true and correct on and as of the Closing Date or any Additional Closing Date, as the case may be,
and that the Company has complied with all agreements and covenants and satisfied all other conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date or any Additional Closing Date, as the case may be.
(h)
No Legal Impediment to Issuance and Sale. No action shall have been taken and no statute, rule, regulation or order shall
have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that would, as of the Closing
Date or any Additional Closing Date, as the case may be, prevent the issuance, sale or delivery of the Firm Securities or the Option Securities
by the Company; and no injunction or order of any federal, state or foreign court shall have been issued that would, as of the Closing
Date or any Additional Closing Date, as the case may be, prevent the issuance, sale or delivery of the Firm Securities or the Option Securities.
(i)
Good Standing. The Underwriter shall have received on and as of the Closing Date and any Additional Closing Date, as the
case may be, satisfactory evidence of the good standing of the Company in its jurisdiction of organization and its good standing in such
other jurisdictions as the Underwriter may reasonably request, in each case, in writing from the appropriate governmental authorities
of such jurisdictions.
(j)
Lock-Up Agreements. The Lock-Up Agreements substantially in the form of Exhibit A hereto executed by the officers,
directors and certain equityholders of the Company relating to sales and certain other dispositions of shares of Common Stock or certain
other securities, delivered to the Underwriter on or before the date hereof, shall be in full force and effect on the Closing Date or
any Additional Closing Date, as the case may be.
(k)
Exchange Listing. On the Closing Date or any Additional Closing Date, as the case may be, the Offered Securities shall have
been approved for listing on the Exchange, subject to notice of issuance.
(l)
Additional Documents. On or prior to the Closing Date or any Additional Closing Date, as the case may be, the Underwriter
and its counsel shall have received such information, certificates and other additional documents from the Company as they may reasonably
require for the purpose of enabling them to pass upon the issuance and sale of the Offered Securities as contemplated herein or in order
to evidence the accuracy of any of the representations and warranties, or the satisfaction of any of the covenants, closing conditions
or other obligations, contained in this Agreement.
All opinions, letters, certificates and
other documents delivered pursuant to this Agreement will be deemed to be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to counsel for the Underwriter.
If any condition specified in this Section
7 is not satisfied when and as required to be satisfied, this Agreement and all obligations of the Underwriter hereunder may be terminated
by the Underwriter by notice to the Company at any time on or prior to the Closing Date or any Additional Closing Date, as the case may
be, which termination shall be without liability on the part of any party to any other party, except that the Company shall continue to
be liable for the payment of expenses under Section 6 and Section 11 hereof and except that the provisions of Section 8 and Section 9
hereof shall at all times be effective and shall survive any such termination.
8.
Indemnification.
(a)
Indemnification of the Underwriter by the Company. The Company agrees to indemnify and hold harmless the Underwriter, its
Affiliates, directors, officers, employees and agents and each person, if any, who controls the Underwriter within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities (including,
without limitation, all reasonable legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim
asserted, as such fees and expenses are incurred), joint or several, that arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement (or any amendment or supplement thereto), or the omission
or alleged omission therefrom of a material fact required to be stated therein or necessary in order to make the statements therein not
misleading, or (ii) any untrue statement or alleged untrue statement of a material fact contained in any Pricing Disclosure Package (including
any Pricing Disclosure Package that has subsequently been amended), the Final Prospectus (or any amendment or supplement thereto), any
Preliminary Prospectus, any Issuer Information, any Issuer Free Writing Prospectus, any Written Testing-the-Waters Communication or any
Road Show, or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, in each case, except insofar as such losses, claims, damages or
liabilities arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with the Underwriter Information. The indemnity agreement set forth in this Section 8(a) shall be in addition to
any liabilities that the Company may otherwise have.
(b)
Indemnification of the Company by the Underwriter. The Underwriter agrees to indemnify and hold harmless the Company, its
directors, each officer who signed the Registration Statement and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities
(including, without limitation, all reasonable legal fees and other expenses incurred in connection with any suit, action or proceeding
or any claim asserted, as such fees and expenses are incurred), joint or several, to the same extent as the indemnity set forth in Section
8(a) hereof; provided, however, that the Underwriter shall be liable only to the extent that any untrue statement or omission or alleged
untrue statement or omission was made in the Registration Statement (or any amendment or supplement thereto), any Pricing Disclosure Package
(including any Pricing Disclosure Package that has subsequently been amended), the Final Prospectus (or any amendment or supplement thereto),
any Preliminary Prospectus, any Issuer Information, any Issuer Free Writing Prospectus, any Written Testing-the-Waters Communication or
any Road Show in reliance upon, and in conformity with, the Underwriter Information relating to the Underwriter. The indemnity agreement
set forth in this Section 8(b) shall be in addition to any liabilities that the Underwriter may otherwise have.
(c)
Notifications and Other Indemnification Procedures. If any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any person in respect of which indemnification may be sought pursuant
to any of the preceding subsections of this Section 8, such person (the “Indemnified Person”) shall promptly
notify the person against whom such indemnification may be sought (the “Indemnifying Person”) in writing; provided
that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have under any of the preceding
subsections of this Section 8 except to the extent that it has been materially prejudiced by such failure; and provided, further,
that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have to an Indemnified Person otherwise
than under any of the preceding subsections of this Section 8. If any such proceeding shall be brought or asserted against an Indemnified
Person and it shall have notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably satisfactory
to the Indemnified Person (who shall not, without the consent of the Indemnified Person, be counsel to the Indemnifying Person) to represent
the Indemnified Person in such proceeding and shall pay the reasonable and documented fees and expenses of such counsel related to such
proceeding, as incurred. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person
shall have mutually agreed to the contrary; (ii) the Indemnifying Person has failed within a reasonable time to retain counsel reasonably
satisfactory to the Indemnified Person; (iii) the Indemnified Person shall have reasonably concluded that there may be legal defenses
available to it that are different from or in addition to those available to the Indemnifying Person; or (iv) the named parties in any
such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of
both parties by the same counsel would be inappropriate due to actual or potential differing interest between them. It is understood and
agreed that the Indemnifying Person shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable
for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be paid or reimbursed as they are incurred. Any such separate firm for (i) the Underwriter, its Affiliates,
directors, officers, employees and agents and each person, if any, who controls the Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall be designated in writing by the Underwriter; and (ii) the Company, its directors,
its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act shall be designated in writing by the Company.
(d)
Settlements. The Indemnifying Person under this Section 8 shall not be liable for any settlement of any proceeding effected
without its written consent, which consent may not be unreasonably withheld, but if settled with such consent or if there be a final judgment
for the plaintiff, the Indemnifying Person agrees to indemnify the Indemnified Person from and against any loss, claim, damage, liability
or expense by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall
have requested an Indemnifying Person to reimburse the Indemnified Person for any reasonably incurred and documented fees and expenses
of counsel as contemplated by this Section 8, the Indemnifying Person agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such Indemnifying Person
of the aforesaid request, (ii) such Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such request,
or shall not have disputed in good faith the Indemnified Person’s entitlement to such reimbursement, prior to the date of such settlement
and (iii) such Indemnified Person shall have given the Indemnifying Person at least 45 days’ prior notice of its intention to settle.
No Indemnifying Person shall, without the prior written consent of the Indemnified Person effect any settlement, compromise or consent
to the entry of judgment in any pending or threatened action, suit or proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity was or could have been sought hereunder by such Indemnified Person, unless such settlement, compromise
or consent (x) includes an unconditional release of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified
Person, from and against all liability on claims that are the subject matter of such action, suit or proceeding and (y) does not include
any statements as to or any findings of fault, culpability or failure to act by or on behalf of any Indemnified Person.
9.
Contribution. To the extent the indemnification provided for in Section 8 hereof is unavailable to or insufficient to hold
harmless an Indemnified Person in respect of any losses, claims, damages, liabilities or expenses referred to therein, then each Indemnifying
Person, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the aggregate amount paid or payable by such Indemnified
Person, as incurred, as a result of any losses, claims, damages, liabilities or expenses referred to therein (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Underwriter, on the other hand, from
the offering of the Offered Securities pursuant to this Agreement or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company, on the one hand, and the Underwriter, on the other hand, in connection with the statements or
omissions that resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company, on the one hand, and the Underwriter, on the other hand, in connection with the offering
of the Offered Securities pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds
from the offering of the Offered Securities pursuant to this Agreement (before deducting expenses) received by the Company, on the one
hand, and the total underwriting discounts and commissions received by the Underwriter, on the other hand, in each case as set forth in
the table on the cover of the Final Prospectus bear to the aggregate initial offering price of the Offered Securities. The relative fault
of the Company, on the one hand, and the Underwriter, on the other hand, shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information
supplied by the Company, on the one hand, or the Underwriter, on the other hand, and the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result
of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set
forth in Section 8 hereof, all reasonable legal or other fees or expenses incurred by such party in connection with investigating or defending
any action or claim. The provisions set forth in Section 8 hereof with respect to notice of commencement of any action shall apply if
a claim for contribution is to be made under this Section 9; provided, however, that no additional notice shall be required with
respect to any action for which notice has been given under Section 8 hereof for purposes of indemnification.
The Company and the Underwriter agree that it would
not be just and equitable if contribution pursuant to this Section 9 was determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in this Section 9.
Notwithstanding the provisions of this Section 9,
the Underwriter shall not be required to contribute any amount in excess of the amount by which the total discounts and commissions received
by the Underwriter in connection with the Offered Securities distributed by it exceeds the amount of any damages the Underwriter has otherwise
paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11 of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 9, each director, officer,
employee and agent of the Underwriter and each person, if any, who controls the Underwriter within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Underwriter, and each director and officer of
the Company who signed the Registration Statement, and each person, if any, who controls the Company with the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act, shall have the same rights to contribution as the Company.
The remedies provided for in Section 8 and Section
9 hereof are not exclusive and shall not limit any rights or remedies which may otherwise be available to any Indemnified Person at law
or in equity.
10.
Termination. Prior to the delivery of and payment for the Offered Securities on the Closing Date or any Additional Closing
Date, as the case may be, this Agreement may be terminated by the Underwriter in the absolute discretion of the Underwriter by notice
given to the Company if after the execution and delivery of this Agreement: (i) trading or quotation of any securities issued or guaranteed
by the Company shall have been suspended or materially limited on any securities exchange, quotation system or in the over-the-counter
market; (ii) trading in securities generally on any of the New York Stock Exchange, the Nasdaq Global Market or the over-the-counter market
shall have been suspended or materially limited; (iii) a general banking moratorium on commercial banking activities shall have been declared
by federal or New York state authorities; (iv) there shall have occurred a material disruption in commercial banking or securities settlement,
payment or clearance services in the United States; (v) there shall have occurred any outbreak or escalation of national or international
hostilities or any crisis or calamity, or any change in the United States or international financial markets, or any substantial change
or development involving a prospective substantial change in general economic, financial or political conditions in the United States
or internationally, as in the judgment of the Underwriter is material and adverse and makes it impracticable or inadvisable to proceed
with the offering, sale or delivery of the Offered Securities on the Closing Date or any Additional Closing Date, as the case may be,
in the manner and on the terms described in the Pricing Disclosure Package or to enforce contracts for the sale of securities; or (vi)
the Company or any of its subsidiaries shall have sustained a loss by strike, fire, flood, earthquake, accident or other calamity of such
character as in the judgment of the Underwriter may interfere materially with the conduct of the business and operations of the Company
and its subsidiaries, considered as one entity, regardless of whether or not such loss shall have been insured.
Any termination pursuant to this Section 10 shall
be without liability on the part of: (x) the Company to the Underwriter, except that the Company shall continue to be liable for the payment
of expenses under Section 6; (y) the Underwriter to the Company; or (z) any party hereto to any other party except that the provisions
of Section 8 and Section 9 hereof shall at all times be effective and shall survive any such termination. In the event this Agreement
is terminated pursuant to this Section 10, the Underwriter shall be entitled to 8.0% of the gross proceeds with respect to any public
or private offering or other financing or capital raising transaction of any kind (“Tail Financing”) to the
extent that such financing or capital is provided to the Company by investors contacted or introduced to the Company by the Underwriter
during the 120-day period beginning November 6, 2023, if such Tail Financing is consummated at any time within the eighteen (18) month
period following of the date of this Agreement. Notwithstanding anything to the contrary contained herein, the Company has the right to
terminate the Agreement for cause in compliance with FINRA Rule 5110(g)(5)(B)(i). The exercise of such right of termination for cause
eliminates the Company’s obligations with respect to the provisions relating to the tail fees.
11.
Reimbursement of the Underwriter’s Expenses. If (a) the Company fails to deliver the Offered Securities to the Underwriter
for any reason at the Closing Date or any Additional Closing Date, as the case may be, in accordance with this Agreement or (b) the Underwriter
declines to purchase the Offered Securities for any reason permitted under this Agreement, then the Company agrees to reimburse the Underwriter
for all reasonable out-of-pocket costs and expenses (including the reasonable and documented fees and expenses of counsel to the Underwriter)
incurred by the Underwriter in connection with this Agreement and the applicable offering contemplated hereby not to exceed $50,000.
12.
Representations and Indemnities to Survive Delivery. The respective indemnities, rights of contribution, agreements, representations,
warranties and other statements of the Company and the Underwriter set forth in or made pursuant to this Agreement or made by or on behalf
of the Company or the Underwriter pursuant to this Agreement or any certificate delivered pursuant hereto shall remain in full force and
effect, regardless of any investigation made by or on behalf of the Underwriter, the Company or any of their respective officers or directors
or any controlling person, as the case may be, and shall survive delivery of and payment for the Offered Securities sold hereunder and
any termination of this Agreement.
13.
Reserved.
14.
Notices. All notices, requests, consents, claims, demands, waivers and other communications under this Agreement shall be
in writing and shall be deemed to have been duly given (i) when delivered by hand (with written confirmation of receipt), (ii) when received
by the addressee if sent by a nationally recognized overnight courier (receipt requested), (iii) on the date sent by facsimile (with confirmation
of transmission) or email of a PDF document if sent during normal business hours of the recipient, and on the next business day if sent
after normal business hours of the recipient, or (iv) on the third day after the date mailed, by certified or registered mail (in each
case, return receipt requested, postage pre-paid). Such communications must be sent to the respective parties at the following addresses
(or at such other address for a party as shall be specified in a notice given in accordance with this Section 14):
If to the Underwriter: |
Aegis Capital Corp.
1345 Avenue of the Americas,
27th Floor
New York, NY 10105
Email Address: reide@aegiscap.com
Attention: Robert Eide
|
with a copy to: |
Kaufman & Canoles, P.C. Two James Center 1021 East Cary Street, Suite 1400 Richmond, Va. 23219 |
|
Email: |
awbasch@kaufcan.com |
|
|
jbwilliston@kaufcan.com |
|
Attention: |
Anthony W. Basch |
|
|
J. Britton Williston |
If to the Company: |
Volcon, Inc. 3121 Eagles Nest St., Suite 120 Round Rock, TX 78665 |
|
Email: |
greg@volcon.com |
|
Attention: |
Greg Endo |
|
|
|
with a copy to: |
ArentFox Schiff LLP 1717 K Street NW Washington, DC 20006 |
|
Email: |
cavas.pavri@afslaw.com |
|
Attention: |
Cavas S. Pavri |
Any party hereto may change the address or facsimile
number for receipt of communications by giving written notice to the others in accordance with this Section 14.
15.
Successors. This Agreement shall inure solely to the benefit of and be binding upon the Underwriter, the Company and the
other indemnified parties referred to in Section 8 and Section 9 hereof, and in each case their respective successors. Nothing in this
Agreement is intended, or shall be construed, to give any other person or entity any legal or equitable right, benefit, remedy or claim
under, or in respect of or by virtue of, this Agreement or any provision contained herein. The term “successors,” as used
herein, shall not include any purchaser of the Offered Securities from the Underwriter merely by reason of such purchase.
16.
Partial Unenforceability. The invalidity or unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or provision hereof. If any Section, paragraph or provision
of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and
only such minor changes) as are necessary to make it valid and enforceable.
17.
Governing Law. This Agreement and any claim, controversy or dispute arising under or related to this Agreement, whether
sounding in contract, tort or statute, shall be governed by and construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed in such state (including its statute of limitations), without giving effect to the conflict
of laws provisions thereof to the extent such principles or rules would require or permit the application of the laws of any jurisdiction
other than those of the State of New York.
18.
Consent to Jurisdiction. No legal suit, action or proceeding
arising out of or relating to this Agreement or the transactions contemplated hereby (each, a “Related Proceeding”)
may be commenced, prosecuted or continued in any court other than the courts of the State of New York located in the City and County of
New York or in the United States District Court for the Southern District of New York, which courts (collectively, the “Specified
Courts”) shall have jurisdiction over the adjudication of any Related Proceeding, and the parties to this Agreement hereby
irrevocably consent to the exclusive jurisdiction the Specified Courts and personal service of process with respect thereto. The parties
to this Agreement hereby irrevocably waive any objection to the laying of venue of any Related Proceeding in the Specified Courts and
irrevocably waive and agree not to plead or claim in any Specified Court that any Related Proceeding brought in any Specified Court has
been brought in an inconvenient forum.
19. Equitable
Remedies. Each party to this Agreement acknowledges and agrees that (a) a breach or threatened breach by the Company of any of
its obligations under Section 4(k) or Section 4(p) would give rise to irreparable harm to the Underwriter for which monetary damages
would not be an adequate remedy and (b) if a breach or a threatened breach by the Company of any such obligations occurs, the
Underwriter will, in addition to any and all other rights and remedies that may be available to such party at law, at equity, or
otherwise in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction,
specific performance of the terms of Sections 4(k) or 4(p), as applicable, and any other relief that may be available from a court
of competent jurisdiction, without any requirement to (i) post a bond or other security, or (ii) prove actual damages or that
monetary damages will not afford an adequate remedy. Each party to this Agreement agrees that such party shall not oppose or
otherwise challenge the existence of irreparable harm, the appropriateness of equitable relief or the entry by a court of competent
jurisdiction of an order granting equitable relief, in either case, consistent with the terms of this Section 19.
20.
Waiver of Jury Trial. The parties to this Agreement hereby irrevocably waive, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any Related Proceeding.
21.
No Fiduciary Relationship. The Company acknowledges and agrees that: (i) the purchase and sale of the Offered Securities
pursuant to this Agreement, including the determination of the offering price of the Offered Securities and any related discounts and
commissions, is an arm’s-length commercial transaction between the Company, on the one hand, and the Underwriter, on the other hand;
(ii) in connection with each transaction contemplated hereby and the process leading to such transaction the Underwriter is and has been
acting solely as a principal and is not the agent or fiduciary of the Company or its Affiliates, stockholders, members, partners, creditors
or employees or any other party; (iii) the Underwriter has not assumed and will not assume an advisory or fiduciary responsibility in
favor of the Company with respect to any of the transactions contemplated hereby or the process leading thereto (irrespective of whether
the Underwriter has advised or is currently advising the Company on other matters) or any other obligation to the Company except the obligations
expressly set forth in this Agreement; (iv) the Underwriter and its respective Affiliates may be engaged in a broad range of transactions
that involve interests that differ from those of the Company, and the Underwriter has no obligation to disclose any of such interests
by virtue of any fiduciary or advisory relationship; and (v) the Underwriter has not provided any legal, accounting, regulatory or tax
advice in any jurisdiction with respect to the offering contemplated hereby, and the Company has consulted its own legal, accounting,
regulatory and tax advisors to the extent they deemed appropriate. The Company waives and releases, to the full extent permitted by applicable
law, any claims it may have against the Underwriter arising from an alleged breach of fiduciary duty in connection with the offering of
the Offered Securities or any matters leading up to the offering of the Offered Securities.
22.
Compliance with the USA Patriot Act. In accordance with the requirements of the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)), the Underwriter is required to obtain, verify and record information that identifies their respective
clients, including the Company, which information may include the name and address of its clients, as well as other information that will
allow the Underwriter to properly identify their respective clients.
23.
Entire Agreement. This Agreement, together with any contemporaneous written agreements and any prior written agreements
(to the extent not superseded by this Agreement) that relate to the offering of the Offered Securities, represents the entire agreement
among the Company and the Underwriter with respect to the preparation of the Registration Statement, the Pricing Disclosure Package, the
Final Prospectus, each Preliminary Prospectus, each Issuer Free Writing Prospectus, each Testing-the-Waters Communication and each Road
Show, the purchase and sale of the Offered Securities and the conduct of the offering contemplated hereby.
24.
Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any consent or approval to any departure
therefrom, shall in any event be effective unless the same shall be in writing and signed by all the parties hereto. No waiver by any
party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written
waiver, whether of a similar or different character, and whether occurring before or after the waiver. No failure to exercise, or delay
in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise of any
other right, remedy, power or privilege.
25.
Section Headings. The headings herein are included for convenience of reference only and are not intended to be part of,
or to affect the meaning or interpretation of, this Agreement.
26.
Counterparts. This Agreement may be executed in counterparts,
each of which will be deemed an original, but all of which together will be deemed to be one and the same agreement. Counterparts may
be delivered via facsimile, email (including PDF or any electronic signature complying with the U.S. federal ESIGN Act of 2000) or other
transmission method, and any counterpart so delivered will be deemed to have been duly and validly delivered and be valid and effective
for all purposes.
27.
Recognition of the U.S. Special Resolution Regimes.
(a)
In the event that the Underwriter is a Covered Entity (as defined below) becomes subject to a proceeding under a U.S. Special Resolution
Regime, the transfer from the Underwriter of this Agreement, and any interest and obligation in or under this Agreement, will be effective
to the same extent as the transfer would be effective under the U.S. Special Resolution Regime (as defined below) if this Agreement, and
any such interest and obligation, were governed by the laws of the United States or a state of the United States.
(b)
In the event that the Underwriter is a Covered Entity or a BHC Act Affiliate (as defined below) of the Underwriter becomes subject
to a proceeding under a U.S. Special Resolution Regime, Default Rights (as defined below) under this Agreement that may be exercised against
the Underwriter are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special
Resolution Regime if this Agreement were governed by the laws of the United States or a state of the United States.
(c)
As used in this section:
“BHC Act Affiliate” has the meaning
assigned to the term “affiliate” in, and shall be interpreted in accordance with, 12 U.S.C. § 1841(k).
“Covered Entity” means any of
the following:
(i)
a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);
(ii)
a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or
(iii)
a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Default Right” has the meaning
assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“U.S. Special Resolution Regime”
means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall
Street Reform and Consumer Protection Act and the regulations promulgated thereunder.
[signature page follows]
If the foregoing is in accordance with your understanding,
please indicate your acceptance of this Agreement by signing in the space provided below.
|
Very truly yours,
Volcon, Inc.
|
|
By:_____________________
Name: Greg Endo
Title: Chief Financial Officer
|
Confirmed and accepted as of the date first above written:
Aegis Capital Corp.
By:_____________________
Name: Robert Eide
Title: Chief Executive Officer
SCHEDULE I
Closing Securities
Underwriter |
Number of Units to Be Purchased |
Number of Option Securities to Be Purchased if the Maximum Over-Allotment Option Is Exercised |
|
|
|
Aegis Capital Corp. |
42,857,142 |
Number of Option Shares: |
498,906 |
|
|
Number of Option Pre-funded Warrants: |
5,929,665 |
|
|
Number of Option Series A Warrants: |
2,250,000 |
|
|
Number of Option Series B Warrants: |
2,250,000 |
Schedule II
Pricing Disclosure Package
Number of Units: |
|
42,857,142 |
· Number of Units containing Firm Shares (“Common Units”) |
|
3,326,042 |
· Number of Units containing Pre-funded Warrants (“Pre-funded Units”) |
|
39,531,100 |
Number of Option Shares: |
|
498,906 |
Number of Option Pre-funded Warrants: |
|
5,929,665 |
Number of Option Series A Warrants: |
|
2,250,000 |
Number of Option Series B Warrants: |
|
2,250,000 |
Public Offering Price per Common Unit: |
$ |
0.42 |
Public Offering Price per Pre-funded Unit: |
$ |
0.41999 |
Exercise Price per Pre-Funded Warrant: |
$ |
0.00001 |
Exercise Price per Series A Warrant per whole share: |
$ |
0.55 |
Exercise Price per Series B Warrant per whole share: |
$ |
0.84 |
Underwriting Discount per Common Unit: |
$ |
0.0336 |
Underwriting Discount per Pre-funded Unit: |
$ |
0.03360 |
Non-accountable expense allowance per Common Unit and per Pre-funded Unit: |
$ |
0.004 |
Purchase Price per Option Share: |
$ |
0.382 |
Purchase Price per Option Pre-Funded Warrant: |
$ |
0.3822 |
Purchase Price per full Option Warrant: |
$ |
0.01 |
Schedule III
Subsidiaries
Subsidiary |
Jurisdiction of Organization |
Volcon ePowersports, LLC |
Delaware |
Volcon ePowersports, LLC |
Colorado |
Exhibit A
Form of Lock-Up Agreement
Exhibit B
Form of Lock-Up Waiver
Exhibit C
Form of Lock-Up Waiver Press Release
[COMPANY]
[Date]
[COMPANY] (the “Company”) announced
today that Aegis Capital Corp., acting as the Underwriter in the Company’s recent public offering of shares of the Company’s
common stock and prefunded warrants to purchase shares of the Company’s common stock, is [waiving] [releasing] a lock-up restriction
with respect to shares of the Company’s common stock held by [certain officers or directors] [an officer or director] of the Company.
The [waiver] [release] will take effect on [Date], and the shares may be sold on or after such date.
This press release is not an offer or sale
of the securities in the United States or in any other jurisdiction where such offer or sale is prohibited, and such securities may not
be offered or sold in the United States absent registration or an exemption from registration under the Securities Act of 1933, as amended.
Exhibit D
Certificate of the Company’s Chief Financial
Officer
Exhibit E
Opinion and Negative Assurance Letter of Counsel
to the Company
Exhibit 4.1
PRE-FUNDED WARRANT TO PURCHASE COMMON STOCK
VOLCON, INC.
Warrant Shares: [●] |
Initial Exercise Date: November 17, 2023 |
|
Issue Date: November 17, 2023 |
THIS PRE-FUNDED WARRANT TO
PURCHASE COMMON STOCK (the “Warrant”) certifies that, for value received, [●] or its assigns (the “Holder”)
is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time until
this Warrant is exercised in full (the “Termination Date”) but not thereafter, to subscribe for and purchase
from Volcon, Inc., a Delaware corporation (the “Company”), up to [●] shares (as subject to adjustment hereunder,
the “Warrant Shares”) of Common Stock. The purchase price of one (1) share of Common Stock under this Warrant shall
be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions.
In addition to the terms defined elsewhere in this Warrant or in the Underwriting Agreement dated November 16, 2023, the following terms
have the meanings indicated in this Section 1:
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Bid Price”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading
Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York
City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed
or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (or a similar organization
or agency succeeding to its functions of reporting prices), the most recent bid price per share of Common Stock so reported, or (d) in
all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by
the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses
of which shall be paid by the Company.
“Board
of Directors” means the board of directors of the Company.
“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.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the common stock of the Company, $0.00001 par value per share, and any other class of securities into which such
securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is
at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company,
joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Subsidiary”
means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed
or acquired after the date hereof.
“Trading
Day” means a day on which the Common Stock is traded on a Trading Market.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock
Exchange, OTCQB or OTCQX (or any successors to any of the foregoing).
“Transaction
Documents” means the Underwriting Agreement dated November 16, 2023, these Warrants, such other Warrants as contemplated in
the Underwriting Agreement, and all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection
with the transactions contemplated hereunder.
“Transfer
Agent” means Computershare, the current transfer agent of the Company, and any successor transfer agent of the Company.
“Underwriting
Agreement” means the underwriting agreement dated as of November 16, 2023 among the Company and Aegis Capital Corp. as underwriter
named therein, as amended, modified or supplemented from time to time in accordance with its terms.
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock
is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market
(or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of Common Stock
so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser
selected in good faith by the holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company,
the fees and expenses of which shall be paid by the Company.
“Warrants”
means this Warrant and other Common Stock purchase warrants issued by the Company pursuant to the Underwriting Agreement.
Section 2. Exercise.
a)
Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any
time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed
PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise substantially in the form attached hereto as Exhibit
A (the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days
comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder
shall deliver the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s
check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable
Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee
or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required
to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three
(3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting
in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding
number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and
the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver
any objection to any Notice of Exercise within one (1) Trading Day of receipt of such notice. The Holder and any assignee, by acceptance
of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the
Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount
stated on the face hereof.
b)
Exercise Price. The aggregate exercise price of this Warrant, except for a nominal
exercise price of $0.00001 per Warrant Share,
was pre-funded to the Company on or prior to the Initial Exercise Date and, consequently, no additional consideration (other than the
nominal exercise price of $0.00001 per Warrant Share)
shall be required to be paid by the Holder to any Person to effect any exercise of this Warrant. The Holder shall not be entitled to
the return or refund of all, or any portion, of such pre-paid aggregate exercise price under any circumstance or for any reason whatsoever,
including in the event this Warrant shall not have been exercised prior to the Termination Date. The remaining unpaid exercise price
per share of Common Stock under this Warrant shall be $0.00001, subject to adjustment hereunder
(the “Exercise Price”).
c)
Cashless Exercise. This Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise”
in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by
(A), where:
(A) = as applicable:
(i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1)
both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant
to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b) of Regulation
NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the
Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal
Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such
Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter
(including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof
or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice
of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on
such Trading Day;
(B) = the Exercise
Price of this Warrant, as adjusted hereunder; and
(X) = the number
of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise
were by means of a cash exercise rather than a cashless exercise.
If Warrant Shares
are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act,
the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The Company agrees not to take any position
contrary to this Section 2(c).
d)
Mechanics of Exercise.
i.
Delivery of Warrant Shares upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. Notwithstanding anything herein to the contrary, upon delivery of the Notice of Exercise, the Holder shall be deemed for purposes of Regulation SHO under the Exchange Act to have become the holder of the Warrant Shares irrespective of the date of delivery of the Warrant Shares. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the third (3rd) Trading Day after the Warrant Share Delivery Date) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a Transfer Agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise. Notwithstanding the foregoing, with respect to any Notice(s) of Exercise delivered on or prior to 12:00 p.m. (New York City time) on the Initial Exercise Date, which may be delivered at any time after the time of execution of the Transaction Documents, the Company agrees to deliver the Warrant Shares subject to such notice(s) by 4:00 p.m. (New York City time) on the Initial Exercise Date and the Initial Exercise Date shall be the Warrant Share Delivery Date for purposes hereunder, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received by such Warrant Share Delivery Date.
ii.
Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request
of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new
Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.
iii.
Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant
to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv.
Compensation for Buy-In on Failure to Timely Deliver Warrant Shares upon Exercise. In addition to any other rights available
to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions
of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required
by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares
of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such
exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained
by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise
at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the
Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored and
return any amount received by the Company in respect of the Exercise Price for those Warrant Shares (in which case such exercise shall
be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely
complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase
price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving
rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay
the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the
Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue
any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.
v.
No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company
shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole share.
vi.
Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer
tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the
Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder;
provided, however, that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder,
this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto as Exhibit B duly executed
by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees
to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic
delivery of the Warrant Shares.
vii.
Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise
of this Warrant, pursuant to the terms hereof.
e)
Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have
the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such
issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and
any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution
Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the
foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall
include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being
made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised portion
of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents)
subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any
of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial
ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder,
it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the
extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation
to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is
exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s
determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates
and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation,
and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any
group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may
rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report
filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice
by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request
of a Holder, the Company shall within one (1) Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock
then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion
or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date
as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall
be 4.99% (or, upon election by a Holder prior to the issuance of any Warrants, 9.99%) of the number of shares of Common Stock outstanding
immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon notice
to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial
Ownership Limitation in no event exceeds 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to
the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall
continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such
notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in
strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent
with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly
give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
Section 3. Certain
Adjustments.
a)
Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or
otherwise makes a distribution or distributions on shares of Common Stock or any other equity or equity equivalent securities payable
in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise
of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way
of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares
of Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such
event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number
of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant
shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for
the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective
date in the case of a subdivision, combination or re-classification.
b)
Reserved.
c)
Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants,
issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to all (or substantially
all) of the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be
entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired
if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations
on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is
taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders
of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that, to the extent
that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance
for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
d)
Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend
or other distribution of its assets (or rights to acquire its assets) to all (or substantially all) holders of shares of Common Stock,
by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property
or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction)
(a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled
to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number
of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution,
or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation
in such Distribution (provided, however, that, to the extent that the Holder’s right to participate in any such Distribution
would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such
Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent)
and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto
would not result in the Holder exceeding the Beneficial Ownership Limitation). To the extent that this Warrant has not been partially
or completely exercised at the time of such Distribution, such portion of the Distribution shall be held in abeyance for the benefit of
the Holder until the Holder has exercised this Warrant.
e)
Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in
one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company or any
Subsidiary, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or
substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer
or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding
Common Stock or 50% or more of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one
or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v)
the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another
Person or group of Persons whereby such other Person or group acquires 50% or more of the outstanding shares of Common Stock or 50% or
more of the voting power of the common equity of the Company (each a “Fundamental Transaction”), then, upon any subsequent
exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in
Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable
as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant).
For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate
Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction,
and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value
of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash
or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in
a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all
of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section
3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable
delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant
a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant that
is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the
shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this
Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of
capital stock (but taking into account the relative value of the shares of Common Stock prior to such Fundamental Transaction and the
value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting
the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory
in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall be added to the
term “Company” under this Warrant (so that from and after the occurrence or consummation of such Fundamental Transaction,
each and every provision of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead
to each of the Company and the Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor Entities,
jointly and severally with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity or Successor
Entities shall assume all of the obligations of the Company prior thereto under this Warrant and the other Transaction Documents with
the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named as the Company
herein. For the avoidance of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(e) regardless of
(i) whether the Company has sufficient authorized shares of Common Stock for the issuance of Warrant Shares and/or (ii) whether a Fundamental
Transaction occurs prior to the Initial Exercise Date.
f)
Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given
date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g)
Notice to Holder.
i.
Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company
shall promptly deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment
to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii.
Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form)
on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which the Company (or any of its Subsidiaries) is a party, any
sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby the Common Stock is converted into
other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding
up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its last email
address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective
date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected
that holders of the Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver
such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified
in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding
the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the
effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
Section 4. Transfer
of Warrant.
a)
Transferability. This Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable,
in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written
assignment of this Warrant substantially in the form attached hereto as Exhibit B duly executed by the Holder or its agent or attorney
and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment,
the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination
or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall
not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case,
the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment
form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new
holder for the purchase of Warrant Shares without having a new Warrant issued.
b)
New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office
of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by
the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division
or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of
this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c)
Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose
(the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat
the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder,
and for all other purposes, absent actual notice to the contrary.
Section 5. Miscellaneous.
a)
No Rights as Stockholder until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights,
dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly
set forth in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant
to Section 2(c) or to receive cash payments pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, in no event shall the Company be
required to net cash settle an exercise of this Warrant.
b)
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares,
and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant,
shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the
Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant
or stock certificate.
c)
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right
required or granted herein shall not be a Trading Day, then such action may be taken or such right may be exercised on the next succeeding
Trading Day.
d)
Authorized Shares.
The Company covenants
that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number
of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further
covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the
necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action
as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation,
or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares
which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented
by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable
(which means that no further sums are required to be paid by the holders thereof in connection with the issue thereof) and free from all
taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).
Except and to the
extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate
of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate
to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the
Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior
to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts
to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary
to enable the Company to perform its obligations under this Warrant.
Before taking any
action that would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price,
the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory
body or bodies having jurisdiction thereof.
e)
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles
of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers,
shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City
of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of
New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, 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 improper or is an inconvenient
venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any
other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant,
the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’ fees
and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. Notwithstanding
the foregoing, nothing in this paragraph shall limit or restrict the federal district court in which a Holder may bring a claim under
the federal securities laws.
f)
Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered,
and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
g)
Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder
shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. No provision of this Warrant
shall be construed as a waiver by the Holder of any rights which the Holder may have under the federal securities laws and the rules and
regulations of the Commission thereunder. Without limiting any other provision of this Warrant or the Purchase Agreement, if the Company
willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company
shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable
attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto
or in otherwise enforcing any of its rights, powers or remedies hereunder.
h)
Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Exercise, shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service, addressed to the Company, at 3121 Eagles Nest Street, Suite 120, Round Rock, TX 78665 Attention: Greg Endo, Chief Financial Officer, email address: warrants2023@volcon.com, or such other email address or address as the Company may specify for such purposes by notice to the Holders. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service addressed to each Holder at the e-mail address or address of such Holder appearing on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.
i)
Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant
to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the
Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.
j)
Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law would be adequate.
k)
Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby
shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted
assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and
shall be enforceable by the Holder or holder of Warrant Shares.
l)
Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company,
on the one hand, and a majority-in-interest of Holders of the Warrants, on the other hand. No modification or amendment or modification
of the provisions hereof may be waived in a manner that is more favorable to other holder(s) of Warrants, as applicable, or to treat any
holder(s) of Warrants in a manner that is in any respect not equal to the treatment of all other holder(s) of Warrants.
m)
Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining
provisions of this Warrant.
n)
Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
********************
[VLCN Pre-Funded Warrant Signature Page Follows]
[VLCN Pre-Funded Warrant Signature Page]
IN WITNESS WHEREOF, the Company
has caused this Pre-Funded Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
VOLCON, INC.
By: ______________________________
Name: Jordan Davis
Its: Chief Executive Officer
Exhibit A
NOTICE OF EXERCISE
To: VOLCON,
INC.
(1)
The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant
(only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes,
if any.
(2)
Payment shall take the form of (check applicable box):
[ ] in lawful money
of the United States; or
[ ] if permitted the
cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise
this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in
subsection 2(c).
(3)
Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The Warrant Shares shall be delivered to the following
DWAC Account Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
Name of Investing Entity: |
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Signature of Authorized Signatory of Investing Entity: |
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Name of Authorized Signatory: |
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Title of Authorized Signatory: |
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Date: |
Exhibit B
ASSIGNMENT FORM
(To assign the foregoing
Warrant, execute this form and supply required information. Do not use this form to exercise the Warrant to purchase shares.)
FOR VALUE RECEIVED, the foregoing
Warrant and all rights evidenced thereby are hereby assigned to
Name: |
______________________________________ |
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(Please Print) |
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Address: |
______________________________________ |
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(Please Print) |
|
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Phone
Number: |
______________________________________ |
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Email
Address: |
______________________________________ |
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Dated: _______________ __, ______ |
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Holder’s Signature: ______________________________________ |
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Holder’s Address: ______________________________________ |
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Exhibit 4.2
SERIES A COMMON SHARE PURCHASE WARRANT
VOLCON,
INC.
Warrant Shares:[●] |
Initial Exercise Date: November 17, 2023 |
|
Issue Date: November 17, 2023 |
THIS SERIES A COMMON SHARE PURCHASE WARRANT (the
“Warrant”) certifies that, for value received, [●] or its assigns (the “Holder”) is entitled,
upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof
(the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on November 17, 2028 (the “Termination
Date”) but not thereafter, to subscribe for and purchase from Volcon, Inc., a Delaware corporation (the “Company”),
up to [●] Common Shares (as subject to adjustment hereunder, the “Warrant Shares”). The purchase price of one
Common Share under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions. In addition
to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated in this Section 1:
“Affiliate” means
any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with
a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Bid Price” means,
for any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares are then listed or quoted
on a Trading Market, the bid price of a Common Share for the time in question (or the nearest preceding date) on the Trading Market on
which the Common Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City
time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average per share price of
the Common Shares for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Shares are not then
listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Shares are then reported on the Pink Open Market (or a similar
organization or agency succeeding to its functions of reporting prices), the most recent bid price per Common Share so reported, or (d)
in all other cases, the fair market value of a Common Share as determined by an independent appraiser selected in good faith by the Holders
of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall
be paid by the Company.
“Board of Directors”
means the board of directors of the Company.
“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.
“Commission”
means the United States Securities and Exchange Commission.
“Common Shares” means
shares of common stock, $0.00001 par value, of the Company, and any other class of securities into which such securities may hereafter
be reclassified or changed.
“Common Share Equivalents”
means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Shares, including,
without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable
or exchangeable for, or otherwise entitles the holder thereof to receive, Common Shares.
“Exchange Act” means
the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Options” means any
rights, warrants or options to subscribe for or purchase Common Shares or Convertible Securities.
“Person” means an
individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Registration Statement”
means the Company’s registration statement on Form S-1 (File No. 333-274800), as amended.
“Securities Act” means
the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Subsidiary” means
any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired
after the date hereof.
“Shareholder Approval”
means such approval as may be required by the applicable rules and regulations of the Nasdaq Stock Market (or any successor entity) from
the shareholders of the Company, or board of directors in lieu thereof: (a) to consent to any adjustment to the exercise price or number
of shares of Common Stock underlying the Warrants in Section 3(b); or (b) to consent to the alternative cashless exercise option in Section
2.
“Transaction Documents”
means, the Warrants, the Underwriting Agreement, Lock-Up Agreement (as defined in the Underwriting Agreement) and all exhibits and schedules
thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.
“Trading Day” means
a day on which the Common Shares are traded on a Trading Market.
“Trading Market” means
any of the following markets or exchanges on which the Common Shares are listed or quoted for trading on the date in question: the NYSE
American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, OTCQB or
OTCQX (or any successors to any of the foregoing).
“Transfer Agent” means
Computershare Inc. and Computershare Trust Company, N.A., the current transfer agent of the Common Shares, and any successor transfer
agent of the Company.
“Underwriter" means
Aegis Capital Corp.
“Underwriting Agreement"
means the underwriting agreement dated as of November 16, 2023 among the Company and Aegis Capital Corp. as underwriter named therein,
as amended, modified or supplemented from time to time in accordance with its terms.
“VWAP” means, for
any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares are then listed or quoted
on a Trading Market, the daily volume weighted average price per share of the Common Shares for such date (or the nearest preceding date)
on the Trading Market on which the Common Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from
9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price per share of Common Shares for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common
Shares are not then listed or quoted for trading on OTCQB or OTCQX and if prices for Common Shares are then reported on the Pink Open
Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per Common Share
so reported, or (d) in all other cases, the fair market value of a Common Share as determined by an independent appraiser selected in
good faith by the holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees
and expenses of which shall be paid by the Company.
“Warrants” means this
Warrant and other Common Share purchase warrants issued to investor by the Company pursuant to the Registration Statement, other than
any pre-funded warrant issued pursuant to the Registration Statement, each of which shall be subject to the terms of such form of pre-funded
warrant, as applicable.
Section 2. Exercise.
a) Exercise of Warrant. Subject
to the provisions of Section 2(e) herein, exercise of the purchase rights represented by this Warrant may be made, in whole or in part,
at any time or times on or after the Initial Exercise Date and on or before the Termination Date, by delivery to the Company of a duly
executed PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto as Annex A (the “Notice
of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement
Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise
Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer of immediately available funds or cashier’s
check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable
Notice of Exercise. For the avoidance of doubt, any reference to cashless exercise herein shall include a reference to alternative cashless
exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization)
of any Notice of Exercise be required unless the Warrants are evidenced by definitive certificates. Notwithstanding anything herein to
the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all
of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant
to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company.
Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall
have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number
of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the
date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Trading Day of receipt of such
notice. Notwithstanding the foregoing, with respect to any Notice(s) of Exercise delivered on or prior to 4:00 p.m. (New York City time)
on the Trading Date prior to the Initial Exercise Date, which may be delivered at any time after the time of execution of the Underwriting
Agreement, the Company agrees to deliver the Warrant Shares subject to such notice(s) by 4:00 p.m. (New York City time) on the Initial
Exercise Date and the Initial Exercise Date shall be the Warrant Share Delivery Date for purposes hereunder, provided that payment of
the aggregate Exercise Price (other than in the case of a cashless exercise) is received by such Warrant Share Delivery Date. The
Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following
the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given
time may be less than the amount stated on the face hereof.
b) Exercise Price. The exercise
price per Common Share under this Warrant shall be $0.55 (the “Initial Exercise Price”), subject to adjustment hereunder
(as in effect from time to time, the “Exercise Price”).
c) Cashless Exercise. The
Company shall use its best efforts to cause the Registration Statement to remain effective with a current prospectus and to maintain the
registration of the Common Shares and of the Warrants under the Exchange Act. If at any time after the Initial Exercise Date, there is
no effective registration statement registering, or no current prospectus available for the issuance of, the Warrant Shares to the Holder,
then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the
Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
|
(A) = |
as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Shares on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day; |
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(B) = |
the Exercise Price of this Warrant, as adjusted hereunder; and |
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(X) = |
the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise. |
If Warrant Shares are issued in such
a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares
shall take on the registered characteristics of the Warrants being exercised. The Company agrees not to take any position contrary to
this Section 2(c).
Notwithstanding anything herein to the
contrary, in the event that, on the Termination Date, there is no effective registration statement registering, or no current prospectus
available for the issuance of, the Warrant Shares to the Holder, this Warrant shall be automatically exercised via cashless exercise pursuant
to this Section 2(c) on such Termination Date.
The Holder may also effect an “alternative
cashless exercise” following the date of Shareholder Approval thereof. In such event, the aggregate number of Warrant Shares issuable
in such alternative cashless exercise pursuant to any given Notice of Exercise electing to effect an alternative cashless exercise shall
equal the product of (i) the aggregate number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with
the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise, multiplied by (ii) 3.0. Notwithstanding
anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant
to this Section 2(c) (including an alternative cashless exercise pursuant to this paragraph).
d) Mechanics of
Exercise.
i. Delivery of Warrant Shares Upon
Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by
crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit
or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there
is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or (B)
this Warrant is being exercised via cashless exercise, and otherwise by physical delivery of a certificate, registered in the Company’s
share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to
such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading
Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price
to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the
Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder
shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant
has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price
(other than in the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days and (ii) the number of Trading
Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. Notwithstanding anything herein to the contrary,
upon delivery of the Notice of Exercise, the Holder shall be deemed for purposes of Regulation SHO under the Exchange Act to have become
the holder of the Warrant Shares irrespective of the date of delivery of the Warrant Shares. If the Company fails for any reason to deliver
to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder,
in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of
the Common Shares on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the third
Trading Day after the Warrant Share Delivery Date ) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares
are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program
so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the
standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common
Shares as in effect on the date of delivery of the Notice of Exercise.
ii. Delivery of New Warrants Upon
Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this
Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder
to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with
this Warrant.
iii. Rescission Rights. If the
Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share
Delivery Date, then the Holder will have the right to rescind such exercise; provided, however, that the Holder shall be required to return
any Warrant Shares subject to any such rescinded exercise notice concurrently with the return to Holder of the aggregate Exercise Price
paid to the Company for such Warrant Shares and the restoration of Holder’s right to acquire such Warrant Shares pursuant to this
Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).
iv. Compensation for Buy-In on Failure
to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause
the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to
an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in
an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, Common Shares to deliver in satisfaction
of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”),
then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the Common Shares so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant
Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the
sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of
the Warrant and equivalent number of Warrant Shares for which such exercise was not honored and return any amount received by the Company
in respect of the Exercise Price for those Warrant Shares (in which case such exercise shall be deemed rescinded) or deliver to the Holder
the number of Common Shares that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder.
For example, if the Holder purchases Common Shares having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of Common Shares with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately
preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating
the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing
herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver Common
Shares upon exercise of the Warrant as required pursuant to the terms hereof.
v. No Fractional Shares or Scrip.
No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of
a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a
cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to
the next whole share.
vi. Charges, Taxes and Expenses.
Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect
of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be
issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however,
that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto as Annex B duly executed by the Holder and the Company may require,
as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay
all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another
established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
vii. Closing of Books. The Company
will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms
hereof.
e) Holder’s Exercise Limitations.
The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant,
pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable
Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the
Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess
of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of Common Shares beneficially
owned by the Holder and its Affiliates and Attribution Parties shall include the number of Common Shares issuable upon exercise of this
Warrant with respect to which such determination is being made, but shall exclude the number of Common Shares which would be issuable
upon (i) exercise of the remaining, non-exercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or
Attribution Parties and (ii) exercise or conversion of the unexercised or non-converted portion of any other securities of the Company
(including, without limitation, any other Common Shares Equivalents) subject to a limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the
preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing
to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any
schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the
determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates
and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission
of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to
other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable,
in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy
of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining
the number of outstanding Common Shares, a Holder may rely on the number of outstanding Common Shares as reflected in (A) the Company’s
most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company
or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of Common Shares outstanding. Upon the
written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of
Common Shares then outstanding. In any case, the number of outstanding Common Shares shall be determined after giving effect to the conversion
or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date
as of which such number of outstanding Common Shares was reported. The “Beneficial Ownership Limitation” shall be 4.99%
(or, upon election by a Holder prior to the issuance of any Warrants, 9.99%) of the number of Common Shares outstanding immediately after
giving effect to the issuance of Common Shares issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase
or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in
no event exceeds 9.99% of the number of Common Shares outstanding immediately after giving effect to the issuance of Common Shares upon
exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial
Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The provisions
of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e)
to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation
herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations
contained in this paragraph shall apply to a successor holder of this Warrant.
Section 3. Certain Adjustments.
a) Stock Dividends and
Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution
or distributions on its Common Shares or any other equity or equity equivalent securities payable in Common Shares (which, for avoidance
of doubt, shall not include any Common Shares issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding Common
Shares into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding Common Shares into a smaller
number of shares, or (iv) issues by reclassification of Common Shares any shares of capital stock of the Company, then in each case the
Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of Common Shares and such other capital stock
of the Company (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the
number of Common Shares and such other capital stock of the Company (excluding treasury shares, if any) outstanding immediately after
such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate
Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately
after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision, combination or re-classification.
b) Share Combination Event Adjustment.
In addition to the adjustments set forth in this Section 3, subject to receipt of Shareholder Approval, if at any time on or after the
Issue Date there occurs any share split, reverse share split, share dividend, share combination recapitalization or other similar transaction
involving the Common Shares (each, a “Share Combination Event”, and such date thereof, the “Share Combination
Event Date”) and the lowest VWAP during the period commencing five (5) consecutive Trading Days immediately preceding and the
five (5) consecutive Trading Days immediately following the Share Combination Event Date (the “Event Market Price”)
(provided if the Share Combination Event is effective after close of Trading on the primary Trading Market, then commencing on the next
Trading Day which period shall be the “Share Combination Adjustment Period”) is less than the Exercise Price then in
effect (after giving effect to the adjustment in clause 3(a) above), then at the close of trading on the primary Trading Market on the
last day of the Share Combination Adjustment Period, the Exercise Price then in effect on such 5th Trading Day shall be reduced (but in
no event increased) to the Event Market Price and the number of Warrant Shares issuable upon exercise of this Warrant hereunder (such
resulting number, the “Share Combination Issuable Shares”) shall be increased such that the aggregate Exercise Price payable
hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the aggregate Exercise Price on the Issuance
Date for the Warrant Shares then outstanding. Notwithstanding the foregoing, if one or more Share Combination Events occurs prior to the
Shareholder Approval being obtained and the reduction of the Exercise Price to the Event Market Price, once the Shareholder Approval is
obtained, the Exercise Price will automatically be reduced to the lowest Event Market Price with respect to any Share Combination Event
that occurred prior to the Shareholder Approval being obtained and the Share Combination Issuable Shares will automatically be adjusted
to equal the highest such number with respect to any Share Combination Event that occurred prior to the Shareholder Approval being obtained.
For the avoidance of doubt, if the adjustment in the immediately preceding sentence would otherwise result in an increase in the Exercise
Price hereunder, no adjustment shall be made, and if this Warrant is exercised, on any given Exercise Date during the Share Combination
Adjustment Period, solely with respect to such portion of this Warrant exercised on such applicable Exercise Date, such applicable Share
Combination Adjustment Period shall be deemed to have ended on, and included, the Trading Day immediately prior to such Exercise Date
and the Event Market Price on such applicable Exercise Date will be the lowest VWAP of the Ordinary Shares immediately prior to the Share
Combination Event Date and ending on, and including the Trading Day immediately prior to such Exercise Date.
c) Subsequent Rights Offerings.
In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Share Equivalents
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 Shares (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 Common
Shares acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation,
the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase
Rights, or, if no such record is taken, the date as of which the record holders of Common Shares 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 exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in
such Purchase Right to such extent (or beneficial ownership of such Common Shares as a result of such Purchase Right to such extent) and
such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result
in the Holder exceeding the Beneficial Ownership Limitation).
d) Pro Rata Distributions.
During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets
(or rights to acquire its assets) to all (or substantially all) of holders of Common Shares, by way of return of capital or otherwise
(including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any
time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to
the same extent that the Holder would have participated therein if the Holder had held the number of Common Shares acquirable upon complete
exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership
Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as
of which the record holders of Common Shares are to be determined for the participation in such Distribution (provided, however, that,
to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership
of any Common Shares as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for
the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership
Limitation). To the extent that this Warrant has not been partially or completely exercised at the time of such Distribution, such portion
of the Distribution shall be held in abeyance for the benefit of the Holder until the Holder has exercised this Warrant.
e) Calculations. All calculations
under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section
3, the number of Common Shares deemed to be issued and outstanding as of a given date shall be the sum of the number of Common Shares
(excluding treasury shares, if any) issued and outstanding.
f) Notice
to Holder.
i. Adjustment to Exercise Price.
Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder
by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant
Shares and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice to Allow Exercise by
Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Shares, (B) the Company
shall declare a special nonrecurring cash dividend on or a redemption of the Common Shares, (C) the Company shall authorize the granting
to all holders of the Common Shares rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any
rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Shares,
any consolidation or merger to which the Company (or any of its Subsidiaries) is a party, any sale or transfer of all or substantially
all of the assets of the Company, or any compulsory share exchange whereby the Common Shares are converted into other securities, cash
or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of
the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number
or email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record
or effective date hereinafter specified, a notice (unless such information is filed with the Commission, in which case a notice shall
not be required) stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights
or warrants, or if a record is not to be taken, the date as of which the holders of the Common Shares of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders
of the Common Shares of record shall be entitled to exchange their Common Shares for securities, cash or other property deliverable upon
such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any
defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice.
To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company
or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Report on Form 6-K. The
Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of
the event triggering such notice except as may otherwise be expressly set forth herein.
g) Shareholder Approval. The Company
shall hold a special meeting of shareholders (which may also be at the annual meeting of shareholders) at the earliest practicable date
after the date hereof, but in no event later than 75 days after the Initial Exercise Date for the purpose of obtaining Shareholder Approval,
and if required to effect the purpose thereof, with the recommendation of the Company’s Board of Directors that such proposal be
approved. The Company shall solicit proxies from its shareholders in connection therewith in the same manner as all other management proposals
in such proxy statement and all management-appointed proxyholders shall vote their proxies in favor of such proposal. The Company shall
use its reasonable best efforts to obtain all such Shareholder Approvals, and officers, directors and shareholders subject to any Lock-Up
Agreement signed contemporaneously herewith shall cast their proxies in favor of such proposal. If the Company does not obtain Shareholder
Approval at the first meeting, the Company shall call a meeting every four (4) months thereafter to seek Shareholder Approval until the
earlier of the date Shareholder Approval or a board approval in lieu thereof is obtained or the Warrants are no longer outstanding.
Section 4. Transfer
of Warrant.
a) Transferability. This
Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon
surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant
substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer
taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver
a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified
in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically
surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this
Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning
this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant
Shares without having a new Warrant issued.
b) New Warrants. If this
Warrant is not held in global form through DTC (or any successor depositary), this Warrant may be divided or combined with other Warrants
upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations
in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to
any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges
shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares
issuable pursuant thereto.
c) Warrant Register. The
Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”),
in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual
notice to the contrary.
Section 5. Reserved.
Section 6. Miscellaneous.
a) No Rights as Stockholder until
Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder
of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3. Without limiting
any rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant to Section 2(c) or to receive cash payments
pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, including if the Company is for any reason unable to issue and deliver Warrant
Shares upon exercise of this Warrant as required pursuant to the terms hereof, in no event shall the Company be required to net cash settle
an exercise of this Warrant or cash settle in any other form.
b) Loss, Theft, Destruction or
Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (including the posting of any bond), and upon surrender and cancellation
of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor
and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays,
etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not
be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.
d) Authorized Shares.
The Company covenants that, during the
period the Warrant is outstanding, it will reserve from its authorized and unissued Common Shares a sufficient number of shares to provide
for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that
its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary
to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements
of the Trading Market upon which the Common Shares may be listed. The Company covenants that all Warrant Shares which may be issued upon
the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant
and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free
from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
Except and to the extent as waived or consented
to by a majority-in-interest of Holders of the Warrants, the Company shall not by any action, including, without limitation, amending
its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale
of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary
or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof,
as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before taking any action which would result
in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain
all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.
e) Governing Law. All questions
concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrant
(whether brought against a party hereto or their respective affiliates, directors, officers, shareholders, partners, members, employees
or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication
of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, 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 improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably
waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof
via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices
to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party
shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in such action, suit or proceeding
shall be reimbursed by the other party for their reasonable attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding. Notwithstanding the foregoing, nothing in this paragraph shall limit or restrict
the forum in which a Holder may bring a claim under the Securities Act or the Exchange Act.
f) Restrictions. The Holder
acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not utilize cashless
exercise, will have restrictions upon resale imposed by state and federal securities laws.
g) Non-waiver and Expenses.
No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right
or otherwise prejudice the Holder’s rights, powers or remedies. No provision of this Warrant shall be construed as a waiver by the
Holder of any rights which the Holder may have under the U.S. federal securities laws and the rules and regulations of the Commission
thereunder. Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision
of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient
to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings,
incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
h) Notices. Any and all notices
or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Exercise, shall
be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service, addressed to the Company,
at 3121 Eagles Nest Street, Suite 120, Round Rock, TX , Attention: Chief Financial Officer, email address: warrants2023@volcon.com, or
such other email address or address as the Company may specify for such purposes by notice to the Holders. Any and all notices or other
communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by e-mail, or sent
by a nationally recognized overnight courier service addressed to each Holder at the e-mail address or address of such Holder appearing
on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest
of (i) the time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section
prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the time of transmission, if such notice or communication
is delivered via e-mail at the e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New
York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. To the extent that any
notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company
shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.
i) Limitation of Liability.
No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of
any Common Shares or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
j) Remedies. The Holder,
in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance
by the Company of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any
action for specific performance that a remedy at law would be adequate.
k) Successors and Assigns.
Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and
be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions
of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder
or holder of Warrant Shares.
l) Amendment. This Warrant
may be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand, and a majority-in-interest
of Holders of the Warrants, on the other hand. No modification or amendment or modification of the provisions hereof may be waived in
a manner that is more favorable to other holder(s) of Warrants, as applicable, or to treat any holder(s) of Warrants in a manner that
is in any respect not equal to the treatment of all other holder(s) of Warrants.
m) Severability. Wherever
possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if
any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
n) Headings. The headings
used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
********************
(Signature Page Follows)
IN WITNESS WHEREOF, the Company has caused this
Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
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VOLCON, INC. |
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By: |
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Jordan Davis |
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Chief Executive Officer |
ANNEX A
NOTICE OF EXERCISE
(1) The undersigned hereby elects to purchase ________
Warrant Shares of the Company pursuant to the terms of the attached Series A Warrant (only if exercised in full), and tenders herewith
payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable
box):
☐ in lawful money of the United States; or
☐ if permitted the cancellation of such number
of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect
to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
☐ if permitted the cancellation of such number
of Warrant Shares as is necessary, in accordance with the provisions of subsection 2(c), to exercise this Warrant pursuant to the “alternative
cashless exercise” procedure set forth in subsection 2(c).
(3) Please issue said Warrant Shares in the name
of the undersigned or in such other name as is specified below:
_______________________________
The Warrant Shares shall be delivered to the following
DWAC Account Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
Name of Investing Entity: _______________________________________________________________________
Signature of Authorized Signatory of Investing
Entity: _________________________________________________
Name of Authorized Signatory: ___________________________________________________________________
Title of Authorized Signatory: ____________________________________________________________________
Date: _______________________________________________________________________________________
A-1
ANNEX B
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this
form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing
Warrant and all rights evidenced thereby are hereby assigned to:
Name: |
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Address: |
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(Please Print) |
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Phone Number: |
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Email Address: |
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Dated: _______________ __, ______ |
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Holder’s Signature: |
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Holder’s Address: |
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(Signature Guaranteed): |
Date: |
___________________, _____ |
Signature to be guaranteed by an authorized officer of a chartered
bank, trust company or medallion guaranteed by an investment dealer who is a member of a recognized stock exchange.
B-1
Exhibit 4.3
SERIES B COMMON SHARE PURCHASE WARRANT
VOLCON,
INC.
Warrant Shares:[●] |
Initial Exercise Date: November 17, 2023 |
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Issue Date: November 17, 2023 |
THIS SERIES B COMMON SHARE PURCHASE WARRANT (the
“Warrant”) certifies that, for value received, [●] or its assigns (the “Holder”) is entitled,
upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof
(the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on November 17, 2028 (the “Termination
Date”) but not thereafter, to subscribe for and purchase from Volcon, Inc., a Delaware corporation (the “Company”),
up to [●] Common Shares (as subject to adjustment hereunder, the “Warrant Shares”). The purchase price of one
Common Share under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions. In addition
to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated in this Section 1:
“Affiliate” means
any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with
a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Bid Price” means,
for any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares are then listed or quoted
on a Trading Market, the bid price of a Common Share for the time in question (or the nearest preceding date) on the Trading Market on
which the Common Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City
time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average per share price of
the Common Shares for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Shares are not then
listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Shares are then reported on the Pink Open Market (or a similar
organization or agency succeeding to its functions of reporting prices), the most recent bid price per Common Share so reported, or (d)
in all other cases, the fair market value of a Common Share as determined by an independent appraiser selected in good faith by the Holders
of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall
be paid by the Company.
“Board of Directors”
means the board of directors of the Company.
“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.
“Commission”
means the United States Securities and Exchange Commission.
“Common Shares” means
shares of common stock, $0.00001 par value, of the Company, and any other class of securities into which such securities may hereafter
be reclassified or changed.
“Common Share Equivalents”
means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Shares, including,
without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable
or exchangeable for, or otherwise entitles the holder thereof to receive, Common Shares.
“Exchange Act” means
the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Options” means any
rights, warrants or options to subscribe for or purchase Common Shares or Convertible Securities.
“Person” means an
individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Registration Statement”
means the Company’s registration statement on Form S-1 (File No. 333-274800), as amended.
“Securities Act” means
the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Subsidiary” means
any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired
after the date hereof.
“Shareholder Approval”
means such approval as may be required by the applicable rules and regulations of the Nasdaq Stock Market (or any successor entity) from
the shareholders of the Company, or board of directors in lieu thereof, including but not limited to: (a) to render inapplicable clause
(i) of the definition of the Floor Price in Section 3(f) hereof; (b) to consent to any adjustment to the exercise price or number of shares
of Common Stock underlying the Warrants in Sections 3(b) and 3(f); or (c) to consent to the voluntary adjustment, from time to time, of
the exercise price of any and all currently outstanding warrants pursuant to Section 3(i).
“Transaction Documents”
means, the Warrants, the Underwriting Agreement, Lock-Up Agreement (as defined in the Underwriting Agreement) and all exhibits and schedules
thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.
“Trading Day” means
a day on which the Common Shares are traded on a Trading Market.
“Trading Market” means
any of the following markets or exchanges on which the Common Shares are listed or quoted for trading on the date in question: the NYSE
American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, OTCQB or
OTCQX (or any successors to any of the foregoing).
“Transfer Agent” means
Computershare Inc. and Computershare Trust Company, N.A., the current transfer agent of the Common Shares, and any successor transfer
agent of the Company.
“Underwriter" means
Aegis Capital Corp.
“Underwriting Agreement"
means the underwriting agreement dated as of November 16, 2023 among the Company and Aegis Capital Corp. as underwriter named therein,
as amended, modified or supplemented from time to time in accordance with its terms.
“VWAP” means, for
any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares are then listed or quoted
on a Trading Market, the daily volume weighted average price per share of the Common Shares for such date (or the nearest preceding date)
on the Trading Market on which the Common Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from
9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price per share of Common Shares for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common
Shares are not then listed or quoted for trading on OTCQB or OTCQX and if prices for Common Shares are then reported on the Pink Open
Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per Common Share
so reported, or (d) in all other cases, the fair market value of a Common Share as determined by an independent appraiser selected in
good faith by the holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees
and expenses of which shall be paid by the Company.
“Warrants” means this
Warrant and other Common Share purchase warrants issued to investor by the Company pursuant to the Registration Statement, other than
any pre-funded warrant issued pursuant to the Registration Statement, each of which shall be subject to the terms of such form of pre-funded
warrant, as applicable.
Section 2. Exercise.
a) Exercise of Warrant. Subject
to the provisions of Section 2(e) herein, exercise of the purchase rights represented by this Warrant may be made, in whole or in part,
at any time or times on or after the Initial Exercise Date and on or before the Termination Date, by delivery to the Company of a duly
executed PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto as Annex A (the “Notice
of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement
Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise
Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer of immediately available funds or cashier’s
check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable
Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee
or notarization) of any Notice of Exercise be required unless the Warrants are evidenced by definitive certificates. Notwithstanding anything
herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased
all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this
Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to
the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder
shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable
number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and
the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Trading Day of receipt of
such notice. Notwithstanding the foregoing, with respect to any Notice(s) of Exercise delivered on or prior to 4:00 p.m. (New York City
time) on the Trading Date prior to the Initial Exercise Date, which may be delivered at any time after the time of execution of the Underwriting
Agreement, the Company agrees to deliver the Warrant Shares subject to such notice(s) by 4:00 p.m. (New York City time) on the Initial
Exercise Date and the Initial Exercise Date shall be the Warrant Share Delivery Date for purposes hereunder, provided that payment of
the aggregate Exercise Price (other than in the case of a cashless exercise) is received by such Warrant Share Delivery Date. The
Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following
the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given
time may be less than the amount stated on the face hereof.
b) Exercise Price.
The exercise price per Common Share under this Warrant shall be $0.84 (the “Initial Exercise Price”), subject to adjustment
hereunder (as in effect from time to time, the “Exercise Price”).
c) Cashless Exercise. The
Company shall use its best efforts to cause the Registration Statement to remain effective with a current prospectus and to maintain the
registration of the Common Shares and of the Warrants under the Exchange Act. If at any time after the Initial Exercise Date, there is
no effective registration statement registering, or no current prospectus available for the issuance of, the Warrant Shares to the Holder,
then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the
Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
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as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Shares on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day; |
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(B) = |
the Exercise Price of this Warrant, as adjusted hereunder; and |
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the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise. |
If Warrant Shares are issued in such
a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares
shall take on the registered characteristics of the Warrants being exercised. The Company agrees not to take any position contrary to
this Section 2(c).
Notwithstanding anything herein to the
contrary, in the event that, on the Termination Date, there is no effective registration statement registering, or no current prospectus
available for the issuance of, the Warrant Shares to the Holder, this Warrant shall be automatically exercised via cashless exercise pursuant
to this Section 2(c) on such Termination Date.
d) Mechanics of Exercise.
i. Delivery of Warrant Shares Upon
Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by
crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit
or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there
is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or (B)
this Warrant is being exercised via cashless exercise, and otherwise by physical delivery of a certificate, registered in the Company’s
share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to
such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading
Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price
to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the
Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder
shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant
has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price
(other than in the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days and (ii) the number of Trading
Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. Notwithstanding anything herein to the contrary,
upon delivery of the Notice of Exercise, the Holder shall be deemed for purposes of Regulation SHO under the Exchange Act to have become
the holder of the Warrant Shares irrespective of the date of delivery of the Warrant Shares. If the Company fails for any reason to deliver
to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder,
in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of
the Common Shares on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the third
Trading Day after the Warrant Share Delivery Date ) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares
are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program
so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the
standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common
Shares as in effect on the date of delivery of the Notice of Exercise.
ii. Delivery of New Warrants Upon
Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this
Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder
to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with
this Warrant.
iii. Rescission Rights. If the
Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share
Delivery Date, then the Holder will have the right to rescind such exercise; provided, however, that the Holder shall be required to return
any Warrant Shares subject to any such rescinded exercise notice concurrently with the return to Holder of the aggregate Exercise Price
paid to the Company for such Warrant Shares and the restoration of Holder’s right to acquire such Warrant Shares pursuant to this
Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).
iv. Compensation for Buy-In on Failure
to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause
the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to
an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in
an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, Common Shares to deliver in satisfaction
of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”),
then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the Common Shares so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant
Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the
sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of
the Warrant and equivalent number of Warrant Shares for which such exercise was not honored and return any amount received by the Company
in respect of the Exercise Price for those Warrant Shares (in which case such exercise shall be deemed rescinded) or deliver to the Holder
the number of Common Shares that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder.
For example, if the Holder purchases Common Shares having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of Common Shares with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately
preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating
the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing
herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver Common
Shares upon exercise of the Warrant as required pursuant to the terms hereof.
v. No Fractional Shares or Scrip.
No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of
a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a
cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to
the next whole share.
vi. Charges, Taxes and Expenses.
Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect
of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be
issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however,
that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto as Annex B duly executed by the Holder and the Company may require,
as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay
all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another
established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
vii. Closing of Books. The Company
will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms
hereof.
e) Holder’s Exercise Limitations.
The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant,
pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable
Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the
Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess
of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of Common Shares beneficially
owned by the Holder and its Affiliates and Attribution Parties shall include the number of Common Shares issuable upon exercise of this
Warrant with respect to which such determination is being made, but shall exclude the number of Common Shares which would be issuable
upon (i) exercise of the remaining, non-exercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or
Attribution Parties and (ii) exercise or conversion of the unexercised or non-converted portion of any other securities of the Company
(including, without limitation, any other Common Shares Equivalents) subject to a limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the
preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing
to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any
schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the
determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates
and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission
of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to
other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable,
in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy
of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining
the number of outstanding Common Shares, a Holder may rely on the number of outstanding Common Shares as reflected in (A) the Company’s
most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company
or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of Common Shares outstanding. Upon the
written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of
Common Shares then outstanding. In any case, the number of outstanding Common Shares shall be determined after giving effect to the conversion
or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date
as of which such number of outstanding Common Shares was reported. The “Beneficial Ownership Limitation” shall be 4.99%
(or, upon election by a Holder prior to the issuance of any Warrants, 9.99%) of the number of Common Shares outstanding immediately after
giving effect to the issuance of Common Shares issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase
or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in
no event exceeds 9.99% of the number of Common Shares outstanding immediately after giving effect to the issuance of Common Shares upon
exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial
Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The provisions
of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e)
to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation
herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations
contained in this paragraph shall apply to a successor holder of this Warrant.
Section 3. Certain Adjustments.
a) Stock Dividends and
Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution
or distributions on its Common Shares or any other equity or equity equivalent securities payable in Common Shares (which, for avoidance
of doubt, shall not include any Common Shares issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding Common
Shares into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding Common Shares into a smaller
number of shares, or (iv) issues by reclassification of Common Shares any shares of capital stock of the Company, then in each case the
Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of Common Shares and such other capital stock
of the Company (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the
number of Common Shares and such other capital stock of the Company (excluding treasury shares, if any) outstanding immediately after
such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate
Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately
after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision, combination or re-classification.
b) Share Combination Event Adjustment.
In addition to the adjustments set forth in this Section 3, subject to receipt of Shareholder Approval, if at any time on or after the
Issue Date there occurs any share split, reverse share split, share dividend, share combination recapitalization or other similar transaction
involving the Common Shares (each, a “Share Combination Event”, and such date thereof, the “Share Combination
Event Date”) and the lowest VWAP during the period commencing five (5) consecutive Trading Days immediately preceding and the
five (5) consecutive Trading Days immediately following the Share Combination Event Date (the “Event Market Price”)
(provided if the Share Combination Event is effective after close of Trading on the primary Trading Market, then commencing on the next
Trading Day which period shall be the “Share Combination Adjustment Period”) is less than the Exercise Price then in
effect (after giving effect to the adjustment in clause 3(a) above), then at the close of trading on the primary Trading Market on the
last day of the Share Combination Adjustment Period, the Exercise Price then in effect on such 5th Trading Day shall be reduced (but in
no event increased) to the Event Market Price and the number of Warrant Shares issuable upon exercise of this Warrant hereunder (such
resulting number, the “Share Combination Issuable Shares”) shall be increased such that the aggregate Exercise Price payable
hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the aggregate Exercise Price on the Issuance
Date for the Warrant Shares then outstanding. Notwithstanding the foregoing, if one or more Share Combination Events occurs prior to the
Shareholder Approval being obtained and the reduction of the Exercise Price to the Event Market Price, once the Shareholder Approval is
obtained, the Exercise Price will automatically be reduced to the lowest Event Market Price with respect to any Share Combination Event
that occurred prior to the Shareholder Approval being obtained and the Share Combination Issuable Shares will automatically be adjusted
to equal the highest such number with respect to any Share Combination Event that occurred prior to the Shareholder Approval being obtained.
For the avoidance of doubt, if the adjustment in the immediately preceding sentence would otherwise result in an increase in the Exercise
Price hereunder, no adjustment shall be made, and if this Warrant is exercised, on any given Exercise Date during the Share Combination
Adjustment Period, solely with respect to such portion of this Warrant exercised on such applicable Exercise Date, such applicable Share
Combination Adjustment Period shall be deemed to have ended on, and included, the Trading Day immediately prior to such Exercise Date
and the Event Market Price on such applicable Exercise Date will be the lowest VWAP of the Ordinary Shares immediately prior to the Share
Combination Event Date and ending on, and including the Trading Day immediately prior to such Exercise Date.
c) Subsequent Rights Offerings.
In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Share Equivalents
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 Shares (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 Common
Shares acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation,
the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase
Rights, or, if no such record is taken, the date as of which the record holders of Common Shares 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 exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in
such Purchase Right to such extent (or beneficial ownership of such Common Shares as a result of such Purchase Right to such extent) and
such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result
in the Holder exceeding the Beneficial Ownership Limitation).
d) Pro Rata Distributions.
During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets
(or rights to acquire its assets) to all (or substantially all) of holders of Common Shares, by way of return of capital or otherwise
(including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any
time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to
the same extent that the Holder would have participated therein if the Holder had held the number of Common Shares acquirable upon complete
exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership
Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as
of which the record holders of Common Shares are to be determined for the participation in such Distribution (provided, however, that,
to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership
of any Common Shares as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for
the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership
Limitation). To the extent that this Warrant has not been partially or completely exercised at the time of such Distribution, such portion
of the Distribution shall be held in abeyance for the benefit of the Holder until the Holder has exercised this Warrant.
e) Fundamental Transaction.
If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects
any merger or consolidation of the Company with or into another Person, (ii) the Company or any Subsidiary, directly or indirectly, effects
any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a
series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (approved or recommended
by the Board of Directors or a committee thereof) is completed pursuant to which holders of Common Shares are permitted to sell, tender
or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding
Common Shares or 50% or more of the total voting power of the Company’s Common Shares, (iv) the Company, directly or indirectly,
in one or more related transactions effects any reclassification, reorganization or recapitalization of Common Shares or any compulsory
share exchange pursuant to which the Common Shares are effectively converted into or exchanged for other securities, cash or property,
or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other
business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with
another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding Common Shares or 50% or
more of the total voting power of the Company’s Common Shares (each a “Fundamental Transaction”), then, upon
any subsequent exercise of a Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable
upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder, the number of Common
Shares of the successor or acquiring corporation or of the Company, if it is the surviving corporation, or depositary shares representing
those shares, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental
Transaction by a holder of the number of Common Shares for which this Warrant is exercisable immediately prior to such Fundamental Transaction
(without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation). For purposes
of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one Common Share in such Fundamental Transaction and the Company
shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different
components of the Alternate Consideration. If holders of Common Shares are given any choice as to the securities, cash or property to
be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives
upon any exercise of this Warrant following such Fundamental Transaction.
Notwithstanding anything to the contrary,
in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option,
exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction (or, if later, the
date of the public announcement of the applicable Fundamental Transaction), purchase this Warrant from the Holder by paying to the Holder
an amount of cash equal to the Black Scholes Value (as defined below) of the remaining unexercised portion of this Warrant on the date
of the consummation of such Fundamental Transaction; provided, however, that, if the Fundamental Transaction is not within the Company’s
control, including not approved by the Company’s Board of Directors, Holder shall only be entitled to receive from the Company or
any Successor Entity the same type or form of consideration (and in the same proportion), at the Black Scholes Value of the unexercised
portion of this Warrant, that is being offered and paid to the holders of Common Shares of the Company in connection with the Fundamental
Transaction, whether that consideration be in the form of cash, stock or any combination thereof, or whether the holders of Common Shares
are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction; provided,
further, that if holders of Common Shares of the Company are not offered or paid any consideration in such Fundamental Transaction, such
holders will be deemed to have received Common Shares of the Successor Entity (which Entity may be the Company following such Fundamental
Transaction) in such Fundamental Transaction.
“Black Scholes Value”
means the value of this Warrant based on the Black-Scholes Option Pricing Model obtained from the “OV” function on
Bloomberg determined as of the day of consummation of the applicable contemplated Fundamental Transaction for pricing purposes and reflecting
(A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement
of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100
day volatility obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day
immediately following the public announcement of the applicable contemplated Fundamental Transaction, (C) the underlying price per share
used in such calculation shall be the greater of (i) the sum of the price per share being offered in cash, if any, plus the value of any
non-cash consideration, if any, being offered in such Fundamental Transaction and (ii) the highest VWAP during the period beginning on
the Trading Day immediately preceding the public announcement of the applicable contemplated Fundamental Transaction (or the consummation
of the applicable Fundamental Transaction, if earlier) and ending on the Trading Day of the Holder’s request pursuant to this Section
3(e) and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction
and the Termination Date and (E) a zero cost of borrow. The payment of the Black Scholes Value will be made by wire transfer of immediately
available funds (or such other consideration) within the later of (i) five (5) Business Days of the Holder’s election and (ii) the
date of consummation of the Fundamental Transaction.
The Company shall cause any successor
entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”), to assume in
writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 3(e) pursuant to written
agreements in form reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental
Transaction and shall, at the option of the Holder, deliver to such Holder in exchange for this Warrant a security of the Successor Entity
evidenced by a written instrument substantially similar in form and substance to this Warrant that is exercisable for a corresponding
number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the Common Shares acquirable and receivable
upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction
and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative
value of the Common Shares pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares
of capital stock and such exercise price being for the purpose of protecting the economic value this Warrant had immediately prior to
the consummation of such Fundamental Transaction). Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall
be added to the term “Company” under this Warrant (so that from and after the occurrence or consumption of such Fundamental
Transaction, each and every provision of this Warrant and other Transaction Documents referring to the “Company” shall refer
instead to each of the Company and the Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor
Entities, jointly and severally with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity
or Successor Entities shall assume all of the obligations of the Company prior thereto under this Warrant Agreement and the other Transaction
Documents with the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named
as the Company herein. For the avoidance of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(e)
regardless of (i) whether the Company has sufficient authorized Common Shares for the issuance of Warrant Shares and/or (ii) whether a
Fundamental Transaction occurs prior to the Initial Exercise Date.
The Company shall mail, by first class
mail, postage prepaid, to each Holder, written notice of the execution of any such amendment, supplement or agreement with the Successor
Entity. Any supplemented or amended agreement entered into by the successor corporation or transferee shall provide for adjustments, which
shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 3(e). The Company shall have no duty,
responsibility or obligation to determine the correctness of any provisions contained in such agreement or such notice, including but
not limited to any provisions relating either to the kind or amount of securities or other property receivable upon exercise of warrants
or with respect to the method employed and provided therein for any adjustments, and shall be entitled to rely conclusively for all purposes
upon the provisions contained in any such agreement. The provisions of this Section 3(e) shall similarly apply to successive reclassifications,
changes, consolidations, mergers, sales and conveyances of the kind described above.
f) Adjustment Upon Issuance of
Common Shares. If, at any time while this Warrant is outstanding (such period, the “Adjustment Period”), the Company
issues, sells, enters into an agreement to sell, or grants any option to purchase, or sells, enters into an agreement to sell, or grants
any right to reprice, or otherwise disposes of or issues (or announces any offer, sale, grant or any option to purchase or other disposition),
or, in accordance with this Section 3(f), is deemed to have issued or sold, any Common Shares or Common Share Equivalents (excluding
any Excluded Securities (as defined below) issued or sold or deemed to have been issued or sold) for a consideration per share less than
a price equal to the Exercise Price in effect immediately prior to such issue or sale or deemed issuance or sale (such Exercise Price
then in effect is referred to as the “Applicable Price”) (the foregoing a “Dilutive Issuance”),
then simultaneously with the consummation (or, if earlier, the announcement) of such Dilutive Issuance, the Exercise Price then in effect
shall be reduced to an amount equal to the lowest VWAP during the period commencing 5 consecutive Trading Days following the Dilutive
Issuance (the “New Issuance Price”) and the number of Common Shares issuable upon exercise of this Warrant shall be
proportionately adjusted such that the aggregate Exercise Price of this Warrant on the Issuance Date for the Warrant Shares then outstanding
shall remain unchanged; provided that the New Issuance Share Price shall not be less than (i) $0.13 or (ii) in the event of Shareholder
Approval, the price of the Dilutive Issuance ((i) and (ii) together, the “Floor Price”) (subject to adjustment for
reverse and forward stock splits, recapitalizations and similar transactions following the date of the Underwriting Agreement). Notwithstanding
the foregoing, if one or more Dilutive Issuances occurred prior to the Shareholder Approval being obtained and the reduction of the Exercise
Price was limited by clause (i) of the definition of Floor Price, once the Shareholder Approval is obtained, the Exercise Price will automatically
be reduced to equal the greater of (x) the lowest New Issuance Price with respect to any Dilutive Issuance that occurred prior to the
Shareholder Approval being obtained, and (y) the price determined by reference to clause (ii) of the definition of Floor Price. “Excluded
Securities” means any issuance of Common Shares, restricted share units, Options and/or Convertible Securities (i) under the
Company’s current or future equity incentive plans or issued to employees, directors, consultants or officers as compensation or
consideration in the ordinary course of business, including any issuance of Options (and the underlying Common Shares) in exchange for
Options issued under the Company’s equity incentive plans, (ii) issued pursuant to agreements, Options, restricted share units,
Convertible Securities or Adjustment Rights (as defined below) existing as of the date hereof, (iii) issued pursuant to acquisitions
(whether by merger, consolidation, purchase of equity, purchase of assets, reorganization or otherwise), mergers, consolidations, reorganizations
or strategic transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall
only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner
of an asset in a business complementary with the business of the Company and shall provide to the Company additional benefits in addition
to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of
raising capital or to an entity whose primary business is investing in securities, provided that such securities are issued as “restricted
securities” (as defined in Rule 144) and carry no registration rights that require or permit the filing of any registration statement
in connection therewith or (iv) to which a majority-in-interest of Holders of the Warrants consent in writing. “Adjustment
Right” means any right granted with respect to any securities issued in connection with, or with respect to, any issuance or sale
(or deemed issuance or sale in accordance with this Section 3(f)) of Common Shares (other than rights of the type described in Sections
3(a) through (e)) that could result in a decrease in the net consideration received by the Company in connection with, or with respect
to, such securities (including, without limitation, any cash settlement rights, cash adjustment or other similar rights). For all purposes
of the foregoing, the following shall be applicable:
i. Issuance of Options. If,
during the Adjustment Period, the Company in any manner grants or sells any Options (other than Excluded Securities) and the lowest price
per share for which one Common Share is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any
Convertible Securities issuable upon exercise of any such Option (such Common Shares issuable upon such exercise of any Option or upon
conversion, exercise or exchange of any Convertible Securities, the “Convertible Securities Shares”) is less than the
Applicable Price, then such Common Shares shall be deemed to be outstanding and to have been issued and sold by the Company at the time
of the granting or sale of such Option for such price per share. For purposes of this Section 3(f)(i), the “lowest price per
share for which one Common Share is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible
Securities issuable upon exercise of any such Option” shall be equal to (A) the sum of (1) the lowest amount of consideration
(if any) received or receivable by the Company with respect to any one Convertible Securities Share upon the granting or sale of such
Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such
Option and (2) the lowest exercise price set forth in such Option for which one Convertible Securities Share is issuable upon the
exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such
Option, minus (B) the sum of all amounts paid or payable to the holder of such Option (or any other Person), with respect to any
one Convertible Securities Share, upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise
or exchange of any Convertible Security issuable upon exercise of such Option plus the value of any other consideration received or receivable
by, or benefit conferred on, the holder of such Option (or any other Person), with respect to any one Convertible Securities Share. Except
as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such Convertible Securities
Share or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Convertible Securities Share
upon conversion, exercise or exchange of such Convertible Securities.
ii. Issuance of Convertible Securities.
If, during the Adjustment Period, the Company in any manner issues or sells any Convertible Securities (other than Excluded Securities)
and the lowest price per share for which one Convertible Securities Share is issuable upon the conversion, exercise or exchange thereof
is less than the Applicable Price, then such Convertible Securities Share shall be deemed to be outstanding and to have been issued and
sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this
Section 3(e)(ii), the “lowest price per share for which one Convertible Securities Share is issuable upon the conversion, exercise
or exchange thereof” shall be equal to (A) the sum of (1) the lowest amount of consideration (if any) received or receivable
by the Company with respect to one Convertible Securities Share upon the issuance or sale of the Convertible Security and upon conversion,
exercise or exchange of such Convertible Security and (2) the lowest conversion price set forth in such Convertible Security for
which one Convertible Securities Share is issuable upon conversion, exercise or exchange thereof, minus (B) the sum of all amounts
paid or payable to the holder of such Convertible Security (or any other Person), with respect to any one Convertible Securities Share,
upon the issuance or sale of such Convertible Security plus the value of any other consideration received or receivable by, or benefit
conferred on, the holder of such Convertible Security (or any other Person), with respect to any one Convertible Securities Share. Except
as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such Convertible Securities
Share upon conversion, exercise or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities
is made upon exercise of any Options for which adjustment of the Exercise Price has been or is to be made pursuant to other provisions
of this Section 3(e), except as contemplated below, no further adjustment of the Exercise Price shall be made by reason of such issue
or sale.
iii. Change in Option Price or
Rate of Conversion. If, during the Adjustment Period, the purchase or exercise price provided for in any Options, the additional consideration,
if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities
are convertible into or exercisable or exchangeable for Common Shares increases or decreases at any time (other than proportional changes
in conversion or exercise prices, as applicable, in connection with an event referred to in Section 3(a)), the Exercise Price in effect
at the time of such increase or decrease shall be adjusted to the Exercise Price which would have been in effect at such time had such
Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased
conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 3(f)(iii), if the
terms of any Option or Convertible Security that was outstanding as of the date of issuance of this Warrant are increased or decreased
in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Convertible Securities
Shares deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase
or decrease. No adjustment pursuant to this Section 3(f) shall be made if such adjustment would result in an increase of the Exercise
Price then in effect.
iv. Calculation of Consideration
Received. If any Option or Convertible Security is issued in connection with the issuance or sale or deemed issuance or sale of any
other securities of the Company (the “Primary Security”, and such Option or Convertible Security, the “Secondary
Securities” and together with the Primary Security, each a “Unit”), together comprising one integrated transaction,
the aggregate consideration per Common Share with respect to such Primary Security shall be deemed to be the lowest of (x) the purchase
price of such Unit, (y) if such Primary Security is an Option and/or Convertible Security, the lowest price per share for which one
Common Share is at any time issuable upon the exercise or conversion of the Primary Security in accordance with Section 3(f)(i) or
3(f)(ii) above and (z) the lowest VWAP of the Common Shares on any Trading Day during the five Trading Day period immediately following
the public announcement of such Dilutive Issuance (for the avoidance of doubt, if such public announcement is released prior to the opening
of the Principal Market on a Trading Day, such Trading Day shall be the first Trading Day in such five Trading Day period). If any Common
Shares, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received
therefor will be deemed to be the net amount of cash received by the Company therefor. If any Common Shares, Options or Convertible Securities
are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value
of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration
received by the Company for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading
Days immediately preceding the date of receipt. If any Common Shares, Options or Convertible Securities are issued to the owners of the non-surviving entity
in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be
the fair market value of such portion of the net assets and business of the non-surviving entity as is attributable to such
Common Shares, Options or Convertible Securities (as the case may be). The fair market value of any consideration other than cash or publicly
traded securities will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days
after the occurrence of an event requiring valuation (the “Valuation Event”), the fair market value of such consideration
will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable
appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties
absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.
v. Record Date. If, during
the Adjustment Period, the Company takes a record of the holders of the Common Shares for the purpose of entitling them (A) to receive
a dividend or other distribution payable in Common Shares, Options or in Convertible Securities or (B) to subscribe for or purchase
Common Shares, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of Common Shares
deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting
of such right of subscription or purchase (as the case may be).
g) Calculations. All calculations
under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section
3, the number of Common Shares deemed to be issued and outstanding as of a given date shall be the sum of the number of Common Shares
(excluding treasury shares, if any) issued and outstanding.
h) Notice
to Holder.
i. Adjustment to Exercise Price.
Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder
by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant
Shares and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice to Allow Exercise by
Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Shares, (B) the Company
shall declare a special nonrecurring cash dividend on or a redemption of the Common Shares, (C) the Company shall authorize the granting
to all holders of the Common Shares rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any
rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Shares,
any consolidation or merger to which the Company (or any of its Subsidiaries) is a party, any sale or transfer of all or substantially
all of the assets of the Company, or any compulsory share exchange whereby the Common Shares are converted into other securities, cash
or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of
the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number
or email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record
or effective date hereinafter specified, a notice (unless such information is filed with the Commission, in which case a notice shall
not be required) stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights
or warrants, or if a record is not to be taken, the date as of which the holders of the Common Shares of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders
of the Common Shares of record shall be entitled to exchange their Common Shares for securities, cash or other property deliverable upon
such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any
defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice.
To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company
or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Report on Form 6-K. The
Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of
the event triggering such notice except as may otherwise be expressly set forth herein.
i) Voluntary Adjustment by Company.
Subject to the rules and regulations of the Trading Market and the consent of Holders of a majority in interest of the Warrants then outstanding,
the Company may at any time during the term of this Warrant, reduce the then current Exercise Price to any amount and for any period of
time deemed appropriate by the Board of Directors.
j) Variable Rate Transactions.
The Company, at any time while a majority-in-interest of Holders of the Warrants are outstanding: shall be prohibited from effecting or
entering into an agreement to effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents
(or a combination of units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction
in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or
include the right to receive, additional Common Shares either (A) at a conversion price, exercise price or exchange rate or other price
that is based upon, and/or varies with, the trading prices of or quotations for the Common Shares at any time after the initial issuance
of such debt or equity securities or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date
after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common Shares or (ii) enters into, or effects a transaction under, any agreement,
including, but not limited to, an equity line of credit; but excluding an "at-the-market offering", whereby the Company may
issue securities at a future determined price. The Holder shall be entitled to obtain injunctive relief against the Company to preclude
any such issuance, which remedy shall be in addition to any right to collect damages.
k) Shareholder Approval. The Company
shall hold a special meeting of shareholders (which may also be at the annual meeting of shareholders) at the earliest practicable date
after the date hereof, but in no event later than 75 days after the Initial Exercise Date for the purpose of obtaining Shareholder Approval,
and if required to effect the purpose thereof, with the recommendation of the Company’s Board of Directors that such proposal be
approved. The Company shall solicit proxies from its shareholders in connection therewith in the same manner as all other management proposals
in such proxy statement and all management-appointed proxyholders shall vote their proxies in favor of such proposal. The Company shall
use its reasonable best efforts to obtain all such Shareholder Approvals, and officers, directors and shareholders subject to any Lock-Up
Agreement signed contemporaneously herewith shall cast their proxies in favor of such proposal. If the Company does not obtain Shareholder
Approval at the first meeting, the Company shall call a meeting every four (4) months thereafter to seek Shareholder Approval until the
earlier of the date Shareholder Approval or a board approval in lieu thereof is obtained or the Warrants are no longer outstanding.
Section 4. Transfer
of Warrant.
a) Transferability. This
Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon
surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant
substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer
taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver
a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified
in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically
surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this
Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning
this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant
Shares without having a new Warrant issued.
b) New Warrants. If this
Warrant is not held in global form through DTC (or any successor depositary), this Warrant may be divided or combined with other Warrants
upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations
in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to
any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges
shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares
issuable pursuant thereto.
c) Warrant Register. The
Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”),
in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual
notice to the contrary.
Section 5. Reserved.
Section 6. Miscellaneous.
a) No Rights as Stockholder until
Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder
of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3. Without limiting
any rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant to Section 2(c) or to receive cash payments
pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, including if the Company is for any reason unable to issue and deliver Warrant
Shares upon exercise of this Warrant as required pursuant to the terms hereof, in no event shall the Company be required to net cash settle
an exercise of this Warrant or cash settle in any other form.
b) Loss, Theft, Destruction or
Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (including the posting of any bond), and upon surrender and cancellation
of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor
and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays,
etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not
be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.
d) Authorized Shares.
The Company covenants that, during the
period the Warrant is outstanding, it will reserve from its authorized and unissued Common Shares a sufficient number of shares to provide
for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that
its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary
to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements
of the Trading Market upon which the Common Shares may be listed. The Company covenants that all Warrant Shares which may be issued upon
the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant
and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free
from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
Except and to the extent as waived or consented
to by a majority-in-interest of Holders of the Warrants, the Company shall not by any action, including, without limitation, amending
its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale
of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary
or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof,
as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before taking any action which would result
in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain
all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.
e) Governing Law. All questions
concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrant
(whether brought against a party hereto or their respective affiliates, directors, officers, shareholders, partners, members, employees
or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication
of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, 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 improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably
waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof
via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices
to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party
shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in such action, suit or proceeding
shall be reimbursed by the other party for their reasonable attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding. Notwithstanding the foregoing, nothing in this paragraph shall limit or restrict
the forum in which a Holder may bring a claim under the Securities Act or the Exchange Act.
f) Restrictions. The Holder
acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not utilize cashless
exercise, will have restrictions upon resale imposed by state and federal securities laws.
g) Non-waiver and Expenses.
No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right
or otherwise prejudice the Holder’s rights, powers or remedies. No provision of this Warrant shall be construed as a waiver by the
Holder of any rights which the Holder may have under the U.S. federal securities laws and the rules and regulations of the Commission
thereunder. Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision
of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient
to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings,
incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
h) Notices. Any and all notices
or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Exercise, shall
be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service, addressed to the Company,
at 3121 Eagles Nest Street, Suite 120, Round Rock, TX , Attention: Chief Financial Officer, email address: warrants2023@volcon.com, or
such other email address or address as the Company may specify for such purposes by notice to the Holders. Any and all notices or other
communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by e-mail, or sent
by a nationally recognized overnight courier service addressed to each Holder at the e-mail address or address of such Holder appearing
on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest
of (i) the time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section
prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the time of transmission, if such notice or communication
is delivered via e-mail at the e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New
York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. To the extent that any
notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company
shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.
i) Limitation of Liability.
No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of
any Common Shares or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
j) Remedies. The Holder,
in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance
by the Company of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any
action for specific performance that a remedy at law would be adequate.
k) Successors and Assigns.
Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and
be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions
of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder
or holder of Warrant Shares.
l) Amendment. This Warrant
may be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand, and a majority-in-interest
of Holders of the Warrants, on the other hand. No modification or amendment or modification of the provisions hereof may be waived in
a manner that is more favorable to other holder(s) of Warrants, as applicable, or to treat any holder(s) of Warrants in a manner that
is in any respect not equal to the treatment of all other holder(s) of Warrants.
m) Severability. Wherever
possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if
any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
n) Headings. The headings
used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
********************
(Signature Page Follows)
IN WITNESS WHEREOF, the Company has caused this
Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
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VOLCON, INC. |
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By: |
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Jordan Davis |
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Chief Executive Officer |
ANNEX A
NOTICE OF EXERCISE
(1) The undersigned hereby elects to purchase ________
Warrant Shares of the Company pursuant to the terms of the attached Series B Warrant (only if exercised in full), and tenders herewith
payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable
box):
☐ in lawful money of the United States; or
☐ if permitted the cancellation of such number
of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect
to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
(3) Please issue said Warrant Shares in the name
of the undersigned or in such other name as is specified below:
_______________________________
The Warrant Shares shall be delivered to the following
DWAC Account Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
Name of Investing Entity: _______________________________________________________________________
Signature of Authorized Signatory of Investing
Entity: _________________________________________________
Name of Authorized Signatory: ___________________________________________________________________
Title of Authorized Signatory: ____________________________________________________________________
Date: _______________________________________________________________________________________
A-1
ANNEX B
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this
form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing
Warrant and all rights evidenced thereby are hereby assigned to:
Name: |
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(Please Print) |
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Address: |
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(Please Print) |
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Phone Number: |
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Email Address: |
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Dated: _______________ __, ______ |
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Holder’s Signature: |
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Holder’s Address: |
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(Signature Guaranteed): |
Date: |
___________________, _____ |
Signature to be guaranteed by an authorized officer of a chartered
bank, trust company or medallion guaranteed by an investment dealer who is a member of a recognized stock exchange.
B-1
Exhibit 4.4
AMENDED AND RESTATED SERIES A SENIOR
CONVERTIBLE NOTE
NEITHER THIS SECURITY NOR THE
SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAS BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES. ANY TRANSFEREE OF THIS NOTE
SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTIONS 3(c)(iii) AND 18(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS
NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNT SET FORTH ON THE FACE HEREOF PURSUANT
TO SECTION 3(c)(iii) OF THIS NOTE.
THIS NOTE HAS BEEN ISSUED WITH
ORIGINAL ISSUE DISCOUNT ("OID"). PURSUANT TO TREASURY REGULATION §1.1275-3(b)(1), GREG ENDO, A REPRESENTATIVE OF THE COMPANY
HEREOF WILL, BEGINNING TEN DAYS AFTER THE ISSUANCE DATE OF THIS NOTE, PROMPTLY MAKE AVAILABLE TO THE HOLDER UPON REQUEST THE INFORMATION
DESCRIBED IN TREASURY REGULATION §1.1275-3(b)(1)(i). GREG ENDO MAY BE REACHED AT TELEPHONE NUMBER 972-679-7964.
VOLCON,
INC.
AMENDED AND RESTATED SERIES
A SENIOR CONVERTIBLE NOTE
Original Issuance Date: August 24, 2022
Amendment and Restatement Date: November 15, 2023 |
Principal Amount: U.S. $[●] |
FOR VALUE RECEIVED,
Volcon, Inc., a Delaware corporation (the "Company"), hereby promises to pay to [●]. or registered assigns (the
"Holder") in cash and/or in shares of Common Stock 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 (as defined below), acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to
pay interest ("Interest"), if applicable, on any outstanding Principal at the applicable Default Rate at any time during
the occurrence and continuance of an Event of Default occurring from the date set out above as the Issuance Date (the "Issuance
Date") until the same becomes due and payable, whether upon the Maturity Date, acceleration, conversion, redemption or otherwise
(in each case in accordance with the terms hereof). This Amended and Restated Series A Senior Convertible Note is one of an issue of
Amended and Restated Series A Senior Convertible Notes originally issued pursuant to the Original Securities Purchase Agreement on the
Original Closing Date, and exchanged pursuant to the New Securities Purchase and Exchange Agreement (such other Amended and Restated
Series A Senior Convertible Notes, the "Other Amended and Restated Series A Notes" and together with (i) the Series
B Amended and Restated Senior Convertible Notes originally issued pursuant to the Original Securities Purchase Agreement and exchanged
pursuant to the New Securities Purchase and Exchange Agreement on the New Closing Date (the "Amended and Restated Series B Notes"
and together with this Note and the Other Amended and Restated Series A Notes, the "Amended and Restated Notes") and
(ii) the newly issued Senior Convertible Notes pursuant to the New Securities Purchase and Exchange Agreement (the "New Notes"),
the "Other Notes", and collectively with this Note, the "Notes"). Certain capitalized terms used herein
are defined in Section 31.
(1)
ORIGINAL ISSUE DISCOUNT; PAYMENTS OF PRINCIPAL; PREPAYMENT. The Company acknowledges and agrees that this Note was issued
at an original issue discount. On the Maturity Date, if any portion of this Note remains outstanding, the Company shall pay to the Holder
an amount in cash representing all outstanding Principal, any accrued and unpaid Interest. The "Maturity Date" shall
be January 31, 2025, as may be extended at the option of the Required Holders (x) in the event that, and for so long as, an Event of Default
(as defined in Section 4(a)) shall have occurred and be continuing on the Maturity Date (as may be extended pursuant to this Section 1)
or any event shall have occurred and be continuing on the Maturity Date (as may be extended pursuant to this Section 1) that with the
passage of time and the failure to cure would result in an Event of Default and/or (y) through the date that is ten (10) Business Days
after the consummation of a Change of Control in the event that a Change of Control is publicly announced or a Change of Control Notice
(as defined in Section 5(b)) is delivered prior to the Maturity Date. Other than as specifically permitted by this Note, the Company may
not prepay any portion of the outstanding Principal or accrued and unpaid Interest, if any.
(2)
INTEREST. No Interest shall accrue hereunder unless and until an Event of Default has occurred. From and after the occurrence
and during the continuance of any Event of Default, Interest shall accrue hereunder at ten percent (10.0%) per annum (the "Default
Rate") and shall be computed on the basis of a 360-day year and twelve 30-day months and shall be payable, if applicable, on
the Maturity Date to the record holder of this Note in cash by wire transfer of immediately available funds pursuant to wire instructions
provided by the Holder in writing to the Company. Accrued and unpaid Interest, if any, may also be payable, at the election of the Holder,
by way of inclusion of the Interest in the Conversion Amount (as defined in Section 3(b)(i)) on each (i) Conversion Date (as defined
in Section 3(c)(i)) in accordance with Section 3(c)(i) and/or (ii) upon any redemption hereunder occurring prior to the Maturity Date,
including, without limitation, upon a Bankruptcy Event of Default redemption. In the event that an Event of Default is subsequently cured
(and no other Event of Default then exists (including, without limitation, for the Company's failure to pay such Interest at the Default
Rate on the Maturity Date)), Interest shall cease to accrue hereunder as of the calendar day immediately following the date of such cure;
provided that the Interest as calculated and unpaid during the continuance of such Event of Default shall continue to apply to
the extent relating to the days after the occurrence of such Event of Default through and including the date of such cure of such Event
of Default; provided, further, that for the purpose of this Section 2, such Event of Default shall not be deemed cured
unless and until any accrued and unpaid Interest shall be paid to the Holder.
(3)
CONVERSION OF NOTES. At any time or times after the Issuance Date, this Note shall be convertible into shares of Common
Stock, 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 Issuance Date, the Holder
shall be entitled to convert all or any portion of the outstanding and unpaid Conversion Amount into fully paid and nonassessable 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 and similar taxes 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 (x) the portion of the Principal to be converted, redeemed or otherwise with
respect to which this determination is being made, and (y) accrued and unpaid Interest, if any, with respect to such Principal.
(ii)
"Conversion Price" means, as of any Conversion Date or other date of determination, $1.369 subject to adjustment
as provided herein.
(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 (A) transmit by electronic mail (or otherwise deliver), for delivery 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 (a "Conversion
Notice") to the Company and (B) if required by Section 3(c)(iii), but without delaying the Company's requirement to deliver
shares of Common Stock on the applicable Share Delivery Date (as defined below), surrender this Note to a common carrier for
delivery to the Company as soon as practicable on or following such date (or an indemnification undertaking with respect to this
Note in the case of its loss, theft, destruction or mutilation in compliance with the procedures set forth in Section 18(b)). No
ink-original Conversion Notice shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of
any Conversion Notice be required. On or before the first (1st) Trading Day following the date of delivery of a Conversion Notice,
the Company shall transmit by electronic mail a confirmation of receipt of such Conversion Notice to the Holder and the Company's
transfer agent (the "Transfer Agent"). On or before the earlier of (i) the second (2nd)
Trading Day and (ii) the number of Trading Days comprising the Standard Settlement Period, in each case, following the date on which
the Holder has delivered the applicable Conversion Notice to the Company (a "Share Delivery Date"), the Company
shall (x) provided that the Transfer Agent is participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer Program and (A) the applicable Conversion Shares are subject to an effective resale registration statement in
favor of the Holder or (B) if converted at a time when Rule 144 would be available for resale of the applicable Conversion Shares by
the Holder, credit such aggregate number of Conversion Shares to which the Holder is 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 (y) if (A) the Transfer
Agent is not participating in the DTC Fast Automated Securities Transfer Program or (B) the applicable Conversion Shares are not
subject to an effective resale registration statement in favor of the Holder and, if converted at a time when Rule 144 would not be
available for resale of the applicable Conversion Shares by the Holder, issue and deliver 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. If this Note is physically surrendered for conversion as required by 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 delivery of this Note and at its own expense,
issue and deliver to the Holder a new Note (in accordance with Section 18(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 applicable Conversion Date, irrespective of the
date such Conversion Shares are credited to the Holder's account with DTC or the date of delivery of the certificates evidencing
such Conversion Shares, as the case may be. The Company's obligations to issue and deliver shares of Common Stock in accordance with
the terms and subject to the conditions hereof are absolute and unconditional, irrespective of any action or inaction by the Holder
to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or
any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination. While any Notes are outstanding,
the Company shall use a transfer agent that participates in the DTC Fast Automated Securities Transfer Program.
(ii)
Company's Failure to Timely Convert. If the Company shall fail, for any reason or no reason, on or prior to the applicable
Share Delivery Date to issue and deliver a certificate to the Holder, if the Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program or if converted, at a time when the applicable Conversion Shares are not subject to an effective resale registration
statement in favor of the Holder and Rule 144 would not be available for resale of the applicable Conversion Shares by the Holder, or
credit the Holder's balance account with DTC, if the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program
and (a) the applicable Conversion Shares are subject to an effective resale registration statement in favor of the Holder or (b) if converted
at a time when Rule 144 would be available for resale of the applicable Conversion Shares by the Holder, for the number of shares of
Common Stock to which the Holder is entitled upon the Holder's conversion of any Conversion Amount (a "Conversion Failure"),
then (A) the Company shall pay cash to the Holder for each Trading Day of such Conversion Failure in an amount equal to 1.5% of the product
of (1) the sum of the number of shares of Common Stock not issued to the Holder on or prior to the applicable Share Delivery Date and
to which the Holder is entitled, and (2) 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 Date and (B) 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 the Company shall fail on or prior to the applicable Share Delivery
Date to issue and deliver a certificate to the Holder if (A) the Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program or (B) the applicable Conversion Shares are not subject to an effective resale registration statement in favor of the
Holder and, if converted at a time when Rule 144 would not be available for resale of the applicable Conversion Shares by the Holder,
or credit the Holder's balance account with DTC if the Transfer Agent is participating in the DTC Fast Automated Securities Transfer
Program and (A) the applicable Conversion Shares are subject to an effective resale registration statement in favor of the Holder or
(B) if converted at a time when Rule 144 would be available for resale of the applicable Conversion Shares by the Holder, for the number
of shares of Common Stock to which the Holder is entitled upon the Holder's conversion of any Conversion Amount or on any date of the
Company's obligation to deliver shares of Common Stock as contemplated pursuant to clause (y) below, and if on or after such Trading
Day the Holder purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by the Holder
of Common Stock issuable upon such conversion that the Holder anticipated receiving from the Company (a "Buy-In"), then
the Company shall, within two (2) Trading Days after the Holder's request and in the Holder's discretion, either (x) pay cash to the
Holder in an amount equal to the Holder's total purchase price (including brokerage commissions and other out-of-pocket expenses, if
any) for the shares of Common Stock so purchased (the "Buy-In Price"), at which point the Company's obligation to issue
and deliver such certificate or credit the Holder's balance account with DTC for the shares of Common Stock to which the Holder is entitled
upon the Holder's conversion of the applicable Conversion Amount shall terminate, or (y) promptly honor its obligation to deliver to
the Holder a certificate or certificates representing such shares of Common Stock or credit the Holder's balance account with DTC for
such shares of Common Stock and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product
of (A) such number of shares of Common Stock, times (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 Date. Nothing
herein 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 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 Notes (and stated interest thereon) held by such
holders (the "Registered Notes"). The entries in the Register shall be conclusive and binding for all purposes absent
manifest error. The Company and the holders of the Notes shall treat each Person whose name is recorded in the Register as the owner
of a Note for all purposes, including, without limitation, the right to receive payments of Principal and Interest, if any, hereunder,
notwithstanding notice to the contrary. A Registered Note may be assigned or sold in whole or in part only by registration of such assignment
or sale on the Register. Upon its receipt of a request to assign or sell all or part of any Registered Note by the Holder, the Company
shall record the information contained therein in the Register and issue one or more new Registered Notes in the same aggregate Principal
amount as the Principal amount of the surrendered Registered Note to the designated assignee or transferee pursuant to Section 18. Notwithstanding
anything to the contrary in this Section 3(c)(iii), the Holder may assign any Note or any portion thereof to an Affiliate of the Holder
or a Related Fund of the Holder without delivering a request to assign or sell the Note to the Company and the recordation of such assignment
or sale in the Register (a "Related Party Assignment"); provided, that (x) the Company may continue to deal solely
with such assigning or selling Holder unless and until the Holder has delivered a request to assign or sell the Note or portion thereof
to the Company for recordation in the Register; (y) the failure
of such assigning or selling Holder to deliver a request to assign or sell the Note or portion thereof to the Company shall not affect
the legality, validity, or binding effect of such assignment or sale and (z) such assigning or selling Holder shall, acting solely for
this purpose as a non-fiduciary agent of the Company, maintain a register (the "Related Party Register") comparable
to the Register on behalf of the Company, and any such assignment or sale shall be effective upon recordation of such assignment or sale
in the Related Party Register. Notwithstanding anything to the contrary set forth herein, upon 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 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 and Interest, if any, 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 and Interest 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)
Pro Rata Conversion; Disputes. In the event that the Company receives a Conversion Notice from the Holder and one or more
holder of Other Notes for the same Conversion Date and the Company can convert some, but not all, of such portions of this Note and/or
the Other Notes submitted for conversion, the Company, subject to Section 3(d), shall convert from the Holder and each holder of Other
Notes electing to have Notes converted on such date, a pro rata amount of such holder's portion of the Note and its Other Notes submitted
for conversion based on the Principal amount of this Note and principal amounts of the Other Notes submitted for conversion on such date
by such holder relative to the aggregate Principal amount of this Note and all Other Notes submitted for conversion on such date. 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
23.
(v) Mandatory
Conversion. If at any time from and after the Issuance Date, (i) the VWAP of the Common Stock for ten (10) consecutive Trading
Days following the Issuance Date (the "Mandatory Conversion Measuring Period") equals or exceeds $5.85 (as adjusted
for any stock dividend, stock split, stock combination, reclassification or similar transaction relating to the Common Stock after
the Amendment and Restatement Date ) (the "Mandatory Conversion Pricing Test") and (ii) no Equity Conditions
Failure has occurred during the period from the applicable Mandatory Conversion Notice Date through the applicable Mandatory
Conversion Date (each as defined below), the Company shall have the right to require the Holder to convert all or any portion of the
Conversion Amount then remaining under this Note (the "Mandatory Conversion Amount"), as designated in the
Mandatory Conversion Notice on the Mandatory Conversion Date (each as defined below) into fully paid, validly issued and
nonassessable shares of Common Stock in accordance with Section 3(a) hereof at the Conversion Rate as of the Mandatory Conversion
Date (as defined below) (a "Mandatory Conversion"). The Company may exercise its right to require conversion under
this Section 3(c)(v) by delivering within not more than ten (10) Trading Days following the end of such Mandatory Conversion
Measuring Period a written notice thereof by electronic mail, and overnight courier to all, but not less than all, of the holders of
Notes and the Transfer Agent (the "Mandatory Conversion Notice" and the date all of the holders of this Note and
the Other Notes received such notice is referred to as the "Mandatory Conversion Notice Date"). The Mandatory
Conversion Notice shall be irrevocable. The Mandatory Conversion Notice shall (i) state (a) the Trading Day on which the applicable
Mandatory Conversion shall occur, which Trading Day shall be not sooner than the thirtieth (30th) Trading Day immediately following
the Mandatory Conversion Notice Date (a "Mandatory Conversion Date"), (b) the aggregate Conversion Amount of the
Notes which the Company has elected to be subject to Mandatory Conversion from the Holder and all of the holders of the Other Notes
pursuant to this Section 3(c)(v) (and analogous provisions under the Other Notes), (c) the number of shares of Common Stock to be
issued to the Holder on the applicable Mandatory Conversion Date and (d) certify that the Mandatory Conversion Pricing Test has been
satisfied and that there has been no Equity Conditions Failure. If there was no Equity Conditions Failure as of the applicable
Mandatory Conversion Notice Date but an Equity Conditions Failure occurred between the applicable Mandatory Conversion Notice Date
and any time through the related Mandatory Conversion Date (a "Mandatory Conversion Interim Period"), the Company
shall provide the Holder a subsequent notice to that effect. If an Equity Conditions Failure occurs (that is not waived in writing
by the Required Holders) during such Mandatory Conversion Interim Period, then such Mandatory Conversion shall be null and void with
respect to all or any part designated by the Holder of the unconverted Mandatory Conversion Amount and the Holder shall be entitled
to all the rights of a holder of this Note with respect to such Mandatory Conversion Amount. On the applicable Mandatory Conversion
Date the Company shall deliver or shall cause to be delivered to the Holder the number of shares of Common Stock the Holder is
entitled to pursuant to Section 3(b) (provided, however, that to the extent that the Holder will be entitled to
receive upon any Mandatory Conversion a number of shares of Common Stock which would result in the Holder and the other Attribution
Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to such shares of Common Stock upon a Mandatory
Conversion to such extent (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such
Mandatory Conversion (and beneficial ownership) to such extent) and such portion of the shares of Common Stock issuable to the
Holder pursuant to such Mandatory Conversion shall be held in abeyance for the Holder until such time or times 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 shares of Common Stock (and any right to receive shares of Common Stock under this Section 3(c)(v) to be held
similarly in abeyance) to the same extent as if there had been no such limitation). Notwithstanding anything to the contrary in this
Section 3(c)(v), until a Mandatory Conversion has occurred, the Mandatory Conversion Amount subject to such Mandatory Conversion may
be converted, in whole or in part, by the Holder into shares of Common Stock pursuant to Section 3(c)(i). All Conversion Amounts
converted by the Holder after a Mandatory Conversion Notice Date shall reduce the Mandatory Conversion Amount of this Note required
to be converted on the related Mandatory Conversion Date, unless the Holder otherwise indicates in the applicable Conversion Notice.
If the Company elects to cause a Mandatory Conversion pursuant to Section 3(c)(v), then it must simultaneously take the same action
in the same proportion with respect to the Other Notes.
(d)
Conversion Limitations.
(i)
Beneficial Ownership. Notwithstanding anything to the contrary contained herein, the Company shall not issue any shares
of Common Stock pursuant to the terms of this Note, and the Holder shall not have the right to any shares of Common Stock otherwise issuable
pursuant to the terms and conditions of this Note and any such issuance shall be null and void and treated as if never made, to the extent
that after giving effect to such issuance, the Holder together with the other Attribution Parties collectively would beneficially own
in excess of 9.99% (the "Maximum Percentage") of the number of shares of Common Stock outstanding immediately after
giving effect to such issuance. 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 pursuant to the terms of this Note with respect to which the determination
of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable (i) pursuant to the terms
of the remaining, nonconverted portion of this Note beneficially owned by the Holder or any of the other Attribution Parties and (ii)
upon 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, including the Other Notes and 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 Exchange
Act. For purposes of determining the number of outstanding shares of Common Stock the Holder may acquire pursuant to the terms of the
Note without exceeding the Maximum Percentage, the Holder may rely on the number of outstanding shares of Common Stock as reflected in
(i) 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, (ii) a more recent public announcement
by the Company or (iii) any other written notice by the Company or the Transfer Agent 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 shall 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) Trading 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 would result 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 Exchange Act), the number of shares so issued by which
the Holder's and the other Attribution Parties' aggregate beneficial ownership would exceed the Maximum Percentage (the "Excess
Shares") shall be deemed null and void and shall be cancelled ab initio and any portion of the Conversion Amount so converted
shall be reinstated, 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 or decrease the Maximum Percentage to any other percentage not in excess of
9.99% as specified in such notice; provided that (i) any such increase in the Maximum Percentage will not be effective until the sixty-first
(61st) day after such notice is delivered to the Company and (ii) any such increase or decrease will apply only to the Holder and the
other Attribution Parties and not to any other holder of Notes that is not an Attribution Party of the Holder. For purposes of clarity,
the shares of Common Stock issuable pursuant to the terms of this 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 Exchange Act. 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 be obligated to issue any shares of Common Stock pursuant to the terms of this Note, and
the Holder shall not have the right to receive pursuant to the terms of this Note any shares of Common Stock, to the extent the issuance
of such shares of Common Stock would exceed the aggregate number of shares of Common Stock which the Company may issue pursuant to the
terms of this Note and the Other Amended and Restated Series A Notes (collectively, the "Amended and Restated Series A Notes")
without breaching the Company's obligations under the rules or regulations of the Principal Market (the "Exchange Cap"),
except that such limitation shall not apply in the event that the Company obtains the approval of its stockholders as required by the
applicable rules of the Principal Market for issuances of Common Stock in excess of such amount. Until such approval is obtained, no Purchaser
shall be issued in the aggregate, pursuant to the terms of the Amended and Restated Series A Notes, shares of Common Stock in an amount
greater than the product of the Exchange Cap multiplied by a fraction, the numerator of which is the Principal amount of Amended and Restated
Series A Notes issued to such Purchaser pursuant to the New Securities Purchase and Exchange Agreement on the New Closing Date and the
denominator of which is the aggregate principal amount of all Amended and Restated Series A Notes issued to all Purchasers pursuant to
the New Securities Purchase and Exchange Agreement on the New Closing Date (with respect to each Purchaser, the "Exchange Cap
Allocation"). In the event that any Purchaser shall sell or otherwise transfer any of such Purchaser's Amended and Restated Series
A Notes, the transferee shall be allocated a pro rata portion of such Purchaser's Exchange Cap Allocation with respect to such portion
of such Amended and Restated Series A Notes transferred, and the restrictions of the prior sentence shall apply to such transferee with
respect to the portion of the Exchange Cap Allocation allocated to such transferee. In the event that any holder of Amended and Restated
Series A Notes shall convert all of such holder's Amended and Restated Series A Notes into a number of shares of Common Stock which, in
the aggregate, is less than such holder's Exchange Cap Allocation, then the difference between such holder's Exchange Cap Allocation and
the number of shares of Common Stock actually issued to such holder shall be allocated to the respective Exchange Cap Allocations of the
remaining holders of the Amended and Restated Series A Notes on a pro rata basis in proportion to the aggregate principal amount of the
Amended and Restated Series A Notes then held by each such holder.
(4)
RIGHTS UPON EVENT OF DEFAULT.
(a)
Event of Default. Each of the following events or failure to comply therewith shall constitute an "Event of Default"
and each of the events described in clauses (vii) and (viii) shall also constitute a "Bankruptcy Event of Default":
(i)
to the extent the Holder is a party to the Registration Rights Agreement, the failure of the applicable Registration Statement
required to be filed pursuant to the Registration Rights Agreement to be filed within on or prior to the date that is fifteen (15) days
after the applicable Filing Date (as defined in the Registration Rights Agreement) or to be declared effective by the SEC on or prior
to the date that is thirty (30) days after the applicable Effectiveness Date (as defined in the Registration Rights Agreement), or, while
the applicable Registration Statement is required to be maintained effective pursuant to the terms of the Registration Rights Agreement,
the effectiveness of the applicable Registration Statement lapses for any reason (including, without limitation, the issuance of a stop
order) or is unavailable to any holder of the Notes for sale of all of such holder's Registrable Securities in accordance with the terms
of the Registration Rights Agreement, and such lapse or unavailability continues for a period of fifteen (15) consecutive days or for
more than an aggregate of thirty (30) days in any 365- day period (other than as permitted pursuant to the Registration Rights Agreement);
(ii)
the suspension of the Common Stock from trading on an Eligible Market for a period of two (2) consecutive Trading Days or for more
than an aggregate of ten (10) Trading Days in any 365-day period or the failure of the Common Stock to be listed on an Eligible Market;
(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 the Holder or any holder of the Other Notes,
including by way of public announcement or through any of its agents, at any time, of its intention not to comply with a request for conversion
of this Note or any Other Notes into shares of Common Stock that is tendered in accordance with the provisions of this Note or the Other
Notes, other than pursuant to Section 3(d) (and analogous provisions under the Other Notes);
(iv)
at any time following the fifth (5th) consecutive Business Day that the Holder's Authorized Share Allocation (as defined in Section
10(a)) is less than the Holder's Pro Rata Amount of the Required Reserve Amount (as defined in Section 10(a));
(v)
the Company's failure to pay to the Holder any amount of Principal, Interest, Redemption Price or other amounts when and as due
under this Note or any other Transaction Document (to the extent the Holder is a party to such Transaction Document), except, in the case
of a failure to pay Interest when and as due, in which case only if such failure continues for a period of at least an aggregate of two
(2) Business Days;
(vi)
any default under, redemption of or acceleration prior to maturity of any Indebtedness of the Company or any of its Subsidiaries
other than with respect to this Note or any Other Notes;
(vii)
the Company or any of its Subsidiaries, pursuant to or within the meaning of Title 11, U.S. Code, or any similar federal, foreign
or state law for the relief of debtors (collectively, "Bankruptcy Law"), (A) commences a bankruptcy voluntary case, (B)
consents to the entry of an order for relief against it in an involuntary bankruptcy case, (C) consents to the appointment of a receiver,
trustee, assignee, liquidator or similar official (a "Custodian"), (D) makes a general assignment for the benefit of
its creditors or
(E) admits in writing that it is generally
unable to pay its debts as they become due;
(viii)
a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (A) is for relief against the Company
or any of its Subsidiaries in an involuntary case, (B) appoints a Custodian of the Company or any of its Subsidiaries or (C) orders the
liquidation of the Company or any of its Subsidiaries;
(ix)
a final judgment or judgments for the payment of money aggregating in excess of $250,000 are rendered against the Company or any
of its Subsidiaries and which judgments are not, within sixty (60) days after the entry thereof, bonded, discharged or stayed pending
appeal, or are not discharged within sixty (60) days after the expiration of such stay; provided, however, that any judgment
which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $250,000 amount set
forth above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement
shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company
or such Subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity within thirty (30) days of the issuance
of such judgment;
(x)
other than as specifically set forth in another clause of this Section 4(a), the Company or any of its Subsidiaries breaches any
representation, warranty, covenant or other term or condition of any Transaction Document (to the extent the Holder is a party to such
Transaction Document), except, in the case of a breach of a covenant or other term or condition of any Transaction Document which is curable,
only if such breach continues for a period of at least an aggregate of five (5) Business Days;
(xi)
any breach or failure in any respect to comply with either Sections 14 or 15 of this Note;
(xii)
any material damage to, or loss, theft or destruction of a material amount of property of the Company, whether or not insured,
or any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty which causes, for more than
fifteen (15) consecutive days, the cessation or substantial curtailment of revenue producing activities at any facility of the Company
or any Subsidiary, if any such event or circumstance would reasonably be expected to have a Material Adverse Effect;
(xiii)
a false or inaccurate certification (including a false or inaccurate deemed certification) by the Company that the Equity Conditions
are satisfied or that there has been no Equity Conditions Failure or as to whether any Event of Default has occurred;
(xiv)
any Material Adverse Effect occurs;
(xv)
the Company fails to remove any restrictive legend on any certificate or any shares of Common Stock issued to the Holder upon
conversion or exercise (as the case may be) of any Securities (as defined in the Original Securities Purchase Agreement, as amended by
the New Securities Purchase and Exchange Agreement), as amended (including this Note), as and when required by such Securities or the
Original Securities Purchase Agreement, unless otherwise then prohibited by applicable federal securities laws, and any such failure
remains uncured for at least five (5) Trading Day;
(xvi)
the electronic transfer by the Company of shares of Common Stock through the Depository Trust Company or another established clearing
corporation is no longer available or is subject to a "chill"; or
(xvii)
any Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes.
(b)
Redemption Right. At any time after the earlier of the Holder's receipt of an Event of Default Notice (as defined in Section
15(f)) and the Holder becoming aware of an Event of Default, the Holder may require the Company to redeem (an "Event of Default
Redemption") all or any portion of this Note by delivering written notice thereof (the "Event of Default Redemption
Notice") to the Company, which Event of Default Redemption Notice shall indicate the portion of this Note the Holder is electing
to require the Company to redeem. Each portion of this Note subject to redemption by the Company pursuant to this Section 4(b) shall
be redeemed by the Company in cash by wire transfer of immediately available funds at a price equal to the greater of (x) the product
of (A) the applicable Redemption Premium and (B) the Conversion Amount being redeemed and (y) the product of (A) the Conversion Amount
being redeemed and (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 such Event
of Default and ending on the date the Holder delivers the Event of Default Redemption Notice, by (II) the lowest Conversion Price in
effect during such period, in addition to any and all other amounts due hereunder (the "Event of Default Redemption Price").
Redemptions required by this Section 4(b) shall be made in accordance with the provisions of Section 11. To the extent redemptions required
by this Section 4(b) are deemed or determined by a court of competent jurisdiction to be prepayments of the Note by the Company, such
redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section 4, but subject to Section
3(d), until the Event of Default Redemption Price is paid in full, the Conversion Amount submitted for redemption under this Section
4(b) may be converted, in whole or in part, by the Holder into Common Stock pursuant to Section 3. The parties hereto agree that in the
event of the Company's redemption of any portion of the Note under this Section 4(b), the Holder's damages would be uncertain and difficult
to estimate because of the parties' inability to predict future interest rates and the uncertainty of the availability of a suitable
substitute investment opportunity for the Holder. Accordingly, any Event of Default 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.
(c)
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 the product of (A) the applicable Redemption Premium and
(B) of all outstanding Principal, accrued and unpaid Interest, if any, in addition to any and all other amounts due hereunder (the "Bankruptcy
Event of Default Redemption Price"), without the requirement for any notice or demand or other action by the Holder or any other
Person; provided that the Holder may, in its sole discretion, waive such right to receive payment upon a Bankruptcy Event of Default,
in whole or in part, and any such waiver shall not affect any other rights of the Holder hereunder, including any other rights in respect
of such Bankruptcy Event of Default, any right to conversion, and any right to payment of the Event of Default Redemption Price or any
other Redemption Price, as applicable. Redemptions required by this Section 4(c) shall be made in accordance with the provisions of Section
11.
(5)
RIGHTS UPON FUNDAMENTAL TRANSACTION AND CHANGE OF CONTROL.
(a)
Assumption. If, at any time while this Note is outstanding, the Company, directly or indirectly, in one or more related
transactions effects any Fundamental Transaction or a Fundamental Transaction occurs or is consummated, then, upon any subsequent conversion
of this Note, the Holder shall have the right to receive, for each share of Common Stock that would have been issuable upon such conversion
immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in
Section 3(d) on the conversion of this Note), the number of shares of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and any additional consideration (the "Alternate Consideration") receivable
as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Note is convertible immediately
prior to such Fundamental Transaction (without regard to any limitation in Section 3(d) on the conversion of this Note). For purposes
of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and
the Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value
of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash
or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any conversion of this Note following such Fundamental Transaction. The Company shall cause any successor entity in
a Fundamental Transaction in which the Company is not the survivor (the "Successor Entity") to assume in writing all
of the obligations of the Company under this Note and the other Transaction Documents (to the extent the Holder is a party to such Transaction
Document) in accordance with the provisions of this Section 5(a) pursuant to written agreements in form and substance reasonably satisfactory
to the Required Holders and approved by the Required Holders (without unreasonable delay) prior to such Fundamental Transaction and shall,
at the option of the Required Holders, deliver to the Holder in exchange for this Note a security of the Successor Entity evidenced by
a written instrument substantially similar in form and substance to this Note which is convertible for a corresponding number of shares
of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon
conversion of this Note (without regard to any limitations on the conversion of this Note) prior to such Fundamental Transaction, and
with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account the relative
value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number
of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Note immediately
prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder.
Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall be added to the term "Company" under this
Note (so that from and after the occurrence or consummation of such Fundamental Transaction, each and every provision of this Note and
the other Transaction Documents referring to the "Company" shall refer instead to each of the Company and the Successor Entity
or Successor Entities, jointly and severally), and the Successor Entity or Successor Entities, jointly and severally with the Company,
may exercise every right and power of the Company prior thereto and the Successor Entity or Successor Entities shall assume all of the
obligations of the Company prior thereto under this Note and the other Transaction Documents (to the extent the Holder is a party to
such Transaction Document) with the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally,
had been named as the Company in this Note.
(b)
Redemption Right. No sooner than twenty-five (25) days nor later than twenty (20) days prior to the consummation of a Change
of Control, 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") setting forth a description of such
transaction in reasonable detail and the anticipated Change of Control Redemption Date (as defined in Section 11(a)) if then known. At
any time during the period beginning on the earlier to occur of (x) any oral or written agreement by the Company or any of its Subsidiaries,
upon consummation of which the transaction contemplated thereby would reasonably be expected to result in a Change of Control, (y) the
Holder becoming aware of a Change of Control and (z) the Holder's receipt of a Change of Control Notice and ending twenty- five (25)
Trading Days after the date of the consummation of such Change of Control, the Holder may require the Company to redeem (a "Change
of Control Redemption") all or any portion of this Note by delivering written notice thereof ("Change of Control Redemption
Notice") to the Company, which Change of Control Redemption Notice shall indicate the Conversion Amount the Holder is electing
to require the Company to redeem. The portion of this Note subject to redemption pursuant to this Section 5(b) shall be redeemed by the
Company in cash by wire transfer of immediately available funds at a price equal to the greater of (x) the Conversion Amount being redeemed
and (y) the product of (A) the Conversion Amount being redeemed and (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 (x) the
consummation of the Change of Control and (y) 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 lowest Conversion Price in effect during such period (the "Change of Control
Redemption Price"). Redemptions required by this Section 5 shall be made in accordance with the provisions of Section 11 and
shall have priority to payments to stockholders in connection with a Change of Control. To the extent redemptions required by this Section
5(b) are deemed or determined by a court of competent jurisdiction to be prepayments of the Note by the Company, such redemptions shall
be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section 5, but subject to Section 3(d), until
the Change of Control Redemption Price is paid in full, the Conversion Amount submitted for redemption under this Section 5(b) may be
converted, in whole or in part, by the Holder into Common Stock pursuant to Section 3. The parties hereto agree that in the event of
the Company's redemption of any portion of the Note under this Section 5(b), the Holder's damages would be uncertain and difficult to
estimate because of the parties' inability to predict future interest rates and the uncertainty of the availability of a suitable substitute
investment opportunity for the Holder. Accordingly, any Change of Control 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)
DISTRIBUTION OF ASSETS; RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS.
(a)
Distribution of Assets. If the Company shall, on or after the Subscription Date, declare or make any dividend or other distributions
of its assets (or rights to acquire its assets) to any or all holders of shares of Common Stock, by way of return of capital or otherwise
(including without limitation, any distribution of cash, stock or other securities, property, Options, evidence of Indebtedness or any
other assets by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction)
(a "Distribution"), then the Holder will be entitled to such Distribution as 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) immediately prior to the date on which a record is taken for such Distribution or, if no such record is taken, the date
as of which the record holders of Common Stock are to be determined for such Distributions (provided, however, that to the
extent that the Holder's right to participate in any such Distribution would result in the Holder and the other Attribution Parties exceeding
the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution to such extent (and shall not be entitled
to beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to such extent) and
the portion of such Distribution shall be held in abeyance for the Holder until such time or times as its right thereto would not result
in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such
Distribution (and any Distributions declared or made on such initial Distribution or on any subsequent Distribution to be held similarly
in abeyance) to the same extent as if there had been no such limitation).
(b)
Purchase Rights. If at any time on or after the Subscription Date the Company grants, issues or sells any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock
(the "Purchase Rights"), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable
upon complete conversion of this Note (without taking into account any limitations or restrictions on the convertibility of this Note)
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 such extent (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 such extent) and such Purchase Right to such extent shall be held in abeyance
for the Holder until such time or times 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 to be held similarly in abeyance) to the same extent as if there had
been no such limitation).
(7)
ADJUSTMENTS TO CONVERSION PRICE. The Conversion Price will be subject to adjustment from time to time as provided in this
Section 7.
(a)
Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. If the Company at any time on or after the
Subscription Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding
shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately
reduced. If the Company at any time on or after the Subscription Date combines (by combination, reverse stock split or otherwise) one
or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately
prior to such combination will be proportionately increased. Any adjustment under this Section 7(a) shall become effective at the close
of business on the date the subdivision or combination becomes effective.
(b)
Voluntary Adjustment by Company. The Company may at any time during the term of this Note, with the prior written consent
of the Required Holders, reduce the then current Conversion Price to any amount and for any period of time deemed appropriate by the Board
of Directors of the Company.
(c)
Adjustment Upon Issuance of Shares of Common Stock. If, at any time from and after the Amendment and Restatement Date and
while this Note is outstanding (the "Adjustment Period"), the Company issues or sells, or, in accordance with this Section
7(c), is deemed to have issued or sold, any shares of Common Stock (excluding any Excluded Securities issued or sold or deemed to have
been issued or sold) for a consideration per share (the "New Issuance Price") less than a price equal to the Conversion
Price in effect immediately prior to such issue or sale or deemed issuance or sale (such Conversion Price then in effect is referred to
as the "Applicable Price") (the foregoing a "Dilutive Issuance"), then immediately after such Dilutive
Issuance, the Conversion Price then in effect shall be reduced to an amount equal to the greater of (i) the New Issuance Price and (ii)
the applicable Floor Price.
i.
Issuance of Options. If, during the Adjustment Period, the Company in any manner grants or sells any Options (other than
Excluded Securities) and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option
or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option (such shares of Common
Stock issuable upon such exercise of any Option or upon conversion, exercise or exchange of any Convertible Securities, the "Convertible
Securities Shares") is less than the Applicable Price, then such Common Stock shall be deemed to be outstanding and to have
been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this
Section 7(c)(i), the "lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option
or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option" shall be equal
to (A) the sum of (1) the lowest amount of consideration (if any) received or receivable by the Company (without duplication) with respect
to the granting or sale of such Option (relating to one Convertible Securities Share) or with respect to any one Convertible Securities
Share upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible
Security issuable upon exercise of such Option and (2) the lowest exercise price set forth in such Option for which one Convertible Securities
Share is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable
upon exercise of any such Option, minus (B) the sum of all amounts paid or payable to the holder of such Option (or any other Person),
with respect to any one Convertible Securities Share, upon the granting or sale of such Option, upon exercise of such Option and upon
conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option plus the value of any other consideration
received or receivable by, or benefit conferred on, the holder of such Option (or any other Person), with respect to any one Convertible
Securities Share. Except as contemplated below, no further adjustment of the Conversion Price shall be made upon the actual issuance
of such Convertible Securities Share or of such Convertible Securities upon the exercise of such Options or upon the actual issuance
of such Convertible Securities Share upon conversion, exercise or exchange of such Convertible Securities.
ii.
Issuance of Convertible Securities. If, during the Adjustment Period, the Company in any manner issues or sells any Convertible
Securities (other than Excluded Securities) and the lowest price per share for which one Convertible Securities Share is issuable upon
the conversion, exercise or exchange thereof is less than the Applicable Price, then such Convertible Securities Share shall be deemed
to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities
for such price per share. For the purposes of this Section 7(c)(ii), the "lowest price per share for which one Convertible Securities
Share is issuable upon the conversion, exercise or exchange thereof" shall be equal to (A) the sum of (1) the lowest amount of consideration
(if any) received or receivable by the Company (without duplication) with respect to the issuance or sale of such Convertible Security
(relating to one Convertible Securities Share) or with respect to one Convertible Securities Share upon the issuance or sale of the Convertible
Security and upon conversion, exercise or exchange of such Convertible Security and (2) the lowest conversion price set forth in such
Convertible Security for which one Convertible Securities Share is issuable upon conversion, exercise or exchange thereof, minus (B)
the sum of all amounts paid or payable to the holder of such Convertible Security (or any other Person), with respect to any one Convertible
Securities Share, upon the issuance or sale of such Convertible Security plus the value of any other consideration received or receivable
by, or benefit conferred on, the holder of such Convertible Security (or any other Person), with respect to any one Convertible Securities
Share. Except as contemplated below, no further adjustment of the Conversion Price shall be made upon the actual issuance of such Convertible
Securities Share upon conversion, exercise or exchange of such Convertible Securities, and if any such issue or sale of such Convertible
Securities is made upon exercise of any Options for which adjustment of the Conversion Price has been or is to be made pursuant to other
provisions of this Section 7(c), except as contemplated below, no further adjustment of the Conversion Price shall be made by reason
of such issue or sale.
iii.
Change in Option Price or Rate of Conversion. If, during the Adjustment Period, the purchase or exercise price provided
for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock
increases or decreases at any time, the Conversion Price in effect at the time of such increase or decrease shall be adjusted to the Conversion
Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased
purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted,
issued or sold. For purposes of this Section 7(c)(iii), if the terms of any Option or Convertible Security that was outstanding as of
the date of issuance of this Note are increased or decreased in the manner described in the immediately preceding sentence, then such
Option or Convertible Security and the Convertible Securities Shares deemed issuable upon exercise, conversion or exchange thereof shall
be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 7(c) shall be made if
such adjustment would result in an increase of the Conversion Price then in effect.
iv.
Calculation of Consideration Received. If any Option or Convertible Security is issued in connection with the issuance
or sale or deemed issuance or sale of any other securities of the Company (the "Primary Security", and such Option or
Convertible Security, the "Secondary Securities" and together with the Primary Security, each a "Unit"),
together comprising one integrated transaction, the aggregate consideration per share of Common Stock with respect to such Primary Security
shall be deemed to be the lowest of (x) the purchase price of such Unit, (y) if such Primary Security is an Option and/or Convertible
Security, the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise or conversion of the
Primary Security in accordance with Section 7(c)(i) or 7(c)(ii) above and (z) the arithmetic average of the VWAPs of the Common Stock
during the five Trading Day period immediately following the public announcement of such Dilutive Issuance (for the avoidance of doubt,
if such public announcement is released prior to the opening of the Principal Market on a Trading Day, such Trading Day shall be the
first Trading Day in such five Trading Day period). If any shares of Common Stock, Options or Convertible Securities are issued or sold
or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount of cash received
by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other
than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration
consists of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be
the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt.
If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with
any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair market value
of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options
or Convertible Securities (as the case may be). The fair market value of any consideration other than cash or publicly traded securities
will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the
occurrence of an event requiring valuation (the "Valuation Event"), the fair market value of such consideration will
be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser
jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties absent
manifest error and the fees and expenses of such appraiser shall be borne by the Company.
v.
Record Date. If, during the Adjustment Period, the Company takes a record of the holders of the Common Stock for the purpose
of entitling them (A) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (B)
to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the
date of the issue or sale of shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making
of such other distribution or the date of the granting of such right of subscription or purchase (as the case may be).
(d)
Stock Combination Event Adjustment. In addition to the adjustments set forth in Section 7(a) above, if at any time and from
time to time on or after the Amendment and Restatement Date there occurs any stock split, reverse stock split, stock dividend, stock combination,
recapitalization or other similar transaction involving the Common Stock (each, a "Stock Combination Event", and such
date thereof, the "Stock Combination Event Date") and the lowest VWAP of the Common Stock (the "Event Market
Price") during the 5 consecutive Trading Days commencing on the Stock Combination Event Date (such period, the "Stock
Combination Adjustment Period" provided if the Stock Combination Event is effective after close of trading on the Principal Market
(or other Eligible Market on which the Common Stock is then listed for trading), the Stock Combination Adjustment Period shall
then commence on the immediately following Trading Day) is less than the Conversion Price then in effect (after giving effect to the adjustment
in Section 7(a) above), then at the close of trading on the Principal Market (or other Eligible Market on which the Common Stock is then
listed for trading) on the last day of the Stock Combination Adjustment Period, the Conversion Price then in effect on such 5th Trading
Day shall be reduced (but in no event increased) to the greater of (i) the Event Market Price and (ii) the applicable Floor Price. For
the avoidance of doubt, if the adjustment in the immediately preceding sentence would otherwise result in an increase in the Conversion
Price hereunder, no adjustment shall be made, and if this Note is converted, on any given Conversion Date during the Stock Combination
Adjustment Period, solely with respect to such portion of this Note converted on such applicable Conversion Date, such applicable Stock
Combination Adjustment Period shall be deemed to have ended on, and included, the Trading Day immediately prior to such Conversion Date
and the Event Market Price on such applicable Conversion Date will be the lowest VWAP of the Common Stock immediately prior to the Stock
Combination Event Date and ending on, and including the Trading Day immediately prior to such Conversion Date. Notwithstanding anything
to the contrary contained herein, the provisions of this Section 7(d) shall no longer apply once the aggregate principal amount of Notes
(which, for the avoidance of doubt, includes all Amended and Restated Notes and New Notes) is less than $14 million.
(8)
OPTIONAL PREPAYMENT. The Company may prepay (each, an "Optional Prepayment") the Note in whole or in part
at any time or from time to time by paying the Holder the Optional Prepayment Price in cash by wire transaction of immediately available
funds with respect to the Conversion Amount being prepaid; provided, however, that the aggregate Conversion Amount under
this Note and the Other Notes being prepaid in any Optional Prepayment pursuant to this Section 8 (and analogous provisions under the
Other Notes) shall be at least $250,000, or such lesser amount that then remains outstanding under this Note and the Other Notes. The
Company may exercise its right to require prepayment under this Section 8 by delivering a written notice thereof by electronic mail and
overnight courier to the Holder and all, but not less than all, of the holders of the Other Notes (an "Optional Prepayment Notice"
and the date all of the holders of the Notes received such notice is referred to as the "Optional Prepayment Notice Date").
Each Optional Prepayment Notice shall be irrevocable. Each Optional Prepayment Notice shall (i) state the date on which the Optional Prepayment
shall occur (the "Optional Prepayment Date"), which date shall not be less than thirty (30) Trading Days following the
applicable Optional Prepayment Notice Date, (ii) state the aggregate Conversion Amount of the Notes which the Company has elected to be
subject to Optional Prepayment from the Holder and all of the other holders of the Other Notes pursuant to this Section 8 (and analogous
provisions under the Other Notes) on the related Optional Prepayment Date, (iii) state the aggregate Optional Prepayment Price with respect
to the Conversion Amount of Notes that the Company has elected to be subject to the Optional Prepayment (which may be required to be changed
if the Optional Prepayment Price with respect to the applicable Conversion Amount being prepaid will be calculated pursuant to clause
(ii) of the definition of Optional Prepayment Price), (iv) state whether there has been an Equity Conditions Failure and (v) contain a
certification by the Company that it does not have knowledge of any pending, proposed or intended Fundamental Transaction that is reasonably
likely to occur within six (6) months of the applicable Optional Prepayment which has not been publicly announced. If the Company confirmed
that there was no Equity Conditions Failure as of the applicable Optional Prepayment Notice Date but an Equity Conditions Failure occurred
between the applicable Optional Prepayment Notice Date and any time through the related Optional Prepayment Date (an "Optional
Prepayment Interim Period"), the Company shall provide the Holder a subsequent notice to that effect, which notice shall (x)
indicate that the Optional Prepayment Price with respect to the applicable Conversion Amount being prepaid will be calculated pursuant
to clause (ii) of the definition of Optional Prepayment Price instead of clause (i) of such definition and (y) again contain a certification
by the Company that it does not have knowledge of any pending, proposed or intended Fundamental Transaction that is reasonably likely
to occur within six (6) months of the applicable Optional Prepayment which has not been publicly announced. Immediately prior to the related
Optional Prepayment Date, the Company shall provide the Holder with the final Optional Prepayment Price with respect to the applicable
Conversion Amount being prepaid. If the Company elects to cause an Optional Prepayment pursuant to this Section 8, then it must simultaneously
take the same action in the same proportion with respect to the Other Notes. Notwithstanding anything to the contrary contained in this
Section 8, if the Company seeks to effect an Optional Prepayment with respect to any Conversion Amount and a pending, proposed or intended
Fundamental Transaction has been publicly announced at any time prior to the Optional Prepayment Date which has not been abandoned, terminated
or consummated, at the option of the Holder (without regard to any limitation in Section 3(d) on the conversion of this Note), in lieu
of receiving from the Company the Optional Prepayment Price in cash, the Holder shall instead have the right to receive upon consummation
of the applicable Fundamental Transaction, the number of shares of Common Stock of the successor or acquiring corporation or of the Company,
if it is the surviving corporation, and any additional consideration receivable as a result of such Fundamental Transaction by a holder
of the number of shares of Common Stock for which the applicable Conversion Amount is convertible immediately prior to such Fundamental
Transaction (without regard to any limitation in Section 3(d) on the conversion of this Note).
(9)
NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of
Incorporation or Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution,
issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of
this Note, and will at all times in good faith carry out all of the provisions of this Note and take all action as may be required to
protect the rights of the Holder of this Note.
(10)
RESERVATION OF AUTHORIZED SHARES.
(a)
Reservation. The Company shall reserve a number of authorized and otherwise unreserved shares of Common Stock to satisfy
its obligation to issue shares of Common Stock pursuant to the terms of this Note and the Other Notes equal to the maximum number of Conversion
Shares issuable pursuant to the terms of the Notes (without regard to any limitation in Section 3(d) on the conversion of this Note and
assuming a Conversion Price equal to 50% of the Transaction Price ) (as applicable, the "Required Reserve Amount"). So
long as any of this Note and the Other Notes are outstanding, the Company shall take all action necessary to reserve and keep available
out of its authorized and unissued Common Stock the Required Reserve Amount solely for the purpose of issuing shares of Common
Stock pursuant to the terms of this Note and the Other Notes. The initial number of shares of Common Stock reserved for issuances pursuant
to the terms of this Note and the Other Notes and each increase in the number of shares so reserved shall be allocated pro rata among
the Holder and the holders of the Other Notes based on the Principal amount of this Note and the Other Notes held by each holder at the
Closing (as defined in the New Securities Purchase and Exchange Agreement) (the "Authorized Share Allocation"). In the
event that a holder shall sell or otherwise transfer this Note or any of such holder's Other Notes, each transferee shall be allocated
a pro rata portion of such holder's Authorized Share Allocation with respect to the portion of the Notes being transferred. Any shares
of Common Stock reserved and allocated to any Person which ceases to hold any Notes shall be allocated to the Holder and the remaining
holders of Other Notes, pro rata based on the Principal amount of this Note and the Other Notes then held by such holders.
(b)
Insufficient Authorized Shares. If at any time while any of the Notes remain 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 Notes
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 Notes then outstanding. Without limiting the generality of the foregoing
sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60)
days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of
an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder
with a proxy statement and shall use its best efforts to solicit its stockholders' approval of such increase in authorized shares of
Common Stock and to cause its Board of Directors to recommend to the stockholders that they approve such proposal. Notwithstanding the
foregoing, if during any such time of an Authorized Share Failure, the Company is able to obtain the written consent of a majority of
the shares of its issued and outstanding Common Stock to approve the increase in the number of authorized shares of Common Stock, the
Company may satisfy this obligation by obtaining such consent and submitting for filing with the SEC an Information Statement on Schedule
14C. If, upon any conversion of this Note, the Company does not have sufficient authorized shares to deliver in satisfaction of such
conversion, then unless the Holder elects to rescind such attempted conversion, the Holder may require the Company to pay to the Holder
within two (2) Trading Days of the applicable attempted conversion, cash in an amount equal to the product of (i) the number of shares
of Common Stock that the Company is unable to deliver pursuant to this Section 10, and (ii) the highest Closing Sale Price of the Common
Stock during the period beginning on the date of the applicable Conversion Date and ending on the date the Company makes the applicable
cash payment.
(11)
REDEMPTIONS.
(a)
Mechanics. The Company shall deliver the applicable Event of Default Redemption Price to the Holder within three (3) Business
Days after the Company's receipt of the Holder's Event of Default Redemption Notice; provided that upon a Bankruptcy Event of Default,
the Company shall deliver the applicable Bankruptcy Event of Default Redemption Price in accordance with Section 4(c) (as applicable,
the "Event of Default Redemption Date"). If the Holder has submitted a Change of Control Redemption Notice in accordance
with Section 5(b), the Company shall deliver the applicable Change of Control Redemption Price to the Holder (i) concurrently with the
consummation of such Change of Control if such notice is received prior to the consummation of such Change of Control and (ii) within
three (3) Business Days after the Company's receipt of such notice otherwise (such date, the "Change of Control Redemption Date").
The Company shall deliver the applicable Optional Prepayment Price to the Holder on the applicable Optional Prepayment Date. The Company
shall pay the applicable Redemption Price to the Holder in cash by wire transfer of immediately available funds pursuant to wire instructions
provided by the Holder in writing to the Company on the applicable due date. In the event of a redemption of less than all of the 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
18(d)) representing the outstanding Principal which has not been redeemed and any accrued Interest on such Principal which shall be calculated
as if no Redemption Notice has been delivered. In the event that the Company does not pay a Redemption Price to the Holder within the
time period required, at any time thereafter and until the Company pays such unpaid Redemption Price in full, the Holder shall have the
option, in lieu of redemption, to require the Company to promptly return to the Holder all or any portion of this Note representing the
Conversion Amount that was submitted for redemption and for which the applicable Redemption Price has not been paid. Upon the Company's
receipt of such notice, (x) the applicable Redemption Notice shall be null and void with respect to such Conversion Amount, (y) the Company
shall immediately return this Note, or issue a new Note (in accordance with Section 18(d)) to the Holder representing such Conversion
Amount to be redeemed and (z) the Conversion Price of this Note or such new Notes shall be adjusted to the lesser of (A) the Conversion
Price as in effect on the date on which the applicable Redemption Notice is voided and (B) the lowest Closing Bid Price of the Common
Stock during the period beginning on and including the date on which the applicable Redemption Notice is delivered to the Company and
ending on and including the date on which the applicable Redemption Notice is voided.
(b)
Redemption by Other Holders. Upon the Company's receipt of notice from any of the holders of the Other Notes for redemption
or repayment as a result of an event or occurrence substantially similar to the events or occurrences described in Section 4(b), Section
5(b) or Section 8 or pursuant to corresponding provisions set forth in the Other Notes (each, an "Other Redemption Notice"),
the Company shall immediately, but no later than one (1) Business Day of its receipt thereof, forward to the Holder by electronic mail
a copy of such notice. If the Company receives a Redemption Notice and one or more Other Redemption Notices, during the seven (7) Business
Day period beginning on and including the date which is three (3) Business Days prior to the Company's receipt of the Holder's Redemption
Notice and ending on and including the date which is three (3) Business Days after the Company's receipt of the Holder's Redemption Notice
and the Company is unable to redeem all principal, interest and other amounts designated in such Redemption Notice and such Other Redemption
Notices received during such seven (7) Business Day period, then the Company shall redeem, a pro rata amount from the Holder and each
holder of the Other Notes based on the Principal amount of this Note and the Other Notes submitted for redemption pursuant to such Redemption
Notice and such Other Redemption Notices received by the Company during such seven (7) Business Day period.
(c)
Insufficient Assets. If upon a Redemption Date, the assets of the Company are insufficient to pay the applicable Redemption
Price, the Company shall (i) take all appropriate action reasonably within its means to maximize the assets available for paying the applicable
Redemption Price, (ii) redeem out of all such assets available therefor on the applicable Redemption Date the maximum possible portion
of the applicable Redemption Price that it can redeem on such date, pro rata among the Holder and the holders of the Other Notes to be
redeemed in proportion to the aggregate Principal amount of this Note and the Other Notes outstanding on the applicable Redemption Date
and (iii) following the applicable Redemption Date, at any time and from time to time when additional assets of the Company become available
to pay the balance of the applicable Redemption Price of this Note and the Other Notes, the Company shall use such assets, at the end
of the then current fiscal quarter, to pay the balance of such Redemption Price of this Note and the Other Notes, or such portion thereof
for which assets are then available, on the basis set forth above at the applicable Redemption Price, and such assets will not be used
prior to the end of such fiscal quarter for any other purpose. Interest on the Principal amount of this Note and the Other Notes that
have not been redeemed shall continue to accrue until such time as the Company redeems this Note and the Other Notes. The Company shall
pay to the Holder the applicable Redemption Price without regard to the legal availability of funds unless expressly prohibited by applicable
law or unless the payment of the applicable Redemption Price could reasonably be expected to result in personal liability to the directors
of the Company.
(12)
VOTING RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law and as expressly
provided in this Note.
(13)
RANK. All payments due under this Note (a) shall rank pari passu with all Other Notes and (b) shall be senior to
all other Indebtedness of the Company and its Subsidiaries.
(14)
NEGATIVE COVENANTS. Except as noted below, until all of the Notes have been converted, redeemed or otherwise satisfied in
full in accordance with their terms, the Company shall not, and the Company shall not permit any of its Subsidiaries without the prior
written consent of the Required Holders to, directly or indirectly by merger or otherwise:
(a)
while more than twenty percent (20.0%) of the Notes remain outstanding, incur or guarantee, assume or suffer to exist any Indebtedness,
other than Permitted Indebtedness;
(b)
allow or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or
assets (including accounts and contract rights) owned by the Company or any of its Subsidiaries (collectively, "Liens")
other than Permitted Liens;
(c)
redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or
in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any Indebtedness
(other than this Note and the Other Notes), whether by way of payment in respect of principal of (or premium, if any) or interest on,
such Indebtedness if at the time such payment is due or is otherwise made or, after giving effect to such payment, an event constituting,
or that with the passage of time and without being cured would constitute, an Event of Default has occurred and is continuing;
(d)
redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or
in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any Indebtedness
(including, without limitation Permitted Indebtedness other than this Note and the Other Notes), by way of payment in respect of principal
of (or premium, if any) such Indebtedness. For clarity, such restriction shall not preclude the payment of regularly scheduled interest
payments which may accrue under such Permitted Indebtedness;
(e)
redeem or repurchase any Equity Interest of the Company;
(f)
declare or pay any cash dividend or distribution on any Equity Interest of the Company or of its Subsidiaries other than wholly-owned
Subsidiaries;
(g)
make, any change in the nature of its business as described in the Company's most recent Annual Report filed on Form 10-K with
the SEC or modify its corporate structure or purpose; or
(h)
encumber, license or otherwise allow any Liens on any Intellectual Property Rights, including, without limitation, any claims for
damage by way of any past, present, or future infringement of any of the foregoing, in each case, other than Permitted Liens;
(i)
enter into, renew, extend or be a party to, any transaction or series of related transactions (including, without limitation, the
purchase, sale, lease, license, transfer or exchange of property or assets of any kind or the rendering of services of any kind) with
any Affiliate, except in the ordinary course of business in a manner and to an extent consistent with past practice and necessary or desirable
for the prudent operation of its business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would
be obtainable in a comparable arm's length transaction with a Person that is not an Affiliate thereof; or
(j)
issue any Notes or issue any other securities that would cause a breach or default under the Notes.
(15)
AFFIRMATIVE COVENANTS. Until all of the Notes have been converted, redeemed or otherwise satisfied in full in accordance
with their terms, the Company shall, and the Company shall cause each Subsidiary to, unless otherwise agreed to by the Required Holders,
directly and indirectly:
(a)
maintain and preserve its existence, rights and privileges, and become or remain duly qualified and in good standing in each jurisdiction
in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary;
(b)
maintain and preserve all of its properties which are necessary or useful in the proper conduct of its business in good working
order and condition, ordinary wear and tear excepted, and comply at all times with the provisions of all leases to which it is a party
as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof or thereunder;
(c)
take all action necessary or advisable to maintain all of the Intellectual Property Rights that is necessary or material to the
conduct of its business in full force and effect;
(d)
maintain insurance with responsible and reputable insurance companies or associations (including, without limitation, comprehensive
general liability, hazard, rent and business interruption insurance) with respect to its properties (including all real properties leased
or owned by it) and business, in such amounts and covering such risks as is required by any governmental authority having jurisdiction
with respect thereto or as is carried generally in accordance with sound business practice by companies in similar businesses similarly
situated;
(e)
cause such Subsidiary formed on or after the Amendment and Exchange Date to execute, and deliver to each holder of Notes a guaranty
agreement in form and substance reasonably acceptable to the Required Holders;
(f)
promptly, but in any event within one (1) Business Day, notify the Holder and the holders of the Other Notes in writing whenever
an Event of Default (an "Event of Default Notice") or an Equity Conditions Failure occurs, and simultaneously with the
delivery of such notice to the Holder and the holders of the Other Notes, file a Current Report on Form 8-K with the SEC to state such
fact; and
(g)
shall have on deposit on June 30, 2024, unrestricted and unencumbered cash in an aggregate amount equal to not less than $5,000,000;
provided, however, from and after the date that less than $15,000,000 of the sum of (x) the Conversion Amount of this Note
and (y) the Conversion Amounts (as defined in the Other Notes) of all Other Notes remain outstanding; the amount of such cash that the
Company is required to maintain on deposit pursuant to this Section 15(g) may be decreased on a dollar-for-dollar basis based on the sum
of (i) the Conversion Amount of this Note and (ii) the Conversion Amounts (as defined in the Other Notes) of all Other Notes, in each
case, that is then outstanding. In satisfying the requirements set forth in this Section 15(g), the Company and its Subsidiaries shall
use its working capital and lines of credit in the ordinary course of business, consistent with past practice, including, without limitation,
paying its accounts payable on terms consistent with past practice.
(h)
From and after January 1, 2024, the monthly Operating Expenses shall not exceed $900,000 in any calendar month, calculated on an
accrual basis in accordance with GAAP. Between 4:00 pm (New York time) and 6:00 pm (New York time) on the first Friday following the end
of each calendar month, the Company shall send the Collateral Agent a written notice indicating whether the Company is in compliance with
the foregoing sentence. If the Company at any time is not in compliance with the first sentence of this provision, unless otherwise agreed
by the Required Holders, the Company shall (i) publicly disclose its non-compliance no later than 9:00 am (New York time) on the first
Monday after the applicable attestation date and (ii) pay by wire transfer of immediately available funds to the Collateral Agent for
the benefit of each of the Noteholders an amount equal to $1,000,000 in the aggregate for all Noteholders within one Business Day of the
attestation day, which payment shall be applied to the Notes in accordance with the terms hereof.
(i)
From and after December 1, 2023, at least one Company employee shall be onsite at the GLV Puebla facility not less than four days
per calendar week (reduced by one day for each business holiday during such week). Such employee shall report directly to the Chief Executive
Officer of the Company and shall provide daily progress / issues reports in writing at the close of business on each such day (local time).
Such report shall include the following information: (1) the number of Volcon Stags in process and the stage of progress of in process
Volcon Stags (ranked 1 to 9 to represent stage, with a 10 ranking representing a completed Stag), (2) the number of completed Volcon Stags
awaiting shipping, (3) current list of non-GLV inventory held at the GLV Puebla Facility (laid out by Stag), (4) the number of Volcon
Stags able to be manufactured with onsite inventory, (5) the rate limiting issues (missing inventory/parts, expected timing of missing
inventory) and (6) the expected number of Volcon Stags to be completed over the following 30 day period (on a rolling basis each day).
Between 4:00pm (New York time) and 6:00pm (New York time) on the first Friday following the end of each calendar month, the Company shall
send the Collateral Agent a written notice indicating whether the Company is in compliance with the foregoing sentence. If the Company
at any time is not in compliance with the first sentence of this provision, unless otherwise agreed by the Required Holders, the Company
shall (i) publicly disclose its non-compliance no later than 9:00 am (New York time) on the first Monday after the applicable attestation
date and (ii) pay by wire transfer of immediately available funds to the Collateral Agent for the benefit of each of the Noteholders an
amount equal to $100,000 in the aggregate for all Noteholders for each calendar week of non-compliance within one Business Day of the
attestation day, which payment shall be applied to the Notes in accordance with the terms hereof.
(j)
From and after November 15, 2023, other than payments to General Motors and the first $3,100,000 payment to Power Control Systems,
no payments to third-party suppliers for which payment obligations have been transferred from GLV to the Company shall be for an amount
greater than the value of the parts from that supplier that are currently installed on completed vehicles that are crated and ready to
be shipped. Between 4:00pm (New York time) and 6:00pm (New York time) on the first Friday following the end of each calendar month, the
Company shall send the Collateral Agent a written notice indicating whether the Company is in compliance with the foregoing sentence.
If the Company at any time is not in compliance with the first sentence of this provision, unless otherwise agreed by the Required Holders,
the Company shall (i) publicly disclose its non-compliance no later than 9:00 am (New York time) on the first Monday after the applicable
attestation date and (ii) pay by wire transfer of immediately available funds to the Collateral Agent for the benefit of each of the Noteholders
an amount equal to $100,000 in the aggregate for all Noteholders for each non-compliance event within one Business Day of the attestation
day, which payment shall be applied to the Notes in accordance with the terms hereof.
(16)
VOTE TO ISSUE, OR CHANGE THE TERMS OF, NOTES. The affirmative vote at a meeting duly called for such purpose or the written
consent without a meeting of the Required Holders shall be required for any exchange, change or amendment or waiver of any provision to
this Note or any of the Other Notes. Any exchange, change, amendment or waiver by the Company and the Required Holders shall be binding
on the Holder of this Note and all holders of the Other Notes. The Holder hereby acknowledges and agrees that any action taken pursuant
to this Section may result in, or be perceived to result in, a disproportionate impact on the Holder compared to the impact of such action
on one or more holder(s) of Other Notes. This provision constitutes a separate right granted to each of the holders of Notes by the Company
and shall not in any way be construed as such holders acting in concert or as a group with respect to the purchase, disposition
or voting of securities or otherwise.
(17)
TRANSFER. This Note 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 4.1 of the Original Securities
Purchase Agreement.
(18)
REISSUANCE OF THIS NOTE.
(a)
Transfer. If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company
will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section 18(d) and subject to Section 3(c)(iii)),
registered as the Holder may request, representing the outstanding Principal being transferred by the Holder and, if less than the entire
outstanding Principal is being transferred, a new Note (in accordance with Section 18(d)) to the Holder representing the outstanding Principal
not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions
of Section 3(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, and, in the case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary form (but without any obligation to post a surety or other bond) and, in the case of mutilation, upon
surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note (in accordance with Section 18(d))
representing the outstanding Principal.
(c)
Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the
principal office of the Company, for a new Note or Notes (in accordance with Section 18(d)) representing in the aggregate the outstanding
Principal of this Note, and each such new Note will represent such portion of such outstanding Principal as is designated by the Holder
at the time of such surrender.
(d)
Issuance of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new
Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining
outstanding (or in the case of a new Note being issued pursuant to Section 18(a) or Section 18(c), the Principal designated by the Holder
which, when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the Principal
remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated
on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions as this
Note, and (v) shall represent accrued and unpaid Interest, if any, from the Issuance Date.
(19)
REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Note shall
be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents (to the extent
the Holder is a party to such Transaction Document) at law or in equity (including a decree of specific performance and/or other injunctive
relief). No remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy. Nothing herein
shall limit the Holder's right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this
Note. The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided
herein. Amounts set forth or provided for herein with respect to payments, conversion, redemption and the like (and the computation thereof)
shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation
of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable
harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of
any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining
any breach, without the necessity of showing economic loss and without any bond or other security being required.
(20)
PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection
or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under
this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company or
other proceedings affecting Company creditors' rights and involving a claim under this Note, then the Company shall pay the costs incurred
by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other
proceeding, including, but not limited to, attorneys' fees and disbursements. The Company expressly acknowledges and agrees that no amounts
due under this Note shall be affected, or limited, by the fact that the purchase price paid for this Note was less than the original Principal
amount hereof.
(21)
CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly drafted by the Company and all the Purchasers and shall
not be construed against any Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form
part of, or affect the interpretation of, this Note.
(22)
FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing and signed
by an authorized representative of the waiving party.
(23)
DISPUTE RESOLUTION. In the case of a dispute as to the determination of the Closing Bid Price or the Closing Sale Price
or the arithmetic calculation of the Conversion Rate, the Conversion Price or any Redemption Price, the Company shall pay the applicable
Redemption Price that is not disputed or shall cause the Transfer Agent to issue to the Holder the number of shares of Common Stock that
is not disputed, and the Company shall submit the disputed determinations or arithmetic calculations via electronic mail within one (1)
Business Day of receipt, or deemed receipt, of the Conversion Notice or Redemption Notice or other event giving rise to such dispute,
as the case may be, to the Holder. If the Holder and the Company are unable to agree upon such determination or calculation within one
(1) Business Day of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within
one (1) Business Day submit via electronic mail (a) the disputed determination of the Closing Bid Price or the Closing Sale Price to
an independent, reputable investment bank selected by the Required Holders and approved by the Company, such approval not to be unreasonably
withheld, conditioned or delayed, or (b) the disputed arithmetic calculation of the Conversion Rate, Conversion Price or any Redemption
Price to an independent, outside accountant, selected by the Required Holders and approved by the Company, such approval not to be unreasonably
withheld, conditioned or delayed. The Company, at the Company's expense, shall cause the investment bank or the accountant, as the case
may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than five (5) Business
Days from the time it receives the disputed determinations or calculations. Such investment bank's or accountant's determination or calculation,
as the case may be, shall be binding upon all parties absent demonstrable error.
(24)
NOTICES; PAYMENTS.
(a)
Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be
given in accordance with Section 5.4 of the Original Securities Purchase Agreement. The Company shall provide the Holder with prompt written
notice of all actions taken pursuant to this Note, including in reasonable detail a description of such action and the reason therefor.
Without limiting the generality of the foregoing, the Company shall give written notice to the Holder (i) immediately upon any adjustment
of the Conversion Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least twenty
(20) Business Days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution
upon the shares of Common Stock, (B) respect to any grants, issuances or sales of any Options, Convertible Securities or rights to purchase
stock, warrants, securities or other property to holders of shares of Common Stock or (C) for determining rights to vote with respect
to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public
prior to or in conjunction with such notice being provided to the Holder.
(b)
Payments. Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, such payment shall
be made in lawful money of the United States of America via wire transfer of immediately available funds to an account designated by the
Holder; provided, that the Holder, upon written notice to the Company, may elect to receive a payment of cash in lawful money of
the United States of America by a check drawn on the account of the Company and sent via overnight courier service to such Person at such
address as previously provided to the Company in writing (which address, in the case of each of the Purchasers, shall initially be as
set forth on the signature pages attached to the Original Securities Purchase Agreement). Whenever any amount expressed to be due by the
terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is a
Business Day.
(25)
CANCELLATION. After all Principal, any accrued Interest and any other amounts at any time owed on this Note have been paid
in full, this Note shall automatically be deemed canceled and shall not be reissued, sold or transferred.
(26)
WAIVER OF NOTICE. To the extent permitted by law, the Company hereby waives demand, notice, protest and all other demands
and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Original Securities
Purchase Agreement.
(27)
GOVERNING LAW; JURISDICTION; JURY TRIAL. This Note shall be governed by and construed and enforced in accordance with,
and all questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the internal
laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of
New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.
The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York,
Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or
that the venue of such suit, action or proceeding is improper. The Company hereby irrevocably waives personal service of process and consents
to process being served in any such suit, action or proceeding by mailing a copy thereof to the Company at the address set forth on the
Company's signature page to the Original Securities Purchase Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other
legal action against the Company in any other jurisdiction to collect on the Company's obligations to the Holder, to realize on any collateral
or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR
IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.
(28)
SEVERABILITY. If any provision of this Note is prohibited by law or otherwise determined to be invalid or unenforceable
by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended
to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall
not affect the validity of the remaining provisions of this Note so long as this Note as so modified continues to express, without material
change, the original intentions of the Company and the Holder as to the subject matter hereof and the prohibited nature, invalidity or
unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations
of the Company or the Holder or the practical realization of the benefits that would otherwise be conferred upon the Company or the Holder.
The Company and the Holder will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s)
with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
(29)
DISCLOSURE. Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the
Company has in good faith determined that the matters relating to such notice do not constitute material, nonpublic information relating
to the Company or its Subsidiaries, the Company shall contemporaneously with any such receipt or delivery publicly disclose such material,
nonpublic information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains material,
nonpublic information relating to the Company or its Subsidiaries, the Company so shall indicate to the Holder contemporaneously with
delivery of such notice, and in the absence of any such indication, the Holder shall be allowed to presume that all matters relating to
such notice do not constitute material, nonpublic information relating to the Company or its Subsidiaries.
(30)
USURY. This Note is subject to the express condition that at no time shall the Company be obligated or required to pay interest
hereunder at a rate or in an amount which could subject the Holder to either civil or criminal liability as a result of being in excess
of the maximum interest rate or amount which the Company is permitted by applicable law to contract or agree to pay. If by the terms of
this Note, the Company is at any time required or obligated to pay interest hereunder, including by way of an original issue discount,
at a rate or in an amount in excess of such maximum rate or amount, the rate or amount of interest under this Note shall be deemed to
be immediately reduced to such maximum rate or amount and the interest payable shall be computed at such maximum rate or be in such maximum
amount and all prior interest payments in excess of such maximum rate or amount shall be applied and shall be deemed to have been payments
in reduction of the principal balance of this Note.
(31)
CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:
(a)
"Adjustment Right" means any right granted with respect to any securities issued in connection with, or with respect
to, any issuance or sale (or deemed issuance or sale in accordance with this Section 7(c)) of Common Stock (other than rights of the type
described in Sections 7(a) and (b)) that could result in a decrease in the net consideration received by the Company in connection with,
or with respect to, such securities (including, without limitation, any cash settlement rights, cash adjustment or other similar rights).
(b)
"Affiliate" shall have the meaning ascribed to such term in Rule 405 of the Securities Act.
(c)
"Attribution Parties" means, collectively, the following Persons: (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 Person whose beneficial ownership of the Common Stock would or could be aggregated with the Holder's and the other
Attribution Parties for purposes of Section 13(d) of the Exchange Act. For clarity, the purpose of the foregoing is to subject collectively
the Holder and all other Attribution Parties to the Maximum Percentage.
(d)
"Authorized Stockholder Approval Date" shall have the meaning ascribed to such term in the New Securities Purchase
and Exchange Agreement.
(e)
"Bloomberg" means Bloomberg Financial Markets.
(f)
"Business Day" means any day other than Saturday, Sunday or other day on which commercial banks in The City of
New York are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall
not be deemed to be authorized or required by law to remain closed due to "stay at home", "shelter-in-place", "non-
essential employee" or any other similar orders or restrictions or the closure of any physical branch locations at the direction
of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The
City of New York, New York generally are open for use by customers on such day.
(g)
"Change of Control" means any Fundamental Transaction other than (i) any reorganization, recapitalization or reclassification
of the Common Stock in which holders of the Company's voting power immediately prior to such reorganization, recapitalization or reclassification
continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly,
are the holders of a majority of the voting power of the surviving entity (or entities with the authority or voting power to elect the
members of the board of directors (or their equivalent if other than a corporation) of such entity or entities) after such reorganization,
recapitalization or reclassification or (ii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction
of incorporation of the Company.
(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 on the Pink Open Market (f/k/a
OTC Pink) published by OTC Markets Group, Inc. (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 pursuant to Section 23. All such determinations to be appropriately adjusted for any stock
dividend, stock split, stock combination, reclassification or other similar transaction relating to the Common Stock during the applicable
calculation period.
(i)
“Collateral Agent” means Empery Tax Efficient, LP, as collateral agent, pursuant to that certain Collateral
Agent Agreement dated as of September 22, 2023 by and among the noteholders party thereto and Empery Tax Efficient, LP (as amended).
(j)
"Common Stock" means (i) the Company's shares of common stock, par value $0.00001 per share, and (ii) any capital
stock into which such Common Stock shall be changed or any capital stock resulting from a reorganization, recapitalization or reclassification
of such Common Stock.
(k)
"Contingent Obligation" means, as to any Person, any direct or indirect liability, contingent or otherwise, of
that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of
the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such
liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability
will be protected (in whole or in part) against loss with respect thereto.
(l)
"Conversion Shares" means shares of Common Stock issuable by the Company pursuant to the terms of any of the Notes,
including any related Interest so converted.
(m)
"Convertible Securities" means any stock or securities (other than Options) directly or indirectly convertible
into or exercisable or exchangeable for shares of Common Stock.
(n)
"Eligible Market" means the Principal Market, The New York Stock Exchange, The Nasdaq Global Market, The Nasdaq
Global Select Market or the NYSE American.
(o)
"Equity Conditions" means each of the following conditions:
(i)
on each day during the applicable Equity Conditions Measuring Period, either (x) one or more Registration Statements required to
be filed pursuant to the Registration Rights Agreement (to the extent the Holder is a party to the Registration Rights Agreement) shall
be effective and available for the resale of all remaining Registrable Securities, including the shares of Common Stock issuable upon
conversion of the Conversion Amount that is subject to the applicable Mandatory Conversion or Optional Prepayment, in accordance with
the terms of the Registration Rights Agreement and there shall not have been any suspension of such Registration Statement(s) or (y) all
Registrable Securities, including the shares of Common Stock issuable upon conversion of the Conversion Amount that is subject to the
applicable Mandatory Conversion or Optional Prepayment, shall be eligible for sale without restriction pursuant to Rule 144 (assuming
that all Warrants were exercised pursuant to a cashless exercise (as described in the Warrants)) and without the need for registration
under any applicable federal or state securities laws;
(ii)
on each day during the applicable Equity Conditions Measuring Period, the Common Stock is designated for quotation on the Principal
Market or any other Eligible Market and shall not have been suspended from trading on such exchange or market nor shall delisting or suspension
by such exchange or market been threatened, commenced or pending, which delisting would occur during the Equity Conditions Measuring Period
or within twenty (20) Trading Days thereafter, either (A) in writing by such exchange or market or (B) by falling below the then
effective minimum listing maintenance requirements of such exchange or market;
(iii)
during the applicable Equity Conditions Measuring Period, the Company shall have delivered shares of Common Stock pursuant to the
terms of this Note and the Other Notes and shares of Common Stock upon exercise of the Warrants to the holders on a timely basis as set
forth in Section 3(c) hereof (and analogous provisions under the Other Notes) and Section 2 of the Warrants;
(iv)
the shares of Common Stock issuable upon conversion of the Conversion Amount that is subject to the applicable Mandatory Conversion
or Optional Prepayment may be issued in full without violating Section 3(d) hereof and the rules or regulations of the Principal Market
or other applicable Eligible Market;
(v)
during the applicable Equity Conditions Measuring Period, the Company shall not have failed to timely make any payments within
five (5) Business Days of when such payment is due pursuant to any Transaction Document (to the extent the Holder is a party to such Transaction
Document);
(vi)
during the applicable Equity Conditions Measuring Period solely with respect to a Mandatory Conversion, (x) there shall not have
occurred either (A) the public announcement of a pending, proposed or intended Fundamental Transaction which has not been abandoned, terminated
or consummated, (B) an Event of Default or (C) an event that with the passage of time or giving of notice would constitute an Event of
Default and (y) the Company shall not have knowledge of any pending, proposed or intended Fundamental Transaction that is reasonably likely
to occur within six (6) months of either a Mandatory Conversion or Optional Prepayment, as applicable, which has not been publicly announced;
(vii)
during the applicable Equity Conditions Measuring Period solely with respect to an Optional Prepayment, there shall not have occurred
either (A) an Event of Default or (B) an event that with the passage of time or giving of notice would constitute an Event of Default;
(viii)
the Company shall have no knowledge of any fact that would cause (x) one or more Registration Statement(s) required to be filed
pursuant to the Registration Rights Agreement (to the extent the Holder is a party to the Registration Rights Agreement) not to be effective
and available for the resale of all remaining Registrable Securities, including the shares of Common Stock issuable upon conversion of
the Conversion Amount that is subject to the applicable Mandatory Conversion or Optional Prepayment, in accordance with the terms of the
Registration Rights Agreement, or (y) any Registrable Securities, including the shares of Common Stock issuable upon conversion of the
Conversion Amount that is subject to the applicable Mandatory Conversion or Optional Prepayment, not to be eligible for sale without restriction
pursuant to Rule 144 (or any successor thereto) promulgated under the Securities Act and any applicable state securities laws;
(ix)
during the applicable Equity Conditions Measuring Period, the Company otherwise shall have been in compliance with and shall not
have breached any provision, covenant, representation or warranty of any Transaction Document (to the extent the Holder is a party to
such Transaction Document);
(x)
during the applicable Equity Conditions Measuring Period, the Holder shall not have been in possession of any material, nonpublic
information received from the Company, any Subsidiary or its respective agent or affiliates; and
(xi)
the shares of Common Stock issuable upon conversion of the Conversion Amount that is subject to applicable Mandatory Conversion
or Optional Prepayment requiring the satisfaction of the Equity Conditions are duly authorized and listed and eligible for trading without
restriction on a Qualified Eligible Market.
(p)
"Equity Conditions Failure" means that on the applicable date of determination through the applicable date of
determination, the Equity Conditions have not each been satisfied or waived in writing by the Required Holders; provided, however,
that the Equity Condition set forth in clause (iv) of such definition is not waivable by the Required Holders.
(q)
"Equity Conditions Measuring Period" means each day during the period beginning ten (10) Trading Days immediately
prior to the applicable date of determination and ending on and including the applicable date of determination.
(r)
"Equity Interests" means (a) all shares of capital stock (whether denominated as common capital stock or preferred
capital stock), equity interests, beneficial, partnership or membership interests, joint venture interests, participations or other ownership
or profit interests in or equivalents (regardless of how designated) of or in a Person (other than an individual), whether voting or non-voting
and (b) all securities convertible into or exchangeable for any of the foregoing and all warrants, Options or other rights to purchase,
subscribe for or otherwise acquire any of the foregoing, whether or not presently convertible, exchangeable or exercisable.
(s)
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
(t)
"Excluded Securities" means any issuance of Common Stock, restricted stock units, Options and/or Convertible
Securities (i) under the Company's current or future equity incentive plans or issued to employees, consultants, service providers, directors
or officers as compensation or consideration in the ordinary course of business, including any issuance of Options (and the underlying
shares of Common Stock) in exchange for Options issued under the Company's equity incentive plans; provided, that the issuances
to consultants and service providers in this clause (i) shall be limited to Common Stock and Options and the aggregate number of shares
of Common Stock issued, and/or issuable upon exercise of Options, shall not exceed 1,000,000 shares (as adjusted for any stock dividend,
stock split, stock combination, reclassification or similar transaction relating to the Common Stock after the Amendment and Exchange
Date), (ii) issued pursuant to agreements, Options, restricted stock units, Convertible Securities or Adjustment Rights existing as of
the date hereof, provided that such agreements, Options, Convertible Securities or Adjustment Rights have not been amended since the
initial issuance date of this Note to increase the number of such securities or decrease the exercise price, exchange price or conversion
price of such securities, (iii) issued pursuant to acquisitions (whether by merger, consolidation, purchase of equity, purchase of assets,
reorganization or otherwise), mergers, consolidations, reorganizations or strategic transactions approved by a majority of the disinterested
directors of the Company, provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself
or through its Subsidiaries, an operating company or an owner of an asset in a business complementary with the business of the Company
and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which
the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in
securities, (iv) to which the Required Holders consent in writing, (v) any securities issued pursuant to that certain Registration Statement
on Form S-1 (file no. 333-274800) (as amended and/or supplemented), including Common Stock, Pre-Funded Warrants, Series A Warrants and
Series B Warrants (and the Common Stock underlying the Pre-Funded Warrants, Series A Warrants and Series B Warrants) (each of them as
(i) may be amended, modified or revised from time to time, in each case with the consent of the Required Holders and/or (ii) may be exchanged
for other securities of the Company from time to time, in each case with the consent of the Required Holders).
(u)
"Floor Price" means $0.22.
(v)
"Fundamental Transaction" means (A) that the Company shall, directly or indirectly, including through Subsidiaries,
Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the
surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all
of the properties or assets of the Company or any of its "significant subsidiaries" (as defined in Rule 1-02 of Regulation
S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject
to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that
is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of
Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with any Subject
Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number of shares of Common Stock
such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such purchase, tender or
exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the Exchange Act) of at least 50% of the outstanding
shares of Common Stock, or (iv) consummate a stock purchase agreement or other business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of arrangement) with one or more Subject Entities whereby such Subject Entities,
individually or in the aggregate, acquire, either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the
outstanding shares of Common Stock calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or
Affiliated with any Subject Entity making or party to, such stock purchase agreement or other business combination were not outstanding;
or (z) such number of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in
Rule 13d-3 under the Exchange Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify
its Common Stock, (B) that the Company shall, directly or indirectly, including through Subsidiaries, Affiliates or otherwise, in one
or more related transactions allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, whether through acquisition, purchase, assignment,
conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination,
reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise
in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common
Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such
Subject Entities as of the Subscription Date calculated as if any shares of Common Stock held by all such Subject Entities were not outstanding,
or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock or other equity
securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger or other transaction requiring
other stockholders of the Company to surrender their shares of Common Stock without approval of the stockholders of the Company or (C)
that the Company shall, directly or indirectly, including through Subsidiaries, Affiliates or otherwise, in one or more related
transactions, the issuance of or the entering into any other instrument or transaction structured in a manner to circumvent, or that
circumvents, the intent of this definition in which case this definition shall be construed and implemented in a manner otherwise than
in strict conformity with the terms of this definition to the extent necessary to correct this definition or any portion of this definition
which may be defective or inconsistent with the intended treatment of such instrument or transaction.
(w)
"GAAP" means United States generally accepted accounting principles, consistently applied during the periods involved.
(x)
"Group" means a "group" as that term is used in Section 13(d) of the Exchange Act and as defined in
Rule 13d-5 thereunder.
(y)
"Indebtedness" of any Person means, without duplication (i) all indebtedness for borrowed money, (ii) all obligations
issued, undertaken or assumed as the deferred purchase price of property or services, including (without limitation) "finance leases"
in accordance with GAAP (other than trade payables entered into in the ordinary course of business consistent with past practice), (iii)
all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (iv) all obligations
evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses, (v) all indebtedness created or arising under any conditional sale or other title retention agreement,
or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale
of such property), (vi) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, is classified
as a finance lease, (vii) all indebtedness referred to in clauses (i) through (vi) above secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any mortgage, deed of trust, lien, pledge, charge, security interest
or other encumbrance of any nature whatsoever in or upon any property or assets (including accounts and contract rights) with respect
to any asset or property owned by any Person, even though the Person which owns such assets or property has not assumed or become liable
for the payment of such indebtedness, and (vii) all Contingent Obligations in respect of indebtedness or obligations of others of the
kinds referred to in clauses
(i)
through (vii) above.
(z)
"Intellectual Property Rights" shall have the meaning ascribed to such term in the Original Securities Purchase
Agreement.
(aa)
"Material Adverse Effect" shall have the meaning ascribed to such term in the Original Securities Purchase Agreement.
(aa) "Nasdaq
Stockholder Approval Date" shall have the meaning ascribed to such term in the New Securities Purchase and Exchange Agreement.
(bb) "New
Closing Date" shall have the meaning ascribed to the term "Closing Date" set forth in the New Securities Purchase and
Exchange Agreement.
(cc) "New
Securities Purchase and Exchange Agreement" means that certain securities purchase and exchange agreement dated as of May 19,
2023 by and among the Company and the investors listed on the signature pages attached thereto, as may be further amended, amended and
restated, supplemented or otherwise modified from time to time.
(dd) "New
Warrants" shall have the meaning ascribed to the term "Warrants" in the New Securities Purchase and Exchange Agreement,
and shall include all warrants issued in exchange therefor or replacement thereof.
(ee) “Operating
Expenses” means payroll and related expenses, lease and related expenses, insurance expenses, travel and entertainment expenses,
general and administrative expenses, sales and marketing expenses (excluding commissions paid for sales of Volcon Stags), research and
development expenses, product development expenses, consulting and related expenses, board of director fees and related expenses, software
and subscription fees and expenses and any other reoccurring monthly expenses, but excludes noncash expenses such as depreciation and
amortization expense and stock based compensation expense.
(ff) "Optional
Prepayment Price" means (i) so long as no Equity Conditions Failure has occurred during the period beginning ten (10) Trading
Days prior to the Optional Prepayment Notice Date and ending on the Prepayment Notice Date and no Equity Conditions Failure has occurred
during the Optional Prepayment Interim Period, 100% of the Conversion Amount being prepaid, and (ii) if an Equity Conditions Failure has
occurred at any time during the period beginning ten (10) Trading Days prior to the Optional Prepayment Notice Date and ending on the
Optional Prepayment Date, the greater of (x) the Conversion Amount being prepaid and (y) the product of (A) the Conversion Amount being
prepaid and (B) the quotient determined by dividing (I) the greatest Closing Sale Price of the shares of Common Stock during the period
beginning on the tenth (10th) Trading Day immediately preceding the applicable Optional Prepayment Notice Date and ending on the Trading
Day immediately preceding the Optional Prepayment Date, by (II) the lowest Conversion Price in effect during such period.
(ff) "Options"
means any rights, warrants or options to subscribe for or purchase (i) shares of Common Stock or (ii) Convertible Securities.
(gg) "Original
Closing Date" shall have the meaning set forth in the Original Securities Purchase Agreement.
(hh) "Original
Securities Purchase Agreement" means that certain securities purchase agreement dated as of the Subscription Date by and among
the Company and the investors listed on the signature pages attached thereto, as may be amended, amended and restated, supplemented or
otherwise modified from time to time.
(ii)
"Original Warrants" shall have the meaning ascribed to the term "Warrants" in the Original Securities
Purchase Agreement, as exchanged pursuant to the New Securities Purchase and Exchange Agreement, and shall include all warrants issued
in exchange therefor or replacement thereof.
(jj) "Permitted
Indebtedness" means (i) Indebtedness evidenced by this Note and the Other Notes, (ii) trade payables incurred in the ordinary
course of business and consistent with past practice, (iii) unsecured Indebtedness incurred by the Company that is made expressly subordinate
in right of payment to the Indebtedness evidenced by this Note, as reflected in a written agreement acceptable to the Required Holders
and approved by the Required Holders in writing, and which Indebtedness (a) does not provide at any time for the payment, prepayment,
repayment, repurchase or defeasance, directly or indirectly, of any principal or premium, if any, thereon until ninety-one (91) days after
the Maturity Date or later and (b) includes terms and conditions acceptable to the Required Holders, (iv) Indebtedness, up to $2,500,000,
in the aggregate, secured by Permitted Liens described in clauses (iv) of the definition of Permitted Liens and (v) Indebtedness, up to
$10 million, from a factoring arrangement on terms acceptable to the Required Holders, provided, that the factoring lender executes a
subordination and intercreditor agreement on terms acceptable to the Required Holders and approved by the Required Holders in writing.
(kk) "Permitted
Liens" means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by appropriate proceedings for
which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising in the ordinary course of business
by operation of law with respect to a liability that is not yet due or delinquent, (iii)
any Lien created by operation of law, such as materialmen's liens, mechanics' liens and other similar liens, arising in the ordinary
course of business with respect to a liability that is not yet due or delinquent or that are being contested in good faith by appropriate
proceedings, (iv) Liens (A) upon or in any equipment acquired or held by the Company or any of its Subsidiaries to secure the purchase
price of such equipment or Indebtedness incurred solely for the purpose of financing the acquisition or lease of such equipment, or (B)
existing on such equipment at the time of its acquisition, provided that the Lien is confined solely to the property so acquired and
improvements thereon, and the proceeds of such equipment, (v) Liens incurred in connection with the extension, renewal or refinancing
of the Indebtedness secured by Liens of the type described in clause (iv) above, provided that any extension, renewal or replacement
Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the Indebtedness being extended, renewed
or refinanced does not increase, (vi) leases or subleases and licenses and sublicenses granted to others in the ordinary course of the
Company's business, not interfering in any material respect with the business of the Company and its Subsidiaries taken as a whole, (vii)
Liens in favor of customs and revenue authorities arising as a matter of law to secure payments of custom duties in connection with the
importation of goods, (viii) Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default
under Section 4(a)(ix) and (ix) Liens arising from Indebtedness of the type described in clause (v) of the definition of Permitted Indebtedness,
provided, that the factoring lender executes a subordination and intercreditor agreement on terms acceptable to the Required Holders
and approved by the Required Holders in writing.
(ll) "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.
(mm) "Principal Market" means the Nasdaq
Capital Market.
(nn) "Pro
Rata Amount" means a fraction (i) the numerator of which is the Subscription Amount (as defined in the Original Securities Purchase
Agreement) paid by the initial Holder of this Note to the Company pursuant to the Original Securities Purchase Agreement and (ii) the
denominator of which is the aggregate Subscription Amounts paid by all the Purchasers to the Company pursuant to the Original Securities
Purchase Agreement.
(oo) "Purchaser"
shall have the meaning ascribed to such term in the Original Securities Purchase Agreement.
(pp) "Redemption
Dates" means, collectively, the Event of Default Redemption Dates and the Change of Control Redemption Dates and the Optional
Prepayment Date, as applicable, each of the foregoing, individually, a Redemption Date.
(qq) "Redemption
Notices" means, collectively, the Event of Default Redemption Notices and the Change of Control Redemption Notices and the Optional
Prepayment Notice, each of the foregoing, individually, a Redemption Notice.
(rr) "Redemption Premium" means 125%.
(ss) "Redemption
Prices" means, collectively, the Event of Default Redemption Prices and the Change of Control Redemption Prices and the Optional
Prepayment Price, each of the foregoing, individually, a Redemption Price.
(tt) "Registrable
Securities" shall have the meaning ascribed to such term in the Registration Rights Agreement.
(uu) "Registration
Rights Agreement" means that certain registration rights agreement dated as of the Subscription Date by and among the Company
and the Purchasers relating to, among other things, the registration of the resale of the shares of Common Stock issuable upon conversion
of the Original Notes and exercise of the Original Warrants, as may be further amended, amended and restated, supplemented or otherwise
modified from time to time, including, without limitation, pursuant to the New Securities purchase and Exchange Agreement.
(vv) "Registration Statement"
shall have the meaning ascribed to such term in the Registration Rights Agreement.
(ww) "Related
Fund" means, with respect to any Person, a fund or account managed by such Person or an Affiliate of such Person.
(xx) "Required
Holders" means the holders of Notes representing at least a majority of the aggregate principal amount of the Notes then outstanding.
(yy) "SEC" means the United
States Securities and Exchange Commission.
(zz) "Securities Act" means the
Securities Act of 1933, as amended.
(aaa) "Standard Settlement
Period" means the standard settlement period, expressed in a number of Trading Days, on the principal securities exchange
or securities market on which the Common Stock is then traded as in effect on the date of delivery of the applicable Conversion
Notice.
(bbb) "Subject Entity"
means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.
(ccc) "Subscription Date"
means August 22, 2022.
(ddd) "Subsidiary"
shall have the meaning ascribed to such term in the Original Securities Purchase Agreement.
(eee) "Trading
Day" means 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 on such day, then on the principal securities exchange or securities market on which the Common Stock
is then traded.
(fff) "Transaction
Documents" shall have the meaning ascribed to such term in the Original Securities Purchase Agreement, as amended by the New
Securities Purchase and Exchange Agreement.
(ggg) "Transaction
Price" means the price per share of Common Stock to be issued pursuant to that certain Underwriting Agreement dated on or about
May 22, 2023 by and between the Company and Aegis Capital Corp., as adjusted for any stock dividend, stock split, stock combination, reclassification
or similar transaction relating to the Common Stock after the Amendment and Exchange Date.
(hhh) "VWAP"
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock or other applicable
security is then listed or quoted on an Eligible Market, the daily volume weighted average price of the Common Stock or such other applicable
security for such date (or the nearest preceding date) on the Eligible Market on which the Common Stock or such other applicable security
is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York
City time)), (b) the volume weighted average price of the Common Stock or other applicable security for such date (or the nearest preceding
date) on OTCQB or OTCQX as applicable, (c) if the Common Stock or other applicable security is not then listed or quoted for trading
on OTCQB or OTCQX and if prices for the Common Stock or such other applicable security are then reported on The Pink Open Market (or
a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common
Stock or such other applicable security so reported, or (d) in all other cases, the fair market value of a share of Common Stock or other
applicable security as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the
Securities then outstanding and reasonably acceptable to the Company, the reasonable fees and expenses of which shall be paid by the
Company.
(iii) "Warrants"
means, collectively, the Original Warrants and the New Warrants.
[Signature Page Follows]
IN WITNESS WHEREOF, the Company has
caused this Note to be duly executed as of the Issuance Date set out above.
VOLCON,
INC.
________________________________
Name: Greg
Endo
Title: CFO
EXHIBIT
I
VOLCON, INC.
CONVERSION NOTICE
Reference is made to the Amended
and Restated Series A Senior Convertible Note (the "Note") issued to the undersigned by Volcon, 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 par value $0.00001 per share (the "Common
Stock") of the Company, as of the date specified below.
Date of Conversion:
Aggregate Conversion Amount
to be converted or number of Conversion Shares to be issued upon conversion: __________________________________
Please confirm
the following information:
Conversion Price: _____________________________________
If Aggregate Conversion Amount
is provided above, number of shares of
Common Stock to be issued: ________________________________________
Please issue the Common Stock
into which the Note is being converted to the Holder, or for its benefit, as follows:
[ ] Check here if requesting
delivery as a certificate to the following name and to the following address:
Issue to: ________________________________________
Address: ________________________________________
Electronic Mail: ___________________________________
[ ] Check here if requesting
delivery by Deposit/Withdrawal at Custodian as follows:
DTC Participant: __________________________________________
DTC Number: _____________________________________________
Account Number:__________________________________________
Authorization: _____________________________________
By: _____________________________________________
Title: ____________________________________________
Dated: ___________________________________
Account Number: __________________________________
(if
electronic book entry transfer)
Transaction Code Number: ____________________________
(if
electronic book entry transfer)
ACKNOWLEDGMENT
The Company hereby acknowledges this Conversion
Notice and hereby directs Computershare to issue the above indicated number of shares of Common Stock.
VOLCON,
INC.
By: __________________________
Name:
Title:
Exhibit 4.5
AMENDED AND RESTATED WARRANT
NEITHER THIS SECURITY NOR THE
SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY
BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
VOLCON,
INC.
Warrant Shares: [●] |
Initial Exercise Date: August 24, 2022 |
Amendment and Restatement Date: November [●],
2023
THIS COMMON STOCK PURCHASE WARRANT
(the "Warrant") certifies that, for value received, [●] or its assigns (the "Holder") is entitled,
upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof
(the "Initial Exercise Date") and on or prior to 5:00 p.m. (New York City time) on August 24, 2027 (the "Termination
Date") but not thereafter, to subscribe for and purchase from Volcon, Inc., a Delaware corporation (the "Company"),
up to [●] shares (as subject to adjustment hereunder, the "Warrant Shares") of Common Stock. The purchase price
of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions.
Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement
(the "Purchase Agreement"), dated August 22, 2022, among the Company and the purchasers signatory thereto.
Section 2. Exercise.
a)
Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any
time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a PDF copy submitted
by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the "Notice of Exercise"). Within
the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section
2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified
in the applicable Notice of Exercise by wire transfer or cashier's check drawn on a United States bank unless the cashless exercise procedure
specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required,
nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding
anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder
has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within 5 Trading Days of the date on which the final Notice of Exercise is delivered
to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available
hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable
number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and
the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of
such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of
this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase
hereunder at any given time may be less than the amount stated on the face hereof.
b)
Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $1.369, subject to adjustment hereunder
(the "Exercise Price").
c)
Cashless Exercise. If at the time of exercise hereof on or after the date that is six (6) months immediately following the
Initial Exercise Date there is no effective registration statement registering, or the prospectus contained therein is not available for
the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of
a "cashless exercise" in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained
by dividing [(A-B) (X)] by (A), where:
(A) = as applicable:
(i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1)
both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant
to Section 2(a) hereof on a Trading Day prior to the opening of "regular trading hours" (as defined in Rule 600(b) of Regulation
NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading
Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading
Market as reported by Bloomberg L.P. ("Bloomberg") as of the time of the Holder's execution of the applicable Notice
of Exercise if such Notice of Exercise is executed during "regular trading hours" on a Trading Day and is delivered within two
(2) hours thereafter (including until two (2) hours after the close of "regular trading hours" on a Trading Day) pursuant to
Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading
Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of "regular trading
hours" on such Trading Day;
(B) = the Exercise
Price of this Warrant, as adjusted hereunder; and
(X) = the number
of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were
by means of a cash exercise rather than a cashless exercise.
If Warrant Shares
are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act,
the holding period of the Warrant Shares being issued may be tacked on to the holding period of this Warrant. The Company agrees
not to take any position contrary to this Section 2(c).
"Bid Price"
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading
Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City
time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common
Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted
for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on The Pink Open Market (or a similar organization
or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d)
in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith
by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the reasonable
fees and expenses of which shall be paid by the Company.
"VWAP"
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m.
(New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average
price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not
then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on The Pink Open Market (or a
similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock
so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser
selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the
Company, the reasonable fees and expenses of which shall be paid by the Company.
d)
Mechanics of Exercise.
i.
Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted
by the Transfer Agent to the Holder by crediting the account of the Holder's or its designee's balance account with The Depository Trust
Company through its Deposit or Withdrawal at Custodian system ("DWAC") if the Company is then a participant in such system
and either (A) there is an effective registration statement permitting the resale of the Warrant Shares by the Holder or (B) the Warrant
Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144 (assuming cashless exercise
of the Warrants), and otherwise by physical delivery of a certificate, registered in the Company's share register in the name of the Holder
or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by
the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of
the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of
Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the "Warrant
Share Delivery Date"). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have
become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery
of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received
within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following
delivery of the Notice of Exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long
as this Warrant remains outstanding and exercisable. As used herein, "Standard Settlement Period" means the standard
settlement period, expressed in a number of Trading Days, on the Company's primary Trading Market with respect to the Common Stock as
in effect on the date of delivery of the Notice of Exercise.
ii.
Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request
of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new
Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.
iii.
Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant
to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv.
Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available
to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions
of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required
by its broker to purchase (in an open market transaction or otherwise) or the Holder's brokerage firm otherwise purchases, shares of Common
Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise
(a "Buy-In"), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder's total
purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at
issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder,
either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which
case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued
had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock
having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate
sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall
be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder
in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder's
right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company's failure to timely deliver shares of Common Stock upon exercise of the
Warrant as required pursuant to the terms hereof.
v.
No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company
shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole share.
vi.
Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer
tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the
Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder;
provided, however, that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder,
this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and
the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.
The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository
Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of
the Warrant Shares.
vii.
Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise
of this Warrant, pursuant to the terms hereof.
e) Holder's
Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise
any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise
as set forth on the applicable Notice of Exercise, the Holder (together with the Holder's Affiliates, and any other Persons acting as
a group together with the Holder or any of the Holder's Affiliates (such Persons, "Attribution Parties")), would beneficially
own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares
of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common
Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares
of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by
the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion
of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution
Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated
in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the
Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act
and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation
contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned
by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the
sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder's determination of whether
this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties)
and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall
have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated
above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For
purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding
shares of Common Stock as reflected in (A) the Company's most recent periodic or annual report filed with the Commission, as the case
may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent
setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall
within one Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any
case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities
of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number
of outstanding shares of Common Stock was reported. The "Beneficial Ownership Limitation" shall be 4.99% of the number
of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise
of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this
Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder
and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective
until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented
in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof)
which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor
holder of this Warrant.
Section 3. Certain
Adjustments.
a)
Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or
otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable
in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise
of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way
of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares
of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction
of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before
such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the
number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this
Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after
the effective date in the case of a subdivision, combination or re-classification.
b)
Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants,
issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the "Purchase Rights"), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had
held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise
hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for
the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that, to the
extent that the Holder's right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance
for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
c)
Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any
dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return
of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way
of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a "Distribution"),
at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial
Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided,
however, that, to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding
the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the
beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution
shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation).
d)
Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in
one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company (or
any Subsidiary), directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all
or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer
or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding
Common Stock or 50% or more of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one
or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v)
the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another
Person or group of Persons whereby such other Person or group acquires 50% or more of the outstanding shares of Common Stock or 50% or
more of the voting power of the common equity of the Company (each a "Fundamental Transaction"), then, upon any subsequent
exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in
Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and any additional consideration (the "Alternate Consideration") receivable
as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant).
For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate
Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction,
and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value
of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash
or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the
event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder's or the Successor Entity's
option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction (or, if later,
the date of the public announcement of the applicable Fundamental Transaction), purchase this Warrant from the Holder by paying to the
Holder an amount of cash equal to the Black Scholes Value (as defined below) of the remaining unexercised portion of this Warrant on the
date of the consummation of such Fundamental Transaction; provided, however, that, if the Fundamental Transaction is not
within the Company's control, including not approved by the Company's Board of Directors, the Holder shall only be entitled to receive
from the Company or any Successor Entity, upon or following the date of consummation of such Fundamental Transaction, the same type or
form of consideration (and in the same proportion), at the Black Scholes Value of the unexercised portion of this Warrant, that is being
offered and paid to the holders of Common Stock of the Company in connection with the Fundamental Transaction, whether that consideration
be in the form of cash, stock or any combination thereof, or whether the holders of Common Stock are given the choice to receive from
among alternative forms of consideration in connection with the Fundamental Transaction; provided, further, that if holders
of Common Stock of the Company are not offered or paid any consideration in such Fundamental Transaction, such holders of Common Stock
will be deemed to have received common stock of the Successor Entity (which Entity may be the Company following such Fundamental Transaction)
in such Fundamental Transaction. "Black Scholes Value" means the value of this Warrant based on the Black-Scholes Option
Pricing Model obtained from the "OV" function on Bloomberg determined as of the day of consummation of the applicable Fundamental
Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal
to the time between the date of the public announcement of the applicable contemplated Fundamental Transaction and the Termination Date,
(B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg (determined
utilizing a 365 day annualization factor) as of the Trading Day immediately following the public announcement of the applicable contemplated
Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the greater of (i) the sum of the price
per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction
and (ii) the highest VWAP during the period beginning on the Trading Day immediately preceding the public announcement of the applicable
contemplated Fundamental Transaction (or the consummation of the applicable Fundamental Transaction, if earlier) and ending on the Trading
Day of the earlier of the Holder's or the Successor Entity's request pursuant to this Section 3(d) and (D) a remaining option time equal
to the time between the date of the public announcement of the applicable contemplated Fundamental Transaction and the Termination Date
and (E) a zero cost of borrow. The payment of the Black Scholes Value will be made by wire transfer of immediately available funds (or
such other consideration) within the later of (i) five Business Days of the earlier of the Holder's or the Successor Entity's election
and (ii) the date of consummation of the Fundamental Transaction. Unless the Holder or the Successor
Entity has elected for this Warrant to be purchased for its Black Scholes Value on or prior to the consummation of a Fundamental Transaction
as contemplated hereby, the Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor
(the "Successor Entity") to assume in writing all of the obligations of the Company under this Warrant and the other
Transaction Documents (to the extent the Holder is a party to such Transaction Document) in accordance with the provisions of this Section
3(d) pursuant to written agreements in form and substance reasonably satisfactory to the Required Holders and approved by the Required
Holders (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder
in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance
to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity)
equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on
the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder
to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental
Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the
purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which
is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor
Entity shall succeed and be substituted for the term "Company" under this Warrant (so that from and after the occurrence or
consummation of such Fundamental Transaction, each and every provision of this Warrant and the other Transaction Documents referring to
the "Company" shall refer instead to each of the Successor Entity or Successor Entities, jointly and severally), and the Successor
Entity or Successor Entities, jointly and severally, may exercise every right and power of the Company prior thereto and the Successor
Entity or Successor Entities shall assume all of the obligations of the Company prior thereto under this Warrant and the other Transaction
Documents (to the extent the Holder is a party to such Transaction Document) with the same effect as if such Successor Entity or Successor
Entities, jointly and severally, had been named as the Company herein.
e)
Adjustment Upon Issuance of Shares of Common Stock. If, at any time while this Warrant is outstanding (the "Adjustment
Period"), the Company issues or sells, or, in accordance with this Section 3(e), is deemed to have issued or sold, any shares
of Common Stock (excluding any Excluded Securities (as defined below) issued or sold or deemed to have been issued or sold) for a consideration
per share (the "New Issuance Price") less than a price equal to the Exercise Price in effect immediately prior to such
issue or sale or deemed issuance or sale (such Exercise Price then in effect is referred to as the "Applicable Price")
(the foregoing a "Dilutive Issuance"), then immediately after such Dilutive Issuance, the Exercise Price then in effect
shall be reduced to an amount equal to the greater of (i) the New Issuance Price and (ii) the applicable Floor Price. "Excluded
Securities" means any issuance of Common Stock, restricted stock units, Options and/or Convertible Securities (each as defined
in the Amended and Restated Notes) (i) under the Company's current or future equity incentive plans or issued to employees, consultants,
service providers, directors or officers as compensation or consideration in the ordinary course of business, including any issuance of
Options (and the underlying shares of Common Stock) in exchange for Options issued under the Company's equity incentive plans; provided,
that the issuances to consultants and service providers shall be limited to Common Stock and Options and the aggregate number of shares
of Common Stock issued, and/or issuable upon exercise of Options, shall not exceed 1,000,000 shares (as adjusted for any stock dividend,
stock split, stock combination, reclassification or similar transaction relating to the Common Stock after the Amendment and Exchange
Date), in any twelve month period, (ii) issued pursuant to agreements, Options, restricted stock units, Convertible Securities or Adjustment
Rights (as defined below) existing as of the date hereof, provided that such agreements, Options, Convertible Securities or Adjustment
Rights have not been amended since the initial issuance date of this Warrant to increase the number of such securities or decrease the
exercise price, exchange price or conversion price of such securities, (iii) issued pursuant to acquisitions (whether by merger, consolidation,
purchase of equity, purchase of assets, reorganization or otherwise), mergers, consolidations, reorganizations or strategic transactions
approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person (or to
the equityholders of a Person) which is, itself or through its Subsidiaries, an operating company or an owner of an asset in a business
complementary with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds,
but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity
whose primary business is investing in securities, (iv) to which the Required Holders consent in writing, or (v) any securities issued
pursuant to that certain Registration Statement on Form S-1 (file no. 333-274800) (as amended and/or supplemented), including Common Stock,
Pre-Funded Warrants, Series A Warrants and Series B Warrants (and the Common Stock underlying the Pre-Funded Warrants, Series A Warrants
and Series B Warrants) (each of them as (i) may be amended, modified or revised from time to time, in each case with the consent of the
Required Holders and/or (ii) may be exchanged for other securities of the Company from time to time, in each case with the consent of
the Required Holders). "Adjustment Right" means any right granted with respect to any securities issued in connection
with, or with respect to, any issuance or sale (or deemed issuance or sale in accordance with this Section 3(e)) of Common Stock (other
than rights of the type described in Sections 3(a) and (b)) that could result in a decrease in the net consideration received by the Company
in connection with, or with respect to, such securities (including, without limitation, any cash settlement rights, cash adjustment or
other similar rights). "Floor Price" means $0.22. For all purposes of the foregoing, the following shall be applicable:
i. Issuance
of Options. If, during the Adjustment Period, the Company in any manner grants or sells any Options (other than Excluded Securities)
and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion,
exercise or exchange of any Convertible Securities issuable upon exercise of any such Option (such shares of Common Stock issuable upon
such exercise of any Option or upon conversion, exercise or exchange of any Convertible Securities, the "Convertible Securities
Shares") is less than the Applicable Price, then such Common Stock shall be deemed to be outstanding and to have been issued
and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 3(e)(i),
the "lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion,
exercise or exchange of any Convertible Securities issuable upon exercise of any such Option" shall be equal to (A) the sum of (1)
the lowest amount of consideration (if any) received or receivable by the Company (without duplication) with respect to the granting or
sale of such Option (relating to one Convertible Securities Share) or with respect to any one Convertible Securities Share upon the granting
or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon
exercise of such Option and (2) the lowest exercise price set forth in such Option for which one Convertible Securities Share is issuable
upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of
any such Option, minus (B) the sum of all amounts paid or payable to the holder of such Option (or any other Person), with respect to
any one Convertible Securities Share, upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise
or exchange of any Convertible Security issuable upon exercise of such Option plus the value of any other consideration received or receivable
by, or benefit conferred on, the holder of such Option (or any other Person), with respect to any one Convertible Securities Share. Except
as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such Convertible Securities
Share or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Convertible Securities Share
upon conversion, exercise or exchange of such Convertible Securities.
ii. Issuance
of Convertible Securities. If, during the Adjustment Period, the Company in any manner issues or sells any Convertible Securities
(other than Excluded Securities) and the lowest price per share for which one Convertible Securities Share is issuable upon the conversion,
exercise or exchange thereof is less than the Applicable Price, then such Convertible Securities Share shall be deemed to be outstanding
and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per
share. For the purposes of this Section 3(e)(ii), the "lowest price per share for which one Convertible Securities Share is issuable
upon the conversion, exercise or exchange thereof" shall be equal to (A) the sum of (1) the lowest amount of consideration (if any)
received or receivable by the Company (without duplication) with respect to the issuance or sale of such Convertible Security (relating
to one Convertible Securities Share) or with respect to one Convertible Securities Share upon the issuance or sale of the Convertible
Security and upon conversion, exercise or exchange of such Convertible Security and (2) the lowest conversion price set forth in such
Convertible Security for which one Convertible Securities Share is issuable upon conversion, exercise or exchange thereof, minus (B) the
sum of all amounts paid or payable to the holder of such Convertible Security (or any other Person), with respect to any one Convertible
Securities Share, upon the issuance or sale of such Convertible Security plus the value of any other consideration received or receivable
by, or benefit conferred on, the holder of such Convertible Security (or any other Person), with respect to any one Convertible Securities
Share. Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such Convertible
Securities Share upon conversion, exercise or exchange of such Convertible Securities, and if any such issue or sale of such Convertible
Securities is made upon exercise of any Options for which adjustment of the Exercise Price has been or is to be made pursuant to other
provisions of this Section 3(e), except as contemplated below, no further adjustment of the Exercise Price shall be made by reason of
such issue or sale.
iii. Change
in Option Price or Rate of Conversion. If, during the Adjustment Period, the purchase or exercise price provided for in any Options,
the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate
at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases
at any time, the Exercise Price in effect at the time of such increase or decrease shall be adjusted to the Exercise Price which would
have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional
consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes
of this Section 3(e)(iii), if the terms of any Option or Convertible Security that was outstanding as of the date of issuance of this
Warrant are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security
and the Convertible Securities Shares deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued
as of the date of such increase or decrease. No adjustment pursuant to this Section 3(e) shall be made if such adjustment would result
in an increase of the Exercise Price then in effect.
iv. Calculation
of Consideration Received. If any Option or Convertible Security is issued in connection with the issuance or sale or deemed issuance
or sale of any other securities of the Company (the "Primary Security", and such Option or Convertible Security, the
"Secondary Securities" and together with the Primary Security, each a "Unit"), together comprising one
integrated transaction, the aggregate consideration per share of Common Stock with respect to such Primary Security shall be deemed to
be the lowest of (x) the purchase price of such Unit, (y) if such Primary Security is an Option and/or Convertible Security, the lowest
price per share for which one share of Common Stock is at any time issuable upon the exercise or conversion of the Primary Security in
accordance with Section 3(e)(i) or 3(e)(ii) above and (z) the arithmetic average of the VWAPs of the Common Stock during the five Trading
Day period immediately following the public announcement of such Dilutive Issuance (for the avoidance of doubt, if such public announcement
is released prior to the opening of the Principal Market on a Trading Day, such Trading Day shall be the first Trading Day in such five
Trading Day period). If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued
or sold for cash, the consideration received therefor will be deemed to be the net amount of cash received by the Company therefor. If
any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such
consideration received by the Company will be the fair value of such consideration, except where such consideration consists of publicly
traded securities, in which case the amount of consideration received by the Company for such securities will be the arithmetic average
of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt. If any shares of Common
Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the
Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair market value of such portion of the
net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities
(as the case may be). The fair market value of any consideration other than cash or publicly traded securities will be determined jointly
by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring
valuation (the "Valuation Event"), the fair market value of such consideration will be determined within five (5) Trading
Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company
and the Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and
expenses of such appraiser shall be borne by the Company.
v. Record
Date. If, during the Adjustment Period, the Company takes a record of the holders of the Common Stock for the purpose of entitling
them (A) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (B) to subscribe
for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the
issue or sale of shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such right of subscription or purchase (as the case may be).
vi. Reserved.
vii. No
Adjustment to Warrant Shares. For the avoidance of doubt, in no event shall the operation of this Section 3(e) result in any adjustment
to the number of Warrant Shares hereunder.
f)
Stock Combination Event Adjustment. In addition to the adjustments set forth in Section 3(a) above, if at any time and from
time to time on or after the Amendment and Restatement Date there occurs any stock split, reverse stock split, stock dividend, stock combination,
recapitalization or other similar transaction involving the Common Stock (each, a "Stock Combination Event", and such
date thereof, the "Stock Combination Event Date") and the lowest VWAP of the Common Stock (the "Event Market
Price") during the 5 consecutive Trading Days commencing on the Stock Combination Event Date (such period, the "Stock
Combination Adjustment Period" provided if the Stock Combination Event is effective after close of trading on the Principal Market
(or other Eligible Market on which the Common Stock is then listed for trading), the Stock Combination Adjustment Period shall then commence
on the immediately following Trading Day) is less than the Exercise Price then in effect (after giving effect to the adjustment in Section
3(a) above), then at the close of trading on the Principal Market (or other Eligible Market on which the Common Stock is then listed for
trading) on the last day of the Stock Combination Adjustment Period, the Exercise Price then in effect on such 5th Trading Day shall be
reduced (but in no event increased) to the greater of (i) the Event Market Price and (ii) the applicable Floor Price. For the avoidance
of doubt, if the adjustment in the immediately preceding sentence would otherwise result in an increase in the Exercise Price hereunder,
no adjustment shall be made, and if the Holder delivers a Notice of Exercise during the Stock Combination Adjustment Period, solely with
respect to such portion of this Warrant exercised on such applicable exercise date, such applicable Stock Combination Adjustment Period
shall be deemed to have ended on, and included, the Trading Day immediately prior to such exercise date and the Event Market Price on
such applicable exercise date will be the lowest VWAP of the Common Stock immediately prior to the Stock Combination Event Date and ending
on, and including the Trading Day immediately prior to such exercise date.
g)
Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given
date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
h)
Notice to Holder.
i.
Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company
shall promptly deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment
to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii.
Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form)
on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which the Company (or any of its Subsidiaries) is a party, any
sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby the Common Stock is converted into
other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding
up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its email address
as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected
that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to
deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to
be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information
regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such
notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
i)
Voluntary Adjustment By Company. Subject to the rules and regulations of the Trading Market on which the Common Stock is
then listed, the Company may at any time during the term of this Warrant, subject to the prior written consent of the Holder, which shall
not unreasonably be withheld, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the
board of directors of the Company.
Section 4. Transfer
of Warrant.
a)
Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d)
hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation,
any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company
or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by
the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such
surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee
or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding
anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder
has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days
of the date on which the Holder delivers an assignment form to the Company assigning this Warrant in full. The Warrant, if properly
assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
b)
New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office
of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by
the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division
or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise Date and
shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c)
Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose
(the "Warrant Register"), in the name of the record Holder hereof from time to time. The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder,
and for all other purposes, absent actual notice to the contrary.
d)
Transfer Restrictions. If, at the time
of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i)
registered pursuant to an effective registration statement under the Securities
Act and under applicable state securities or blue sky laws or (ii) eligible for
resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may
require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, comply with the
provisions of Section 5.7 of the Purchase Agreement.
e)
Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant
and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to
or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities
law, except pursuant to sales registered or exempted under the Securities Act.
Section 5. Miscellaneous.
a)
No Rights as Stockholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights,
dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly
set forth in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a "cashless exercise" pursuant
to Section 2(c) or to receive cash payments pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, in no event shall the Company be
required to net cash settle an exercise of this Warrant.
b)
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares,
and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant,
shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the
Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant
or stock certificate.
c)
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right
required or granted herein shall not be a Trading Day, then such action may be taken or such right may be exercised on the next succeeding
Trading Day.
d)
Authorized Shares.
The Company covenants
that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number
of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further
covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the
necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action
as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation,
or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares
which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented
by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable
and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).
Except and to the
extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate
of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate
to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the
Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior
to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts
to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary
to enable the Company to perform its obligations under this Warrant.
Before taking any
action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price,
the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory
body or bodies having jurisdiction thereof.
e)
Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall
be determined in accordance with the provisions of the Purchase Agreement.
f)
Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered,
and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
g)
Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder
shall operate as a waiver of such right or otherwise prejudice the Holder's rights, powers or remedies. Without limiting any other provision
of this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant,
which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover
any costs and expenses including, but not limited to, reasonable attorneys' fees, including those of appellate proceedings, incurred by
the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
h)
Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company
shall be delivered in accordance with the notice provisions of the Purchase Agreement.
i)
Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant
to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the
Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.
j)
Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law would be adequate.
k)
Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby
shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted
assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and
shall be enforceable by the Holder or holder of Warrant Shares.
l)
Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company
and the Holder; provided, that the provisions of Section 2(e) of this Warrant may not be amended, modified or waived.
m)
Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining
provisions of this Warrant.
n)
Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
********************
(Signature Page Follows)
IN WITNESS WHEREOF, the Company
has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
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volcon, INC.
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By:__________________________________________
Name:
Title:
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NOTICE OF EXERCISE
To: volcon,
INC.
(1)
The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant
(only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes,
if any.
(2)
Payment shall take the form of (check applicable box):
[ ] in lawful money
of the United States; or
[ ] if permitted the
cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise
this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in
subsection 2(c).
(3)
Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The Warrant Shares shall be delivered to the
following DWAC Account Number:
_______________________________
_______________________________
_______________________________
(4) Accredited Investor.
The undersigned is an "accredited investor" as defined in Regulation D promulgated under the Securities Act of 1933, as amended.
[SIGNATURE
OF HOLDER]
Name of Investing Entity: ________________________________________________________________________
Signature of Authorized Signatory of Investing
Entity: _________________________________________________
Name of Authorized Signatory: ___________________________________________________________________
Title of Authorized Signatory: ____________________________________________________________________
Date: _______________________________________________________________________________________
EXHIBIT B
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this
form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and
all rights evidenced thereby are hereby assigned to
Name: |
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(Please Print) |
Address: |
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Phone
Number:
Email
Address:
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(Please Print)
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Dated: _______________ __, ______ |
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Holder's Signature: |
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Holder's Address: |
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Exhibit 10.1
AMENDMENT AGREEMENT
This Amendment Agreement dated
as of November 17, 2023 (the “Agreement”) is by and between Volcon, Inc., a Delaware corporation (the “Company”),
and the undersigned, a Holder of Notes (as defined below) and a Holder of Warrants (as defined below) identified on the signature pages
hereto. Capitalized terms not defined herein shall have the meanings assigned to them in that certain (i) Securities Purchase and Exchange
Agreement (the “SPA”) dated as of May 19, 2023 by and among the Company and each purchaser identified on the signature
pages thereto (each, a “Purchaser” and collectively, the “Purchasers”); (ii) the amended and restated
Original Issue Discount Senior Convertible Series A Notes and the amended and restated Original Issue Discount Senior Convertible Series
B Notes dated as of May 24, 2023 (collectively, the “Amended and Restated Notes”) issued by the Company to each Purchaser;
and (iii) the additional Original Issue Discount Senior Convertible Notes dated as of May 24, 2023 (the “New Notes”
and with the Amended and Restated Notes, the “Notes”) issued by the Company to each Purchaser; and (iii) each of the
Warrants issued(A) on August 24, 2022 (as subsequently amended and restated), (B) issued on May 24, 2023, (C) issued on September
29, 2023 and (D) issued on or about October 20, 2023, in each case by the Company to each Purchaser (the “Warrants”).
WITNESSETH:
WHEREAS, the Company
is requesting amendments to the Notes and the Warrants to expand the definition of Excluded Securities (as defined in the Notes and the
Warrants) for its benefit.
WHEREAS, the Holder
is requesting amendments to the Notes to add certain covenants of the Company.
NOW, THEREFORE, in
consideration of and for the mutual promises and covenants contained herein, and for other good and valuable consideration, the receipt
of which is hereby acknowledged, subject to Section 2 hereof, the parties agree as follows:
1.
Amendment of the Notes.
(a) The Company and the Holder hereby
agree that the Notes are hereby amended and restated in their entirety as set forth in the Amended and Restated Notes attached hereto
as Exhibit A.
(b) The Company and the Holder hereby
agree that the Warrants are hereby amended and restated in their entirety as set forth in the Amended and Restated Notes attached hereto
as Exhibit B.
2.
Effective Date. The amendments set forth in Section 1 shall only become effective upon the due execution and delivery with
the Company of a Note Amendment identical in form and substance to this Agreement by the Company and each of the holders of Notes and
Warrants that constitute the Required Holders (as defined in the Notes and in the Warrants).
3.
No Implied Waiver or Consent. Except for the specific amendment set forth above, nothing herein shall be deemed to be a
consent to, amendment of or waiver of any provision in the Notes, and all provisions in the Notes, as modified hereby, are hereby confirmed
and ratified in all respects and shall remain in full force and effect in accordance with their respective terms.
4.
Entire Agreement. This Agreement constitutes the entire agreement between the Company and the Holder with respect to the
matters covered hereby and supersedes all previous written, oral or implied understandings among them with respect to such matters. The
terms set forth in this Agreement may not be amended without the prior written consent of the Company and Holder. This Agreement is intended
for the benefit of the parties hereto and their respective successors and assigns and is not for the benefit of, nor may any provisions
hereof be enforced by, any other person or entity.
5.
Governing Law. This Agreement shall be governed by and construed under the laws of the State of New York without regard
to the choice of law principles thereof.
6.
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 an electronic 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 facsimile or electronic file signature page (as the case may be) were an original thereof.
[Signature page follows]
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first stated above.
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VOLCON, INC.
By:_________________________________
Name:
Title: |
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empery ASSET MASTER, LTD.
By: Empery Asset Management, LP, its authorized agent
_________________________________
Name: Brett Director
Title: General Counsel |
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IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first stated above.
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VOLCON, INC.
By:_________________________________
Name:
Title: |
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empery TAX EFFICIENT, LP
By: Empery Asset Management, LP, its authorized agent
_________________________________
Name: Brett Director
Title: General Counsel |
|
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IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first stated above.
|
VOLCON, INC.
By:_________________________________
Name:
Title: |
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empery debt opportunity
fund, lp
By: Empery Asset Management, LP, its authorized agent
_________________________________
Name: Brett Director
Title: General Counsel |
|
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Exhibit 99.1
Volcon, Inc. Announces Closing of $18.0 Million Underwritten Public
Offering
AUSTIN, TX / ACCESSWIRE / November 17, 2023 / Volcon, Inc. (NASDAQ:
VLCN), ("Volcon" or the "Company"), the first all-electric, off-road powersports company, announced today the closing
of a firm commitment underwritten public offering. The aggregate gross proceeds to the Company were $18.0 million, before deducting underwriting
discounts and other estimated expenses payable by the Company. The offering consisted of 42,857,142 Common Units or Pre-funded Units,
each consisting of one share of common stock or one pre-funded warrant ("Pre-Funded Warrant") to purchase one share of common
stock, 0.35 of a warrant to purchase one share of common stock at an exercise price of $0.55 per share (or 130% of the price of each Common
Unit sold in the offering) or pursuant to an alternative cashless exercise option, which warrant will expire on the five-year anniversary
of the original issuance date (the "Series A Warrants") and 0.35 of a warrant to purchase one share of common stock at an exercise
price of $0.84 per share (or 200% of the price of each Common Unit sold in the offering), which warrant will expire on the five-year anniversary
of the original issuance date (the "Series B Warrants" and together with the Series A Warrants, the "Warrants"). The
purchase price of each Common Unit was $0.42, and each Pre-Funded Unit was $0.41999 (which is equal to the public offering price per Common
Unit to be sold in the offering minus $0.00001). The Pre-Funded Warrants will be immediately exercisable and may be exercised at any time
until all of the Pre-Funded Warrants are exercised in full. The Company intends to use the net proceeds from this offering for general
corporate purposes.
In addition, the Company has granted Aegis Capital Corp. a 45-day option
to purchase additional shares of Common Stock and/or Pre-Funded Warrants, representing up to 15% of the number of Common Stock and/or
Pre-Funded Warrants sold in the offering, and additional Warrants representing up to 15% of the Warrants sold in the offering solely to
cover over-allotments, if any. On November 17, 2023, Aegis partially exercised its over-allotment option with respect to 842,575 Series
A Warrants and Series B Warrants.
Aegis Capital Corp. acted as the sole book-running manager for the
Offering
The offering was made pursuant to an effective registration statement
on Form S-1 (No. 333-274800) previously filed with the U.S. Securities and Exchange Commission (the "SEC") and declared effective
by the SEC on November 15, 2023. A final prospectus (the "Final Prospectus") describing the terms of the proposed offering was
filed with the SEC and is available on the SEC's website located at www.sec.gov. Electronic copies of the Final Prospectus may be obtained
by contacting Aegis Capital Corp., Attention: Syndicate Department, 1345 Avenue of the Americas, 27th floor, New York, NY 10105, by email
at syndicate@aegiscap.com, or by telephone at (212) 813-1010. Interested parties should read in their entirety the registration statement
and the Final Prospectus and the other documents that the Company has filed with the SEC that are incorporated by reference in such registration
statement and the Final Prospectus, which provide more information about the Company and the offering.
This press release shall not constitute an offer to sell or the solicitation
of an offer to buy nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
About Volcon
Based in the Austin, Texas area, Volcon was founded as the first all-electric
power sports company producing high-quality and sustainable electric vehicles for the outdoor community. Volcon electric vehicles are
the future of off-roading, not only because of their environmental benefits but also because of their near-silent operation, which allows
for a more immersive outdoor experience.
Volcon's vehicle roadmap includes both motorcycles and UTVs. Its first
product, the innovative Grunt, began shipping to customers in late 2021 and combines a fat-tired physique with high-torque electric power
and a near-silent drive train. The Volcon Grunt EVO, an evolution of the original Grunt with a belt drive, improved suspension, and a
seat, began shipping to customers in September 2023. Volcon will also offer the Runt LT, a fun-sized version of the groundbreaking Grunt,
better suited for small-statured riders, more compact properties and trails, or as a pit bike at race events, while still delivering robust
off-road capabilities. The Brat is Volcon's first foray into the wildly popular eBike market for both on-road and off-road riding and
is currently being delivered to dealers across North America. Volcon is also currently delivering the Volcon Youth line of dirt bikes
for younger riders between the ages of 4 and 11. Volcon debuted the Stag in July 2022 and entered the rapidly-expanding UTV market and
previously announced that it expects to begin shipping the Stag to customers in the fourth quarter of 2023. The Stag empowers the driver
to explore the outdoors in a new and unique way that gas-powered UTVs cannot. The Stag offers the same thrilling performance of a standard
UTV without the noise (or pollution), allowing the driver to explore the outdoors with all their senses.
Volcon Contacts
For Media: media@volcon.com
For Dealers: dealers@volcon.com
For Investors: investors@volcon.com
For Marketing: marketing@volcon.com
For more information on Volcon or to learn more about its complete
motorcycle and side-by-side line-up, visit: www.volcon.com
Forward-Looking Statements
The information contained herein may contain "forward-looking
statements." Forward-looking statements in this press release include, without limitation, whether the Company can begin production
of the Stag to meet expected deliveries to customers beginning in the fourth quarter of 2023, and whether production of the Runt LT will
occur. Forward-looking statements reflect the current view about future events. When used in this press release, the words "anticipate,"
"believe," "estimate," "expect," "future," "intend," "plan," or the negative
of these terms and similar expressions, as they relate to us or our management, identify forward-looking statements. Such statements include,
but are not limited to, statements contained in this press release relating to the closing of the offering. Forward-looking statements
are based on the Company's current expectations and assumptions regarding its business, the economy, and other future conditions. In this
news release, such forward-looking statements include statements regarding the anticipated use of proceeds from the offering. Because
forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that
are difficult to predict, many of which are beyond the control of the Company, including those set forth in the Risk Factors section of
the Preliminary Prospectus. The Company's actual results may differ materially from those contemplated by the forward-looking statements.
They are neither statements of historical fact nor guarantees of assurance of future performance. We caution you therefore against relying
on any of these forward-looking statements. Factors or events that could cause the Company's actual results to differ may emerge from
time to time, and it is not possible for the Company to predict all of them. The Company cannot guarantee future results, levels of activity,
performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does
not intend to update any of the forward-looking statements. References and links to websites have been provided as a convenience, and
the information contained on such websites is not incorporated by reference into this press release.
SOURCE: Volcon ePowersports, Inc.
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