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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): October 29, 2024
GREENLANE
HOLDINGS, INC.
(Exact
name of registrant as specified in its charter)
Delaware |
|
001-38875 |
|
83-0806637 |
(State
or other jurisdiction
of
incorporation) |
|
(Commission
File
Number) |
|
(IRS
Employer
Identification
No.) |
1095
Broken Sound Parkway Suite 100
Boca
Raton FL |
|
33487 |
(Address
of principal executive offices) |
|
(Zip
Code) |
Registrant’s
telephone number, including area code: (877) 292-7660
Not
Applicable
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
☐ |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
☐ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
Class
A Common Stock, $0.01 par value per share |
|
GNLN |
|
Nasdaq
Global Market |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item
1.01. Entry into a Material Definitive Agreement
On October 29, 2024, Greenlane Holdings, Inc. (the
“Company’) entered into a series of agreements in order to restructure existing senior debt. The Company and its senior lenders
entered into the agreements described below to extend the maturity and reduce the amount of such debt.
Exchange
Agreement
On October 29, 2024,the Company entered into an Exchange
Agreement (the “Exchange Agreement”) with its Senior Subordinated Lender, whereby the Company agreed to exchange an aggregate
of $4,617,307 of debt originally owed to Agile Capital Funding LLC and Cedar Advance LLC in a 3(a)(9) exchange for new Senior Subordinated
Notes in the principal amount of $4,000,000 due one year from issuance (the “Exchange Note”), reducing outstanding indebtedness
by approximately $617,000. The Exchange Note is convertible at the option of the holder at $3.17 per share. In connection with the Exchange,
the Company issued an aggregate of 1,261,830 five year warrants with an exercise price of $3.04 per share (the “Exchange Warrants”).
In addition, pursuant to the terms of the Exchange
Agreement, the Company agreed to issue warrants to the Holders, with an initial exercise price of $3.04, exercisable 180 days after issuance
(the “Exchange Inducement Warrants”). The Exchange Inducement Warrants were issued to incentivize the holders to exercise
some or all of their existing warrants originally issued on August 13, 2024 (the “Existing Warrants”) for cash, which existing
warrants have an exercise price of $2.50 per share. The Exchange Inducement Warrants are initially exercisable for zero shares, but to
the extent that the Holders exercise any of such Existing Warrants during the one-hundred sixty day inducement period, the Exchange Inducement
Warrants will become exercisable on April 30, 2025 for 200% of the number of Existing Warrants exercised for cash during such inducement
period.
Also, pursuant to the Exchange Agreement, the Senior
Subordinated Lender agreed that it will exercise its Existing Warrants for cash prior to exercising any of its outstanding pre-funded
warrants, contingent on the market price of the common stock being above $2.50 per share and certain other conditions. The above agreement
will terminate upon the Company receiving certain cash proceeds and prepaying at least $2,250,000 of Cobra’s Notes.
The Company engaged Aegis Capital Corp. (“Aegis”)
to act as its exclusive placement agent in connection with the transactions summarized above and will pay Aegis a cash fee equal to 4.0%
of the aggregate gross proceeds from the exercise of the Existing Warrants. No fees were paid to Aegis by the Company in connection
with the restructuring of debt described above.
The
Exchange Agreement is filed as Exhibit 10.1. The Exchange Note is filed as Exhibit 10.2. The Exchange Warrant is filed as Exhibit 10.3.
The Exchange Inducement Warrant is filed as Exhibit 10.4. The descriptions of the Exchange Agreement, the Exchange Notes, the Exchange
Warrants and the Exchange Inducement Warrants are qualified by the actual agreements filed as Exhibits hereto.
First
Amendment to Amended and Restated Secured Promissory Note
On October 29, 2024, the Company entered into the
First Amendment to Amended and Restated Secured Promissory Note (the “Note Amendment”) with Cobra Alternative Capital Strategies
LLC (“Cobra”). Pursuant to the Note Amendment, Cobra agreed to extend the Maturity Date of its senior promissory note dated
May 1, 2024, which is currently due. The new Maturity Date will be October 29, 2025. In consideration for the extension, the Company (i)
agreed to make such Notes convertible at the option of Cobra with a conversion price of $3.17 per share, (ii) agreed to prepay Cobra’s
debt with 50% of any money raised by the Company from warrant exercise proceeds and from capital raise transactions, and (iii) issued
Cobra an aggregate of 500,000 five year warrants with an exercise price of $3.04 per share which are identical to the Exchange Warrants.
The
description of the Note Amendment is a summary and is qualified by the actual agreement which is filed as Exhibit 10.5 hereto.
Item
2.03. Creation of a Direct Financial Obligation
See
Item 1.01.
Item
3.02 Unregistered Sales of Equity Securities
See
Item 1.01
Item
9.01. Financial Statements and Exhibits.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
|
GREENLANE
HOLDINGS, INC. |
|
|
|
Dated:
October 30, 2024 |
By: |
/s/
Barbara Shur |
|
|
Barbara
Shur |
|
|
Chief
Executive Officer |
Exhibit
10.1
EXCHANGE
AGREEMENT
THIS
EXCHANGE AGREEMENT (the “Agreement”) is dated this 29th day of October, 2024 (the “Effective Date”), by
and among Greenlane Holdings, Inc. a Delaware corporation (the “Company”), and Empery Asset Master LTD, Empery Tax
Efficient, LP and Empery Debt Opportunity Fund, LP (each, a “Holder” and collectively, the “Holders”).
WHEREAS,
the Holders entered into that certain Purchase Agreement, dated as of even date herewith (the “Purchase Agreement”),
by and among Cedar Advance LLC (“Cedar”), Agile Capital Funding LLC (“Agile”) and the Holders;
WHEREAS,
pursuant to the Purchase Agreement, Cedar assigned all of their rights, title, and interests contained in that certain Standard Merchant
Cash Advance Agreements dated July 11, 2023, October 30, 2023 and March 15, 2024 (the “SMA Agreements”) by and among
the Company, certain subsidiaries and guarantor of the Company and Cedar, to the Holders, along with all rights, title, and interests
contained in the ancillary transaction documents;
WHEREAS,
pursuant to the Purchase Agreement, Agile assigned all of their rights, title and interests contained in that certain Agreement for the
Purchase and Sale of Future Receipts dated July 28, 2023, October 30, 2023 and March 15, 2024 (the “PSFR Agreements”)
by and among the Company, certain subsidiaries and guarantors of the Company and Agile, to the Holders, along with all rights, title
and interests contained in the ancillary transaction documents;
WHEREAS,
pursuant to the Purchase Agreement, the Holders are now deemed to be the holders of notes relating to an aggregate of Four Million Six
Hundred Seventeen Thousand Three Hundred Seven Dollars ($4,617,307) of debt outstanding under the SMA Agreements and the PSFR Agreements
(the “Notes”);
WHEREAS,
pursuant to the Purchase Agreement the Holders beneficially own and hold the Notes, all as set forth on Exhibit A hereto (the
“Securities”);
WHEREAS,
each Holder desires to exchange the Securities for the (i) Company’s Senior Subordinated Convertible Notes in the form attached
hereto as Exhibit B (the “Exchange Notes”), (ii) Warrants to Purchase Common Stock in the form attached hereto
as Exhibit C (the “Exchange Warrants”) and (iii) Inducement Warrants to Purchase Common Stock in the form attached
hereto as Exhibit D (the “Exchange Inducement Warrants” and together with the Exchange Notes and the Exchange
Warrants, the “Exchange Securities”), and the Company desires to issue the Exchange Securities in exchange for the
Securities, in the amounts set forth on Exhibit A, and on the terms and conditions set forth in this Agreement; and
WHEREAS,
the reliance upon the representations made by each of the Holders and the Company in this Agreement, the transactions contemplated by
this Agreement are such that the offer and exchange of securities by the Company under this Agreement will be exempt from registration
under applicable United States securities laws as a result of this exchange offer being undertaken pursuant to Section 3(a)(9) of the
Securities Act (as defined below).
NOW,
THEREFORE, in consideration of the terms and conditions contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and each of the Holders hereby agree as follows:
Section
1. Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement: (a) capitalized
terms that are not otherwise defined herein have the meanings given to such terms in the Note (as defined herein), and (b) the following
terms have the meanings set forth below:
“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.
“Board
of Directors” means the board of directors of the Company.
“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day
on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the common stock of the Company, par value $0.01 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.
“Conversion
Price” shall have the meaning ascribed to such term in the Exchange Notes.
“Conversion
Shares” shall have the meaning ascribed to such term in the Exchange Notes. For the avoidance of doubt, such Conversion Shares
includes all shares of Common Stock issued and issuable pursuant to the terms of the Exchange Notes, including without limitation, shares
of Common Stock issued and issuable in lieu of the cash payment of interest, if any, on the Exchange Note in accordance with the terms
of the Note, in each case without respect to any limitation or restriction on the conversion of the Exchange Note.
“Disclosure
Schedules” shall have the meaning ascribed to such term in Section 3.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.
“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.2.
“Material
Permits” shall have the meaning ascribed to such term in Section 3.13.
“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.
“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.
“SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(h).
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1 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 principal Trading Market is open for trading.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock
Exchange, (or any successors to any of the foregoing).
“Transaction
Documents” means this Agreement, the Exchange Securities and the Purchase Agreement.
“Warrant
Shares” shall have the meaning ascribed to such term in the Exchange Warrants and the Exchange Inducement Warrants. For the
avoidance of doubt, such Warrant Shares includes all shares of Common Stock issued and issuable pursuant to the terms of the Exchange
Warrants and the Exchange Inducement Warrants, in each case without respect to any limitation or restriction on the exercise of the Exchange
Warrants and the Exchange Inducement Warrants.
Section
2. Exchange. Subject to and upon the terms and conditions set forth in this Agreement, each Holder hereby agrees that the Securities
listed next to such Holder’s name on Exhibit A attached hereto are deemed surrendered and, in exchange therefore, the Company
shall issue to such Holder the Exchange Securities, in such amounts and to such Holders as set forth on Exhibit A attached hereto
(each, an “Exchange”).
2.1
Closing. On the date hereof (the “Closing Date”), the Company will issue and deliver (or cause to be issued
and delivered) the Exchange Securities to each applicable Holder, or in the name of a custodian or nominee of such Holder, or as otherwise
requested by such Holder in writing, and such Holder will be deemed to have surrendered, to the Company the applicable Securities set
forth on Exhibit A attached hereto (such terms, the “Closing”).
2.2
Section 3(a)(9). Assuming the accuracy of the representations and warranties of the Company and each Holder set forth in Sections
3 and 4 of this Agreement, the parties acknowledge and agree that the purpose of such representations and warranties is, among other
things, to ensure that the Exchange qualifies as an exchange of securities under Section 3(a)(9) of the Securities Act.
2.3
Legal Opinion. At the Closing the Company shall cause its legal counsel to issue to the Holders a legal opinion of its counsel,
substantially in the form of Exhibit C attached hereto. Such opinion shall opine on the availability of an exemption from registration
under the Securities Act as it relates to the Exchange, the tacking of the holding period of the Exchange Securities to the original
issuance date of the Securities under Rule 144, which is deemed to have began no later than March 15, 2024 and other matters reasonably
requested by a Holder. The Company shall be responsible for all costs and expenses related to the issuance of the legal opinion described
in this Section 2.3.
2.4
Exchange Securities Delivery. Within two days of the Closing, the Company shall deliver the Exchange Securities applicable to
each Holder to the address set forth on each Holder’s signature page attached hereto, or as otherwise directed by each such Holder.
2.5.
Warrant Inducement. Each Holder currently holds warrants originally issued by the Company on August 13, 2024 to such Holder, each
currently with an exercise price of $2.50 per share, as the same may be adjusted pursuant to the terms thereof (the “Existing
Warrants”). The Company and the Holders hereby agree that the Exchange Inducement Warrants will be issued pursuant to the Exchange
with an initial exercise price of $3.04 for a maximum eligibility number of Warrant Shares equal to 200% of the number of Existing Warrants
held by each applicable Holder, and that none of the Exchange Inducement Warrants will initially be exercisable as of the Closing Date.
The Company and the Holders hereby agree, that, as an inducement for the Holders to exercise some or all of the Existing Warrants in
accordance with their terms at any time starting on the Closing Date and ending on the one-hundred sixtieth calendar day following the
Closing Date (the “Inducement Period”), that for every Warrant Share underlying the Existing Warrants exercised for
cash by a Holder during the Inducement Period that, effective as of April 30, 2025, two Warrant Share underlying the Exchange Inducement
Warrants will become exercisable for such Holder. The Exchange Inducement Warrants will terminate on the five year anniversary of the
end of the Inducement Period.
2.6
Repayment of Senior Debt. The Holders understand from the Company that the Company has agreed with Cobra Alternative Capital Strategies
LLC] (“Cobra”) that unless or until Cobra’s Senior Secured Promissory Note as amended on the date hereof (the
“Cobra Debt”) has been repaid in full that the Company agreed with Cobra to use 50% of any gross proceeds from (i)
the exercise of any of the Company’s warrants and/or (ii) any capital raised pursuant to one or more transactions involving the
issuance of any securities, to repay such Cobra Debt. In furtherance of the foregoing, each Holder hereby covenants and agrees with the
Company that it will not exercise any pre-funded warrants prior to the exercise in full of its Existing Warrants so long as at the time
of any such exercise (i) both (x) the last VWAP (as defined in the Existing Warrants) and (y) if any such exercise is contemplated to
occur during “regular trading hours” on a Trading Day, the Bid Price (as defined in the Existing Warrants) of the Company’s
Common Stock, at all times during such Trading Day is above the Exercise Price (as defined in the Existing Warrants) and (ii) an effective
registration statement registering the resale of all shares of Common Stock underlying such Existing Warrants is effective and available.
The Holder’s obligation under the immediately preceding sentence will no longer apply when the Company has repaid at least $2,250,000
of the Cobra Debt from warrant exercises or otherwise.
Section
3. Representations and Warranties of the Company. Except as set forth in the disclosure schedules (the “Disclosure Schedules”),
which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent
of the disclosure contained in the corresponding section of the Disclosure Schedules, the Company, represents and warrants to each Holder
that:
3.1
Subsidiaries. All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1. The Company owns,
directly or indirectly, all of the capital stock or other equity interests of each any subsidiary of the Company as set forth on Schedule
3.1 and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date
hereof (a “Subsidiary”) free and clear of any liens, and all of the issued and outstanding shares of capital stock
of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or
purchase securities. If the Company has no subsidiaries, all other references to the Subsidiaries or any of them in the Transaction Documents
(as defined in the Note) shall be disregarded.
3.2
Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power
and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any
Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or
other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good
standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned
by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could
not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction
Document; (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise)
of the Company and the Subsidiaries, taken as a whole; or (iii) a material adverse effect on the Company’s ability to perform in
any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material
Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking
to revoke, limit or curtail such power and authority or qualification.
3.3
Authorization; Enforcement. The Company has the requisite power and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it of
the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no
further action is required by the Company, the Board of Directors or the Company’s stockholders in connection herewith or therewith
other than in connection with the Required Approvals. This Agreement and each other Transaction Document to which it is a party has been
(or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will
constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except: (i)
as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally; (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies; and (iii) insofar as indemnification and contribution provisions may be limited
by applicable law.
3.4
No Conflicts. The execution, delivery and performance by the Company of this Agreement and the other transaction documents to
which it is a party, the issuance of the Exchange Securities in connection with the Exchange and the consummation by it of the transactions
contemplated hereby and thereby do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s
certificate or articles of incorporation, bylaws or other organizational or charter documents; (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default) under, result in the creation of any lien (except liens
in favor of such Holder) upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a
party or by which any property or asset of the Company or any Subsidiary is bound or affected; or (iii) subject to the Required Approvals,
conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations),
or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and
(iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.
3.5
Filings, Consents and Approvals. Except as set forth on Schedule 3.5, the Company is not required to obtain any consent,
waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction
Documents, other than: (i) the filings required by Section 21, and (ii) the filing of Form D (if applicable) and Form 8-K with the Commission
and such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).
3.6
Issuance of the Exchange Securities; Tacking. The Exchange Securities are duly authorized, validly issued, fully paid and nonassessable,
free and clear of all liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. The
Exchange Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be
duly and validly issued, fully paid and nonassessable, free and clear of all liens imposed by the Company other than restrictions on
transfer provided for in the Transaction Documents. Based on representations and warranties of Agile and Cedar set forth in the Purchase
Agreement, the Company hereby acknowledges and agrees that the holding period of the Exchange Securities by the Holders may be tacked
to the holding period of the Securities in the hands of Agile and Cedar, which began no later than March 15, 2024.
3.7
Capitalization. The capitalization of the Company is as set forth on Schedule 3.7, which Schedule 3.7 shall also
include the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof. Except
as set forth on Schedule 3.7, the Company has not issued any capital stock since its most recently filed periodic report under
the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance
of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans and pursuant to the conversion and/or
exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act. Except
as set forth on Schedule 3.7, other than with regards to an Exempt Issuance (as defined in the Note), no Person has any right
of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the
Transaction Documents. Except as a result of the Exchange and securities issued to employees, officers or directors, or former employees,
officers or directors and other service providers or former service providers of the Company pursuant to the Equity Incentive Plan or
otherwise, except as set forth on Schedule 3.7, there are no outstanding options, warrants, rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or
giving any Person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings or arrangements
by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents.
Except as set forth on Schedule 3.7, the Exchange will not obligate the Company to issue shares of Common Stock or other securities
to any Person (other than a Holder) and will not result in a right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are duly authorized,
validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of
such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No
further approval or authorization of any stockholder, the Board of Directors or others is required for the Exchange. Other than as set
forth on Schedule 3.7, there are no stockholders agreements, voting agreements or other similar agreements with respect to the
Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s
stockholders.
3.8
SEC Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the
two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the
foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein
as the “SEC Reports”). As of their respective dates, the SEC Reports complied in all material respects with the requirements
of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of
a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading. The Company has never been an issuer subject to Rule 144(i)
under the Securities Act. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent
basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the
notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all
material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results
of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end
audit adjustments.
3.9
Material Changes; Undisclosed Events, Liabilities or Developments. Since the filing of the Company’s Form 10-Q for the period
ended June 30, 2024, except as set forth on Schedule 3.9: (i) there has been no event, occurrence or development that has had
or that could reasonably be expected to result in a Material Adverse Effect; (ii) the Company has not incurred any liabilities (contingent
or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice
and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings
made with the Commission; (iii) the Company has not altered its method of accounting; (iv) the Company has not declared or made any dividend
or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any
shares of its capital stock; and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant
to any stock option plan or as set forth in the SEC Reports. Except for the issuance of the Exchange Securities contemplated by this
Agreement, no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur
or exist with respect to the Company or its Subsidiaries or their respective businesses, properties, operations, assets or financial
condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is
made or deemed made that has not been publicly disclosed at least one (1) Trading Day prior to the date that this representation is made.
3.10
Litigation. Except as set forth on Schedule 3.10, there is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their
respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state,
county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity
or enforceability of any of the Transaction Documents or the Exchange Securities or (ii) could, if there were an unfavorable decision,
have or reasonably be expected to result in a Material Adverse Effect, and neither the Company nor any Subsidiary, nor any director or
officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities
laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated,
any investigation by the Commission involving the Company or any current or former director or officer of the Company that is likely
to lead to action that can reasonably be expected to result in a Material Adverse Effect. There has not been, and to the knowledge of
the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former
director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration
statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.
3.11
Labor Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees
of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’
employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither
the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company or any Subsidiary,
is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary
information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third
party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability
with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local
and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours,
except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
3.12
Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that
has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor
has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound
(whether or not such default or violation has been waived); (ii) is in violation of any judgment, decree or order of any court, arbitrator
or other governmental authority; or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental
authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational
health and safety, product quality and safety and employment and labor matters, except in each case as could not have or reasonably be
expected to result in a Material Adverse Effect.
3.13
Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports,
except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or
modification of any Material Permit.
3.14
Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them
and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries,
in each case free and clear of all liens, except for (i) liens as do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) liens for the payment
of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and, the payment of
which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries
are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.
3.15
Intellectual Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights
and similar rights as described in the SEC Reports, all as necessary or required for use in connection with their respective businesses
as presently conducted and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual
Property Rights”). None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any
of, the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned,
within two (2) years from the date of this Agreement. Neither the Company nor any Subsidiary has received, since the date of the latest
audited financial statements included within the SEC Reports, a written notice of a claim or otherwise has any knowledge that the Intellectual
Property Rights violate or infringe upon the rights of any Person, except as could not have or reasonably be expected to not have a Material
Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement
by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures
to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
3.16
Transactions with Affiliates and Employees. Except for any Exempt Issuances, none of the officers or directors of the Company
or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party to
any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to
or from providing for the borrowing of money from or lending of money to, or otherwise requiring payments to or from any officer, director
or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee, stockholder, member or partner, in each case in excess of $120,000 other than for: (i)
payment of salary or consulting fees for services rendered; (ii) reimbursement for expenses incurred on behalf of the Company; and (iii)
other employee benefits, including stock option or stock award agreements under the Equity Incentive Plan.
3.17
Sarbanes-Oxley; Internal Accounting Controls. Except as set forth on Schedule 3.17, the Company and the Subsidiaries are
in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and
any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as
of the Closing Date. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions
are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to
any differences. The Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers have
evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of the period
covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The
Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about
the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation
Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) of the
Company that have materially affected, or is reasonably likely to materially affect, the internal control over financial reporting of
the Company and its Subsidiaries.
3.18
Certain Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiaries to
any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents. The Holders shall have no obligation with respect to any fees or with respect to any claims
made by or on behalf of other Persons for fees of a type contemplated in this Section 3.18 that may be due in connection with the transactions
contemplated by the Transaction Documents.
3.19
Private Placement. Assuming the accuracy of the Holders’ representations and warranties set forth in Section 4, no registration
under the Securities Act is required for the issuance of the Exchange Securities by the Company to the Holders as contemplated hereby.
The issuance of the Exchange Securities hereunder does not contravene the rules and regulations of the Trading Market.
3.20
Investment Company. The Company is not, and is not an Affiliate of, and immediately after the Exchange, will not be or be an Affiliate
of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company shall conduct
its business in a manner so that it will not become an “investment company” subject to registration under the Investment
Company Act of 1940, as amended.
3.21
Registration Rights. Except as set forth on Schedule 3.21, no Person has any right to cause the Company to effect the registration
under the Securities Act of any securities of the Company or any Subsidiaries.
3.22
Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and
the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration
of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating
such registration. Except as disclosed in the Company’s SEC filings, the Company has not, in the twelve (12) months preceding the
date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.
3.23
Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order
to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the
laws of its state of incorporation that is or could become applicable to any Holder as a result of such Holder and the Company fulfilling
their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of the Company’s
issuance of the Exchange Securities and the Holder’s ownership of the Exchange Securities or the Underlying Shares (as defined
below).
3.24
Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents,
the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Holders or their agents or counsel
with any information that it believes constitutes or might constitute material, non-public information. The Company understands and confirms
that the Holders will rely on the foregoing representation in effecting transactions in securities of the Company. All of the disclosure
furnished by or on behalf of the Company to the Holders regarding the Company and its Subsidiaries, their respective businesses and the
transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any
untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading. The Company acknowledges and agrees that no Holder makes or has made
any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section
3 hereof.
3.25
No Integrated Offering. Assuming the accuracy of the Holders’ representations and warranties set forth in this Section 4,
neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers
or sales of any security or solicited any offers to buy any security, under circumstances that would cause this Exchange to be integrated
with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of any such securities
under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of the securities
of the Company are listed or designated.
3.26
No General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Exchange
Securities by any form of general solicitation or general advertising. The Company has offered the Exchange Securities only to the Holders
and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.
3.27
Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any
agent or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity; (ii) made any unlawful
payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate
funds; (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf
of which the Company is aware) which is in violation of law; or (iv) violated in any material respect any provision of FCPA.
3.28
Accountants. The Company’s accounting firm is set forth on Schedule 3.28 of the Disclosure Schedules. To the knowledge
and belief of the Company, such accounting firm is a registered public accounting firm as required by the Exchange Act.
3.29
No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company.
3.30
Acknowledgment Regarding the Exchange. The Company acknowledges and agrees that the Holders are acting solely in the capacity
of an arm’s length party with respect to the Transaction Documents and the transactions contemplated thereby. The Company further
acknowledges that no Holder is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to
the Transaction Documents and the transactions contemplated thereby and any advice given by any Holder or any of their respective representatives
or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Holders’
agreement to participate in the Exchange. The Company further represents to the Holders that the Company’s decision to enter into
this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated
hereby by the Company and its representatives.
3.31
Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate
the sale or resale of any of the Exchange Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting issuances
of, any of the Exchange Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase
any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s placement
agent (if applicable) in connection with the placement of the Exchange Securities.
3.32
Stock Option Plans. Each stock option granted by the Company was granted (i) in accordance with the terms of the applicable stock
option plan of the Company and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date such
stock option would be considered granted under GAAP and applicable law. No stock option granted under the Company’s stock option
plan has been backdated. The Company has not knowingly granted, and there is no and has been no policy or practice of the Company to
knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public
announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.
3.33
Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director,
officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).
3.34
U.S. Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within
the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon a Holder’s request.
3.35
Bank Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company
Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the
“Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly or indirectly,
five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent or more of the total equity
of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries
or Affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and
to regulation by the Federal Reserve.
3.36
Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company (i) has made or filed all United States federal, state and local income and all foreign income and
franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other
governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations
and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim.
3.37
Seniority. No Indebtedness or other claim against the Company is senior to the Exchange Notes in right of payment, whether with
respect to interest or upon liquidation or dissolution, or otherwise, other than the Cobra Debt secured by purchase money security interests
(which is senior only as to underlying assets covered thereby) and capital lease obligations..
3.38
Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with
applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended,
applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”),
and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company
or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or any Subsidiary, threatened.
3.39
Non-Shell Representation. The Company hereby represents that it is not, and has never been, an issuer subject to Rule 144(i) under
the Securities Act.
Section
4. Representations and Warranties of the Holders. Each Holder represents and warrants to the Company, with respect to itself only,
that:
4.1
Ownership of the Securities. Such Holder is the legal and beneficial owner of the Securities. Such Holder paid for the Securities,
and has continuously held the Securities since its issuance or purchase. Such Holder, individually or through an affiliate, owns the
Securities outright and free and clear of any options, contracts, agreements, liens, security interests, or other encumbrances.
4.2
No Public Sale or Distribution. Such Holder is acquiring the Exchange Securities in the ordinary course of business for its own
account and not with a view toward, or for resale in connection with, the public sale or distribution thereof; provided, however, that
by making the representations herein, such Holder does not agree to hold any of the Exchange Securities for any minimum or other specific
term and reserves the right to dispose of the Exchange Securities at any time in accordance with an exemption from the registration requirements
of the Securities Act and applicable state securities laws. Such Holder does not presently have any agreement or understanding, directly
or indirectly, with any person to distribute, or transfer any interest or grant participation rights in, the Securities or the Exchange
Securities.
4.3
Accredited Investor and Affiliate Status. At the time such Holder was offered the Exchange Securities, it was, as of the date
hereof, it is, and as of the date it converts the Exchange Securities, it will be, an “accredited investor” as that term
is defined in Rule 501 of Regulation D under the Securities Act. Such Holder is not, and has not been, for a period of at least three
(3) months prior to the date of this Agreement (a) an officer or director of the Company, (b) an “affiliate” of the Company
(as defined in Rule 144) (an “Affiliate”) or (c) a “beneficial owner” of more than 10% of the common stock
(as defined for purposes of Rule 13d-3 of the Exchange Act).
4.4
Reliance on Exemptions. Such Holder understands that the Exchange is being made in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of,
and such Holder’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Holder
set forth herein in order to determine the availability of such exemptions and the eligibility of such Holder to complete the Exchange
and to acquire its pro-rata portion of the Exchange Securities.
4.5
Information. Such Holder has been furnished with all materials relating to the business, finances and operations of the Company
and materials relating to the Exchange which have been requested by such Holder. Such Holder has been afforded the opportunity to ask
questions of the Company. Neither such inquiries nor any other due diligence investigations conducted by such Holder or its representatives
shall modify, amend or affect such Holder’s right to rely on the Company’s representations and warranties contained herein.
Such Holder acknowledges that all of the documents filed by the Company with the SEC under Sections 13(a), 14(a) or 15(d) of the Exchange
Act that have been posted on the SEC’s EDGAR site are available to such Holder, and such Holder has not relied on any statement
of the Company not contained in such documents in connection with such Holder’s decision to enter into this Agreement and the Exchange.
4.6
Risk. Such Holder understands that its investment in the Exchange Securities involves a high degree of risk. Such Holder is able
to bear the risk of an investment in the Exchange Securities including, without limitation, the risk of total loss of its investment.
Such Holder has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with
respect to the Exchange.
4.7
No Governmental Review. Such Holder understands that no United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement in connection with the Exchange or the fairness or suitability of the
investment in the Exchange Securities nor have such authorities passed upon or endorsed the merits of the Exchange Securities.
4.8
Organization; Authorization. Such Holder is duly organized, validly existing and in good standing under the laws of its state
of formation and has the requisite organizational power and authority to enter into and perform its obligations under this Agreement.
4.9
Validity; Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of such Holder and
shall constitute the legal, valid and binding obligations of such Holder enforceable against such Holder in accordance with its terms.
The execution, delivery and performance of this Agreement by such Holder and the consummation by such Holder of the transactions contemplated
hereby (including, without limitation, the irrevocable surrender of the Securities) will not result in a violation of the organizational
documents of such Holder.
4.10
Prior Investment Experience. Such Holder acknowledges that it has prior investment experience, including investment in securities
of the type being exchanged, including the Securities or the Exchange Securities, and has read all of the documents furnished or made
available by the Company to it and is able to evaluate the merits and risks of such an investment on its behalf, and that it recognizes
the highly speculative nature of this investment.
4.11
Tax Consequences. Such Holder acknowledges that the Company has made no representation regarding the potential or actual tax consequences
for such Holder which will result from entering into the Agreement and from consummation of the Exchange. Such Holder acknowledges that
it bears complete responsibility for obtaining adequate tax advice regarding this Agreement and the Exchange.
4.12
No Registration, Review or Approval. Such Holder acknowledges, understands and agrees that its pro-rata portion of the Exchange
Securities are being exchanged hereunder pursuant to an exchange offer exemption under Section 3(a)(9) of the Securities Act.
Section
5. Conditions Precedent to Obligations of the Company. The obligation of the Company to consummate the transactions contemplated
by this Agreement is subject to the satisfaction on the Closing Date of each of the following conditions, provided that these conditions
are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing such Holder
with prior written notice thereof:
5.1
No Prohibition. No order of any court, arbitrator, or governmental or regulatory authority shall be in effect which purports to
enjoin or restrain any of the transactions contemplated by this Agreement.
5.3
Representations. The accuracy in all material respects when made and on the Closing Date of the representations and warranties
of the Holders contained herein (unless as of a specific date therein).
Section
6. Conditions Precedent to Obligations of the Holders. The obligation of each Holder to consummate the transactions contemplated
by this Agreement is subject to the satisfaction on the Closing Date of each of the following conditions, provided that these conditions
are for each such Holder’s sole benefit and may be waived by the applicable Holder at any time in its sole discretion by providing
the Company with prior written notice thereof:
6.1
No order of any court, arbitrator, or governmental or regulatory authority shall be in effect which purports to enjoin or restrain any
of the transactions contemplated by this Agreement;
6.2
The accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Company contained
herein (unless as of a specific date therein);
6.3
All obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;
6.4
There is no event of default then existing on the Securities on such date; and
6.5
From the date hereof to the relevant Closing Date, trading in the Company’s common stock shall not have been suspended by the SEC
or any trading market and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall
not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such
service, or on any trading market, nor shall a banking moratorium have been declared either by the United States or New York State authorities
nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such
magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of
any Holder makes it impracticable or inadvisable to effect the Exchange of the Exchange Securities at the Closing.
Section
7. Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement shall be construed under the laws of the state of New York,
without regard to principles of conflicts of law or choice of law that would permit or require the application of the laws of another
jurisdiction. The Company and the Holders each hereby agree that all actions or proceedings arising directly or indirectly from or in
connection with this Agreement shall be litigated only in the Supreme Court of the State of New York or the United States District Court
for the Southern District of New York located in New York County, New York. The Company and the Holders each consents to the exclusive
jurisdiction and venue of the foregoing courts and consents that any process or notice of motion or other application to either of said
courts or a judge thereof may be served inside or outside the State of New York or the Southern District of New York by generally recognized
overnight courier or certified or registered mail, return receipt requested, directed to such party at its or his address set forth below
(and service so made shall be deemed “personal service”) or by personal service or in such other manner as may be permissible
under the rules of said courts. THE COMPANY AND THE HOLDERS EACH HEREBY WAIVE ANY RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION
PURSUANT TO THIS AGREEMENT.
Section
8. Indemnification of Holder. Subject to the provisions of this Section 8, the Company will indemnify and hold each Holder and
its directors, officers, managers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Holder (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents,
members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding
a lack of such title or any other title) of such controlling persons (each, a “Holder Party”) harmless from any and
all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements,
court costs and reasonable attorneys’ fees and costs of investigation that any such Holder Party may suffer or incur as a result
of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement
or in the other Transaction Documents or (b) any action instituted against the Holder Parties in any capacity (including a Holder Party’s
status as an investor), or any of them or their respective Affiliates, by the Company or any stockholder of the Company who is not an
Affiliate of such Holder Party, arising out of or relating to any of the transactions contemplated by the Transaction Documents. For
the avoidance of doubt, the indemnification provided herein is intended to, and shall also cover, direct claims brought by the Company
against the Holder Parties; provided, however, that such indemnification shall not cover any loss, claim, damage or liability to the
extent it is finally judicially determined to be attributable to any Holder Party’s breach of any of the representations, warranties,
covenants or agreements made by such Holder Party in any Transaction Document or any conduct by a Holder Party which is finally judicially
determined to constitute fraud, gross negligence or willful misconduct. If any action shall be brought against any Holder Party in respect
of which indemnity may be sought pursuant to this Agreement, such Holder Party shall promptly notify the Company in writing, and, except
with respect to direct claims brought by the Company, the Company shall have the right to assume the defense thereof with counsel of
its own choosing reasonably acceptable to the Holder Party. Any Holder Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Holder Party
except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has
failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable
opinion of counsel to the applicable Holder Party (which may be internal counsel), a material conflict on any material issue between
the position of the Company and the position of such Holder Party, in which case the Company shall be responsible for the reasonable
fees and expenses of no more than one such separate counsel. The Company will not be liable to any Holder Party under this Agreement
for any settlement by a Holder Party effected without the Company’s prior written consent, which shall not be unreasonably withheld
or delayed. In addition, if any Holder Party takes actions to collect amounts due under any Transaction Documents or to enforce the provisions
of any Transaction Documents, then the Company shall pay the costs incurred by such Holder Party for such collection, enforcement or
action, including, but not limited to, attorneys’ fees and disbursements. The indemnification and other payment obligations required
by this Section 8 shall be made by periodic payments of the amount thereof during the course of the investigation, defense, collection,
enforcement or action, as and when bills are received or are incurred; provided, that if any Holder Party is finally judicially determined
not to be entitled to indemnification or payment under this Section 8, such Holder Party shall promptly reimburse the Company for any
payments that are advanced under this sentence. The indemnity agreements contained herein shall be in addition to any cause of action
or similar right of any Holder Party against the Company or others and any liabilities the Company may be subject to pursuant to law
Section
9. Fees and Expenses. Except as expressly set forth below, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement.
Section
10. [Intentionally Omitted]
Section
11. Certificates. Certificates evidencing the shares of the Company’s common stock underlying the Exchange Securities (the
“Underlying Shares”) shall not contain any legend: (i) while a registration statement covering the resale of such
security is effective under the Securities Act; (ii) following any sale of such Underlying Shares pursuant to Rule 144; (iii) if the
Underlying Shares are eligible for sale under Rule 144 (assuming cashless exercise of the Exchange Warrants and the Exchange Inducement
Warrants) or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations
and pronouncements issued by the staff of the Commission). The Company shall cause its counsel to issue a legal opinion to the Company’s
transfer agent promptly after any of the events described in (i)-(iii) in the preceding sentence if required by the Company’s transfer
agent to effect the removal of the legend hereunder (with a copy to each Holders and its broker). If all or any portion of an Exchange
Security is converted at a time when there is an effective registration statement to cover the resale of the Underlying Shares, or if
such Underlying Shares may be sold under Rule 144 or if such legend is not otherwise required under applicable requirements of the Securities
Act (including judicial interpretations and pronouncements issued by the staff of the Commission) then such Underlying Shares shall be
issued free of all legends. The Company agrees that following the Effective Date or at such time as such legend is no longer required
under this Section 11, it will, no later than two (2) Trading Days following the delivery by a Holder to the Company or the Company’s
transfer agent of a certificate representing Underlying Shares, as applicable, issued with a restrictive legend, deliver or cause to
be delivered to such Holder a certificate representing such shares that is free from all restrictive and other legends. The Company may
not make any notation on its records or give instructions to the Company’s transfer agent that enlarge the restrictions on transfer
set forth in this Section 11. Certificates for Underlying Shares subject to legend removal hereunder shall be transmitted by the Company’s
transfer agent to the applicable Holder by crediting the account of such Holder’s prime broker with the Depository Trust Company
System as directed by such Holder.
Section
12. 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; provided
that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and
effect as if the signature were an original, not a facsimile signature.
Section
13. Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation
of, this Agreement.
Section
14. Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity
or enforceability of any provision of this Agreement in any other jurisdiction.
Section
15. Entire Agreement; Amendments. This Agreement supersedes all other prior oral or written agreements between the Holders, the
Company, its affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except
as specifically set forth herein or therein, neither the Company nor the Holders make any representation, warranty, covenant or undertaking
with respect to such matters; provided, however, that all representations and warranties contained in the Loan Agreement, shall be incorporated
herein. No provision of this Agreement may be amended other than by an instrument in writing signed by each of the Company and the Holders.
No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought.
Section
16. Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be
in writing and shall be deemed given and effective on the earliest of: (a) the time of transmission, if such notice or communication
is delivered via facsimile at the facsimile number or email attachment at the email address as set forth on the signature pages attached
hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the time of transmission, if such
notice or communication is delivered email attachment at the email address as set forth on the signature pages attached hereto on a day
that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party
to whom such notice is required to be given.
The
addresses for such communications shall be:
If
to the Company:
Greenlane
Holdings
1885
West 2100 South
Boca
Raton, FL
Attn:
CFO and General Counsel
Email:
lana.reeve@greenlane
If
to a Holder:
c/o
Empery Asset Management, LP
1
Rockefeller Plaza, Suite 1205
New
York, NY 10020
Attn:
Ryan M, Lane
Email:
notices@emperyam.com
or
to such other address and/or to the attention of such other person as the recipient party has specified by written notice given to each
other party five (5) days prior to the effectiveness of such change.
Section
17. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of the Exchange Securities. The Holder may assign some or all of their rights hereunder
without the consent of any of the Company, in which event such assignee shall be deemed to be the Holder hereunder with respect to such
assigned rights.
Section
18. No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.
Section
19. Survival of Representations. The representations and warranties of the Company and the Holder contained in Sections 3 and
4, respectively, will survive the closing of the transactions contemplated by this Agreement.
Section
20. Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request
in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.
Section
21. Securities Laws Disclosure; Publicity. The Company shall by 9:00 a.m. (New York City time) on October 30, 2024, file a Current
Report on Form 8-K, including the Transaction Documents as exhibits thereto with the Commission. From and after the filing of such Form
8-K, the Company represents to the Holder that it shall have publicly disclosed all material, non-public information delivered to any
of the Holder by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents. In addition,
effective upon the filing of such Form 8-K, the Company acknowledges and agrees that any and all confidentiality or similar obligations
under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors,
agents, employees or Affiliates on the one hand, and the Holder or any of its Affiliates on the other hand, shall terminate. Notwithstanding
the foregoing, the Company shall not publicly disclose the name of the Holder, or include the name of the Holder in any filing with the
Commission or any regulatory agency or Trading Market, without the prior written consent of the Holder, except (a) as required by federal
securities law in connection with the filing of final Transaction Documents with the Commission and (b) to the extent such disclosure
is required by law or Trading Market regulations, in which case the Company shall provide the Holder with prior notice of such disclosure
permitted under this clause (b).
Section
22. Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, which shall be disclosed pursuant to Section 21, the Company covenants and agrees that neither it, nor any other Person acting
on its behalf has provided nor will provide the Holder or its agents or counsel with any information that constitutes, or the Company
reasonably believes constitutes, material non-public information, unless prior thereto the Holder shall have consented to the receipt
of such information and agreed with the Company to keep such information confidential. The Company understands and confirms that the
Holder shall be relying on the foregoing covenant in effecting transactions in securities of the Company. To the extent that the Company
delivers any material, non-public information to the Holder without the Holder’s consent, the Company hereby covenants and agrees
that the Holder shall not have any duty of confidentiality to the Company, any of its Subsidiaries, or any of their respective officers,
directors, agents, employees or Affiliates, or a duty to the Company, any of its Subsidiaries or any of their respective officers, directors,
agents, employees or Affiliates not to trade on the basis of, such material, non-public information, provided that the Holder shall remain
subject to applicable law. To the extent that any notice provided pursuant to any Transaction Document 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. The Company understands and confirms that the Holder shall be relying on the foregoing covenant
in effecting transactions in securities of the Company.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the parties have executed this Exchange Agreement as of the date first written above.
GREENLANE HOLDINGS |
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By: |
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Name: |
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Title: |
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EMPERY
ASSET Master LTD
bY:
EMPERY ASSET MANAGEMENT, LP
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By: |
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Name: |
Brett Director |
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Title: |
General Counsel |
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EMPERY
TAX EFFICIENT, LP
bY:
EMPERY ASSET MANAGEMENT, LP |
By: |
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Name: |
Brett Director |
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Title: |
General Counsel |
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EMPERY
DEBT OPPORTUNITY FUND, LP
bY:
EMPERY ASSET MANAGEMENT, LP |
By: |
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Name: |
Brett Director |
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Title: |
General Counsel |
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Exhibit
10.2
[FORM
OF SENIOR SUBORDINATED 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.
Greenlane
Holdings, Inc.
SENIOR
SUBORDINATED CONVERTIBLE NOTE
Issuance
Date: October 29, 2024 |
Original
Principal Amount: U.S. $[ ] |
FOR
VALUE RECEIVED, Greenlane Holdings, Inc., a Delaware corporation (the “Company”), hereby promises to pay to [Empery]
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 Senior Subordinated Convertible Note (including all
Senior Subordinated Convertible Notes issued in exchange, transfer or replacement hereof, this “Note”) is one of an
issue of Senior Subordinated Convertible Notes issued pursuant to the Exchange Agreement on the Closing Date (collectively, the “Notes”
and such other Senior Subordinated Convertible Notes, the “Other Notes”). Certain capitalized terms used herein are
defined in Section 31.
(1)
PAYMENTS OF PRINCIPAL; PREPAYMENT. 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 October 29, 2025, as may be extended at the option of the Holder (x) in the event that, and for so long as, an Event of Default
(as defined in Section 4(a)) shall have occurred and be continuing on the Maturity Date (as may be extended pursuant to this Section
1) or any event shall have occurred and be continuing on the Maturity Date (as may be extended pursuant to this Section 1) that with
the passage of time and the failure to cure would result in an Event of Default and/or (y) through the date that is ten (10) Business
Days after the consummation of a Change of Control in the event that a Change of Control is publicly announced or a Change of Control
Notice (as defined in Section 5(b)) is delivered prior to the Maturity Date. Other than as specifically permitted by this Note, the Company
may not prepay any portion of the outstanding Principal or accrued and unpaid Interest, if any.
(2)
INTEREST. No Interest shall accrue hereunder unless and until an Event of Default has occurred. From and after the occurrence
and during the continuance of any Event of Default, Interest shall accrue hereunder at 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, $3.17, 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 first (1st) 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)
[Intentionally Omitted].
(d)
Beneficial Ownership Conversion Limitations. 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). For purposes of this Section 3(d), 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), 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) 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) 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.
(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)
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;
(ii)
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);
(iii)
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));
(iv)
the Company’s failure to pay to the Holder any amount of Principal, Interest, Redemption Price or other amounts when and as due
under this Note or any other Transaction Document, except, in the case of a failure to pay Interest when and as due, in which case only
if such failure continues for a period of at least an aggregate of two (2) Business Days;
(v)
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., except that the Senior Note (as defined below) shall be due on the same date. ;
(vi)
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;
(vii)
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;
(viii)
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;
(ix)
other than as specifically set forth in another clause of this Section 4(a), the Company or any of its Subsidiaries breaches any representation,
warranty, covenant or other term or condition of any Transaction Document, except, in the case of a breach of a covenant or other term
or condition of any Transaction Document which is curable, only if such breach continues for a period of at least an aggregate of five
(5) Business Days after notice of such default;
(x)
any breach or failure in any respect to comply with either Sections 14 or 15 of this Note;
(xi)
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;
(xii)
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;
(xiii)
any Material Adverse Effect occurs;
(xiv)
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 (including this Note) as and when required by such Securities or the Exchange Agreement,
unless otherwise then prohibited by applicable federal securities laws, and any such failure remains uncured for at least five (5) Trading
Day;
(xv)
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
(xvi)
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 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 in accordance with the provisions of this Section
5(a) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable
delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Note
a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Note 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 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.
(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) and (iv) state whether there has been an Equity Conditions Failure.
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 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. 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.
(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. From and after the date the Issuance Date, 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) (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 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, other than the Senior Debt owed to Cobra Alternative Capital Strategies LLC (“Cobra”)
pursuant to that certain Amended and Restated Promissory Note, as amended on October 29, 2024, which shall be senior to this Note.
(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 issued on the Closing Date 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 to Cobra of 50% of the gross proceeds
of any exercise of the Company’s warrants or any capital raised pursuant to one or more transactions involving the issuance of
any securities, which payments may be made against interest or principal.
(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 material 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)
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
(i)
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 and proprietary
rights of the Company and its Subsidiaries that is necessary or material to the conduct of its business in full force and effect;
(d)
maintain insurance with responsible and reputable insurance companies or associations (including,
without limitation, comprehensive general liability, hazard, rent and business interruption insurance) with respect to its properties
(including all real properties leased or owned by it) and business, in such amounts and covering such risks as is required by any governmental
authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies
in similar businesses similarly situated; and
(e)
promptly, but in any event within one (1) Business Day, notify the Holder and the holders of the
Other Notes in writing whenever an Event of Default (an “Event of Default Notice”) 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.
(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 [ ] of the Exchange 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 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 reasonable 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 Holders 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 Holder 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 Holder and approved by the Company, such approval not to be unreasonably withheld, conditioned or delayed.
The Company, at the Company’s expense, shall cause the 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 [ ] of the Exchange Agreement. The Company shall provide the Holder with prompt written notice of all actions
taken pursuant to this Note, including in reasonable detail a description of such action and the reason therefor. Without limiting the
generality of the foregoing, the Company 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 Holders, shall initially
be as set forth on the signature pages attached to the Exchange 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 Exchange 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 Exchange Agreement and agrees that such service shall constitute good and sufficient service
of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal
action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on any collateral
or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR
IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.
(28)
Severability. If any provision of this Note is prohibited by law or otherwise determined
to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable
shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability
of such provision shall not affect the validity of the remaining provisions of this Note so long as this Note as so modified continues
to express, without material change, the original intentions of the Company and the Holder as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal
obligations of the Company or the Holder or the practical realization of the benefits that would otherwise be conferred upon the Company
or the Holder. The Company and the Holder will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable
provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable
provision(s).
(29)
DISCLOSURE. Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the Company
has in good faith determined that the matters relating to such notice do not constitute material, nonpublic information relating to the
Company or its Subsidiaries, the Company shall contemporaneously with any such receipt or delivery publicly disclose such material, nonpublic
information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains material, nonpublic
information relating to the Company or its Subsidiaries, the Company so shall indicate to the Holder contemporaneously with delivery
of such notice, and in the absence of any such indication, the Holder shall be allowed to presume that all matters relating to such notice
do not constitute material, nonpublic information relating to the Company or its Subsidiaries.
(30)
USURY. This Note is subject to the express condition that at no time shall the Company be
obligated or required to pay interest hereunder at a rate or in an amount which could subject the Holder to either civil or criminal
liability as a result of being in excess of the maximum interest rate or amount which the Company is permitted by applicable law to contract
or agree to pay. If by the terms of this Note, the Company is at any time required or obligated to pay interest hereunder, including
by way of an original issue discount, at a rate or in an amount in excess of such maximum rate or amount, the rate or amount of interest
under this Note shall be deemed to be immediately reduced to such maximum rate or amount and the interest payable shall be computed at
such maximum rate or be in such maximum amount and all prior interest payments in excess of such maximum rate or amount shall be applied
and shall be deemed to have been payments in reduction of the principal balance of this Note.
(31)
CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:
(a)
“Affiliate” shall have the meaning ascribed to such term in Rule 405 of the Securities Act.
(b)
“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.
(c)
“Bloomberg” means Bloomberg Financial Markets.
(d)
“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.
(e)
“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.
(f)
“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.
(g)
“Closing Date” shall have the meaning set forth in the Exchange Agreement, which date is the date the Company initially
issued Notes pursuant to the terms of the Exchange Agreement.
(h)
“Common Stock” means (i) the Company’s shares of common stock, par value $0.01 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.
(i)
“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.
(j)
“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.
(k)
“Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into
or exercisable or exchangeable for shares of Common Stock.
(l)
“Eligible Market” means the Principal Market, The New York Stock Exchange, The Nasdaq Global Market, The Nasdaq Global
Select Market or the NYSE American.
(m)
“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 shall be effective
and available for the resale of all remaining Underlying Shares, including the shares of Common Stock issuable upon conversion of the
Conversion Amount that is subject to the applicable Optional Prepayment, and there shall not have been any suspension of such registration
statement(s) or (y) all Underlying Shares, including the shares of Common Stock issuable upon conversion of the Conversion Amount that
is subject to the applicable 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 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 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;
(vi)
[Intentionally omitted].
(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 any Underlying Shares, including the shares of Common Stock issuable
upon conversion of the Conversion Amount that is subject to the applicable 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;
(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 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.
(n)
“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 Holder; provided, however, that the Equity
Condition set forth in clause (iv) of such definition is not waivable by the Holder.
(o)
“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.
(p)
“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.
(q)
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
(r)
“Exchange Agreement” means that certain exchange agreement dated as of the Subscription Date by and among the Company
and the investors listed on the signature pages attached thereto pursuant to which the Company issued the Notes and Warrants in exchange
for certain debt purchased from Agile and Cedar (as such entities are defined therein), as may be amended, amended and restated, supplemented
or otherwise modified from time to time.
(s)
“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.
(t)
“GAAP” means United States generally accepted accounting principles, consistently applied during the periods involved.
(u)
“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.
(v)
“Holders” shall have the meaning ascribed to such term in the Exchange Agreement.
(w)
“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.
(a)
“Material Adverse Effect” means (i) a material adverse effect on the legality, validity or enforceability of any Transaction
Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise)
of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in
any material respect on a timely basis its obligations under any Transaction Document.
(b)
“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.
(c)
“Options” means any rights, warrants or options to subscribe for or purchase (i) shares of Common Stock or (ii) Convertible
Securities.
(d)
“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 $1,000,000, in the aggregate, secured by Permitted Liens described in clauses (iv) of the definition of Permitted
Liens and (v) an aggregate of $3,955,000 owed to Cobra (“Senior Debt”).
(e)
“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)(viii) and (ix)
and (ix) security interests in all of the Company’s assets currently perfected in favor of Cobra..
(f)
“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.
(g)
“Principal Market” means the Nasdaq Capital Market.
(h)
“Pro Rata Amount” means a fraction (i) the numerator of which is the aggregate principal amount of Notes issued to
the initial Holder of this Note pursuant to the Exchange Agreement and (ii) the denominator of which is the aggregate principal amount
of Notes issued to all holders of Notes pursuant to the Exchange Agreement.
(i)
“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.
(j)
“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.
(k)
“Redemption Premium” means 125%.
(l)
“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.
(m)
“Related Fund” means, with respect to any Person, a fund or account managed by such Person or an Affiliate of such
Person.
(n)
“Required Holders” means the holders of Notes representing at least a majority of the aggregate principal amount of
the Notes then outstanding.
(o)
“SEC” means the United States Securities and Exchange Commission.
(p)
“Securities Act” means the Securities Act of 1933, as amended.
(q)
“Securities” means the Notes, the Warrants and the Underlying Shares.
(r)
“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.
(s)
“Subject Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.
(t)
“Subscription Date” means October [ ], 2024.
(u)
“Subsidiary” means any direct or indirect subsidiary of the Company.
(v)
“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.
(w)
“Transaction Documents” shall have the meaning ascribed to such term in the Exchange Agreement.
(x)
“Underlying Shares” means the Warrant Shares and Conversion Shares, including without limitation, shares of Common
Stock issued and issuable in lieu of the cash payment of interest on the Notes in accordance with the terms of the Notes, in each case
without respect to any limitation or restriction on the conversion of the Notes or the exercise of the Warrants.
(y)
“Warrants” shall have the meaning ascribed to such term in the Exchange Agreement, and shall include all warrants
issued in exchange therefor or replacement thereof.
(z)
“Warrant Shares” means the shares of Common Stock issuable upon exercise of the 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.
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Greenlane
Holdings, Inc. |
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By: |
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Name: |
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Title: |
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EXHIBIT
I
greenlane holdings, Inc.
CONVERSION
NOTICE
Reference
is made to the Senior Subordinated Convertible Note (the “Note”) issued to the undersigned by Greenlane Holdings,
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 $0.01
per share (the “Common Stock”) of the Company, as of the date specified below.
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Aggregate Conversion Amount to
be converted or number of Conversion Shares to be issued upon conversion: |
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Please
confirm the following information:
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If Aggregate Conversion Amount
is provided above, number of shares of Common Stock to be issued: |
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Please
issue the Common Stock into which the Note is being converted to 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:
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Issue to: |
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Address: |
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Electronic Mail: |
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☐
Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows:
DTC Participant: |
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DTC Number: |
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Account Number: |
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Account Number: |
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(if electronic book entry transfer) |
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Transaction Code Number: |
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(if electronic book entry transfer) |
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ACKNOWLEDGMENT
The
Company hereby acknowledges this Conversion Notice and hereby directs Pacific Stock Transfer Company to issue the above indicated number
of shares of Common Stock.
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Greenlane Holdings, Inc. |
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By: |
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Name: |
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Title: |
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Exhibit
10.3
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. |
PIPE
COMMON WARRANT TO PURCHASE COMMON STOCK
GREENLANE
HOLDINGS, INC.
Warrant
Shares: [●] |
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Issuance
Date: October 29, 2024 |
THIS
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 on or after the Issuance Date and on or prior to 5:00 p.m. (New York City time) on five years thereafter (the
“Termination Date”) but not thereafter, to subscribe for and purchase from Greenlane Holdings, Inc., 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 2.2.
1. |
Definitions.
In addition to the terms defined elsewhere in this Warrant or in the Exchange Agreement dated October 29, 2024 by and among the Company
and the holders party thereto (the “Holders”) referred to therein (the “Exchange Agreement”),
the following terms have the meanings indicated in this Section 1: |
1.1.
“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.
1.2.
“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.
1.3.
“Board of Directors” means the board of directors of the Company.
1.4.
“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.
1.5.
“Commission” means the United States Securities and Exchange Commission.
1.6.
“Common Stock” means the common stock of the Company, $0.01 par value per share, and any other class of securities
into which such securities may hereafter be reclassified or changed.
1.7.
“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.
1.8.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
1.9.
[Intentionally Omitted]
1.10.
[Intentionally Omitted]
1.11.
“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.
1.12.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
1.13.
[Intentionally Omitted]
1.14.
“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.
1.15.
“Trading Day” means a day on which the Common Stock is traded on a Trading Market.
1.16.
“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).
1.17.
“Transaction Documents” means the Exchange Agreement dated October 29, 2024, these Warrants, such other Warrants
as contemplated in the Exchange Agreement, and all exhibits and schedules thereto and hereto and any other documents or agreements executed
in connection with the transactions contemplated hereunder.
1.18.
“Transfer Agent” means Equiniti Trust Company LLC the current transfer agent of the Company, with a mailing
address of 1110 Centre Point Curve, Suite 101, Mendota Heights, MN 55120 and an email address of jeff.carlson@equiniti .com, and any
successor transfer agent of the Company.
1.19.
“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.
1.20.
“Warrants” means this Warrant and other Common Stock purchase warrants issued by the Company pursuant to the
Exchange Agreement.
2.1.
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 Issuance 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 2.1
(the “Notice of Exercise”). Within the earlier of (i) one (1) Trading Day and (ii) the number of Trading
Days comprising the Standard Settlement Period (as defined in Section 2.4.1 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 2.3 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 after 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.
2.2.
Exercise Price. The exercise price per Warrant Share shall be $3.04, subject to adjustment hereunder (the “Exercise
Price”).
2.3.
Cashless Exercise. If at the time of exercise hereof 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) delivered pursuant to Section 2.1
hereof on a day that is not a Trading Day or (2) delivered pursuant to Section 2.1 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 highest Bid Price of the
Common Stock on the principal Trading Market as reported by Bloomberg L.P. within two (2)
hours of the time of the Holder’s delivery of the Notice of Exercise if such Notice
of Exercise is delivered during “regular trading hours,” or within two (2) hours
after the close of “regular trading hours,” on a Trading Day 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 delivered pursuant to Section 2.1 hereof
after two (2) hours following 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. Without
limiting any other provision in the Transaction Documents, assuming (i) the Holder is not an Affiliate of the Company, and (ii) all of
the applicable conditions of Rule 144 promulgated under the Securities Act with respect to Holder and the Warrant Shares are met in the
case of such a cashless exercise, the Company agrees that the Company will cause the removal of the legend from such Warrant Shares (including
by delivering an opinion of the Company’s counsel to the Company’s transfer agent at its own expense to ensure the foregoing),
and the Company agrees that the Holder is under no obligation to sell the Warrant Shares issuable upon the exercise of the Warrant prior
to removing the legend. The Company agrees not to take any position contrary to this Section 2.3.
Notwithstanding
anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant
to this Section 2.3.
2.4. |
Mechanics of Exercise. |
2.4.1.
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) 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 or by electronic
delivery (at the election of the Holder), 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 earlier of (i) one (1) Trading Day after the
delivery to the Company of the Notice of Exercise and (ii) 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) one
(1) Trading Day 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 Issuance Date, which may be delivered at any time after the time of execution of the Exchange 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 Issuance Date and the Issuance 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.
2.4.2.
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.
2.4.3.
Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant
to Section 2.4.1 by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
2.4.4.
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 2.4.1 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.
2.4.5.
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.
2.4.6.
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 2.4.6 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.
2.4.7.
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.
2.5.
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 2.5,
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 2.5 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 2.5, 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 2.5, 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 2.5 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 2.5 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.
3.1.
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 3.1 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.
3.2.
Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3.1 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).
3.3.
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.
3.4.
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 2.5 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
2.5 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 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 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/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, L.P. (“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 contemplated Fundamental Transaction and the
Termination Date, (B) an expected volatility equal to the greater of (1) 100% and (2) the 100 day volatility as 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 3.4 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 (5) Business Days after 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 and the other Transaction Documents in accordance with the provisions of this Section 3.4 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 3.4 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 Issuance Date.
3.5.
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.
3.6.
Notice to Holder.
3.6.1.
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.
3.6.2.
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.
3.7.
[Intentionally Omitted]
3.8.
Voluntary Adjustment by Company. Subject to the rules and regulations of the Trading Market and the consent of the Holder,
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.
4.1.
Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4.4
hereof, 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 2.4.6 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 after 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.
4.2.
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 4.1, 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.
4.3.
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.
4.4.
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
(x) the transferor (other than in connection with a transfer to an Affiliate of the transferor) provide to the Company an opinion of
counsel to the effect that such transfer does not require registration of such transferred Warrant under the Securities Act and (y) that
the transferee agree in writing to be bound by the terms of the Exchange Agreement, with all the rights and obligations of one of the
Holders under such agreement.
4.5.
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.
5.1.
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 2.4.1, 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 2.3 or to receive cash payments pursuant to Section 2.4.1 and Section 2.4.4 herein,
in no event shall the Company be required to net cash settle an exercise of this Warrant.
5.2.
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.
5.3.
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right
required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding
Business Day.
5.4.
Authorized Shares.
5.4.1.
Reservation of Authorized and Unissued 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 of Common Stock 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).
5.4.2.
Noncircumvention. 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.
5.4.3.
Authorizations, Exemptions and Consents. 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.
5.5.
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.
5.6.
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.
5.7.
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, notwithstanding the fact
that the right to exercise this Warrant terminates on the Termination Date. 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 Exchange 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.
5.8.
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 1095 Broken Sound Parkway, Suite 100, Boca Raton, Florida, Attention: Barbara Sher, Chief
Executive Officer, email address: barbara.sher@greenlane.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 5.8 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 5.8 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.
5.9.
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.
5.10.
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.
5.11.
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.
5.12.
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.
5.13.
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.
5.14.
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.
********************
[GNLN
Investor PIPE Common Warrant Signature Page Follows]
[GNLN
Investor PIPE Common Warrant Signature Page]
IN
WITNESS WHEREOF, the Company has caused this PIPE Common Warrant to be executed by its officer thereunto duly authorized as of the date
first above indicated.
|
By: |
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|
Name: |
Barbara Sher |
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Its: |
Chief Executive Officer |
Exhibit
2.1
NOTICE
OF EXERCISE
To: |
GREENLANE HOLDINGS, 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.
[
] if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection
2.3, to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise
procedure set forth in subsection 2.3.
(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)
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: |
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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: |
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Exhibit
2.4.6
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 of Common Stock.)
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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Phone
Number: |
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Email
Address: |
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Date: |
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Holder’s
Signature: |
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Holder’s
Address: |
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Exhibit
10.4
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.
PIPE
COMMON WARRANT TO PURCHASE COMMON STOCK
GREENLANE
HOLDINGS, INC.
Warrant
Shares: Up to the Maximum Eligibility Number |
|
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Issuance
Date: October 29, 2024 |
THIS
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 on or after the Issuance Date and on or prior to 5:00 p.m. (New York City time) on five years and one hundred
and sixty calendar day anniversary thereafter (the “Termination Date”) but not thereafter, to subscribe for
and purchase from Greenlane Holdings, Inc., 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 2.2.
1. | Definitions.
In addition to the terms defined elsewhere in this Warrant or in the Exchange Agreement dated
October 29, 2024 by and among the Company and the holders party thereto (the “Holders”)
referred to therein (the “Exchange Agreement”), the following terms
have the meanings indicated in this Section 1: |
1.1.
“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.
1.2
“August Warrants” means those certain PIPE Common Warrants to Purchase Common Stock of the Company initially
issued to the Holder on August 13, 2024.
1.2.
“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.
1.3.
“Board of Directors” means the board of directors of the Company.
1.4.
“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.
1.5.
“Commission” means the United States Securities and Exchange Commission.
1.6.
“Common Stock” means the common stock of the Company, $0.01 par value per share, and any other class of securities
into which such securities may hereafter be reclassified or changed.
1.7.
“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.
1.8.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
1.9.
“Maximum Eligibility Number” means initially zero (0) and such number shall be increased (but not decreased)
on April 30, 2025 by two Warrant Shares for each Warrant Share of the August Warrants that are exercised for cash during the period beginning
on the Issuance Date and ending one hundred sixty calendar days following the Issuance Date.
1.10.
“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.
1.11.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
1.12.
[Intentionally Omitted]
1.13.
“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.
1.14.
“Trading Day” means a day on which the Common Stock is traded on a Trading Market.
1.15.
“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).
1.16.
“Transaction Documents” means the Exchange Agreement dated October [ ], 2024, these Warrants, such other Warrants
as contemplated in the Exchange Agreement, and all exhibits and schedules thereto and hereto and any other documents or agreements executed
in connection with the transactions contemplated hereunder.
1.17.
“Transfer Agent” means Equiniti Trust Company LLC , the current transfer agent of the Company, with a mailing
address of 1110 Centre Point Curve , Suite 101, Mendota Heights, MN 55120 and an email address of jeff.carlson@equiniti.com, and any
successor transfer agent of the Company.
1.18.
“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.
1.19.
“Warrants” means this Warrant and other Common Stock purchase warrants issued by the Company pursuant to the
Exchange Agreement.
2.1.
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 Issuance 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 2.1
(the “Notice of Exercise”). Within the earlier of (i) one (1) Trading Day and (ii) the number of Trading
Days comprising the Standard Settlement Period (as defined in Section 2.4.1 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 2.3 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 after 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. NOTWITHSTANDING ANY PROVISION OF THIS WARRANT TO THE CONTRARY,
NO MORE THAN THE MAXIMUM ELIGIBILITY NUMBER OF WARRANT SHARES SHALL BE EXERCISABLE HEREUNDER.
2.2.
Exercise Price. The exercise price per Warrant Share shall be $3.04, subject to adjustment hereunder (the “Exercise
Price”).
2.3.
Cashless Exercise. If at the time of exercise hereof 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) delivered pursuant to Section 2.1
hereof on a day that is not a Trading Day or (2) delivered pursuant to Section 2.1 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 highest Bid Price of the
Common Stock on the principal Trading Market as reported by Bloomberg L.P. within two (2)
hours of the time of the Holder’s delivery of the Notice of Exercise if such Notice
of Exercise is delivered during “regular trading hours,” or within two (2) hours
after the close of “regular trading hours,” on a Trading Day 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 delivered pursuant to Section 2.1 hereof
after two (2) hours following 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. Without
limiting any other provision in the Transaction Documents, assuming (i) the Holder is not an Affiliate of the Company, and (ii) all of
the applicable conditions of Rule 144 promulgated under the Securities Act with respect to Holder and the Warrant Shares are met in the
case of such a cashless exercise, the Company agrees that the Company will cause the removal of the legend from such Warrant Shares (including
by delivering an opinion of the Company’s counsel to the Company’s transfer agent at its own expense to ensure the foregoing),
and the Company agrees that the Holder is under no obligation to sell the Warrant Shares issuable upon the exercise of the Warrant prior
to removing the legend. The Company agrees not to take any position contrary to this Section 2.3.
Notwithstanding
anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant
to this Section 2.3.
2.4.
Mechanics of Exercise.
2.4.1.
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) 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 or by electronic
delivery (at the election of the Holder), 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 earlier of (i) one (1) Trading Day after the
delivery to the Company of the Notice of Exercise and (ii) 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) one
(1) Trading Day 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 Issuance Date, which may be delivered at any time after the time of execution of the Exchange 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 Issuance Date and the Issuance 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.
2.4.2.
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.
2.4.3.
Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant
to Section 2.4.1 by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
2.4.4.
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 2.4.1 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.
2.4.5.
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.
2.4.6.
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 2.4.6
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.
2.4.7.
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.
2.5.
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 2.5,
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 2.5 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 2.5, 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 2.5, 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 2.5 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 2.5 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.
3.1.
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 3.1 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.
3.2.
Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3.1 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).
3.3.
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.
3.4.
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 2.5 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
2.5 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 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 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/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, L.P. (“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 contemplated Fundamental Transaction and the
Termination Date, (B) an expected volatility equal to the greater of (1) 100% and (2) the 100 day volatility as 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 3.4 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 (5) Business Days after 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 and the other Transaction Documents in accordance with the provisions of this Section 3.4 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 3.4 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 Issuance Date.
3.5.
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.
3.6.
Notice to Holder.
3.6.1.
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.
3.6.2.
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.
3.7.
[Intentionally Omitted]
3.8.
Voluntary Adjustment by Company. Subject to the rules and regulations of the Trading Market and the consent of the Holder,
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.
4.1.
Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4.4
hereof, 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 2.4.6 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 after 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.
4.2.
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 4.1, 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.
4.3.
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.
4.4.
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
(x) the transferor (other than in connection with a transfer to an Affiliate of the transferor) provide to the Company an opinion of
counsel to the effect that such transfer does not require registration of such transferred Warrant under the Securities Act and (y) that
the transferee agree in writing to be bound by the terms of the Exchange Agreement, with all the rights and obligations of one of the
Holders under such agreement.
4.5.
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.
5.1.
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 2.4.1, 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 2.3 or to receive cash payments pursuant to Section 2.4.1 and Section 2.4.4 herein,
in no event shall the Company be required to net cash settle an exercise of this Warrant.
5.2.
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.
5.3.
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right
required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding
Business Day.
5.4.
Authorized Shares.
5.4.1.
Reservation of Authorized and Unissued 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 of Common Stock to provide for the issuance
of the maximum number of Warrant Shares issuable 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).
5.4.2.
Noncircumvention. 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.
5.4.3.
Authorizations, Exemptions and Consents. 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.
5.5.
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.
5.6.
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.
5.7.
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, notwithstanding the fact
that the right to exercise this Warrant terminates on the Termination Date. 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 Exchange 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.
5.8.
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 1095 Broken Sound Parkway, Suite 100, Boca Raton, Florida, Attention: Barbara Sher, Chief
Executive Officer, email address: barbara.sher@greenlane.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 5.8 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 5.8 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.
5.9.
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.
5.10.
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.
5.11.
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.
5.12.
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.
5.13.
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.
5.14.
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.
********************
[GNLN
Investor PIPE Common Warrant Signature Page Follows]
[GNLN
Investor PIPE Common Warrant Signature Page]
IN
WITNESS WHEREOF, the Company has caused this PIPE Common Warrant to be executed by its officer thereunto duly authorized as of the date
first above indicated.
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GREENLANE
HOLDINGS, INC. |
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By: |
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Name: |
Barbara
Sher |
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Its: |
Chief
Executive Officer |
Exhibit
2.1
NOTICE
OF EXERCISE
To: GREENLANE
HOLDINGS, 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. |
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|
☐ |
if
permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection
2.3, to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise
procedure set forth in subsection 2.3. |
(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)
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: |
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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: |
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Exhibit
2.4.6
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 of Common Stock.)
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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Phone
Number: |
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Email
Address: |
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Date: |
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Holder’s
Signature: |
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Holder’s
Address: |
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Exhibit
10.5
FIRST
AMENDMENT
TO
AMNEDED
AND RESTATED SECURED PROMISSORY NOTE
THIS
FIRST AMENDMENT (this “Amendment”), dated as of October ___, 2024, to that certain Amended and Restated Secured
Promissory Note issued as of May 1, 2024 (the “Note”), by GREENLANE HOLDINGS, INC., a Delaware corporation
(the “Company”), and that certain Loan Modification Agreement dated as of May 1, 2024 (the “Loan Agreement”).
Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Note, or if not defined therein,
the Purchase Agreement (as defined below) or the Loan Agreement.
WHEREAS,
the Company entered into to that certain Purchase and Assignment Agreement of Amended and Restated Promissory Note, dated as of August
16, 2024 (the “Purchase Agreement”), with the Holder set forth on the signature page attached thereto, pursuant to
which the Note and Loan Agreement were assigned to the Holder and assumed by the Company;
WHEREAS,
Section 9.10 of the Note provides that any term of the Note may be amended only by an instrument in writing executed by the Company and
the Holder;
WHEREAS,
the Company entered into that certain Subscription Agreement, dated as of August 7, 2024, with the Holder, pursuant to which the Company
issued a Convertible Note to the Buyer (the “Bridge Note”);
WHEREAS,
the Company and the Holder desire to (i) extend the Maturity Date of the Note, (ii) increase the principal sum of the Note to $3,995,000
to include the amount of the obligations under the Bridge Note in addition to the current outstanding principal under the Note, (iii)
increase the right of the Holder to receive 50% of the gross proceeds from (x) any sale of equity or debt securities of the Company;
or (y) any warrants of the Company exercised, each deemed to be a “Material Transaction”, and (iv) provide for the ability
of the Holder to convert the Note and provide the terms for such conversion, as set forth herein; and
WHEREAS,
in consideration for the extension of the Maturity Date, the Company shall issue the Holder 500,000 warrants with an exercise price of
$3.04 per share.
NOW,
THEREFORE, in consideration of the premises and other good and valuable consideration, the Company and the Holder hereby agree as
follows:
1.
Maturity Date Extension. Section 1.1 of the Note is hereby amended to provide that the “Maturity Date” (as defined
and set forth in the Note) shall be October 29, 2025, and any and all other references in the Note to the “Maturity Date”
shall be deemed to refer to the Maturity Date as amended hereby.
2.
Principal Sum. All references to the principal sum of the Note shall be $3,995,000, and any and all references in the Note to
the Principal Amount shall be deemed to refer to the principal sum as amended hereby.
3.
Conversion. Section 10 is hereby added to the end of the Note:
“Section
10. 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 10.
(a)
Conversion Right. Subject to the provisions of Section 10(d), at any time or times on or after the Original 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 10(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 10(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, $3.17, 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 a form to be agreed upon between Company and Holder (a “Conversion Notice”)
to the Company and (B) if required by Section 10(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. 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 first
(1st) 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. For purposes
of this Agreement, “Standard Settlement Period” means the standard settlement period, expressed in a number of Business 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. If this Note is physically surrendered for conversion as required by Section 10(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 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 10(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) Business 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 9.8. Notwithstanding anything to the contrary
in this Section 10(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
the terms herein.
(v)
[Intentionally Omitted].
(d)
Beneficial Ownership Conversion Limitations. 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 4.99% (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
10(d). For purposes of this Section 10(d), 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 10(d), 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 10(d) 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 Section10(d) 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.
4.
Mandatory Repayments. Each of Section 5.5(b)(ii), Section 5.5(c) and Section 5.5(d) of the Note is hereby deleted in its entirety
and Section 5.5(b)(i) of the Note is hereby amended to read as follows:
“Fifty
percent (50%) of the Net Proceeds from a Material Transaction, which, for avoidance of doubt, shall include any exercise of any of the
Company’s warrants or additional capital raised pursuant to one or more transactions involving the issuance of any securities,
shall be paid to Lender by the Company promptly following the closing of such Material Transaction, and such payment will be treated
as a payment of the Loan, such that the outstanding and unpaid principal amount of the Loan or any accrued and unpaid interest will be
reduced by the amount of such payment to Lender; and;”
5.
Interest. Notwithstanding anything to the contrary contained in the Note and/or Loan Agreement, the parties hereto acknowledge
and agree that no interest under the Note and/or the Loan Agreement shall be required to be paid other than to the extent the source
for the payment is as set forth in Section 5.5(b)(i) of the Note, as amended. Any such interest shall continue to accrue to the extent
not paid, and no default or Event of Default under the Note and/or Loan Agreement shall be deemed to occur solely by virtue of the failure
of the Company to pay interest under such Note and/or Loan Agreement so long as the Company remains in compliance with the provisions
of Section 5.5(b)(i) of the Note, as amended. In the event of a payment pursuant to Section 4 hereof, such payment shall first be applied
to any penalties or interest due under the Note.
6.
Warrants. In consideration for the extension of the Maturity Date and other concessions made by the Holder as set forth herein,
the Company shall issue the Holder a warrant to purchase 500,000 shares of common stock at an exercise price of $3.04 per share, which
Warrant shall be in the form of Exhibit A hereto.
7.
No Other Amendments. Unless expressly amended by this Amendment, the terms and provisions of the Note and the Loan Agreement shall
remain in full force and effect.
8.
Titles and Subtitles. The titles of the sections and subsections of this Amendment are for convenience and reference only and
are not to be considered in construing this Amendment.
9.
Governing Law. This Amendment shall be governed by, and construed and enforced in accordance with, the Laws of the State of New
York without regard to the choice of law principles thereof.
10.
Counterparts. This Amendment may be executed in one or more counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original and all such counterparts shall together constitute one and the same instrument.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the undersigned have executed and delivered this Amendment as of the date first written above.
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COMPANY: |
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GREENLANE HOLDINGS, INC.. |
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By: |
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Name: |
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Title: |
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HOLDER (if an entity): |
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Name of Entity: |
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By: |
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Name: |
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Title: |
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HOLDER (if an individual): |
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v3.24.3
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Oct. 29, 2024 |
Cover [Abstract] |
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Document Type |
8-K
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Amendment Flag |
false
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Document Period End Date |
Oct. 29, 2024
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Entity File Number |
001-38875
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Entity Registrant Name |
GREENLANE
HOLDINGS, INC.
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Entity Central Index Key |
0001743745
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Entity Tax Identification Number |
83-0806637
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Entity Incorporation, State or Country Code |
DE
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Entity Address, Address Line One |
1095
Broken Sound Parkway
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Suite 100
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Entity Address, City or Town |
Boca
Raton
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FL
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33487
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