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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): |
December 18, 2023 |
|
MULLEN
AUTOMOTIVE INC.
_____________________________________________________________
(Exact name of registrant as specified in its
charter)
Delaware |
001-34887 |
86-3289406 |
(State
or other jurisdiction of
incorporation) |
(Commission
File Number) |
(IRS
Employer Identification No.) |
1405
Pioneer Street, Brea, California
92821
(Address, including
zip code, of principal executive offices)
Registrant’s
telephone number, including area code |
(714)
613-1900 |
|
(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 (see
General Instruction A.2. below):
¨
Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Securities
registered pursuant to Section 12(b) of the Act: |
|
Title
of each class |
Trading
symbol(s) |
Name
of each exchange on which registered |
Common
Stock, par value $0.001 |
MULN |
The
Nasdaq Stock Market, LLC (Nasdaq Capital Market) |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405)
or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
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
December 18, 2023, Mullen Automotive, Inc. (the “Company”) agreed to issue a non-convertible secured
promissory note (the “Note”) that does not include any stock, warrants or other securities (the
“Debt Agreement”). The Note, which does not include any conversion rights, will provide additional capital for the
Company’s manufacturing operations. Pursuant to the Debt Agreement, the Company will issue a Note that will have an aggregate principal amount of $50,000,000, for a total purchase price of
$32,000,000, or an original issue discount of $18,000,000. The issuance of the non-convertible Note contemplated by the Debt Agreement will occur on the later of: (i) January 1, 2024 or (ii) the first day on which the Nasdaq Stock Market is open for
trading on which all conditions to closing of both parties under the Debt Agreement have been satisfied. The Debt Agreement
contains customary representations, warranties and covenants.
The
Note will bear interest at a rate of 10% per annum (which interest rate is increased to 18% per annum immediately after the occurrence
and continuance of an Event of Default (as defined in the Note) and it will have a maturity date set as the date that is three months
from its date of issuance. The Company's repayment obligations under the Note may be accelerated, at the holder’s election, upon
the occurrence of certain customary events of default. In the event of a default and acceleration of the Company's obligations, the Company
would be required to pay the principal amount of the Note, plus all accrued and unpaid interest, plus all other amounts, costs, or expenses
due under the Note.
The
Note contains customary representations, warranties and covenants including among other things and subject to certain exceptions, covenants
that restrict the Company from incurring additional indebtedness other than certain Permitted Indebtedness (as defined in the Note), creating
or permitting liens on assets other than certain Permitted Liens (as defined in the Note), repurchasing or otherwise acquiring more than
a de minimis number of its Common Stock or equivalents thereof, repaying outstanding indebtedness, and entering into transactions with
affiliates. Further, the Note provides that following the consummation of any financing, the Company shall prepay the outstanding
principal amount of the Note from the net amount of proceeds raised in such financing.
The
foregoing descriptions of the terms of the Debt Agreement, the Note and the transactions contemplated thereby do not purport to be
complete and are qualified in their entirety by reference to the Debt Agreement and form of Note, which are included as Exhibit 10.1
to this Current Report on Form 8-K and are incorporated herein by reference.
|
Item 9.01. |
Financial Statements and Exhibits |
(d) 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.
|
MULLEN AUTOMOTIVE
INC. |
|
|
|
Date: December 22, 2023 |
By: |
/s/
David Michery |
|
|
David Michery |
|
|
Chief Executive Officer |
Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement
(this “Agreement”) is dated as of December 18, 2023, between Mullen Automotive Inc., a Delaware corporation (the
“Company”) and the purchaser identified on the signature pages hereto (the “Purchaser”).
WHEREAS, subject to the terms
and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act (as defined below), and Rule 506
promulgated thereunder, the Company desires to issue and sell to the Purchaser, and the Purchaser desires to purchase from the Company,
securities of the Company as more fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION
of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Company and the Purchaser agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions.
In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Note (as defined herein), and (b) the following terms have the meanings set forth in this Section 1.1:
“Action”
shall have the meaning ascribed to such term in Section 3.1(h).
“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 other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized
or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee”
or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority
so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York are generally
open for use by customers on such day.
“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section 2.1.
“Closing
Date” means the later of (i) January 1, 2024 or (ii) the first Trading Day on which all of the Transaction Documents
have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchaser’s obligations
to pay the Subscription Amount and (ii) the Company’s obligations to deliver the Securities, in each case, have been satisfied
or waived.
“Collateral” shall
mean the following assets and rights of the Company: (a) inventory; (b) equipment (including accessions thereto); (c) fixtures;
(d) instruments (including promissory notes); (e) documents; (f) accounts; (g) chattel paper (whether tangible or
electronic); (h) deposit accounts; (i) letter-of-credit rights (whether or not the letter of credit is evidenced by a writing);
(j) commercial tort claims; (k) securities and all other investment property (whether certificated or uncertificated); (l) general
intangibles (including payment intangibles); (m) supporting obligations; (n) rights to personal property or goods not otherwise
described above (including rights to returned or repossessed goods and rights of stoppage in transit) which are represented by, arise
form, or relate to any of the foregoing; (o) supporting evidence and documents relating to any of the above-described property; (p) to
the extent not otherwise included above, all proceeds and products of any and all of the foregoing and all accessions and additions to,
and substitutions and replacements of, any and all of the foregoing; (q) real property and (r) intellectual property.
“Commission” means
the United States Securities and Exchange Commission.
“Common
Stock” means the common stock of the Company, par value $0.001 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.
“Company
Counsel” means McDermott Will & Emery LLP with offices located at One Vanderbilt Avenue, New York, New York 10017-3852.
“Note”
means the Secured Prmoissory Note due, subject to the terms therein, three months from their date of issuance, issued by the Company to
the Purchaser hereunder, in the form of Exhibit A attached hereto.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.
“GAAP”
shall have the meaning ascribed to such term in Section 3.1(g).
“Indebtedness”
shall have the meaning ascribed to such term in Section 3.1(u).
“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section 3.1(l).
“Liens”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).
“Maximum
Rate” shall have the meaning ascribed to such term in Section 5.15.
“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.
“Principal
Amount” means, as to the Purchaser, the amount set forth below the Purchaser’s signature block on the signature pages hereto
next to the heading “Principal Amount,” in United States Dollars, which amount, in the aggregate, shall be $50,000,000.
“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding,
such as a deposition), whether commenced or threatened.
“Required
Holders” means, as of any time, the holders of a majority of the outstanding principal balance of the Note at such time.
“Rule 144”
means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from
time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect
as such Rule.
“SEC Reports”
shall have the meaning ascribed to such term in Section 3.1(g).
“Securities”
means the Note.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Security
Agreement” means the Security Agreement between the Company and the Purchaser, in a form reasonably satisfactory to the Purchaser,
granting a security interest in the Collateral.
“Subscription
Amount” means, as to the Purchaser, the aggregate amount to be paid for the Note purchased hereunder as specified below the
Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,” in United
States dollars and in immediately available funds, which amount, in the aggregate, shall be $32,000,000.
“Subsidiary”
means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed
or acquired after the date hereof.
“Trading
Day” means a day on which the 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 Nasdaq Capital Market, the NYSE American, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York
Stock Exchange or any dealer network or trading platform operated by OTC Markets Group Inc. (formerly Pink Sheets LLC) (or any successors
to any of the foregoing).
“Transaction
Documents” means this Agreement, the Note, the Security Agreement, all exhibits and schedules thereto and hereto and any other
documents or agreements executed in connection with the transactions contemplated hereunder.
ARTICLE II.
PURCHASE AND SALE
2.1 Closing.
On the Closing Date, upon the terms and subject to the conditions set forth herein, the Company agrees to sell, and the Purchaser agrees
to purchase, an aggregate of $50,000,000 in principal amount of the Note (including $18,000,000 of original issue discount). The Purchaser
shall deliver to the Company via wire transfer immediately available funds equal to the Purchaser’s Subscription Amount as set forth
on the signature page hereto executed by the Purchaser, and the Company shall deliver to the Purchaser its Note, as determined pursuant
to Section 2.2(a), and the Company and the Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the
Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall take place remotely by
electronic transfer of the Closing documentation.
2.2 Deliveries.
(a) On
or prior to the Closing Date, the Company shall deliver or cause to be delivered to the Purchaser the following:
(i) this
Agreement duly executed by the Company;
(ii) a
Note with a principal amount equal to the Purchaser’s Principal Amount, registered in the name of the Purchaser;
(iii) the
Company shall have provided the Purchaser with the Company’s wire instructions, on Company letterhead and executed by the Chief
Executive Officer or Chief Financial Officer; and
(iv) the
Security Agreement duly executed by the Company.
(b) On
or prior to the Closing Date, the Purchaser shall deliver or cause to be delivered to the Company the following:
(i) this
Agreement duly executed by the Purchaser; and
(ii) the
Security Agreement duly executed by the Purchaser.
2.3 Closing
Conditions.
(a) The
obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met, provided that
these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing
the Purchaser with prior written notice thereof:
(i) the
accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality, in all respects) on
the Closing Date of the representations and warranties of the Purchaser contained herein (unless as of a specific date therein in which
case they shall be accurate in all material respects (or, to the extent representations or warranties are qualified by materiality, in
all respects) as of such date);
(ii) all
obligations, covenants and agreements of the Purchaser required to be performed at or prior to the Closing Date shall have been performed;
and
(iii) the
delivery by the Purchaser of the items set forth in Section 2.2(b) of this Agreement.
(b) The
obligations of the Purchaser hereunder in connection with the Closing are subject to the following conditions being met, provided that
these conditions are for the Purchaser’s sole benefit and may be waived by the Purchaser at any time in its sole discretion by providing
the Company with prior written notice thereof:
(i) the
accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect,
in all respects) when made and on the Closing Date of the representations and warranties of the Company contained herein (unless as of
a specific date therein in which case they shall be accurate in all material respects or, to the extent representations or warranties
are qualified by materiality or Material Adverse Effects, in all respects) as of such date);
(ii) all
obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;
(iii) the
delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;
(iv) there
shall have been no Material Adverse Effect with respect to the Company;
(v) from
the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s
principal Trading Market and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall
not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such
service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities
nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude
in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of the Purchaser,
makes it impracticable or inadvisable to purchase the Securities at the Closing; and
(vi) the
closing price of the Comon Stock on the Trading Market on each Trading Day starting on the Trading Day immediately after the Company effects
a reverse stock split and until the Closing Day shall exceed $1.00 per share.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations
and Warranties of the Company. Except as set forth in the SEC Reports, which SEC Reports shall be deemed a part hereof and shall qualify
any representation or otherwise made herein, the Company hereby makes the following representations and warranties to the Purchaser:
(a) Subsidiaries.
All of the direct and indirect subsidiaries of the Company are set forth in the SEC Reports. The Company owns, directly or indirectly,
all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens (other than restrictions contained
in the organizational documents of the Company or its Subsidiaries and restrictions arising from applicable securities laws), 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 shall be disregarded.
(b) Organization
and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to
own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in
violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational
or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as the case may be, 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 or condition (financial or otherwise) of the Company and the Subsidiaries,
taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely
basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”),
and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail
such power and authority or qualification.
(c) Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated
by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The
execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further
action is required by the Company, the Board of Directors or the Company’s stockholders in connection herewith or therewith. 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.
(d) No
Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which
it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby
do not and will not 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, or (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 (other than Permitted Liens)
upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, anti-dilution
or similar adjustments, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility,
debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary
is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) 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 clause (ii) and (iii), such as would
not have or reasonably be expected to result in a Material Adverse Effect.
(e) Filings,
Consents and Approvals. 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 in connection with the
execution, delivery and performance by the Company of the Transaction Documents.
(f) Issuance
of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than
restrictions on transfer provided for in the Transaction Documents.
(g) 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 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.
(h) Litigation.
Except as set forth in the SEC Reports, there is no material action, suit, notice of violation, or legal proceeding 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”). Except as set forth in the SEC Reports, none of the Actions set forth on the SEC Reports, (i) adversely
affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could,
if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor
any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability
under federal or state securities laws. 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.
(i) 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.
(j) 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 would not reasonably be expected to result in a Material Adverse Effect.
(k) 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) Permitted Liens, (ii) Liens as do not materially affect the value of such property
and do not materially interfere with the use made of such property by the Company and the Subsidiaries and (iii) Liens for the payment
of federal, state or other taxes. 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 in all material respects.
(l) 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
necessary or required for use in connection with their respective businesses as described in the SEC Reports and which the failure to
so have would 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 would 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 would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(m) Insurance.
The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited
to, directors and officers insurance coverage. Neither the Company nor any Subsidiary has any reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business without a significant increase in cost.
(n) Transactions
with Affiliates and Employees. Except as set forth on the SEC Reports, 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 $500,000 other than for (i) payment of salary
or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other
employee benefits, including stock option agreements under any stock option plan of the Company.
(o) 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 Purchaser shall have no obligation with respect to any fees or with respect to any claims made by or
on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated
by the Transaction Documents.
(p) Private
Placement. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2, no registration
under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchaser as contemplated hereby.
The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.
(q) Investment
Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be
or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company
shall conduct its business in a manner so that it will not become an “investment company” subject to registration under the
Investment Company Act of 1940, as amended.
(r) 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 SEC Reports, the Company has not, in the 12 months preceding the date hereof, received
notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance
with the listing or maintenance requirements of such Trading Market. The Common Stock is currently eligible for electronic transfer through
the Depository Trust Company or another established clearing corporation and the Company is current in payment of the fees to the Depository
Trust Company (or such other established clearing corporation) in connection with such electronic transfer.
(s) Disclosure.
The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain
any untrue statement of a material fact or omit 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 and when made, not misleading. The Company acknowledges
and agrees that the Purchaser does not make nor has made any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 3.2 hereof.
(t) No
Integrated Offering. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2,
neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers
or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities
to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration
of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on
which any of the securities of the Company are listed or designated.
(u) Indebtedness.
The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts
of cash to be payable on or in respect of its debt). For the purposes of this Agreement, “Indebtedness” means (x) any
liabilities for borrowed money or amounts owed in excess of $500,000 (other than trade accounts payable incurred in the ordinary course
of business), (y) all guaranties, endorsements and other contingent obligations of the Company or its Subsidiaries in respect of
indebtedness of others, whether or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary
course of business; and (z) the present value of any lease payments in excess of $500,000 due under leases required to be capitalized
in accordance with GAAP. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.
(v) Tax
Status. Except for matters that would not, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States
federal, state and local income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction
to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown
or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate
for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There
are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company
or of any Subsidiary know of no basis for any such claim.
(w) No
General Solicitation. Neither the Company nor any Person acting on behalf of the Company has offered or sold any of the Securities
by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Purchaser and
certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.
(x) 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.
(y) 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”).
(z) U.S.
Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within the meaning
of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Purchaser’s request.
(aa) 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.
(bb) Money
Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable
financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable
money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”),
and no Action or Proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or
any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or any Subsidiary, threatened.
(cc) Other
Covered Persons. The Company is not aware of any person (other than any Issuer Covered Person) that has been or will be paid (directly
or indirectly) remuneration for solicitation of purchasers in connection with the sale of any Securities.
3.2 Representations
and Warranties of the Purchaser. The Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the date
hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein, in which case they shall be accurate
as of such date):
(a) Organization;
Authority. The Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company
or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise
to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by the
Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate, partnership,
limited liability company or similar action, as applicable, on the part of the Purchaser. Each Transaction Document to which it is a
party has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute
the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms, except (i) as limited
by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by
applicable law. The execution, delivery and performance by the Purchaser of this Agreement and the other Transaction Documents to which
they are a party, the acquisition and purchase of the Securities and the consummation by them of the transactions contemplated hereby
and thereby do not and will not conflict with or violate any provision of the Purchaser’s certificate or articles of incorporation,
bylaws or other organizational or charter documents, or (ii) 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 Purchaser is subject (including
federal and state securities laws and regulations), or by which any property or asset of the Purchaser is bound or affected.
(b) Own
Account. The Purchaser understands that the Securities are “restricted securities” and have not been registered under
the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account and not with
a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state
securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state
securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution
of such Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting
the Purchaser’s right to sell the Securities pursuant to the Registration Statement or otherwise in compliance with applicable federal
and state securities laws). The Purchaser is acquiring the Securities hereunder in the ordinary course of its business.
(c) Purchaser
Status. At the time the Purchaser was offered the Securities, it was, and as of the date hereof it is an “accredited investor”
as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), (a)(8), (a)(9), (a)(12), or (a)(13) under the Securities Act.
(d) General
Solicitation. The Purchaser is not, to the Purchaser’s knowledge, purchasing the Securities as a result of any advertisement,
article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or, to the knowledge of the Purchaser, any other general solicitation or general advertisement.
(e) Acknowledgement.
The Purchaser acknowledges and agrees that neither the Company nor any Subsidiary makes or has made any representations or warranties
with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.1 hereof. The Purchaser
further represents to the Company that the Purchaser’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 Purchaser and its representatives.
(f) Certain
Transactions and Confidentiality. Other than to other Persons party to this Agreement or to the Purchaser’s representatives,
including, without limitation, its officers, directors, partners, legal and other advisors, employees, agents and Affiliates, the Purchaser
has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms
of this transaction). Notwithstanding the foregoing, for the avoidance of doubt, nothing contained herein shall constitute a representation
or warranty against, or a prohibition of, any actions with respect to the borrowing of, arrangement to borrow, identification of the
availability of, and/or securing of, securities of the Company in order for the Purchaser (or its broker or other financial representative)
to effect Short Sales or similar transactions in the future.
The Company acknowledges and agrees that the representations
contained in this Section 3.2 shall not modify, amend or affect the Purchaser’s right to rely on the Company’s representations
and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other
document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transactions contemplated
hereby.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer
Restrictions.
(a) The
Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of the Purchaser or in
connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company
an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall
be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities
under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement
and shall have the rights and obligations of the Purchaser under this Agreement.
(b) The
Purchaser agrees to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following
form:
THIS SECURITY HAS NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
The Company acknowledges
and agrees that the Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Securities to a financial institution that is an “accredited investor” as
defined in Rule 501(a) under the Securities Act and, if required under the terms of such arrangement, the Purchaser may transfer
pledged or secured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company
and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no
notice shall be required of such pledge. At the Purchaser’s expense, the Company will execute and deliver such reasonable documentation
as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities.
(c) The
Purchaser agrees with the Company that the Purchaser will sell the Securities only pursuant to either the registration requirements of
the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Securities are
sold pursuant to a Registration Statement, they will be sold in compliance with the plan of distribution set forth therein, and acknowledges
that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 4.1 is predicated
upon the Company’s reliance upon this understanding.
4.2 Securities
Laws Disclosure; Publicity. The Company shall file a Current Report on Form 8-K, including the Transaction Documents as exhibits
thereto, with the Commission within the time required by the Exchange Act. From and after the filing of such Form 8-K, the Company
represents to the Purchaser that it shall have publicly disclosed all material, non-public information delivered to any of the Purchaser
by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees, Affiliates or agents in connection
with the transactions contemplated by the Transaction Documents. 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, Affiliates or agents, on the one
hand, and any of the Purchaser or any of their Affiliates on the other hand, shall terminate and be of no further force or effect. The
Company understands and confirms that the Purchaser shall be relying on the foregoing covenant in effecting transactions in securities
of the Company. The Company and the Purchaser shall consult with each other in issuing any other press releases with respect to the transactions
contemplated hereby, and neither the Company nor the Purchaser shall issue any such press release nor otherwise make any such public statement
without the prior consent of the Company, with respect to any press release of the Purchaser, or without the prior consent of the Purchaser,
with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure
is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement
or communication.
4.3 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 4.2, the Company covenants and agrees that neither it, nor any other Person acting
on its behalf will provide the Purchaser or its agents or counsel with any information that constitutes, or the Company reasonably believes
constitutes, material non-public information, unless prior thereto the Purchaser shall have consented in writing to the receipt of such
information and agreed in writing with the Company to keep such information confidential. The Company understands and confirms that the
Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company. To the extent that the Company,
any of its Subsidiaries, or any of their respective officers, director, agents, employees or Affiliates delivers any material, non-public
information to the Purchaser without the Purchaser’s consent, the Company hereby covenants and agrees that the Purchaser shall
not have any duty of confidentiality to the Company, any of its Subsidiaries, or any of their respective officers, directors, employees,
Affiliates, or agents, or a duty to the Company, any of its Subsidiaries or any of their respective officers, directors, employees, Affiliates
or agents, not to trade on the basis of, such material, non-public information, provided that the Purchaser 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 with the delivery of such notice file such notice with the
Commission pursuant to a Current Report on Form 8-K. The Company understands and confirms that the Purchaser shall be relying on
the foregoing covenant in effecting transactions in securities of the Company.
4.4 Certain
Transactions and Confidentiality. The Purchaser covenants that neither it, nor any Affiliate acting on its behalf or pursuant to
any understanding with it will execute any purchases or sales, including Short Sales, of any of the Company’s securities during
the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement
are first publicly announced pursuant to the Form 8-K as described in Section 4.2. The Purchaser covenants that until
such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the Form 8-K as described
in Section 4.2, the Purchaser will maintain the confidentiality of the existence and terms of this transaction (other than as disclosed
to its legal and other representatives under a duty of confidentiality). Notwithstanding the foregoing, and notwithstanding anything
contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) the Purchaser does not make
any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company after
the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the Form 8-K as described
in Section 4.2, (ii) the Purchaser shall be not be restricted or prohibited from effecting any transactions in any securities
of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated by this Agreement
are first publicly announced pursuant to the Form 8-K as described in Section 4.2 and (iii) the Purchaser shall not have
any duty of confidentiality or duty not to trade in the securities of the Company to the Company, any of its Subsidiaries, or any of
their respective officers, directors, employees, Affiliates or agent, after the filing of the Form 8-K as described in Section 4.2.
4.5 General
Release. In consideration for the payment(s) and benefits provided under this Agreement, each party (for itself and its heirs,
executors, administrators, beneficiaries, personal representatives and assigns) hereby completely, forever, irrevocably and unconditionally
release and discharge, to the maximum extent permitted by law, the other party, the other party’s past, present and future parent
organizations, subsidiaries and other affiliated entities regardless of the nature of the affiliation, related companies and divisions
and each of their respective past, present and future officers, directors, employees, shareholders, trustees, members, partners, attorneys
and agents (in each case, individually and in their official capacities) and each of their respective employee benefit plans (and such
plans’ fiduciaries, agents, administrators and insurers, individually and in their official capacities), as well as any predecessors,
future successors or assigns or estates of any of the foregoing from any and all claims, actions, charges, controversies, causes of action,
suits, rights, demands, liabilities, obligations, damages, costs, expenses, attorneys’ fees and obligations of any kind or character
whatsoever, that such party ever had, now have or may in the future claim to have by reason of any act, conduct, omission, transaction,
agreement, occurrence or any other matter whatsoever occurring up to and including the date of this Agreement.
ARTICLE V.
MISCELLANEOUS
5.1 Termination.
This Agreement may be terminated by the Purchaser by written notice to the other parties, if the Closing has not been consummated on or
before the fifth (5th) Trading Day following January 1, 2024, provided, however, that no such termination
will affect the right of any party to sue for any breach by any other party (or parties).
5.2 Fees
and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the reasonable and
documented 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.
5.3 Entire
Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
5.4 Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective on the earliest of: (a) the time of transmission, if such notice or communication is delivered via
email attachment at the email address as set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York
City time) on a Trading Day, (b) the next Trading Day after the time of transmission, if such notice or communication is delivered
via email attachment as set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New
York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address
for such notices and communications shall be as set forth on the signature pages attached hereto.
5.5 Amendments;
Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in
the case of an amendment, by the Company and the Purchaser or, in the case of a waiver, by the party against whom enforcement of any
such waived provision is sought, provided that if any amendment, modification or waiver disproportionately and adversely impacts the
Purchaser, the consent of the Purchaser shall also be required. No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver
of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder
in any manner impair the exercise of any such right. Any amendment effected in accordance with this Section 5.5 shall be binding
upon the Purchaser and holder of Securities and the Company.
5.6 Headings.
The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any
of the provisions hereof.
5.7 Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser (other
than by merger). The Purchaser may assign any or all of its rights under this Agreement to any Person to whom the Purchaser assigns or
transfers the Note, provided that such transferee agrees in writing to be bound, with respect to the transferred Note, by the provisions
of the Transaction Documents that apply to the “Purchaser.”
5.8 No
Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
5.9 Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed
by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts
of law thereof. Each party agrees that all legal Proceedings concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates,
directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts
sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts
sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents),
and hereby irrevocably waives, and agrees not to assert in any Action or Proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such Action or Proceeding is improper or is an inconvenient venue for such Proceeding. Each party
hereby irrevocably waives personal service of process and consents to process being served in any such Action or Proceeding by mailing
a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect
for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.
If any party shall commence an Action or Proceeding to enforce any provisions of the Transaction Documents, then the prevailing party
in such Action or Proceeding shall be reimbursed by the non-prevailing party for its reasonable attorneys’ fees and other costs
and expenses incurred with the investigation, preparation and prosecution of such Action or Proceeding.
5.10 Survival.
The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.
5.11 Execution.
This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that
the parties need not sign the same counterpart. In the event that any signature is delivered by e-mail delivery of a “.pdf”
format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature
is executed) with the same force and effect as if such “.pdf” signature page were an original thereof.
5.12 Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force
and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts
to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
5.13 Replacement
of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall
issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of
and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of
such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable
third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.
5.14 Remedies.
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchaser
and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may
not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby
agree to waive and not to assert in any Action for specific performance of any such obligation the defense that a remedy at law would
be adequate.
5.15 Usury.
To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will
resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter
in force, in connection with any Action or Proceeding that may be brought by the Purchaser in order to enforce any right or remedy under
any Transaction Document. Notwithstanding any provision to the contrary contained in any Transaction Document, it is expressly agreed
and provided that the total liability of the Company under the Transaction Documents for payments in the nature of interest shall not
exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”), and, without limiting the foregoing,
in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums in the nature of interest
that the Company may be obligated to pay under the Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum contract
rate of interest allowed by law and applicable to the Transaction Documents is increased or decreased by statute or any official governmental
action subsequent to the date hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to
the Transaction Documents from the effective date thereof forward, unless such application is precluded by applicable law. If under any
circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to the Purchaser with respect to indebtedness
evidenced by the Transaction Documents, such excess shall be applied by the Purchaser to the unpaid principal balance of any such indebtedness
or be refunded to the Company, the manner of handling such excess to be at the Purchaser’s election.
5.16 Independent
Nature of Purchaser’s Obligations and Rights. The Purchaser has been represented by its own separate legal counsel in its review
and negotiation of the Transaction Documents. It is expressly understood and agreed that each provision contained in this Agreement and
in each other Transaction Document is between the Company and the Purchaser, solely, and not between the Company and any third party to
this Agreement.
5.17 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.
5.18 Construction.
The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents
and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of the Transaction Documents or any amendments thereto.
5.19 WAIVER
OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY
AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
(Signature Pages Follow)
IN WITNESS WHEREOF, the parties
hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first
indicated above.
MULLEN AUTOMOTIVE INC. |
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Address for Notice: |
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1405 Pioneer Street |
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Brea, California 92821 |
By: |
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Name: |
David Michery |
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Email: |
Title: |
Chief Executive Officer |
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With a copy to (which shall not constitute notice):
McDermott Will & Emery LLP
One Vanderbilt Avenue
New York, New York 10017-3852
Attention: Robert Cohen, Esq.
E-mail:
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
[PURCHASER
SIGNATURE PAGES TO MULLEN AUTOMOTIVE INC. SECURITIES
PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned
have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated
above.
Name of Purchaser: Esousa Holdings LLC
Signature
of Authorized Signatory of Purchaser: __________________________________
Name of Authorized Signatory: Michael Wachs
Title of Authorized Signatory: Managing Member
Email Address of Authorized Signatory:
Address for Notice to Purchaser:
Address for Delivery of Securities to Purchaser (if not same as address
for notice):
Subscription Amount: $ 32,000,000
Principal Amount: $50,000,000
[SIGNATURE PAGES CONTINUE]
EXHIBIT A
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR RESOLD 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.
Original Issue Date: January [·], 2024
$[50,000,000]
Secured
Promissory Note
THIS
SECURED PROMISSORY NOTE is a duly authorized and validly issued Secured Promissory Note of Mullen Automotive Inc., a Delaware corporation
(the “Company”), having its principal place of business at 1405 Pioneer Street, Brea, California 92821 designated as
its Secured Promissory Note due April 1, 2024 (the “Note”).
FOR VALUE RECEIVED, the Company
promises to pay to [·] or its registered assigns (the “Holder”), or shall have paid pursuant to the terms hereunder,
the principal sum of $[50,000,000] on April 1, 2024 (the “Maturity Date”) or such earlier date as this Note is
required or permitted to be repaid as provided hereunder, and to pay interest to the Holder on the aggregate then outstanding principal
amount of this Note in accordance with the provisions hereof. The purchase price paid for this Note is $32,000,000, which amount reflects
an original issue discount of $18,000,000 off the original principal sum of this Note. This Note is subject to the following additional
provisions:
Section 1. Definitions.
For the purposes hereof, in addition to the terms defined elsewhere in this Note, the following terms shall have the following meanings:
“Bankruptcy
Event” means any of the following events: (a) the Company or any Subsidiary thereof commences a case or other proceeding
under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar
law of any jurisdiction relating to the Company or any Subsidiary thereof, (b) there is commenced against the Company or any Subsidiary
thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Subsidiary thereof
is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the
Company or any Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property
that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Subsidiary thereof makes
a general assignment for the benefit of creditors, (f) the Company or any Subsidiary thereof calls a meeting of its creditors with
a view to arranging a composition, adjustment or restructuring of its debts, (g) the Company or any Subsidiary thereof admits in
writing that it is generally unable to pay its debts as they become due, (h) the Company or any Subsidiary thereof, by any act or
failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other
action for the purpose of effecting any of the foregoing.
“Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized
or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee”
or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority
so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York are generally
are open for use by customers on such day.
“CARES
Act” means the Coronavirus Aid, Relief, and Economic Security Act (Pub. L. No. 116-136)(H.R. 748), as amended from time
to time, and all rules, requirements, regulations, and administrative guidance related to the same.
“CARES
Act Deferred Payroll Taxes” means, collectively, the employer portion of Social Security Payroll Taxes for the period beginning
March 27, 2020 and ending December 31, 2020 deferred by the Company in accordance with Section 2302 of the CARES Act.
“Change
of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof by
an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of
effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess
of 35% of the voting securities of the Company, (b) any Person or two or more Persons acting in concert shall have acquired by contract
or otherwise, or shall have entered into a contract or arrangement that, upon consummation thereof, will result in its or their acquisition
of the power to exercise, directly or indirectly, a controlling influence over the management or policies of the Company or control over
the equity interests of tsuch Person entitled to vote for members of the Board of Directors of the Company on a fully-diluted basis (and
taking into account all such voting powere that such Person or group has the right to acquire pursuant to any option right) representing
35% or more of the combined voting power of such equity interests, (c) the Company (and all of its Subsidiaries, taken as a whole)
sells or transfers all or substantially all of its assets to another Person, (d) a replacement at one time or within a three year
period of more than one-half of the members of the Board of Directors which is not approved by a majority of those individuals who are
members of the Board of Directors on the Original Issue Date (or by those individuals who are serving as members of the Board of Directors
on any date whose nomination to the Board of Directors was approved by a majority of the members of the Board of Directors who are members
on the date hereof), or (e) the execution by the Company of an agreement to which the Company is a party or by which it is bound,
providing for any of the events set forth in clauses (a) through (d) above. Notwithstanding the foregoing, the Asset Sale is
not a Change of Control Transaction.
“Disqualified
Stock” shall mean, with respect to any person, any Equity Interests of such person that, by its terms (or by the terms of any
security or other Equity Interests into which it is convertible or for which it is exchangeable) or upon the happening of any event or
condition (a) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, (b) is redeemable at
the option of the holder thereof, in whole or in part, (c) provides for the scheduled payments of dividends in cash, or (d) is
or becomes convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Stock.
“Event
of Default” shall have the meaning set forth in Section 7(a).
“Fundamental
Transaction” shall include (i) the Company, directly or indirectly, in one or more related transactions effecting
any merger or consolidation of the Company with or into another Person, (ii) the Company (and all of its Subsidiaries, taken as a
whole), directly or indirectly, effecting 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 (other than the Asset Sale), (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, (iv) the Company, directly or indirectly, in one or more related transactions effecting
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 more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock
held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such
stock or share purchase agreement or other business combination).
“Indebtedness”
of a Person shall include (a) all obligations for borrowed money or the deferred purchase price of property or services (excluding
trade credit and trade accounts payable incurred in the ordinary course of business), (b) all obligations evidenced by bonds, debentures,
notes, or other similar instruments and all reimbursement or other obligations in respect of letters of credit, surety bonds, bankers
acceptances, current swap agreements, interest rate hedging agreements, interest rate swaps or other financial products, (c) all
capital lease obligations (as determined in accordance with GAAP), (d) all obligations or liabilities secured by a Lien on any asset
of such Person, irrespective of whether such obligation or liability is assumed by such Person, (e) any obligation arising with respect
to any other transaction that is the functional equivalent of borrowing but which does not constitute a liability on the balance sheets
of such Person (excluding trade credit and trade accounts payable incurred in the ordinary course of business), (f) Disqualified
Stock, and (g) any obligation guaranteeing or intended to guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted or sold with recourse) any of the foregoing obligations of any other Person.
“Investments”
means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or
other acquisition (including by merger) of Equity Interests of another Person, (b) a loan, advance or capital contribution to, guarantee
or assumption of debt of, or purchase or other acquisition of any other debt or interest in, another Person, or (c) the purchase
or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit or all
or a substantial part of the business of, such Person.
“Late Fees”
shall have the meaning set forth in Section 2(d).
“New York
Courts” shall have the meaning set forth in Section 8(d).
“Note Register”
shall have the meaning set forth in Section 2(c).
“Original
Issue Date” means the date of the first issuance of this Note, regardless of any transfers of this Note and regardless of the
number of instruments which may be issued to evidence this Note.
“Permitted
Indebtedness” means (a) the Indebtedness evidenced by this Note, (b) the Indebtedness existing on the Original Issue
Date, (c) lease obligations and purchase money indebtedness of up to $2,000,000, in the aggregate, incurred in connection with the
acquisition of capital assets and lease obligations with respect to newly acquired or leased assets, (d) unfunded pension or employment
benefit plan obligations not constituting an Event of Default, (e) contingent indemnification obligations arising in the ordinary
course of business from the honoring by a bank of checks or similar instruments against insufficient funds, (f) Indebtedness incurred
in the ordinary course of business in respect of performance bonds, bid bonds, customs and appeal bonds, performance and completion guarantees
and similar obligations related thereto, (g) other unsecured Indebtedness not exceeding $10,000,000 in aggregate principal amount
outstanding, (h) Indebtedness owing by the Company to one of its Subsidiaries, (i) Indebtedness incurred in the ordinary course
of business to finance insurance premiums, (j) the CARES Act Deferred Payroll Taxes; (k) Indebtedness that is expressly subordinate
to this Note pursuant to a written subordination agreement with the Holder; and (l) hedging transactions entered into in the ordinary
course of business and not for speculative purpose.
“Permitted
Lien” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental
charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good faith and
by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Company) have been established
in accordance with GAAP, (b) Liens imposed by law which were incurred in the ordinary course of the Company’s business, such
as carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other similar Liens arising
in the ordinary course of the Company’s business, and which (x) do not individually or in the aggregate materially detract
from the value of such property or assets or materially impair the use thereof in the operation of the business of the Company and its
consolidated Subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings have the effect
of preventing for the foreseeable future the forfeiture or sale of the property or asset subject to such Lien, (c) Liens incurred
in connection with Permitted Indebtedness, (d) easements, rights of way, restrictions, minor defects or irregularities in title and
other similar Liens, in each case, not interfering in any material respect with the ordinary conduct of the Company’s business,
(e) any interest or title of a licensor, sublicensor, lessor or sublessor under any license or lease agreement, (f) licenses,
sublicenses, leases or subleases of real property or Intellectual Property granted by Borrower (as lessor or licensor) to third Persons
in the ordinary course of business consistent with past practices, (g) banker’s Liens and rights of set-off of financial institutions
arising in connection with items deposited in accounts maintained at such financial institution and subsequently unpaid and fees and expenses
that are charged to Borrower by such financial institutions in the normal course of business of the maintenance and operation of such
accounts, and (h) Liens on insurance policies and the proceeds thereof incurred in connection with the financing of insurance premiums
in the ordinary course of business.
“Purchase
Agreement” means the Securities Purchase Agreement, dated as of December 18, 2023, between the Company and the original
Holder, as amended, modified or supplemented from time to time in accordance with its terms.
“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 Nasdaq Capital Market, the NYSE American, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock
Exchange or any dealer network or trading platform operated by OTC Markets Group Inc. (formerly Pink Sheets LLC) (or any successors to
any of the foregoing).
Section 2. Interest.
a) Payment
of Interest in Cash. The Company shall pay interest to the Holder on the aggregate then outstanding principal amount of this Note
at the rate of 10% per annum, payable on the Maturity Date, in cash.
b) Intentionally
Omitted.
c) Interest
Calculations. Interest shall be calculated on the basis of a 360-day year and the actual number of days elapsed, and shall accrue
daily commencing on the Original Issue Date until payment in full of the outstanding principal, together with all accrued and unpaid interest,
liquidated damages and other amounts which may become due hereunder, has been made. Interest hereunder will be paid to the Person in whose
name this Note is registered on the records of the Company regarding registration and transfers of this Note (the “Note Register”).
d) Late
Fee. All overdue accrued and unpaid interest to be paid hereunder shall entail a late fee at an interest rate equal to the lesser
of 18.0% per annum or the maximum rate permitted by applicable law (the “Late Fees”) which shall accrue daily from
the date such interest is due hereunder through and including the date of actual payment in full.
e) Prepayment.
The Company may prepay any portion of the principal amount of this Note in whole or in part at any time or from time to time without
penalty or premium by paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment. Following
the consummation of any equity or debt financing, the Company shall, within three (3) Trading Days after the consummation of such
financing, prepay the outstanding principal amount of this Note from the net amount of proceeds raised in any equity or debt financing
after paying any fees and or expenses associated with such equity or debt financing.
Section 3. Registration
of Transfers and Exchanges.
a) Different
Denominations. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as
requested by the Holder surrendering the same. No service charge will be payable for such registration of transfer or exchange.
b) Restrictions
on Transfer. This Note has been issued subject to certain investment representations of the original Holder set forth in the Purchase
Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement and applicable federal and state securities
laws and regulations.
c) Reliance
on Note Register. Prior to due presentment for transfer to the Company of this Note, the Company and any agent of the Company may
treat the Person in whose name this Note is duly registered on the Note Register as the owner hereof for the purpose of receiving payment
as herein provided and for all other purposes, whether or not this Note is overdue, and neither the Company nor any such agent shall be
affected by notice to the contrary.
Section 4. Negative
Covenants. As long as any portion of this Note remains outstanding, the Company shall not, directly or indirectly, without the prior
written approval of the Holder:
a) other
than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any Indebtedness of any kind, including,
but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein
or any income or profits therefrom;
b) other
than Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any of its property
or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;
c) repay,
repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common Stock or Common
Stock Equivalents other than as to repurchases of Common Stock or Common Stock Equivalents of departing officers and directors of the
Company, provided that such repurchases shall not exceed an aggregate of $1,000,000 for all officers and directors during the term of
this Note;
d) repay,
repurchase or offer to repay, repurchase or otherwise acquire any Indebtedness, other than this Note if on a pro-rata basis, other than
regularly scheduled principal and interest payments as such terms are in effect as of the Original Issue Date, provided that such payments
shall not be permitted if, at such time, or after giving effect to such payment, any Event of Default exist or occur;
e) enter
into any transaction with any Affiliate of the Company which would be required to be disclosed in any public filing with the Commission,
unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of
the Company (even if less than a quorum otherwise required for board approval); or
f) enter
into any agreement with respect to any of the foregoing.
Section 5. Events
of Default.
a) “Event
of Default” means, wherever used herein, any of the following events (whatever the reason for such event and whether such event
shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order,
rule or regulation of any administrative or governmental body):
i. any
default in the payment of (A) the principal amount of this Note or (B) interest and other amounts owing to a Holder on this
Note, as and when the same shall become due and payable (whether on the Maturity Date or by acceleration or otherwise) which default,
solely in the case of an interest payment or other default under clause (B) above, is not cured within two (2) Trading Days;
ii. the
Company shall fail to observe or perform any other covenant or agreement contained in this Note or in any Transaction Document, which
failure is not cured, if possible to cure, within the earlier to occur of (A) ten (10) Trading Days after notice of such failure
sent by the Holder or by any other Holder to the Company and (B) ten (10) Trading Days after the Company has become or should
have become aware of such failure;
iii. a
default or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument) shall
occur under (A) any of the Transaction Documents or (B) any other material agreement, lease, document or instrument to which
the Company or any Subsidiary is obligated (and not covered by clause (vi) below);
iv. any
representation or warranty made in this Note, any other Transaction Documents, any written statement pursuant hereto or thereto or any
other report, financial statement or certificate made or delivered to the Holder or any other Holder shall be untrue or incorrect in any
material respect as of the date when made or deemed made;
v. the
Company or any Subsidiary shall be subject to a Bankruptcy Event;
vi. the
Company or any Subsidiary shall default on any of its obligations under any Indebtedness, that (a) involves an obligation greater
than $2,000,000, whether such Indebtedness now exists or shall hereafter be created, and (b) results in such Indebtedness becoming
or being declared due and payable prior to the date on which it would otherwise become due and payable;
vii. the
Common Stock shall not be eligible for listing or quotation for trading on a Trading Market and shall not be eligible to resume listing
or quotation for trading thereon within three (3) Trading Days;
viii. the
Company (and all of its Subsidiaries, taken as a whole) shall be a party to any Change of Control Transaction or Fundamental Transaction;
ix. any
final and non-appealable monetary judgment, writ or similar process shall be entered or filed against the Company, any subsidiary or any
of their respective property or other assets involving in the aggregate a liability (to the extent not paid or covered by insurance) in
an amount in excess of $5,000,000, and such judgment, writ or similar final process shall remain unvacated, unbonded or unstayed for a
period of forty-five (45) calendar days; or
x. the
occurrence of a Material Adverse Effect that has not been cured within ten (10) Business Days following the Company’s receipt
of notice thereof from the Holder.
b) Remedies
Upon Event of Default. If any Event of Default occurs and is continuing, the outstanding principal amount of this Note, plus accrued
but unpaid interest, liquidated damages and other amounts owing in respect thereof through the date of acceleration, shall become, at
the Holder’s election, immediately due and payable in cash; provided that such acceleration shall be automatic, without any notice
or other action of the Required Holder required, in respect of an Event of Default occurring pursuant to clause (v) of Section 7(a).
Commencing immediately after the occurrence and continuance of any Event of Default, the interest rate on this Note shall accrue at an
interest rate equal to the lesser of 18.0% per annum or the maximum rate permitted under applicable law. Upon the payment in full, the
Holder shall promptly surrender this Note to or as directed by the Company. In connection with such acceleration described herein, the
Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may
immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies
available to it under applicable law. Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder
and the Holder shall have all rights as a holder of this Note until such time, if any, as the Holder receives full payment pursuant to
this Section 7(b). No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.
Section 6. Miscellaneous.
a) Notices.
Any and all notices or other communications or deliveries to be provided by the Holder hereunder shall be in writing and delivered personally,
by email attachment, or sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth
above, or such other email address, or address as the Company may specify for such purposes by notice to the Holder delivered in accordance
with this Section 6(a). Any and all notices or other communications or deliveries to be provided by the Company hereunder shall
be in writing and delivered personally, by email attachment, or sent by a nationally recognized overnight courier service addressed to
each Holder at the email address or address of the Holder appearing on the books of the Company, or if no such email attachment or address
appears on the books of the Company, at the principal place of business of such Holder. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is
delivered via email attachment to the email address set forth on the signature pages attached hereto prior to 5:30 p.m. (New
York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered
via email attachment to the email address 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, (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.
b) Absolute
Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable, on this Note at the time,
place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of the Company.
c) Lost
or Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange
and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note,
a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss,
theft or destruction of such Note, and of the ownership hereof, reasonably satisfactory to the Company.
d) Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Note 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 conflict of laws thereof.
Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by
any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders,
employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “New
York Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication
of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper
or 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 Note 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 applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted
by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Note or the transactions
contemplated hereby. If any party shall commence an action or proceeding to enforce any provisions of this Note, then the prevailing party
in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred in the
investigation, preparation and prosecution of such action or proceeding.
e) Waiver.
Any waiver by the Company or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Company or the Holder
to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party
of the right thereafter to insist upon strict adherence to that term or any other term of this Note on any other occasion. Any waiver
by the Company or the Holder must be in writing.
f) Severability.
If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision
is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances. If it shall
be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate
of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law. The Company
covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying
all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter
in force, or which may affect the covenants or the performance of this Note, and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such
law has been enacted.
g) Remedies,
Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative
and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including
a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual
and consequential damages for any failure by the Company to comply with the terms of this Note. 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 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 such breach or any such threatened breach,
without the necessity of showing economic loss and without any bond or other security being required. The Company shall provide all information
and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the
terms and conditions of this Note.
h) Next
Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall
be made on the next succeeding Business Day.
i) Headings.
The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit or affect
any of the provisions hereof.
j) Secured
Obligation. The obligations of the Company under this Note are secured by the assets of the Company pursuant to the Security Agreement,
dated [January 1, 2024], by and among the Company and the Purchaser.
Section 9. Disclosure. Upon
receipt or delivery by the Company of any notice in accordance with the terms of this Note, in the event that the Company believes that
such notice contains material, non-public information relating to the Company or its Subsidiaries, the Company shall so indicate in such
notice that it contains material, non-public information relating to the Company or its Subsidiarie and, simultaneously with the delivery
of such notice to the Holder, the Company shall publicly disclose the contents of such notice in a Current Report on Form 8-K filed
with the Commission. If the Company does not indicate to the Holder with delivery of such notice that it contains material, non-public
information relating to the Company or its Subsidiarie, the Holder shall be allowed to presume that all matters set forth in such notice
do not constitute material, nonpublic information relating to the Company or its Subsidiaries.
*********************
(Signature Page Follows)
IN WITNESS WHEREOF, the Company
has caused this Note to be duly executed by a duly authorized officer as of the date first above indicated.
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