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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):
February 20, 2024
TENON MEDICAL, INC.
(Exact name of registrant as specified in its charter)
Delaware |
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001-41364 |
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45-5574718 |
(State or other jurisdiction |
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(Commission File Number) |
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(IRS Employer |
of incorporation) |
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Identification No.) |
104 Cooper Court |
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Los Gatos, CA |
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95032 |
(Address of principal executive offices) |
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(Zip Code) |
(408) 649-5760
(Registrant’s telephone number, including
area code)
N/A
(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) |
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☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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☐ |
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 |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Common Stock, par value $0.001 per share |
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TNON |
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The Nasdaq Stock Market LLC |
Warrants |
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TNONW |
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The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the
Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company ☒
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Item 1.01. Entry into a Material Definitive Agreement.
On February 20, 2024 (the “Closing Date”),
Tenon Medical, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with
certain investors (the “Investors”), pursuant to which the Company agreed to sell, issue and deliver to the Investors, in
a private placement offering (the “Offering”), a total of 172,239 shares of the Company’s Series A Preferred Stock (the
“Series A Preferred Stock”) and warrants (the “Warrants”) to purchase 258,374 shares of common stock, par value
$0.001 per share, of the Company (“Common Stock”) at an exercise price equal to $1.2705 per share for an aggregate offering
price of $2,605,000. Under the Securities Purchase Agreement, each Investor paid $15.125 for each share of Series A Preferred Stock and
along with their shares of Series A Preferred Stock, received Warrants equal to 15% of the number of shares of the Company’s common
stock initially underlying such shares of Series A Preferred Stock.
The Certificate of Designations, Rights, and Preferences
of the Series A Preferred Stock (the “Certificate of Designation”) was filed in Delaware on the Closing Date and contains
the terms of the Series A Preferred Stock. The Series A Preferred Stock is convertible, at any time, at the option of the holder into
shares of Common Stock. Each share of Series A Preferred Stock shall be convertible, at any time after the date of issuance, at the option
of the holder thereof (or, upon a Required Conversion (as defined below), at the option of the Corporation), into that number of shares
of Common Stock determined by dividing the Stated Value (as defined below) for such share of Series A Preferred Stock by the Conversion
Price (as defined below). “Stated Value” means for any share of Series A Preferred Stock, an amount equal to the product of
(x) $15.125 multiplied by (y) the sum of 1 plus the product of (A) 0.06 multiplied by (B) a fraction equal to the number of days that
such share of Series A Preferred Stock has been issued divided by 365. “Conversion Price” means (i) for the shares of Series
A Preferred Stock issued on the Closing Date, $1.5125 and (ii) for each share of Series A Preferred Stock issued thereafter, an amount
equal to the greater of (x) $1.5125 and the average of the VWAPs for the 10 Trading Days prior the issuance date of such share of Series
A Preferred Stock, in each case subject to adjustment as set forth herein. On any date that ten out the last 15 daily VWAPs of the Common
Stock is 250% higher than the Conversion Price on such date, then the Company will have the right to require 50% of the Preferred
Stock to be converted into shares of Common Stock. Additionally, on and after the time on which the Company has $2.25 million in
revenues in any single financial quarter, the Company will have the right to require 50% of the Preferred Stock to be converted into
shares of Common Stock (a “Required Conversion”). No dividends are payable on the Series A Preferred Stock The Series A
Preferred Stock will vote together with the Common Stock on all matters other than as required by law; provided however that any additional
shares underlying the Series A Preferred Stock as a result of the anti-dilution provision described below shall not vote on
an “as converted” basis and shall only vote when issued upon conversion. Notwithstanding the foregoing, the vote of an individual
holder of Series A Preferred Stock (and underlying Common Stock) shall be capped at 9.99% (or 4.99% if selected by the holder). The
Conversion Price is subject to anti-dilution adjustment as the result of any subdivision, combination of shares or recapitalization,
stock dividends, stock splits and similar transactions affecting the Common Stock. In addition, the Series A Preferred Stock will
have weighted average anti-dilution protection providing for adjustment of the Conversion Price in the event of issuance of, or commitments
to issue, Common Stock for less than the Conversion Price then in effect immediately prior to such issue or sale (a “Dilutive Issuance”),
subject to customary exceptions; provided however the anti-dilution for Dilutive Issuances shall not be operative until the stockholders
of the Company have approved the terms of the Series A Preferred Stock. Upon any liquidation or winding up of the Company (a “Liquidation”),
the holders of Series A Preferred Stock will be entitled to receive in preference to any other class or series of the Company’s
equity securities the greater of (i) the Stated Value plus accrued and unpaid dividends and (ii) what would be paid if the Series A
Preferred Stock plus accrued and unpaid dividends had been converted into Common Stock. A consolidation or merger of the Company or sale
or transfer of all or substantially all of its assets, or any transaction which results in the stockholders of the Company owning less
than 50% of the equity or voting power of the surviving entity (excluding the issuance of Common Stock in any financing transaction unless
more than 50% of the Company’s shares are issued to one stockholder or a number of stockholders who act as a one group) shall be
deemed a Liquidation (a “Deemed Liquidation”) with respect to the shares of Series A Preferred Stock of any holder who
opts to have such occurrence treated as a Deemed Liquidation; provided that if the liquidation preference payable on a Deemed Liquidation
is less than 110% of the stated value of the Series A Preferred Stock, the dividend rate on any accrued and unpaid dividends payable
with respect to such Deemed Liquidation will increase to 10%. All liquidation preferences payable in respect of a Deemed Liquidation will
be payable in shares of Common Stock based on the closing price of the Common Stock on the date of such Deemed Liquidation. Consent of
the majority of the holders will be required to (i) amend the Certificate of Incorporation or Bylaws of the Company so as to adversely
alter the rights, preferences, privileges of the Series A Preferred Stock, (ii) create any new class of shares pari
passu or senior to the Series A Preferred Stock or increase or decrease the number of authorized shares of Common Stock
or preferred stock, (iii) pay or declare any dividend on Common Stock or other junior securities, or incur indebtedness in any single
transaction in excess of $1 million or (iv) redeem, purchase or otherwise acquire any share or shares of preferred stock or
Common Stock (other than (a) the repurchase of shares of Common Stock pursuant to a written benefit plan or employment or consulting
agreement, or (b) the repurchase of any equity securities in connection with the Company’s right of first offer with respect
to those securities contained in any written agreement with the Company)
The Warrants have an initial exercise price of
$1.2705 per share and a five (5) year term. Each Warrant will contain a “cashless exercise” feature and the same anti-dilution rights
as the Series A Preferred Stock.
Under the Securities Purchase Agreement the Company
will be required to file a registration statement in respect of the Common Stock underlying the Series A Preferred Stock and the
Warrants that will be effective within 120 days of the Closing Date.
Also on the Closing Date, the Company exchanged
(i) the outstanding principal amount of $1 million plus accrued interest of a secured note of the Company issued on November 21, 2023
(the "Ascent Note") held by Ascent Special Ventures LLC (“Ascent”) and (ii) the outstanding principal amount of
$250,000 plus accrued interest of a secured note of the Company issued on November 21, 2023 (the "WZC Note" and together with
the Ascent Note, the “Notes”) held by WZC Ascent Family Limited Partnership (“WZC”) for Ascent receiving 67,783
shares of Series A Preferred Stock and 125,675 Warrants and WZC receiving 16,946 shares of Series A Preferred Stock and 31,419 Warrants.
The foregoing summaries of the Securities Purchase
Agreement, the Certificate of Designations and the Warrants do not purport to be complete and are subject to, and qualified in their entirety
by, such form of documents attached as Exhibits 10.1, 10.2 and 10.3, respectively, to this Current Report on Form 8-K (this “Report”),
which are incorporated herein by reference.
Item 1.02 Termination of a Material Definitive
Agreement.
The information regarding the Notes set forth
under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Any summary of the Notes contained in Item 1.01
does not purport to be complete and is subject to, and qualified in its entirety by, such form of documents attached as Exhibit 10.2 to
the Company’s Current Report on Form 8-K filed on November 28, 2023, which is incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity
Securities.
The information set forth under Item 1.01 of this
Current Report on Form 8-K is incorporated herein by reference.
The Company offered and sold the Series A Preferred
Stock and Warrants to the purchasers in reliance on the exemption from registration provided by Section 4(a)(2) and Regulation 506(b)
under the Securities Act of 1933, as amended (the “Securities Act”).
Item 9.01. Financial Statement 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.
Date: February 22, 2024 |
TENON MEDICAL, INC. |
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By: |
/s/ Steven M. Foster |
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Name: |
Steven M. Foster |
|
Title: |
Chief Executive Officer and President |
3
Exhibit 10.1
SECURITIES PURCHASE
AGREEMENT
This Securities Purchase Agreement
(this “Agreement”) is dated as of February 20, 2024, between Tenon Medical, Inc., a Delaware corporation (the “Company”),
and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a “Purchaser”
and collectively, the “Purchasers”).
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 each Purchaser, and each Purchaser, severally and not jointly, 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 each Purchaser agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions.
In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, 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(j).
“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.
“Ascent”
means Ascent Special Ventures or related funds.
“Board
of Directors” means the board of directors of the Company.
“Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed; provided, however, for clarification, commercial
banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”,
“non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations
at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial
banks in The City of New York generally are open for use by customers on such day.
“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section 2.1.
“Closing
Date” means the 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 Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s
obligations to deliver the Securities, in each case, have been satisfied or waived.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means 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 Sichenzia Ross Ferrence Carmel LLP, with offices located at 1185 Avenue of Americas, 31st Floor, New
York, New York 10036.
“Conversion Shares”
means the Common Stock issuable upon conversion of Shares.
“Damages”
means any loss, damage, claim or liability (joint or several) to which a party hereto may become subject under the Securities Act, the
Exchange Act, or other federal or state law, insofar as such loss, damage, claim or liability (or any action in respect thereof) arises
out of or is based upon: (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement
of the Company, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto; (ii)
an omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein
not misleading; or (iii) any violation or alleged violation by the indemnifying party (or any of its agents or Affiliates) of the Securities
Act, the Exchange Act, any state securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act, or
any state securities law.
“Evaluation
Date” shall have the meaning ascribed to such term in Section 3.1(s).
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exempt
Issuance” means the issuance of (a) shares of Common Stock, options or restricted stock units to employees, officers, directors
or eligible service providers of the Company pursuant to any stock or option plan duly adopted for such purpose, by a majority of the
non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such
purpose for services rendered to the Company, provided that such issuances to service providers are issued as “restricted securities”
(as defined in Rule 144 under the Securities Act of 1933), and (b) securities issued pursuant to acquisitions or strategic transactions
approved by a majority of the disinterested directors of the Company, provided that such securities are issued as “restricted securities”
(as defined in Rule 144 under the Securities Act of 1933).
“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.
“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).
“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section 3.1(p).
“Legend
Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).
“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).
“Material
Permits” shall have the meaning ascribed to such term in Section 3.1(n).
“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.
“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.
“Registration
Statement” means a registration statement covering the resale by the Purchasers of the Shares and the Warrant Shares.
“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).
“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.
“Rule 424”
means Rule 424 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(h).
“Securities”
means the Shares, the Warrants and the Warrant Shares.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Series
A Preferred Stock” means the Company’s Series A Preferred Stock, par value, $0.001 per share having the terms set forth
in the Certificate of Designation attached hereto as Exhibit A.
“Shares”
means the shares of Series A Preferred Stock issued or issuable to each Purchaser pursuant to this Agreement.
“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be
deemed to include locating and/or borrowing shares of Common Stock).
“Stockholder
Approval” means the approval of the terms of the Series A Preferred Stock and Warrants by the Company’s stockholders.
“Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for Shares and Warrants purchased hereunder as specified
below such 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.
“Subsidiaries”
has the meaning set forth in Section 3.1(a)
“Trading
Day” means a day on which the principal Trading Market is open for trading.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE American, The Nasdaq Capital Market, The Nasdaq Global Market, The Nasdaq Global Select Market, or the New York
Stock Exchange, (or any successors to any of the foregoing).
“Transaction
Documents” means this Agreement, the Warrants, the Certificate of Designation, the Series A Preferred Stock certificates, all
exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated
hereunder.
“Transfer
Agent” means VStock Transfer, LLC, the current transfer agent of the Company, with a mailing address of 18 Lafayette Place,
Woodmere, New York 11598 and any successor transfer agent of the Company.
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock
is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market
(or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common
Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser
selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the
Company, the fees and expenses of which shall be paid by the Company.
“Warrants”
means, collectively, the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section 2.2(a) hereof,
which Warrants shall be exercisable immediately and have a term of exercise equal to five (5) years, in the form of Exhibit B attached
hereto.
“Warrant
Shares” means the shares of Common Stock issuable upon exercise of the Warrants.
ARTICLE II.
PURCHASE AND SALE
2.1 Closing.
On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery
of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase,
an aggregate of 172,239 of Shares and Warrants to purchase 258,374 shares of Common Stock. Each Purchaser shall deliver to the Company,
via wire transfer, immediately available funds equal to such Purchaser’s Subscription Amount as set forth on the signature page
hereto executed by such Purchaser, and the Company shall deliver to each Purchaser its respective Shares and a Warrant, as determined
pursuant to Section 2.2(a), and the Company and each 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 each Purchaser the following:
(i) this
Agreement duly executed by the Company;
(ii) a
legal opinion of Company Counsel, in a form reasonably acceptable to each Purchaser;
(iii) a
Series A Preferred Stock share certificate or statement from the Company’s transfer agent evidencing that such Purchaser is the
owner of the Shares such Purchaser subscribed and paid for;
(iv) a
Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 15% of the Common Stock
underlying such Purchaser’s Shares, with an exercise price per share equal to $1.2705, subject to adjustment therein; and
(v) the
Company’s wire instructions, on Company letterhead and executed by the Chief Executive Officer or Chief Financial Officer.
(vi) On
or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:
(vii) this
Agreement duly executed by such Purchaser; and
(viii) such
Purchaser’s Subscription Amount by wire transfer to the account specified in writing by the Company.
2.3 Closing
Conditions.
(a) The
obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:
(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) on the Closing Date of the representations and warranties of the Purchasers contained herein (unless as of a specific
date therein in which case they shall be accurate as of such date);
(ii) all
obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been performed
in all material respects; and
(iii) the
delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.
(b) The
respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:
(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 as of such date);
(ii) all
obligations, covenants and agreements of the Company required to be performed under the Transaction Documents 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 since the date hereof;
(v) no
fees are payable to Maxim Group LLC; and
(vi) 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 such Purchaser,
makes it impracticable or inadvisable to purchase the Securities at the Closing.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations
and Warranties of the Company. Except as set forth in the SEC Reports, the Company hereby makes the following representations and
warranties to each Purchaser as of the Closing Date:
(a) Subsidiaries.
All of the direct and indirect subsidiaries (“Subsidiaries”) of the Company, if any, 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,
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, prospects or condition (financial or otherwise) of the Company and the Subsidiaries,
taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis
its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”); provided further,
that “Material Adverse Effect” shall not include any event, occurrence, fact, condition or change, directly or indirectly,
arising out of or attributable to: (i) general economic or political conditions, (ii) conditions generally affecting the industry in which
the Company operates, (iii) any changes in financial or securities markets in general, (iv) acts of war (whether or not declared), armed
hostilities or terrorism, or the escalation or worsening thereof, (v) any pandemic, epidemics or human health crises (including COVID-19),
(vi) any changes in applicable laws or accounting rules, (vii) the announcement, pendency or completion of the transactions contemplated
by the Transaction Documents, or (viii) any action required or permitted by the Transaction Documents or any action taken (or omitted
to be taken) with the written consent of or at the written request of Purchaser). To the knowledge of the Company, 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 other
than in connection with the Required Approvals. This Agreement and each other Transaction Document to which it is a party has been (or
upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute
the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by
general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
(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 (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, 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 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) subject to the Required Approvals, conflict with or result in
a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority
to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property
or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not
have or reasonably be expected to result in a Material Adverse Effect.
(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 or other Person in connection
with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings required pursuant
to Section 4.4 of this Agreement, (ii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of
the Securities and the listing of the Conversion Shares and Warrant Shares for trading thereon in the time and manner required thereby,
and (iv) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively,
the “Required Approvals”).
(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. The Conversion Shares and Warrant Shares, when issued in accordance
with the terms of the Transaction Documents, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed
by the Company other than restrictions on transfer provided for in the Transaction Documents. The Company has reserved from its duly authorized
capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement, the Series A Preferred Stock and the Warrants.
(g) Capitalization.
The authorized Capital Stock of the Company, and the issued and outstanding shares thereof, is as set forth in the most current
relevant SEC Reports (as of the date thereof). The Company has duly reserved up to [*] shares of Common Stock for issuance upon the
conversion of the Series A Preferred Stock and the exercise of the Warrants. The Conversion Shares, when issued upon conversion of
the Series A Preferred Stock in accordance with their terms, and the Warrant Shares, if and when issued upon exercise of the
Warrants in accordance with their terms, will be validly issued, fully paid and non-assessable and free from all taxes, liens and
charges with respect to the issuance thereof. No shares of the Company’s capital stock are subject to preemptive rights or any
other similar rights or any liens or encumbrances suffered or permitted by the Company. The Company’s certificate of
incorporation and bylaws on file on the SEC’s EDGAR website are true and correct copies of the Company’s certificate of
incorporation and bylaws as in effect as of the Closing Date. The Company is not in violation of any provision of its certificate of
incorporation or bylaws.
(h) 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”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any
untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading. The Company has never been an issuer
subject to Rule 144(i) under the Securities Act. The financial statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at
the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles
applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial
statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly
present in all material respects the consolidated financial position of the Company and its Subsidiaries as of and for the dates thereof
and the consolidated 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.
(i) Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included within
the SEC Reports, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in
a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and
accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected
in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to
its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company
has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans. The
Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance of
the Securities contemplated by this Agreement, no event, liability, fact, circumstance, occurrence or development has occurred or exists
or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries or their respective businesses, prospects,
properties, operations, assets or financial condition that would be required to be disclosed by the Company under applicable securities
laws at the time this representation is made or deemed made that has not been publicly disclosed at least 1 Trading Day prior to the date
that this representation is made. Except for ordinary course accounts payable and as set forth on Schedule 3.1(i), the Company has no
outstanding loans.
(j) Litigation.
There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened
against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental
or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”).
Neither the Company nor any Subsidiary, nor, to the Company’s knowledge, any director or officer thereof, is or has been the subject
of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary
duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission
involving the Company or any current or former director or officer of the Company. 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.
(k) Labor
Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company,
which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’ employees
is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company
nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships
with their employees are good. To the knowledge of the Company, no executive officer of the Company or any Subsidiary is, or is now expected
to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement
or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued
employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any
of the foregoing matters. The Company and its Subsidiaries are in compliance with all applicable U.S. federal, state, local and foreign
laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where
the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(l) 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 the case of (ii) and (iii) as could not have or reasonably be expected to result
in a Material Adverse Effect.
(m)
Environmental Laws. The Company and its Subsidiaries (i) are in compliance with all applicable federal, state, local and foreign
laws relating to pollution or protection of human health or the environment (including ambient air, surface water, groundwater, land surface
or subsurface strata), including laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants,
or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands, or demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations, issued, entered, promulgated or approved thereunder (“Environmental Laws”);
(ii) have received all permits licenses or other approvals required of them under applicable Environmental Laws to conduct their respective
businesses; and (iii) are in compliance with all terms and conditions of any such permit, license or approval where in each clause (i),
(ii) and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.
(n) 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, and neither
the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.
(o) Title
to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good
and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each
case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for the payment of federal,
state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and the payment of which is neither
delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are held by
them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.
(p) 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 (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. 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.
(q) 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 for companies of the Company’s size and in the businesses in which the Company and the Subsidiaries
are engaged, including, but not limited to, directors and officers insurance coverage in an amount deemed commercially reasonable. 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.
(r) Transactions
with Affiliates and Employees. Except as set forth in its 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 $120,000 other than for (i) payment of salary
or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits,
including stock option agreements under any stock option plan of the Company.
(s) Sarbanes-Oxley;
Internal Accounting Controls. Except as set forth in its SEC Reports, the Company and the Subsidiaries are in compliance with any
and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable
rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as of the Closing Date. Except
as set forth in its SEC Reports, the Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide
reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to
any differences. Except as set forth in its SEC Reports, the Company and the Subsidiaries have established disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls
and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange
Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Except
as disclosed in the SEC Reports, the Company’s certifying officers have evaluated the effectiveness of the disclosure controls and
procedures of the Company and the Subsidiaries as of the end of the period covered by the most recently filed periodic report under the
Exchange Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under
the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on
their evaluations as of the Evaluation Date. Since the Evaluation Date, and other than as set forth in the SEC Reports, there have been
no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) of the Company and its Subsidiaries
that have materially affected, or is reasonably likely to materially affect, the internal control over financial reporting of the Company
and its Subsidiaries.
(t) Certain
Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiary to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or other Person, including but not limited to Maxim Group LLC,
with respect to the transactions contemplated by the Transaction Documents. The Purchasers 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.
(u) Private
Placement. Assuming the accuracy of the Purchasers’ 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 Purchasers as contemplated hereby.
The issuance and sale of the Securities hereunder do not contravene the rules and regulations of the Trading Market.
(v) 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.
(w) Registration
Rights. Other than each of the Purchasers, except for Lincoln Park Capital Fund, LLC, as disclosed in the Company’s Current
Report on Form 8-K, filed with the SEC on July 28, 2023, no Person has any right to cause the Company or any Subsidiary to effect the
registration under the Securities Act of any securities of the Company or any Subsidiary.
(x) 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.
The Company has not, in the 12 months preceding the date hereof (or such shorter period if applicable), 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. Except as set forth on Schedule 3.1(x), the Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements. 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.
(y) Application
of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the laws of its state
of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations
or exercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of
the Securities and the Purchasers’ ownership of the Securities.
(z) Disclosure.
Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms
that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information
that it believes constitutes or might constitute material, non-public information. The Company understands and confirms that the Purchasers
will rely on the foregoing representation in effecting transactions in securities of the Company. All of the disclosure furnished by or
on behalf of the Company to the Purchasers regarding the Company and its Subsidiaries, their respective businesses and the transactions
contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. 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 no Purchaser makes or has made any representations or warranties with
respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.
(aa) No Integrated
Offering. Assuming the accuracy of the Purchasers’ 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.
(bb) 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 material 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 material
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.
(cc) 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 Purchasers and certain
other “accredited investors” within the meaning of Rule 501 under the Securities Act.
(dd) 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.
(ee) Accountants.
The Company’s accounting firm is Haskell & White LLP. To the knowledge and belief of the Company, such accounting firm (i) is
a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the financial statements
to be included in the Company’s Annual Report for the fiscal year ending December 31, 2023.
(ff) No Disagreements
with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably anticipated by the Company
to arise, between the Company and the accountants (set forth on Schedule 3.1(ff)) and outside legal counsel presently employed by the
Company and the Company.
(gg) Acknowledgment
Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers is acting solely
in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby.
The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or any of their
respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely
incidental to the Purchasers’ purchase of the Securities. The Company further represents to each Purchaser that the Company’s
decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions
contemplated hereby by the Company and its representatives.
(hh) Regulation
M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate
the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any
of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities
of the Company.
(ii) FDA.
As to each product subject to the jurisdiction of the U.S. Food and Drug Administration (“FDA”) under the Federal Food,
Drug and Cosmetic Act, as amended, and the regulations thereunder (“FDCA”) that is manufactured, packaged, labeled,
tested, distributed, sold, and/or marketed by the Company or any of its Subsidiaries (each such product, a “Medical Device”),
such Medical Device is being manufactured, packaged, labeled, tested, distributed, sold and/or marketed by the Company in compliance with
all applicable requirements under FDCA and similar laws, rules and regulations relating to registration, investigational use, premarket
clearance, licensure, or application approval, good manufacturing practices, good laboratory practices, good clinical practices, product
listing, quotas, labeling, advertising, record keeping and filing of reports, except where the failure to be in compliance would not have
a Material Adverse Effect. There is no pending, completed or, to the Company’s knowledge, threatened, action (including any lawsuit, arbitration,
or legal or administrative or regulatory proceeding, charge, complaint, or investigation) against the Company or any of its Subsidiaries,
and none of the Company or any of its Subsidiaries has received any notice, warning letter or other communication from the FDA or any
other governmental entity, which (i) contests the premarket clearance, licensure, registration, or approval of, the uses of, the distribution
of, the manufacturing or packaging of, the testing of, the sale of, or the labeling and promotion of any Medical Device, (ii) withdraws
its approval of, requests the recall, suspension, or seizure of, or withdraws or orders the withdrawal of advertising or sales promotional
materials relating to, any Medical Device, (iii) imposes a clinical hold on any clinical investigation by the Company or any of its Subsidiaries,
(iv) enjoins production at any facility of the Company or any of its Subsidiaries, (v) enters or proposes to enter into a consent decree
of permanent injunction with the Company or any of its Subsidiaries, or (vi) otherwise alleges any violation of any laws, rules or regulations
by the Company or any of its Subsidiaries, and which, either individually or in the aggregate, would have a Material Adverse Effect. The
properties, business and operations of the Company have been and are being conducted in all material respects in accordance with all applicable
laws, rules and regulations of the FDA. The Company has not been informed by the FDA that the FDA will prohibit the marketing, sale,
license or use in the United States of any product proposed to be developed, produced or marketed by the Company nor has the FDA expressed
any concern as to approving or clearing for marketing any product being developed or proposed to be developed by the Company.
(jj) Officers’
Certificate. Any certificate signed by any duly authorized officer of the Company and delivered to the Purchasers shall be deemed
a representation and warranty by the Company to the Purchasers as to the matters covered thereby.
(kk) Stock
Option Plans. Each stock option granted by the Company under the Company’s stock option plan was granted (i) in accordance with
the terms of the Company’s stock option plan and (ii) with an exercise price at least equal to the fair market value of the Common
Stock on the date such stock option would be considered granted under GAAP and applicable law. No stock option granted under the Company’s
stock option plan has been backdated. The Company has not knowingly granted, and there is no and has been no Company policy or practice
to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public
announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.
(ll) Cybersecurity.
(i)(x) To the Company’s knowledge, there has been no security breach or other compromise of or relating to any of the Company’s
or any Subsidiary’s information technology and computer systems, networks, hardware, software, data (including the data of its respective
customers, employees, suppliers, vendors and any third party data maintained by or on behalf of it), equipment or technology (collectively,
“IT Systems and Data”) and (y) the Company and the Subsidiaries have not been notified of, and has no knowledge of
any event or condition that would reasonably be expected to result in, any security breach or other compromise to its IT Systems and Data;
(ii) the Company and the Subsidiaries are presently in compliance with all applicable laws or statutes and all judgments, orders, rules
and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating
to the privacy and security of IT Systems and Data and to the protection of such IT Systems and Data from unauthorized use, access, misappropriation
or modification, except as would not, individually or in the aggregate, have a Material Adverse Effect; (iii) the Company and the
Subsidiaries have implemented and maintained commercially reasonable safeguards to maintain and protect its material confidential information
and the integrity, continuous operation, redundancy and security of all IT Systems and Data; and (iv) the Company and the Subsidiaries
have implemented backup and disaster recovery technology consistent with industry standards and practices.
(mm) 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”).
(nn) 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.
(oo) 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.
(pp) 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.
(qq) No Disqualification
Events. With respect to the Securities to be offered and sold hereunder in reliance on Rule 506 under the Securities Act, none
of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating
in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated
on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Company
in any capacity at the time of sale (each, an “Issuer Covered Person” and, together, “Issuer Covered Persons”)
is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a
“Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has
exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied,
to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Purchasers a copy of any disclosures
provided thereunder.
(rr) 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.
(ss) Notice
of Disqualification Events. The Company will notify the Purchasers in writing, prior to the Closing Date of (i) any Disqualification
Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, reasonably be expected to become
a Disqualification Event relating to any Issuer Covered Person, in each case of which it is aware.
3.2 Representations
and Warranties of the Purchasers. Each 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. Such 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 such
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 such Purchaser. Each Transaction Document to which it is a
party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute
the valid and legally binding obligation of such 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.
(b) Own
Account. Such 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
such Purchaser’s right to sell the Securities pursuant to the Registration Statement or otherwise in compliance with applicable
federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.
(c) Purchaser
Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on which
it exercises any Warrants, it will be either: (i) 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 or (ii) a “qualified institutional buyer” as defined in Rule
144A(a) under the Securities Act.
(d) Experience
of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities,
and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete loss of such investment.
(e) General
Solicitation. Such Purchaser is not, to such 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 such Purchaser, any other general solicitation or general advertisement.
(f) Access
to Information. Such Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including all exhibits
and schedules thereto) and the SEC Reports and has been afforded (i) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities
and the merits and risks of investing in the Securities; (ii) access to information about the Company and its financial condition, results
of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity
to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary
to make an informed investment decision with respect to the investment.
(g) Certain
Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not, nor has
any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any purchases or
sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser first
received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material terms
of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing, in the
case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s
assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions
of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by
the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement. Other than to other Persons
party to this Agreement or to such Purchaser’s representatives, including, without limitation, its officers, directors, partners,
legal and other advisors, employees, agents and Affiliates, such 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, or preclude any actions, with respect
to locating or borrowing shares in order 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 such 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. Notwithstanding the foregoing, for the avoidance of doubt, nothing contained herein shall constitute
a representation or warranty, or preclude any actions, with respect to locating or borrowing shares in order to effect Short Sales or
similar transactions in the future.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer
Restrictions.
(a)
The Securities may only be transferred or otherwise disposed of in compliance with state and federal securities laws. In connection
with any transfer or other disposition of Securities other than pursuant to an effective registration statement or Rule 144, to the Company
or to an Affiliate of a 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 a Purchaser under this Agreement.
(b)
The Purchasers agree 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:
NEITHER THIS SECURITY NOR THE SECURITIES
ISSUABLE UPON EXERCISE OF THIS SECURITY HAS BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF
ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER
OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES
ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
The Company acknowledges
and agrees that a 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, such 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
appropriate 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, including, if the Securities are subject
to registration pursuant to this Agreement, the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under
the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of selling stockholders.
(c)
Certificates evidencing the Conversion Shares and Warrant Shares shall not contain any legend (including the legend set forth in
Section 4.1(b) hereof), (i) while a registration statement (including the Registration Statement) covering the resale of such security
is effective under the Securities Act, (ii) following any sale of such Conversion Shares or Warrant Shares pursuant to Rule 144 (assuming
cashless exercise of the Warrants), (iii) if such Conversion Shares or Warrant Shares are eligible for sale under Rule 144 (assuming cashless
exercise of the Warrants), or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission). The Company shall cause its counsel to issue a legal opinion
to the Transfer Agent or the Purchaser if required by the Transfer Agent to effect the removal of the legend hereunder, or if requested
by a Purchaser, respectively. If all or any portion of a Share is converted or a Warrant is exercised at a time when there is an effective
registration statement to cover the resale of the Conversion Shares and Warrant Shares, or if such Conversion Shares or Warrant Shares
may be sold under Rule 144 and the Company is then in compliance with the current public information required under Rule 144 (assuming
cashless exercise of the Warrants), or if the Conversion Shares or Warrant Shares may be sold under Rule 144 without the requirement for
the Company to be in compliance with the current public information required under Rule 144 as to such Conversion Shares or Warrant Shares
or if such legend is not otherwise required under applicable requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Commission) then such Conversion Shares or Warrant Shares shall be issued free of all legends.
The Company agrees that at such time as such legend is no longer required under this Section 4.1(c), it will, no later than the earlier
of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined below) following
the delivery by a Purchaser to the Company or the Transfer Agent of a certificate representing Conversion Shares or Warrant Shares, as
the case may be, issued with a restrictive legend (such date, the “Legend Removal Date”), deliver or cause to be delivered
to such Purchaser a certificate representing such shares that is free from all restrictive and other legends. The Company may not make
any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Article
IV. Certificates for Securities subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by crediting
the account of the Purchaser’s prime broker with the Depository Trust Company System as directed
by such Purchaser. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in
a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery
of a certificate representing Conversion Shares or Warrant Shares, as the case may be, issued with a restrictive legend.
(d)
Each Purchaser, severally and not jointly with the other Purchasers, agrees with the Company that such Purchaser will sell any
Securities 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 Integration. The
Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section
2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of the Securities for purposes
of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other
transaction unless shareholder approval is obtained before the closing of such subsequent transaction.
4.3 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 issuance of such Form 8-K, the Company
represents to the Purchasers that it shall have publicly disclosed all material, non-public information delivered to any of the
Purchasers 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 issuance of
such press release, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement,
whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, agents,
employees or Affiliates on the one hand, and any of the Purchasers or any of their Affiliates on the other hand, shall terminate.
The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the transactions
contemplated hereby, and neither the Company nor any 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 any Purchaser, or without the prior consent
of each 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. Notwithstanding the foregoing, the Company shall not publicly disclose the name of
any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market,
without the prior written consent of such Purchaser, except (a) as required by federal securities law in connection with (i) any
registration statement contemplated by this Agreement and (ii) the filing of final Transaction Documents with the Commission and (b)
to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the
Purchasers with prior notice of such disclosure permitted under this clause (b).
4.4
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 4.3 and any information a Holder has regarding mergers, acquisitions
or strategic alliances involving the Company, the Company covenants and agrees that neither it, nor any other Person acting on its behalf
will provide any Purchaser or its agents or counsel with any information that constitutes, or the Company reasonably believes constitutes,
material non-public information, unless prior thereto such Purchaser shall have consented to the receipt of such information and agreed
with the Company to keep such information confidential. The Company understands and confirms that each 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, directors, agents, employees or Affiliates delivers any material, non-public information to a Purchaser
without such Purchaser’s consent, the Company hereby covenants and agrees that such Purchaser shall not have any duty of confidentiality
to the Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees or Affiliates, or a duty to
the Company, any of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates not to trade on the
basis of, such material, non-public information, provided that the 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 file such notice with the Commission pursuant to a Current Report on Form 8-K. The
Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities
of the Company.
4.5
Use of Proceeds The Company shall use the net proceeds from the sale of the Securities hereunder for working capital and
general corporate purposes.
4.6
Indemnification of Purchasers. Subject to the provisions of this Section 4.6, the Company will indemnify and hold each Purchaser
and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser
(within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding
a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any
and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in
settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur
as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in
this Agreement or in the other Transaction Documents or (b) any action instituted against the Purchaser Parties in any capacity, or any
of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser Party, with respect
to any of the transactions contemplated by the Transaction Documents (unless such action is solely based upon a material breach of such
Purchaser Party’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser
Party may have with any such stockholder or any violations by such Purchaser Party of state or federal securities laws or any conduct
by such Purchaser Party which is finally judicially determined to constitute fraud, gross negligence or willful misconduct). If any action
shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party
shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own
choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party
except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has
failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable
opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party,
in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company
will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s
prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss,
claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants
or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by this
Section 4.6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills
are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of
any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law.
4.7 Reservation of
Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at
all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue
Conversion Shares pursuant to any conversion of the Shares and Warrant Shares pursuant to any exercise of the Warrants.
4.8 Listing
of Common Stock. For so long as the Series A Preferred Stock or Warrants are outstanding and convertible or exercisable, as
applicable, the Company hereby agrees to use reasonable commercial efforts to maintain the listing or quotation of the Common Stock
on the Trading Market on which it is currently listed for a period of no less than five (5) years from the Closing Date, and
concurrently with the Closing, the Company shall apply to list or quote all of the Conversion Shares and Warrant Shares on such
Trading Market and promptly secure the listing of all of the Conversion Shares and Warrant Shares on such Trading Market. The
Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will then include in
such application all of the Conversion Shares and Warrant Shares, and will take such other action as is necessary to cause all of
the Conversion Shares and Warrant Shares to be listed or quoted on such other Trading Market as promptly as possible. The Company
will then take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will
comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading
Market. For so long as the Company maintains a listing or quotation of the Common Stock on a Trading Market, the Company agrees to
maintain the eligibility of the Common Stock for electronic transfer through the Depository Trust Company or another established
clearing corporation, including, without limitation, by timely payment of fees to the Depository Trust Company or such other
established clearing corporation in connection with such electronic transfer.
4.9 Equal Treatment of
Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid to any Person to amend
or consent to a waiver or modification of any provision of this Agreement unless the same consideration is also offered to all of the
parties to this Agreement. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company
and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any
way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Securities
or otherwise.
4.10 Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, 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 in a Current Report on Form 8-K as
described in Section 4.3. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time
as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial press release as
described in Section 4.3, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the
information included in the Disclosure Schedules. Notwithstanding the foregoing and notwithstanding anything contained in this
Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes 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 initial press release as described in
Section 4.3, (ii) no Purchaser shall 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 initial press release as described in Section 4.3 and (iii) no Purchaser shall have any duty of
confidentiality or duty not to trade in the securities of the Company to the Company or its Subsidiaries after the issuance of the
initial press release as described in Section 4.3. Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and
the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions
of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the
portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.
4.11 Form D; Blue Sky
Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation D and to provide
a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall reasonably determine
is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers at the Closing under applicable
securities or “Blue Sky” laws of the states of the United States, and shall provide evidence
of such actions promptly upon request of any Purchaser.
4.12 Acknowledgment
of Dilution. The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding shares of
Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its
obligations under the Transaction Documents, including, without limitation, its obligation to issue the Conversion Shares and the
Warrant Shares pursuant to the Transaction Documents, are unconditional and absolute and not subject to any right of set off,
counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have against any
Purchaser and regardless of the dilutive effect that such issuance may have on the ownership of the other stockholders of the
Company.
4.13 Conversion and Exercise
Procedures. The form of Notice of Conversion and Notice of Exercise included in the Series A Preferred Stock Certificate of Designations
and Warrants set forth the totality of the procedures required of the Purchasers in order to convert the Shares and exercise the Warrants,
respectively. No additional legal opinion, other information or instructions shall be required of the Purchasers to convert their Shares
or exercise their Warrants. Without limiting the preceding sentences, no ink-original Notice of Conversion or Notice of Exercise shall
be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion or Notice of
Exercise form be required in order to convert the shares or exercise the Warrants. The Company shall honor conversions of Shares and
exercises of the Warrants and shall deliver Conversion Shares or Warrant Shares, as applicable, in accordance with the terms, conditions
and time periods set forth in the Transaction Documents.
4.14 Use of Proceeds.
The Subscription Amounts received by the Company shall be used for working capital and general corporate purposes.
4.15
Registration Rights.
(a) Registration
Statement. Promptly after the date of this Agreement, the Company shall prepare and file with the Commission a Registration Statement
covering the resale of all of the Conversion Shares and Warrant Shares that may be issued pursuant to the Transaction Documents. The
foregoing Registration Statements shall be filed on Form S-1 or any successor forms thereto. The Registration Statements (and each amendment
or supplement thereto, and each request for acceleration of effectiveness thereof) shall be provided to the Purchasers at least five
(5) Business Days prior to its filing or other submission and the Company shall incorporate all reasonable comments provided by the Purchasers
or its counsel.
(b) Expenses.
Except as otherwise expressly provided herein, the Company will pay all fees and expenses incident to the performance of or
compliance with this Section 4.15, including all fees and expenses associated with effecting the registration of the
Conversion Shares and Warrant Shares, including all filing and printing fees, the Company’s counsel and accounting fees and
expenses, costs associated with clearing the Conversion Shares and Warrant Shares for sale under applicable state securities laws,
listing fees, fees and expenses of one counsel to the Purchasers and the Purchasers’ reasonable expenses in connection with
the registration, but excluding discounts, commissions, fees of underwriters, selling brokers, dealer managers or similar securities
industry professionals with respect to the Conversion Shares and Warrant Shares being sold.
(c) Effectiveness.
The Company shall use its best efforts to have the Registration Statement declared effective as soon as practicable after filing
thereof but in no event later than the date that is one hundred twenty (120) days following the Closing Date. The Company shall
notify the Purchasers by e-mail as promptly as practicable, and in any event, within twenty-four (24) hours, after the Registration
Statement is declared effective and shall simultaneously provide the Purchasers with copies of any related prospectus to be used in
connection with the sale or other disposition of the securities covered thereby. If such Registration Statement is not effective
within one hundred twenty (120) days following the Closing Date (the “Effectiveness Deadline”) then, in addition to any
other rights the Purchasers may have hereunder or under applicable law, on each such Effectiveness Deadline and on each monthly
anniversary of each such Effectiveness Deadline (if the applicable failure shall not have been cured by such date) until the
applicable failure is cured, the Company shall pay to each Investor an amount in cash, as partial liquidated damages and not as a
penalty, equal to the product of 2.0% multiplied by the aggregate Subscription Amount paid by such Purchaser pursuant to this
Agreement. The parties agree that the maximum aggregate liquidated damages payable to a Purchaser under this Agreement shall be
12.0% of the aggregate Subscription Amount paid by such Purchaser pursuant to this Agreement. If the Company fails to pay any
partial liquidated damages pursuant to this Section in full within seven days after the date payable, the Company will pay interest
thereon at a rate of 18% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Purchaser,
accruing daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in
full. The partial liquidated damages pursuant to the terms hereof shall apply on a daily pro rata basis for any portion of a month
prior to the cure of a failure.
(a) Company
Obligations. The Company will use its reasonable best efforts to effect the registration of the Conversion Shares and the
Warrant Shares in accordance with the terms hereof, and pursuant thereto the Company will, as expeditiously as possible:
(i) use
its best efforts to cause the Registration Statement to become effective and to remain continuously effective for a period that will terminate
upon the first date on which all Conversion Shares and Warrant Shares either may be sold without restriction, including volume or manner-of-sale
restrictions, pursuant to Rule 144 or have been sold by the Purchasers (the “Effectiveness Period”) and advise the Purchasers
in writing when the Effectiveness Period has expired;
(ii) prepare
and file with the SEC such amendments and post-effective amendments and supplements to the Registration Statement and the prospectus as
may be necessary to keep the Registration Statement effective for the Effectiveness Period, and to comply with the provisions of the Securities
Act and the Exchange Act with respect to the distribution of all of the Conversion Shares and Warrant Shares covered thereby;
(iii) provide
copies to and permit counsel designated by the Purchasers to review all amendments and supplements to the Registration Statement no fewer
than three (3) Business Days prior to its filing with the Commission and not file any document to which such counsel reasonably objects;
(iv) furnish
to the Purchasers and its legal counsel, without charge, (i) promptly after the same is prepared and publicly distributed, filed with
the Commission, or received by the Company (but not later than two (2) Business Days after the filing date, receipt date or sending date,
as the case may be) one copy of the Registration Statement and any amendment thereto, each preliminary prospectus and Prospectus and each
amendment or supplement thereto, and each letter written by or on behalf of the Company to the Commission or the staff of the Commission,
and each item of correspondence from the Commission or the staff of the Commission, in each case relating to the Registration Statement
(other than any portion of any thereof which contains information for which the Company has sought confidential treatment), and (ii) such
number of copies of a prospectus, including a preliminary prospectus, and all amendments and supplements thereto and such other documents
as the Purchasers may reasonably request in order to facilitate the disposition of the Conversion Shares and Warrant Shares that are covered
by the related Registration Statement;
(v) immediately
notify the Purchasers of any request by the Commission for the amending or supplementing of the Registration Statement or Prospectus or
for additional information;
(vi) use
its best efforts to (i) prevent the issuance of any stop order or other suspension of effectiveness with respect to the Registration Statement
and, (ii) if such order is issued, obtain the withdrawal of any such order at the earliest possible moment and notify the Company of the
issuance of any such order and the resolution thereof, or its receipt of notice of the initiation or threat of any proceeding for such
purpose;
(vii) prior
to any public offering of Conversion Shares and Warrant Shares, use its commercially reasonable efforts to register or qualify or cooperate
with the Purchasers and its counsel in connection with the registration or qualification of such Conversion Shares and Warrant Shares
for offer and sale under the securities or blue sky laws of such jurisdictions requested by the Purchasers and do any and all other commercially
reasonable acts or things necessary or advisable to enable the distribution in such jurisdictions of the Purchasers covered by the Registration
Statement and the Company shall promptly notify the Purchasers of any notification with respect to the suspension of the registration
or qualification of any of such Conversion Shares and Warrant Shares for sale under the securities or blue sky laws of such jurisdictions
or its receipt of notice of the initiation or threat of any proceeding for such purpose;
(viii) immediately
notify the Purchasers, at any time prior to the end of the Effectiveness Period, upon discovery that, or upon the happening of any event
as a result of which, the Registration Statement or Prospectus includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein not misleading (in the case of the Prospectus, in light
of the circumstances in which they were made), and promptly prepare, file with the Commission and furnish to such holder a supplement
to or an amendment of such Registration Statement or Prospectus as may be necessary so that such Registration Statement or Prospectus
shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading (in the case of such Prospectus, in light of the circumstances in which they were made);
(ix) otherwise
use its best efforts to comply with all applicable rules and regulations of the SEC under the Securities Act and the Exchange Act;
(x) hold
in confidence and not make any disclosure of information concerning the Purchasers provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to complete
the Registration Statement or to avoid or correct a misstatement or omission in the Registration Statement, (iii) the release of such
information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction,
or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any
other agreement, and upon learning that disclosure of such information concerning the Purchasers is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt written notice to the Purchasers and allow the Purchasers, at the Purchasers’
expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information;
(xi) use
its commercially reasonable efforts to cause all Conversion Shares and Warrant Shares covered by such Registration Statement to
be listed on a national securities exchange or trading system and each securities exchange and trading system (if any) on which similar
securities issued by the Company are then listed;
(xii)
provide a transfer agent and registrar for all Conversion Shares and Warrant Shares registered pursuant to this Agreement and provide
a CUSIP number for all such Conversion Shares and Warrant Shares, in each case not later than the effective date of such registration;
(xiii) promptly
make available for inspection by the selling Purchasers, any managing underwriter(s) participating in any disposition pursuant to such
registration statement, and any attorney or accountant or other agent retained by any such underwriter or selected by the selling Purchasers,
all financial and other records, pertinent corporate documents, and properties of the Company, and cause the Company’s officers,
directors, employees, and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney,
accountant, or agent, in each case, as necessary or advisable to verify the accuracy of the information in such registration statement
and to conduct appropriate due diligence in connection therewith; and
(xiv) take
all other reasonable actions necessary to expedite and facilitate disposition by the Purchasers of all Conversion Shares and Warrant Shares
pursuant to the Registration Statement.
4.16 Indemnification.
(a)
To the extent permitted by law, the Company will indemnify and hold harmless each selling Purchaser, and the partners, members,
officers, directors, and stockholders of each such Purchaser; legal counsel and accountants for each such Purchaser; any underwriter (as
defined in the Securities Act) for each such Purchaser; and each Person, if any, who controls such Purchaser or underwriter within the
meaning of the Securities Act or the Exchange Act, against any Damages, and the Company will pay to each such Purchaser, underwriter,
controlling Person, or other aforementioned Person any legal
or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages
may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section
4.16(a) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent
of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable for any Damages to the extent that they
arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on
behalf of any such underwriter, Purchaser, controlling Person, or other aforementioned Person expressly for use in connection with such
registration.
(b) To the extent
permitted by law, each selling Purchaser, severally and not jointly, will indemnify and hold harmless the Company, and each of its directors,
each of its officers who has signed the registration statement, each Person (if any), who controls the Company within the meaning of
the Securities Act, legal counsel and accountants for the Company, any underwriter (as defined in the Securities Act), any other Purchaser
selling securities in such registration statement, and any controlling Person of any such underwriter or other Purchaser, against any
Damages, in each case only to the extent that such Damages arise out of or are based upon actions or omissions made in reliance upon
and in conformity with written information furnished by or on behalf of such selling Purchaser expressly for use in connection with such
registration; and each such selling Purchaser will pay to the Company and each other aforementioned Person any legal or other expenses
reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such
expenses are incurred; provided, however, that the indemnity agreement contained in this Section 4.16(b) shall not
apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Purchaser,
which consent shall not be unreasonably withheld; and provided further that in no event shall the aggregate amounts payable by
any Purchaser by way of indemnity or contribution under Section 4.16(b) and 4.16(d) exceed the proceeds from the offering received
by such Purchaser , except in the case of fraud, gross negligence, bad faith or willful misconduct by such Purchaser.
(c)
Promptly after receipt by an indemnified party under this Section 4.16 of notice of the commencement of any action (including
any governmental action) for which a party may be entitled to indemnification hereunder, such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 4.16, give the indemnifying party notice of the commencement
thereof. The indemnifying party shall have the right to participate in such action and, to the extent the indemnifying party so desires,
participate jointly with any other indemnifying party to which notice has been given, and to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that
may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to
be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would
be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such
counsel in such action. The failure to give notice to the indemnifying party within a reasonable time of the commencement of any such
action shall relieve such indemnifying party of any liability to the indemnified party under this Section 4.16, only to the extent
that such failure materially prejudices the indemnifying party’s ability to defend such action. The failure to
give notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under
this Section 4.16.
(d) To
provide for just and equitable contribution to joint liability under the Securities Act in any case in which either: (i) any party
otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this Section 4.16 but it is
judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding the
fact that this Section 4.16 provides for indemnification in such case, or (ii) contribution under the Securities Act may be
required on the part of any party hereto for which indemnification is provided under this Section 4.16, then, and in each
such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they may be
subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of the
indemnifying party and the indemnified party in connection with the statements, omissions, or other actions that resulted in such
loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations. The relative fault of
the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or
allegedly untrue statement of a material fact, or the omission or alleged omission of a material fact, relates to information
supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or omission; provided, however, that, in any such
case (x) no Purchaser will be required to contribute any amount in excess of the public offering price of all such Registrable
Securities offered and sold by such Purchaser pursuant to such registration statement, and (y) no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation; and provided further that in no event shall a Purchaser’s
liability pursuant to this Section 4.16(d), when combined with the amounts paid or payable by such Purchaser pursuant to Section
4.16(b), exceed the proceeds from the offering received by such Purchaser, except in the case of fraud, gross negligence, bad
faith or willful misconduct by such Purchaser.
(e)
Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions
in the underwriting agreement shall control; provided, however, that any matter expressly provided for or addressed by the
foregoing provisions that is not expressly provided for or addressed by the underwriting agreement shall be controlled by the foregoing
provisions.
(f)
Unless otherwise superseded by an underwriting agreement entered into in connection with the underwritten public offering, the
obligations of the Company and Purchasers under this Section 4.16 shall survive the completion of any offering of Conversion Shares
or Warrant Shares in a registration under this Section 4.16, and otherwise shall survive the termination of this Agreement or any
provision(s) of this Agreement.
4.17 Reports Under
Exchange Act. With a view to making available to the Purchasers the benefits of Rule 144 and any other rule or regulation of the
Commission that may at any time permit a Purchaser to sell securities of the Company to the public without registration or pursuant
to a registration on Form S-3, the Company shall use commercially reasonable efforts to file with the Commission in a timely manner
all reports and other documents required of the Company under the Securities Act and the Exchange Act.
4.18 Stockholder
Approval. The Company will request Stockholder Approval in its proxy materials for its 2024 annual stockholders meeting and
cause all of its executive officers and directors who are stockholders of the Company to vote in favor of Stockholder Approval at
the Company’s 2024 annual stockholders meeting.
ARTICLE V.
MISCELLANEOUS
5.1 Termination.
This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing
has not been consummated on or before the fifth (5th) Trading Day following the date hereof; 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 hereto shall
pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party
incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent
fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company and
any exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of any Securities
to the Purchasers.
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
facsimile at the facsimile number or email attachment at the email address as set forth on the signature pages attached hereto at or
prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the time of transmission, if such notice or
communication is delivered via facsimile at the facsimile number or email attachment at the email address as set forth on the
signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day,
(c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier
service or (d) upon actual receipt by the party to whom such notice is required to be given. The 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 Purchasers which purchased at least 50.1% in interest of the Shares based on the initial Subscription
Amounts hereunder (or, prior to the Closing, the Company and each 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
a Purchaser (or group of Purchasers), the consent of such disproportionately impacted Purchaser (or group of Purchasers) 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
proposed amendment or waiver that disproportionately, materially and adversely affects the rights and obligations of any Purchaser relative
to the comparable rights and obligations of the other Purchasers shall require the prior written consent of such adversely affected Purchaser.
Any amendment effected in accordance with this Section 5.5 shall be binding upon each 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 each
Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such
Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the
transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”
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, except as otherwise
set forth in Section 4.6.
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 Delaware, 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 State of Delaware. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the State of Delaware 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, in addition to the obligations of the Company under Section 4.6, 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 facsimile
transmission or 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
facsimile or “.pdf” signature page was 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 Rescission and
Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of
the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document
and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind
or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in
whole or in part without prejudice to its future actions and rights; provided, however, that, in the case of a
rescission of an exercise of a Warrant, the applicable Purchaser shall be required to return any shares of Common Stock subject to
any such rescinded exercise notice concurrently with the return to such Purchaser of the aggregate exercise price paid to the
Company for such shares and the restoration of such Purchaser’s right to acquire such shares pursuant to such
Purchaser’s Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).
5.14 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.
5.15 Remedies. In
addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the
Purchasers 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.
5.16 Payment Set
Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a
Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise
or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by
or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the
extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.
5.17 Independent
Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several
and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or
non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other
Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers
as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in
any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction
Documents. Each Purchaser shall be entitled to independently protect and enforce its rights including, without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any Proceeding for such purpose. Each Purchaser has been represented by its own
separate legal counsel in its review and negotiation of the Transaction Documents. The Company has elected to provide all Purchasers
with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do
so by any of the Purchasers. It is expressly understood and agreed that each provision contained in this Agreement and in each other
Transaction Document is between the Company and a Purchaser, solely, and not between the Company and the Purchasers collectively and
not between and among the Purchasers.
5.18 Liquidated Damages.
The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents is a continuing
obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding
the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts are due and payable shall
have been canceled.
5.19 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.
5.20 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. In addition, each and
every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after
the date of this Agreement.
5.21 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.
5.22 Electronic
Images, Electronic Signatures, and Counterparts. Notwithstanding any other provision of this Agreement or any Transaction
Document, including without limitation a provision requiring a “writing” or “written instrument,” this
Agreement, any share of Series A Preferred Stock, any Warrant and any other Transaction Document, and any amendment or
modification to any of the foregoing, may in the sole and absolute discretion of Purchasers be presented, delivered and/or executed
in as many counterparts as necessary or convenient, including both counterparts that are executed on paper and counterparts that are
electronic records and executed electronically, and each executed counterpart shall be deemed an original for all purposes.
All such counterparts shall constitute one and the same document. For the avoidance of doubt: (a) the authorization
under this paragraph may include, without limitation, a manually signed paper document which has been converted into electronic form
(such as scanned into PDF format or transmitted via facsimile), or an electronically signed document converted into another format,
for transmission, delivery and/or retention; and (b) the exchange of email discussing or negotiating the terms of an amendment or
modification, even if such email is signed, does not in and of itself constitute a signed electronic record agreeing to such an
amendment or its terms.
(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.
TENON MEDICAL, INC.
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Address for Notice: |
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By: |
/s/ Steven Foster |
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Email: |
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Name: |
Steven Foster |
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Fax: |
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Title: |
President & CEO |
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With a copy to (which shall not constitute notice): |
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[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
[PURCHASER SIGNATURE PAGES TO TENON MEDICAL, 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: ________________________________________________________
Signature of Authorized Signatory of Purchaser:
__________________________________
Name of Authorized Signatory: ____________________________________________________
Title of Authorized Signatory: _____________________________________________________
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: $_________________
Shares: _________________
Warrant Shares: ______________ Beneficial Ownership Blocker ☐
4.99% or ☐ 9.99%
EIN Number: _______________________
[SIGNATURE PAGES CONTINUE]
Exhibit A
Form of Certificate of Designation
Exhibit B
Form of Warrant
42
Exhibit
10.2
TENON
MEDICAL, INC.
CERTIFICATE
OF DESIGNATIONS, RIGHTS, AND PREFERENCES OF
SERIES A PREFERRED STOCK
Pursuant
to Section 151 of the Delaware General Corporation Law
Tenon
Medical, Inc., a Delaware corporation (the “Corporation”), hereby certifies that the following resolution was adopted
by the Board of Directors of the Corporation (the “Board of Directors”) pursuant to the authority of the Board of
Directors as required by Section 151 of the Delaware General Corporation Law.
WHEREAS,
the Second Amended and Restated Certificate of Incorporation of the Corporation, as amended (the “Certificate of Incorporation”),
provides for a class of its authorized stock known as preferred stock, comprised of 20,000,000 shares, $0.001 par value per share (the
“Preferred Stock”), issuable from time to time in one or more series;
WHEREAS,
the Board of Directors is authorized by the provisions of the Certificate of Incorporation to fix the powers, designations, preferences
and relative, participating, optional or other rights, if any, and the qualifications, limitations or restrictions thereof, if any, including
dividend rights, dividend rate, voting rights, conversion rights, rights and terms of redemption and liquidation preferences, of any
series of Preferred Stock and the number of shares constituting any such series;
NOW,
THEREFORE, BE IT RESOLVED, that pursuant to this authority granted to and vested in the Board of Directors in accordance with the provisions
of the Certificate of Incorporation, the Board of Directors hereby adopts this Certificate of Designations, Rights, and Preferences (the
“Certificate of Designation”) for the purpose of creating a series of Preferred Stock of the Corporation designated
as Series A Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”), and hereby states the designation
and number of shares, and fixes the relative rights, powers and preferences, and qualifications, limitations and restrictions of the
Series A Preferred Stock as follows:
1.
Designation and Amount. The shares of such series of Preferred Stock shall be designated as “Series A Preferred Stock”
and the number of shares constituting such series shall be 500,000 shares. Each share of Series A Preferred Stock shall be identical
in all respects to every other share of Series A Preferred Stock. Such number of shares of Series A Preferred Stock may from time to
time be increased (but not in excess of the total number of authorized shares of preferred stock) or decreased (but not below the number
of shares of Series A Preferred Stock then outstanding) by further resolution duly adopted by the Board of Directors and by the filing
of a certificate pursuant to the provisions of the Delaware General Corporation Law stating that such increase or decrease, as the case
may be, has been so authorized.
2.
No Maturity, Sinking Fund, Mandatory Redemption. Except as otherwise provided herein, the Series A Preferred Stock has no stated
maturity and will not be subject to any sinking fund for the payment of the redemption price or mandatory redemption, and will remain
outstanding indefinitely unless the Series A Preferred Stock is redeemed or otherwise repurchased in accordance with this Certificate
of Designations. The Corporation is not required to set aside funds to redeem the Series A Preferred Stock.
3. Ranking.
With respect to payment of dividends and distribution of assets upon liquidation, dissolution, or winding up of the Corporation,
whether voluntary or involuntary, the Series A Preferred Stock will rank: (i) senior to all other classes or series of capital stock
of the Corporation now existing or hereafter authorized, classified or reclassified, and (ii) junior to all Indebtedness of the
Corporation now existing or hereafter authorized (including Indebtedness convertible into Common Stock).
4.
Dividends. No dividends shall be payable on the Series A Preferred Stock.
5. Liquidation Preference.
(a)
Upon any voluntary or involuntary liquidation, dissolution, or winding up of the Corporation, before any distribution or payment shall
be made to holders of shares of Common Stock or any other class or series of capital stock of the Corporation, the holders of shares
of Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation legally available for
distribution to its stockholders, a per share liquidation preference equal to the greater of (x) the aggregate of the Stated Values of
the Series A Preferred Stock and (y) the amount that would be paid to the holders of the Series A Preferred Stock (including any accrued
and unpaid dividends thereon) if, prior to such voluntary or involuntary liquidation, dissolution, or winding up of the Corporation,
the Series A Preferred Stock had been converted into shares of Common Stock pursuant to Section 9 and the Common Stock that has
accrued thereon had been issued. In the event that, upon such voluntary or involuntary liquidation, dissolution, or winding up, the available
assets of the Corporation are insufficient to pay the full amount of the liquidating distributions on all outstanding shares of Series
A Preferred Stock, then the holders of the Series A Preferred Stock shall share ratably in any such distribution of assets in proportion
to the full liquidating distributions to which they would otherwise be respectively entitled. Written notice of any such voluntary or
involuntary liquidation, dissolution, or winding up of the Corporation, stating the payment date or dates when, and the place or places
where, the amounts distributable in such circumstances shall be payable, shall be given within ten (10) days of the date the Board of
Directors approves such action, or no later than twenty (20) days of any stockholders’ meeting called to approve such action, or
within twenty (20) days of the commencement of any involuntary proceeding, whichever is earlier, , to each record holder of shares of
Series A Preferred Stock at the respective addresses of such holders as the same shall appear on the stock transfer records of the Corporation.
After payment of the full amount of the liquidating distributions to which they are entitled, the holders of Series A Preferred Stock
will have no right or claim to any of the remaining assets of the Corporation.
(b)
If, at any time while the Series A Preferred Stock is outstanding, (i) the Corporation, directly or indirectly, in one or more related
transactions effects any merger or consolidation of the Corporation with or into another entity, (ii) the Corporation, directly or indirectly,
effects any sale, assignment, transfer, conveyance, or other disposition of all or substantially all of its assets in one or a series
of related transactions, (iii) any, direct or indirect, purchase offer, tender offer, or exchange offer (whether by the Corporation or
another person or entity) 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 more than 50% of the outstanding Common Stock or more
than 50% of the voting power of the common equity of the Corporation, or (iv) the Corporation, 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 voting power of the Common Stock of the Corporation (each a “Deemed Liquidation”);
provided, however, that the issuance of Common Stock in a financing transaction engaged in by the Corporation shall not be a Deemed Liquidation
unless it results in more than 50% of the voting power of Common Stock being issued to one stockholder or a number of stockholders who
report on a Schedule 13G or Schedule 13D pursuant to Section 13(d) of the Exchange Act that they are acting as a single group in holding
the Common Stock, then the Corporation shall provide at least 10 days’ notice to the holders of the Series A Preferred Stock prior
to the consummation of the Deemed Liquidation, which shall be deemed given by the Corporation upon the disclosure of the potential Deemed
Liquidation in any of the Corporation’s public filings with the SEC. If a Deemed Liquidation occurs, any holder of Series A Preferred
Stock will have the option (the “Deemed Liquidation Option”) to receive the liquidation preference it would have been
entitled to receive under Section 5(a) if a voluntary or involuntary liquidation, dissolution, or winding up of the Corporation
had occurred (the “Deemed Liquidation Preference Amount”); provided, however, if the amount payable in a Deemed Liquidation
is less than the product of (x) 110% of the amount set forth in clause (x) of the definition of “Stated Value” multiplied
by (y) the number of outstanding shares of Series A Preferred Stock, then for purposes of calculating the Deemed Liquidation Preference
Amount only, Stated Value will be calculated from issuance at the increased rate per annum of 10%. A holder of the Series A Preferred
Stock may elect to exercise its Deemed Liquidation Option by providing the Corporation with written notice of such election within five
(5) business days from the consummation of the Deemed Liquidation pursuant to Section 5(d). All payments in respect of a Deemed
Liquidation will be paid in shares of Common Stock based on the Conversion Price.
(c)
In determining whether a distribution (other than upon voluntary or involuntary liquidation), by dividend, redemption, or other acquisition
of shares of capital stock of the Corporation or otherwise, is permitted under the Delaware General Corporation Law, amounts that would
be needed, if the Corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution
of holders of shares of Series A Preferred Stock shall not be added to the Corporation’s total liabilities
(d)
Holders of the Series A Preferred Stock shall send notices pursuant to Section 5(b) to the Chief Financial Officer of the Company
at 104 Cooper Ct, Los Gatos, CA 95032.
6.
Conversion at the Option of the Corporation. On any date that ten (10) of the last fifteen (15) daily VWAPs of the Common Stock
is 250% higher than the Conversion Price on such date, then the Corporation has the right, but not the obligation, to require and cause
50% of the number of outstanding shares of Series A Preferred Stock held by each holder of Series A Preferred Stock to be converted into
shares of Common Stock using the then current Conversion Price without the approval of any holder of Series A Preferred Stock (“VWAP
Required Conversion”). Additionally, on and after the date on which the Corporation receives at least $2.25 million in revenues
in any single financial quarter, the Corporation has the right, but not the obligation, to require and cause 50% of the number of outstanding
shares of Series A Preferred Stock held by each holder of Series A Preferred Stock to be converted into shares of Common Stock using
the then current Conversion Price without the approval of any holder of Series A Preferred Stock (the “Revenue Required Conversion”
and collectively with the VWAP Required Conversion, the “Required Conversions”). If the criteria for both Required
Conversions are met, the Corporation may exercise its rights to require either or both Required Conversion and if the Corporation exercises
its rights to require both Required Conversions, 100% of the shares of the Series A Preferred Stock will be converted into Common Stock.
The conversions effected under this Section 6 will be implemented in accordance with the provisions of Section 8, including
the Beneficial Ownership Limitations set forth therein.
7.
Voting Rights.
(a)
For so long as any shares of the Series A Preferred Stock remain issued and outstanding, each share of Series A Preferred Stock shall
entitle the holder thereof to the right to vote in respect of all matters concerning the Common Stock in an amount equal to the number
of shares of Common Stock underlying a share of Series A Preferred Stock on an as-converted basis on the record date for such vote; provided,
however, the Series A Preferred Stock shall not be entitled to any additional votes resulting from a decrease in the Conversion Price
caused by the application of Section 9(b). The Common Stock (and any other class or series of capital stock of the Corporation
entitled to vote generally with the Common Stock) and the Series A Preferred Stock shall vote as a single class and such voting rights
shall be identical in all respects.
(b)
As long as any shares of Series A Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly by amendment,
merger, consolidation, domestication, transfer, continuance, recapitalization, reclassification, waiver, statutory conversion, or otherwise,
effect any of the following acts or transactions without (in addition to any other vote required by law or this Certificate of Incorporation)
the written consent or affirmative vote of the holders of a majority of the then outstanding shares of the Series A Preferred Stock,
and any such act or transaction that has not been approved by such consent or vote prior to such act or transaction being effected shall
be null and void ab initio, and of no force or effect: (i) amend the Corporation’s Certificate of Incorporation or Bylaws
so as to adversely alter the rights, preferences, privileges or powers of the Series A Preferred Stock; (ii) create any new class or
series of shares pari passu or senior to the Series A Preferred Stock or increase or decrease the number of authorized shares,
or change the par value, of Common Stock or Preferred Stock; (iii) pay or declare any dividend on Common Stock or junior securities of
the Corporation, or incur Indebtedness in any single transaction in excess of $1 million; or (iv) redeem, purchase or otherwise
acquire any share or shares of Preferred Stock or Common Stock (other than (x) the repurchase of shares of Common Stock pursuant to a
written benefit plan or employment or consulting agreement, or (y) the repurchase of any equity securities in connection with the Corporation’s
right of first offer with respect to those securities contained in any written agreement with the Corporation).
8.
Conversion.
(a)
Each share of Series A Preferred Stock shall be convertible, at any time after the date of issuance, at the option of the holder thereof
(or, upon a Required Conversion, at the option of the Corporation), into that number of shares of Common Stock determined by dividing
the Stated Value for such share of Series A Preferred Stock by the Conversion Price. In order for the holder of Series A Preferred Stock
to convert such Series A Preferred Stock into shares of Common Stock pursuant to this Section 8, such holder will provide
the Corporation with a completed duly executed form of conversion notice attached hereto as Exhibit A (a “Notice of Conversion”).
The date on which the Notice of Conversion is delivered to the Corporation with respect to any share of Series A Preferred Stock shall
be the conversion date (the “Conversion Date”) for such share of Series A Preferred Stock.
(b)
Notwithstanding anything herein to the contrary, the Corporation shall not effect any conversion of the Series A Preferred Stock, and
a holder shall not have the right (or obligation) to convert any portion of the Series A Preferred Stock, to the extent that, after giving
effect to an attempted conversion set forth on an applicable Notice of Conversion, such holder (together with such holder’s affiliates,
and any other Person whose beneficial ownership of Common Stock would be aggregated with the holder’s for purposes of Section 13(d)
of the Exchange Act and the applicable regulations of the Securities Exchange Commission (“SEC”), including any “group”
of which the holder is a member) would beneficially own a number of shares of Common Stock in excess of the Beneficial Ownership Limitation
(as defined below); provided, however, that, to the extent that a Series A Preferred Stock holder’s right to convert would
result in such holder exceeding the Beneficial Ownership Limitation, then such holder shall not be entitled to convert its Series A Preferred
Stock to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such conversion to such extent) and
the portion of such conversion shall be held in abeyance for the benefit of such holder until such time, if ever, as its right thereto
would not result in the holder exceeding the Beneficial Ownership Limitation. To the extent that any Series A preferred Stock has not
been partially or completely converted at the time of such conversion, such portion of the conversion shall be held in abeyance for the
benefit of the holder of such Series A Preferred Stock until such holders have converted such Series A Preferred Stock. For purposes
of the foregoing sentence, the number of shares of Common Stock beneficially owned by such holder and its affiliates shall include the
number of shares of Common Stock issuable upon conversion of the Series A Preferred Stock subject to the Notice of Conversion with respect
to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (A) conversion
of the remaining, unconverted Series A Preferred Stock beneficially owned by such holder or any of its affiliates, and (B) exercise or
conversion of the unexercised or unconverted portion of any other securities of the Corporation (including any warrants) beneficially
owned by such holder or any of its affiliates that are subject to a limitation on conversion or exercise similar to the limitation contained
herein. Except as set forth in the preceding sentence, beneficial ownership shall be calculated in accordance with Section 13(d) of the
Exchange Act and the applicable regulations of the SEC. In addition, for purposes hereof, “group” has the meaning set forth
in Section 13(d) of the Exchange Act and the applicable regulations of the SEC. For purposes of this Section 8(b) in determining
the number of outstanding shares of Common Stock, a holder may rely on the number of outstanding shares of Common Stock as stated in
the most recent of the following: (A) the Corporation’s most recent periodic or annual filing with SEC, as the case maybe, (B)
a more recent public announcement by the Corporation that is filed with the SEC, or (C) a more recent notice by the Corporation or the
Corporation’s transfer agent to the holder setting forth the number of shares of Common Stock then outstanding. Upon the written
request of a holder (which may be by email), the Corporation shall, within three (3) Trading Days thereof, confirm in writing to such
holder (which may be via email) the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares
of Common Stock shall be determined after giving effect to any actual conversion or exercise of securities of the Corporation, including
shares of Series A Preferred Stock, by such holder or its affiliates since the date as of which such number of outstanding shares of
Common Stock was last publicly reported or confirmed to the holder. The “Beneficial Ownership Limitation” shall be
4.99% (or 9.99% if specified by the holder) of the number of shares of the Common Stock outstanding immediately after giving effect to
the issuance of shares of Common Stock pursuant to such Notice of Conversion. The Corporation shall be entitled to rely on representations
made to it by the holder in any Notice of Conversion regarding its Beneficial Ownership Limitation.
(c)
Mechanics of Conversion.
(i)
Not later than three (3) Trading Days after the applicable Conversion Date , or if the holder requests the issuance of physical certificate(s),
two (2) Trading Days after receipt by the Corporation of the original certificate(s) representing such shares of Series A Preferred Stock
being converted, duly endorsed, and the accompanying Notice of Conversion (the “Share Delivery Date”), the Corporation
shall deliver, or cause to be delivered, to the converting holder a book entry statement from the Corporation’s transfer agent
(or if requested by the holder, a physical certificate or certificates) representing the number of shares (the “Conversion Shares”)
being acquired upon the conversion of shares of Series A Preferred Stock If in the case of any Notice of Conversion such statement is
not, or if applicable, such certificate or certificates are not delivered to or as directed by the applicable holder by the Share Delivery
Date, the applicable holder shall be entitled to elect to rescind such Notice of Conversion by written notice to the Corporation
at any time on or before its receipt of such statement or certificate or certificates for Conversion Shares or electronic receipt of
such shares, as applicable, in which event the Corporation shall promptly return to such holder any original Series A Preferred Stock
certificate delivered to the Corporation and such holder shall promptly return to the Corporation any Common Stock any certificates representing
the shares of Series A Preferred Stock unsuccessfully tendered for conversion to the Corporation.
(ii)
The Corporation covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock
for the sole purpose of issuance upon conversion of the Series A Preferred Stock, free from preemptive rights or any other actual contingent
purchase rights of Persons other than the holders of the Series A Preferred Stock, not less than such aggregate number of shares of the
Common Stock as shall be issuable upon the conversion of all outstanding shares of Series A Preferred Stock. The Corporation covenants
that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid, and nonassessable.
(iii)
No fractional shares or scrip representing fractional shares of Common Stock shall be issued upon the conversion of the Series A Preferred
Stock. As to any fraction of a share which a holder would otherwise be entitled to receive upon such conversion, the Corporation shall
at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Conversion Price or round up to the next whole share.
(iv)
The issuance of certificates for shares of the Common Stock upon conversion of the Series A Preferred Stock shall be made without charge
to any holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates,
provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in
the issuance and delivery of any such certificate upon conversion in a name other than that of the registered holder(s) of such shares
of Series A Preferred Stock and the Corporation shall not be required to issue or deliver such certificates unless or until the Person
requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction
of the Corporation that such tax has been paid.
(v)
Upon each Conversion Date, (i) the shares of Series A Preferred Stock being converted shall be deemed converted into shares of Common
Stock and (ii) the holder’s rights as a holder of such converted shares of Series A Preferred Stock shall cease and terminate, excepting
only the right to receive certificates for such shares of Common Stock and to any remedies provided herein or otherwise available at
law or in equity to such holder because of a failure by the Corporation to comply with the terms of this Certificate of Designation.
In all cases, the holder shall retain all of its rights and remedies for the Corporation’s failure to convert Series A Preferred Stock.
9.
Certain Adjustments.
(a)
Stock Dividends and Stock Splits. If the Corporation, at any time while the Series A Preferred Stock is outstanding: (i)
pays a stock dividend or otherwise makes a distribution that is payable in shares of Common Stock on shares of Common Stock or any other
Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation upon
conversion of, or payment of a dividend on, the Series A Preferred Stock), (ii) subdivides outstanding shares of Common Stock into a
larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller
number of shares, or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the
Corporation, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common
Stock (excluding any treasury shares of the Corporation) outstanding immediately before such event, and of which the denominator shall
be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section 9(a)
shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend
or distribution and, in the case of a subdivision, combination or re-classification, shall become effective immediately after the effective
date of such subdivision, combination or re-classification. Notwithstanding the foregoing in no event may the Conversion Price be less
than the par value per share of Series A Preferred Stock.
(b)
Pro Rata Distributions. During such time as the Series A Preferred Stock is outstanding, if the Corporation shall declare or make
any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return
of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property, or options by
way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement, or other similar transaction) (a “Distribution”),
at any time after the issuance of the Series A Preferred Stock, then, in each such case, the holder of Series A Preferred Stock shall
be entitled to participate in such Distribution to the same extent that the holder of Series A Preferred Stock would have participated
therein if the holder of Series A Preferred Stock had held the number of shares of Common Stock acquirable upon complete conversion of
the Series A Preferred Stock (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership
Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as
of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however,
that, to the extent that a Series A Preferred Stock holder’s right to participate in any such Distribution would result in such
holder exceeding the Beneficial Ownership Limitation, then such holder shall not be entitled to participate in such Distribution to such
extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion
of such Distribution shall be held in abeyance for the benefit of such holder until such time, if ever, as its right thereto would not
result in the holder exceeding the Beneficial Ownership Limitation). To the extent that any Series A preferred Stock has not been partially
or completely converted at the time of such Distribution, such portion of the Distribution shall be held in abeyance for the benefit
of the holder of such Series A Preferred Stock until such holders have converted such Series A Preferred Stock.
(c)
Subsequent Equity Offerings. If the Corporation at any time while the Series A Preferred Stock is outstanding, shall sell, enter
into an agreement to sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or
announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents, at an effective
price per share less than the Conversion Price then in effect (such issuances collectively, a “Dilutive Issuance”),
then simultaneously with the consummation of each Dilutive Issuance, the Conversion Price shall be reduced to equal the Weighted Average
Price. Notwithstanding the foregoing, no adjustments shall be made, paid or issued under this Section 9(c) in respect of an Exempt
Issuance. The Corporation shall notify the holder, in writing, no later than the Trading Day following the issuance or deemed issuance
of any Common Stock or Common Stock Equivalents subject to this Section 9(c), indicating therein the applicable issuance price,
or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”).
For purposes of clarification, whether or not the Corporation provides a Dilutive Issuance Notice pursuant to this Section 9(c),
upon the occurrence of any Dilutive Issuance, the Conversion Price will be adjusted to equal the Weighted Average Price. Notwithstanding
anything to the contrary contained in this Section 9(c), no adjustments to the Conversion Price will be made for any Dilutive Issuance
until after Stockholder Approval has been obtained. For purposes of clarity, with respect to Dilutive Issuances that occur prior to Stockholder
Approval, the Conversion Price will be adjusted immediately after Stockholder Approval is obtained to reflect the lowest Weighted Average
Price that would have resulted from the Dilutive Issuances if no Stockholder Approval requirement was contained in this Section 9(c).
The
“Weighted Average Price” for the Series A Preferred Stock on any date of determination shall be calculated as follows:
| CP2 |
= | CP1
* (A+B) / (A+C), where: |
| |
| |
| CP2 |
= | New
Conversion Price |
| |
| |
| CP1 |
= | Conversion
Price in effect immediately prior to new issue |
| |
| |
| A |
= | Number
of shares of Common Stock deemed to be outstanding immediately prior to new issue (includes
all shares of outstanding common stock, all shares of outstanding preferred stock on an as-converted
basis and all outstanding options on an as-exercised basis) |
| B |
= | Aggregate
consideration received by the Corporation with respect to the new issue divided by CP1 |
| C |
= | Number
of shares of stock issued in the subject transaction |
(d)
Calculations. All calculations under this Section 9 shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be. For purposes of this Section 9, the number of shares of Common Stock deemed to be issued and outstanding as
of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
(e)
Notice to Holder.
i.
Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 9,
the Corporation shall promptly deliver by email to the holder a notice setting forth the Conversion Price after such adjustment and any
resulting adjustment to the number of Conversion Shares and setting forth a brief statement of the facts requiring such adjustment.
ii.
Notice to Allow Exercise by Holder. If (A) the Corporation shall declare a dividend (or any other distribution in whatever form)
on the Common Stock, (B) the Corporation shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C)
the Corporation shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any rights, (D) the approval of any stockholders of the Corporation shall be required in connection
with any reclassification of the Common Stock, any consolidation, merger, statutory conversion, transfer, domestication, or continuance
to which the Corporation or any Subsidiary is a party, any sale or transfer of all or substantially all of the assets of the Corporation,
of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Corporation
shall authorize a Deemed Liquidation or the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Corporation,
then, in each case, the Corporation shall cause to be delivered to each holder of Series A Preferred Stock, in writing or by electronic
transmission, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record
is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share
exchange (or other applicable transaction) is expected to become effective or close, and the date as of which it is expected that holders
of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable
upon such transaction; provided that the failure to deliver such notice or any defect therein or in the mailing thereof shall not affect
the validity of the corporate action required to be specified in such notice.
(f)
Voluntary Adjustment by Corporation. Subject to the rules and regulations of the Trading Market, the Corporation may at any time
while the Series A Preferred Stock is outstanding reduce the then current Conversion Price to any amount and for any period of time deemed
appropriate by the Board of Directors so long as not adverse to any holder of Series A Preferred Stock whose shares are being converted
to Common Stock pursuant to such holder’s conversion option or a Required Conversion.
10.
Record Holders. The Corporation and its transfer agent may deem and treat the record holder of any Series A Preferred Stock as
the true and lawful owner thereof for all purposes, and neither the Corporation nor its transfer agent shall be affected by any notice
to the contrary.
11.
No Preemptive Rights. No holders of the Series A Preferred Stock will, as holders of Series A Preferred Stock, have any preemptive
rights to purchase or subscribe for Common Stock or any other security of the Corporation.
12.
Exclusion of Other Rights. The Series A Preferred Stock shall not have any preferences or other rights, voting powers, restrictions,
limitations as to dividends or other distributions, qualifications, or terms or conditions of redemption other than expressly set forth
in the Certificate of Incorporation and this Certificate of Designation, as each may be amended from time to time.
13.
Headings of Subdivisions. The headings of the various subdivisions hereof are for convenience of reference only and shall not
affect the interpretation of any of the provisions hereof.
14.
Severability of Provisions. If any preferences or other rights, voting powers, restrictions, limitations as to dividends or other
distributions, qualifications, or terms or conditions of redemption of the Series A Preferred Stock set forth in this Certificate of
Designation are invalid, unlawful, or incapable of being enforced by reason of any rule of law or public policy, all other preferences
or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications, or terms or conditions
of redemption of Series A Preferred Stock set forth in this Certificate of Designation which can be given effect without the invalid,
unlawful, or unenforceable provision thereof shall, nevertheless, remain in full force and effect and no preferences or other rights,
voting powers, restrictions, limitations as to dividends or other distributions, qualifications, or terms or conditions of redemption
of the Series A Preferred Stock herein set forth shall be deemed dependent upon any other provision thereof unless so expressed therein.
15.
Definitions. As used herein the following terms shall have the following meanings:
“Common
Stock” means the Corporation’s common stock, par value $0.001 per share.
“Common
Stock Equivalents” means any securities of the Corporation which would entitle the holder thereof to acquire at any time Common
Stock, including, without limitation, any debt, preferred stock, right, option, warrant, or other instrument that is at any time convertible
into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Conversion
Price” means (i) for the shares of Series A Preferred Stock issued on February 20, 2024, $1.5125 and (ii) for each share of
Series A Preferred Stock issued thereafter, an amount equal to the greater of (x) $1.5125 and the average of the VWAPs for the 10 Trading
Days prior the issuance date of such share of Series A Preferred Stock, in each case subject to adjustment as set forth herein.
“Exempt
Issuance” means the issuance of (a) shares of Common Stock, options or restricted stock units to employees, officers, directors
or eligible service providers of the Corporation pursuant to any stock or option plan duly adopted for such purpose, by a majority of
the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established
for such purpose for services rendered to the Corporation, provided that such issuances to service providers are issued as “restricted
securities” (as defined in Rule 144 under the Securities Act of 1933, as amended), and (b) securities issued pursuant to acquisitions
or strategic transactions approved by a majority of the disinterested directors of the Corporation, provided that such securities are
issued as “restricted securities” (as defined in Rule 144 under the Securities Act of 1933, as amended).
“Indebtedness”
means (a) all obligations of the Corporation or any Subsidiary for borrowed money or with respect to deposits or advances of any kind,
(b) all obligations of the Corporation or any of its Subsidiaries evidenced by bonds, debentures, notes or similar instruments, (c) all
letters of credit and letters of guaranty in respect of which the Corporation or any of its Subsidiaries is an account party, (d) all
securitization or similar facilities of the Corporation or any of its Subsidiaries, and (e) all guarantees by the Corporation or any
of its Subsidiaries of any of the foregoing.
“Person”
means any individual, corporation, estate, partnership, joint venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or any other entity.
“Stockholder
Approval” means the approval from the stockholders of the Company of the terms of this Certificate of Designation.
“Stated
Value” means for any share of Series A Preferred Stock, an amount equal to the product of (x) $15.125 multiplied by (y) the
sum of 1 plus the product of (A) 0.06 multiplied by (B) a fraction equal to the number of days that such share of Series A Preferred
Stock has been issued divided by 365.
“Subsidiary”
of any Person means any corporation, limited liability company, partnership, association, trust or other entity of which securities or
other ownership interests representing more than 50% of the ordinary voting power (or, in the case of a partnership, more than 50% of
the general partnership interests) are owned by such Person or one or more Subsidiaries of such Person or by such Person and one or more
Subsidiaries of such Person.
“Trading
Day” means a day on which the Common Stock is traded on a Trading Market.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE American, The Nasdaq Capital Market, The Nasdaq Global Market, The Nasdaq Global Select Market, or the New York
Stock Exchange (or any successors to any of the foregoing).
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m.
(New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price
of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then
listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (or a similar
organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported,
or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good
faith by the holders of a majority in interest of the Series A Preferred Stock then outstanding and reasonably acceptable to the Corporation,
the fees and expenses of which shall be paid by the Corporation.
{Signature
page follows}
IN
WITNESS WHEREOF, the Corporation has caused this Certificate of Designation to be signed in its name and on its behalf on this 20th day
of February, 2024.
TENON
MEDICAL, INC.
By: |
/s/ Steven Foster |
|
Name: |
Steven Foster |
|
Title: |
Chief Executive Officer |
|
Signature
Page 10 Certificate of Designation, Rights, and Preferences of
Series A Preferred Stock
EXHIBIT
A
NOTICE
OF CONVERSION
(TO
BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF SERIES A PREFERRED STOCK)
The
undersigned holder hereby irrevocably elects to convert the number of shares of Series A Preferred Stock indicated below, represented
by stock certificate No(s). (the “Preferred Stock Certificates”), into shares of common stock, par value $0.001 per
share (the “Common Stock”), of Tenon Medical, Inc., a Delaware corporation, as of the date written below. If securities
are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect
thereto. Capitalized terms utilized but not defined herein shall have the meaning ascribed to such terms in that certain Certificate
of Designations, Rights, and Preferences of Series A Preferred Stock (the “Certificate of Designation”) filed by the
Corporation on February 20, 2024.
As
of the date hereof, the number of shares of Common Stock beneficially owned by the undersigned holder (together with such holder’s
affiliates, and any other person or entity whose beneficial ownership of Common Stock would be aggregated with the holder’s for
purposes of Section 13(d) of the Exchange Act and the applicable regulations of the SEC, including any “group” of which the
holder is a member), including the number of shares of Common Stock issuable upon conversion of the Series A Preferred Stock subject
to this Notice of Conversion, but excluding the number of shares of Common Stock which are issuable upon (A) conversion of the remaining,
unconverted Series A Preferred Stock beneficially owned by such holder or any of its affiliates, and (B) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Corporation (including any warrants) beneficially owned by such holder
or any of its Affiliates that are subject to a limitation on conversion of the Certificate of Designation, is no more than 4.99% (or
9.99% if specified by the holder). For purposes hereof, beneficial ownership shall be calculated in accordance with Section 13(d) of
the Exchange Act and the applicable regulations of the SEC. In addition, for purposes hereof, “group” has the meaning set
forth in Section 13(d) of the Exchange Act and the applicable regulations of the SEC.
Conversion
calculations:
Date
to Effect Conversion:
Number
of shares of Series A Preferred Stock owned prior to Conversion:
Number of shares of Series A Preferred Stock to be Converted:
Number
of shares of Common Stock to be Issued:
Address for delivery of physical certificates:
Exhibit 10.3
FORM OF WARRANT
NEITHER THIS SECURITY NOR THE SECURITIES ISSUABLE
UPON EXERCISE OF THIS SECURITY HAS BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER
OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES
ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
TENON MEDICAL, INC.
Warrant No. _____ |
Issue Date: February 20, 2024 |
THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”)
certifies that, for value received, [ ] or any registered assigns (the “Holder”) is entitled, upon the
terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time following the Issue Date (the “Initial
Exercise Date”) and on or prior to the close of business on February 20, 2029 (the “Termination Date”)
but not thereafter, to subscribe for and purchase from Tenon Medical Inc., a Delaware corporation (the “Company”),
up to [ ]1 shares (subject to adjustment) of Common Stock (the “Warrant Shares”). The purchase
price of one share of Common Stock under this Warrant shall be equal to the Exercise Price.
Section 1. Definitions. For the
purposes hereof, in addition to the terms defined elsewhere in this Warrant, (a) capitalized terms not otherwise defined herein shall
have the meanings set forth in the Purchase Agreement and (b) the following terms shall have the following meanings:
“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.
“Attribution Parties”
shall have the meaning ascribed to such term in Section 2(d) below.
“Business Day” means any day except
any Saturday, any Sunday, any day which shall be a federal legal holiday in the United States or any day on which banking institutions
in the State of New York are authorized or required by law or other governmental action to close.
“Common Stock”
means the shares of common stock, $0.001 par value per share, of the Company.
“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, rights, options, warrants 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.
“Exercise Period”
shall have the meaning as that term is defined in Section 2(a) below.
“Exercise Price”
shall have the meaning as that term is defined in Section 2(b) below.
| 1 | 15% of the shares of Common Stock initially underlying the Series
A Preferred Stock. |
“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.
“Purchase Agreement”
means the securities purchase agreement between the Company and the signatory purchasers thereto, dated February 15, 2024
“Securities Act”
means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Series A Preferred
Stock” means the Company’s Series A Preferred Stock, par value, $0.001 per share.
“Stockholder Approval”
means the approval from the stockholders of the Company of the terms of this Warrant.
“Trading Day”
means a day on which the Nasdaq Capital Market is open for business.
“Trading Market”
means the following markets or exchanges on which the Common Stock may be listed or quoted for trading on the date in question: the NYSE
MKT, LLC, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock Exchange.
“Transfer Agent” means
Vstock Transfer, LLC, the current transfer agent of the Company, with offices located at 18 Lafayette Pl, Woodmere, NY 11598, and any
successor transfer agent of the Company.
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m.
(New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average
price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not
then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (or a
similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock
so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser
selected in good faith by the holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company,
the fees and expenses of which shall be paid by the Company.
“Warrant Shares”
shall have the meaning ascribed to such term in the Preamble.
“Warrants”
means this Warrant and other Common Stock purchase warrants issued by the Company pursuant to the Purchase Agreement.
Section 2. Exercise.
a) Exercise
of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on
or after the Initial Exercise Date and on or before the Termination Date (the “Exercise Period”) by delivery
to the Company of a duly executed PDF copy submitted by e-mail (or e-mail attachment) (or such other office or agency of the Company as
it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of
a duly executed notice of exercise (“Notice of Exercise”) form attached hereto as Exhibit 1-A; and, within three
(3) Trading Days of the date said Notice of Exercise is delivered to the Company, the Company shall have received payment of the aggregate
Exercise Price of the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States
bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise.
No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of
any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender
this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised
in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date
the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the
total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable
hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing
the number of Warrant Shares purchased and the date of such purchases. In the event of any dispute or discrepancy, the records of the
Company shall be controlling and determinative in the absence of manifest error.
b) Exercise
Price. The exercise price per share of the Common Stock under this Warrant shall be $1.2705, subject to adjustment hereunder (the
“Exercise Price”).
c) Cashless
Exercise. This Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which
the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
| (A) |
= | as applicable: (i) the VWAP on the Trading Day immediately
preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section
2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior
to the opening of “regular trading hours” (as defined in Rule 600(b) of Regulation NMS promulgated under the federal securities
laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of
the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg as
of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular
trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close
of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable
Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered
pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day; |
| (B) |
= | the Exercise Price of this Warrant, as adjusted hereunder;
and |
| (X) |
= | the number of Warrant Shares that would be issuable upon
exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a
cashless exercise. |
If Warrant Shares are issued in such a cashless
exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take
on the registered characteristics of the Warrants being exercised. The Company agrees not to take any position contrary to this Section
2(c).
As to any fraction of a share which the Holder
would otherwise be entitled to upon exercise pursuant to this Section 2(c), the Company shall round down to the next whole share.
Notwithstanding anything herein to the contrary,
on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).
c) Mechanics
of Exercise.
i. Delivery
of Warrant Shares Upon Exercise. Certificates for shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder
by crediting the account of the Holder’s broker with the Depository Trust Company through its Deposit Withdrawal Agent Commission
(“DWAC”) system if the Company is then a participant in such system and either (A) there is a registration statement
permitting the resale of the Warrant Shares by the Holder or (B) the shares are eligible for resale without volume or manner-of-sale limitations
pursuant to Rule 144, and otherwise by physical delivery of certificates to the address specified by the Holder in the Notice of Exercise
within five (5) Trading Days from the delivery to the Company of the Notice of Exercise Form, surrender of this Warrant (if required)
and payment of the aggregate Exercise Price as set forth above (the “Warrant Share Delivery Date”). This Warrant
shall be deemed to have been exercised on the date the Exercise Price is received by the Company, or in the case of a cashless exercise,
the date on which the Notice of Exercise, is received by the Company. The Warrant Shares shall be deemed to have been issued, and Holder
or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes,
as of the date the Warrant has been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the
Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such shares, have been paid. If the Company fails for any reason
to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay
to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based
on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $5 per Trading Day for each Trading Day after such
Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a
transfer agent that is a participant in the Fast Automated Securities Transfer Program so long as this Warrant remains outstanding and
exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number
of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the
Notice of Exercise
ii. Delivery
of Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon
surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver
to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant.
iii. Rescission
Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing
the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such
exercise.
iv. No
Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at
its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise
Price or round up to the next whole share.
v. Charges,
Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer
tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company,
and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided,
however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant
when surrendered for exercise shall be accompanied by the assignment form (“Assignment Form”) attached hereto
as Exhibit 1-B duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse
it for any transfer tax incidental thereto. The Company will pay all fees associated with the issuance of the Warrant Shares.
vi. Closing
of Books. The Company will not close its shareholder books or records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.
d) Holder’s
Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise
any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after
exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons
acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)),
would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence,
the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number
of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude
the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant
beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or
nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject
to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its
Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(d), beneficial
ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder,
it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the
extent that the limitation contained in this Section 2(d) applies, the determination of whether this Warrant is exercisable (in
relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant
is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s
determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates
and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation,
and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any
group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder
may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report
filed with the Commission, as the case may be, (B) a more recent public announcement by the Company, or (C) a more recent written notice
by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request
of a Holder, the Company shall within one (1) Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock
then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion
or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date
as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall
be 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock
issuable upon exercise of this Warrant. The provisions of this paragraph shall be construed and implemented in a manner otherwise than
in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective
or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable
to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
Section 3. Certain Adjustments.
a) Stock
Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise make a
distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common
Stock (which, for avoidance of doubt, shall not include any Warrant Shares issued by the Company upon exercise of this Warrant), (ii)
subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split)
outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any
shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator
shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which
the denominator shall be the number of shares of Common Stock outstanding immediately after such event and the number of shares issuable
upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged.
Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of shareholders
entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision,
combination or re-classification.
b) Pro Rata Distributions.
During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets
(or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation,
any distribution of cash, stock or other securities, property, or options by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement, or other similar transaction) (a “Distribution”), at any time after the issuance
of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the
Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of
this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation)
immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the
record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however,
that, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership
of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance
for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership
Limitation). To the extent that this Warrant has not been partially or completely exercised at the time of such Distribution, such portion
of the Distribution shall be held in abeyance for the benefit of the Holder until the Holder has exercised this Warrant.
c) Subsequent
Equity Offerings.
(i) Dilutive
Issuances. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding, shall sell, enter
into an agreement to sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue any
shares of Common Stock or Common Stock Equivalents, at an effective price per share less than the Exercise Price then in effect (such
issuances collectively, a “Dilutive Issuance”), then simultaneously with the consummation (or, if earlier, the announcement)
of each Dilutive Issuance the Exercise Price shall be reduced and only reduced to equal the Weighted Average Price. Notwithstanding the
foregoing, no adjustments shall be made, paid or issued under this Section 3(c) in respect of an Exempt Issuance (as defined in the Purchase
Agreement). The Company shall notify the Holder, in writing, no later than the Trading Day following the issuance or deemed issuance of
any Common Stock or Common Stock Equivalents subject to this Section 3(c), indicating therein the applicable issuance price, or applicable
reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”).
For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(c), upon the
occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price regardless
of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise. Notwithstanding anything to the contrary contained
in this Section 3(c), no adjustments to the Exercise Price will be made for any Dilutive Issuance until after Stockholder Approval has
been obtained. For purposes of clarity, with respect to Dilutive Issuances that occur prior to Stockholder Approval, the Conversion Price
will be adjusted immediately after Stockholder Approval is obtained to reflect the lowest Weighted Average Price that would have resulted
from the Dilutive Issuances if no Stockholder Approval requirement was contained in this Section 3(c)
(ii) Calculation
of Weighted Average Price. The “Weighted Average Price” of the Warrant on any date of determination shall be calculated
as follows:
|
CP2 |
= |
CP1 * (A+B) / (A+C), where: |
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|
CP2 |
= |
New Warrant Exercise Price |
|
|
|
|
|
CP1 |
= |
Warrant Exercise Price in effect immediately prior to new issue |
|
|
|
|
|
A |
= |
Number of shares of Common Stock deemed to be outstanding immediately prior to new issue (includes all shares of outstanding common stock, all shares of outstanding preferred stock on an as-converted basis, and all outstanding options on an as-exercised basis) |
|
|
|
|
|
B |
= |
Aggregate consideration received by the Corporation with respect to the new issue divided by CP1 |
|
|
|
|
|
C |
= |
Number of shares of stock issued in the subject transaction |
d) Calculations.
All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the
number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
e)
Notice to Holder.
i. Adjustment
to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly
deliver by email to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number
of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice
to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common
Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall
authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock
of any class or of any rights, (D) the approval of any shareholders of the Company shall be required in connection with any reclassification
of the Common Stock, any consolidation or merger to which the Company or any Subsidiary is a party, any sale or transfer of all or substantially
all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or
property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the
Company, then, in each case, the Company shall cause to be emailed to the Holder at its last email address as it shall appear upon the
Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants,
or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer
or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of
record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the
mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder is entitled
to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice.
h) Voluntary Adjustment by Company. Subject to the rules and
regulations of the Trading Market, the Company may at any time during the term of this Warrant reduce the then current Exercise Price
to any amount and for any period of time deemed appropriate by the Board of Directors.
Section 4. Transfer
of Warrant.
a) Transferability.
This Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part,
upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute
and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so
assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required
to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall
surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the
Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for
the purchase of Warrant Shares without having a new Warrant issued.
b) Warrant
Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder
of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other
purposes, absent actual notice to the contrary.
Section 5. Miscellaneous.
a) No
Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder
of the Company prior to the exercise hereof.
b) Loss,
Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include
the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make
and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted
herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.
d) Authorized
Shares. The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock one hundred (100%) of the number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase
rights under this Warrant. In case such amount of Common Stock is insufficient at any time, the Company shall call and hold a special
meeting to increase the number of authorized shares of common stock. Management of the Company shall recommend to shareholders to vote
in favor of increasing the number of authorized shares of common stock.
The Company further covenants
that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates
to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The
Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without
violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.
The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant
will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable
and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).
Except and to the extent as
waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its amended and restated
certificate of incorporation, as amended, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may
be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality
of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof,
as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before taking any action which
would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company
shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or
bodies having jurisdiction thereof.
e) Jurisdiction.
All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance
with the provisions of the laws of the State of Delaware.
f) Restrictions.
The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions
upon resale imposed by state and federal securities laws.
g) Nonwaiver
and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as
a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder
terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results
in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses
including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting
any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
h) Notices.
Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice
of Exercise, shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service, addressed
to the Company, at 104 Cooper Ct., Los Gatos, CA 95032, Attention: Steve Van Dick, email address: svandick@tenonmed.com, or such
other email address or address as the Company may specify for such purposes by notice to the Holders. Any and all notices or other communications
or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by e-mail, or sent by a nationally
recognized overnight courier service addressed to each Holder at the e-mail address or address of such Holder appearing on the books of
the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the
time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section prior to
5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the time of transmission, if such notice or communication
is delivered via e-mail at the e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New
York City time) on any Trading Day, (iii) the second (2nd) 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.
i) Limitation
of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price
of any Common Stock or as a shareholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
j) Remedies.
The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any
action for specific performance that a remedy at law would be adequate.
k) Successors
and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this
Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by the Holder or
holder of Warrant Shares.
l) Amendment.
This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
m) Severability.
Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
n) Headings.
The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
[Signature Page Follows.]
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized as of the date first above indicated.
TENON MEDICAL, INC. |
|
|
|
|
By: |
|
|
|
Name: |
Steven Foster |
|
|
Title: |
President & CEO |
|
EXHIBIT 1-A
NOTICE OF EXERCISE
TO:
(1) The undersigned
hereby elects to purchase Warrant Shares of the Company pursuant to the terms of the attached Warrant and tenders herewith payment of
the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form
of (check applicable box):
☠☐ in lawful money of the United States;
or
☠☐ if
permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection
2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise
procedure set forth in subsection 2(c).
(3) Please
issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified
below:
The Warrant Shares shall be delivered to the following DWAC Account
Number or by physical delivery of a certificate to:
(3) Accredited
Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act
of 1933, as amended.
[SIGNATURE OF HOLDER] |
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|
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Name of Investing Entity: |
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|
|
Signature of Authorized Signatory of Investing Entity: |
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|
|
|
Name of Authorized Signatory: |
|
|
|
|
|
Title of Authorized Signatory: |
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|
|
|
|
Date: |
|
|
|
EXHIBIT 1-B
ASSIGNMENT FORM
(To assign the foregoing warrant, execute this
form and supply required information. Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, [ ] all of or [ ] shares
of the foregoing Warrant and all rights evidenced thereby are hereby assigned to
|
|
|
whose address is |
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Dated: |
_______________________,________ |
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Holder’s Signature: |
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Holder’s Address: |
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|
NOTE: The signature to this Assignment Form must
correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must
be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should
file proper evidence of authority to assign the foregoing Warrant.
12
Exhibit 99.1
Tenon Medical, Inc. Issues Approximately $3.85
Million in Series A Preferred Stock
~ Raises approximately $2.6 Million in gross
proceeds ~
~ Retires $1.25 Million in secured debt ~
LOS GATOS, CA / ACCESSWIRE / February 21, 2024
/ Tenon Medical, Inc. (“Tenon” or the “Company”) (NASDAQ:TNON), a company transforming care for patients suffering
with certain sacroiliac joint disorders, today announced the closing of a private placement of 172,239 shares of the Company’s
Series A Preferred Stock (the “Preferred Stock”) and 258,374 warrants to purchase the Company’s common stock at an
exercise price of $1.27 per share at a combined offering price of $15.125 per share of Preferred Stock, for total gross proceeds of approximately
$2.6 million. The Company will utilize the proceeds for growth investments, working capital and general corporate purposes.
Simultaneous with the issuance of the Preferred
Stock, the Company exchanged $1.25 million in secured notes of the Company (the “Notes”), plus accrued and unpaid interest
thereon for 84,729 shares of Preferred Stock and 157,094 warrants to purchase the Company’s common stock at an exercise price of
$1.27 in full repayment of the Notes including interest.
This press release shall not constitute an offer to sell or the solicitation
of an offer to buy, nor shall there be any sale of securities of Tenon in any state or other jurisdiction in which such offer, solicitation
or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction.
About Tenon Medical, Inc.
Tenon Medical, Inc., a medical device company
formed in 2012, has developed The Catamaran® SI Joint Fusion System that offers a novel, less invasive approach to the
SI joint using a single, robust titanium implant. The system features the Catamaran® Fixation Device which passes through
both the axial and sagittal planes of the ilium and sacrum, stabilizing and transfixing the SI Joint along its longitudinal axis. The
angle and trajectory of the Catamaran surgical approach is also designed to provide a pathway away from critical neural and vascular
structures and into the strongest cortical bone. Since the national launch of the Catamaran SI Joint Fusion System in October 2022 Tenon
is focused on three commercial opportunities with its System in the SI Joint market which includes: 1) Primary SI Joint procedures, 2)
Revision procedures of failed SI Joint implants and 3) SI Joint fusion adjunct to a spine fusion construct. For more information, please
visit https://www.tenonmed.com/.
The Tenon Medical logo, Tenon Medical and Catamaran are registered
trademarks of Tenon Medical, Inc.
Forward Looking Statements
This press release contains “forward-looking
statements,” which are statements related to events, results, activities or developments that Tenon expects, believes or anticipates
will or may occur in the future. Forward-looking often contains words such as “intends,” “estimates,” “anticipates,”
“hopes,” “projects,” “plans,” “expects,” “seek,” “believes,” “see,”
“should,” “will,” “would,” “target,” and similar expressions and the negative versions thereof.
Such statements are based on Tenon’s experience and perception of current conditions, trends, expected future developments and other factors
it believes are appropriate under the circumstances, and speak only as of the date made. Forward-looking statements are inherently uncertain
and actual results may differ materially from assumptions, estimates or expectations reflected or contained in the forward-looking statements
as a result of various factors. For details on the uncertainties that may cause our actual results to be materially different than those
expressed in our forward-looking statements, please review our Annual Report on Form 10-K for the fiscal year ended December 31, 2022
on file with the Securities and Exchange Commission at www.sec.gov, particularly the information contained in the section entitled “Risk
Factors”. We undertake no obligation to publicly update or revise any forward-looking statements to reflect new information or future
events or otherwise unless required by law.
IR Contact:
Shannon Devine / Rory Rumore
203-741-8811
MZ North America
tenon@mzgroup.us
SOURCE: Tenon Medical, Inc.
v3.24.0.1
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Entity File Number |
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Entity Registrant Name |
TENON MEDICAL, INC.
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Entity Central Index Key |
0001560293
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Entity Tax Identification Number |
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DE
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Entity Address, Address Line One |
104 Cooper Court
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Entity Address, City or Town |
Los Gatos
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Entity Address, Postal Zip Code |
95032
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