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UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): May
1, 2024
SPLASH
BEVERAGE GROUP, INC. |
(Exact Name of Registrant as Specified in Its
Charter) |
Nevada |
(State or Other Jurisdiction of Incorporation) |
001-40471 |
|
34-1720075 |
(Commission File Number) |
|
(IRS Employer Identification No.) |
|
1314 East Las Olas Blvd, Suite 221
Fort Lauderdale, Florida 33301 |
|
(Address of Principal Executive Offices) |
|
(954) 745-5815 |
(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) |
|
|
☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
|
☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of
the Act:
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on
which registered |
Common Stock, $0.001 par value per share |
|
SBEV |
|
NYSE American LLC |
Warrants to purchase shares of common stock |
|
SBEV-WT |
|
NYSE American 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.
Senior Secured
Convertible Promissory Notes
On
May 1, 2024, the Company entered
into a securities purchase agreement (the “Purchase Agreement”) with certain accredited investors (the “Purchasers”).
Pursuant to the Purchase Agreement, the Company sold the Purchasers: (i) senior convertible notes in the aggregate original principal
amount of $1,850,000, (the “Notes”) convertible into up to 4,625,000 shares of common stock of the Company, par value $0.001
per share (“Common Stock”), subject to adjustments as provided in the Notes, (ii) 925,000 shares of Common Stock (the “Commitment
Shares”), (ii) warrants to initially acquire up to an aggregate of 4,625,000 additional shares of Common Stock (the “Warrants”)
at an exercise price of $0.85 per Warrant Share. The Warrants are exercisable for cash only, provided
there is an effective Registration Statement registering the shares exercisable upon exercise of the Warrant. The Company has received
gross proceeds of $1,850,000 in connection with the closing of the financing. The conversion price of the Notes is $0.40 per share, subject
to adjustments as provided in the Notes.
The
maturity date of the Notes is eighteen months from the issuance date of the Notes. Interest on the unpaid principal balance of the Notes
accrues at 12% per annum, payable in arrears for on the first calendar day of each calendar month. Subject to the conversion of the Notes,
any accrued interest outstanding is payable in full on the maturity date of the Notes.
The
Notes are subject to customary events of default including the failure to pay principal and interest when due or bankruptcy by the Company.
Upon the occurrence of an event of default, the unpaid portion of the principal amount will
bear simple interest from the date of the event of default at a rate equal to 18% per annum, for the duration from such event of default
until the cure of such default or the repayment date of the entire outstanding balance of the Note.
The
Warrants are exercisable at any time
after the six (6) month and one (1) day anniversary of the date of issuance until May 1, 2029, at an exercise price of $0.85 per Warrant
Share, subject to adjustments as provided in the Warrants. The Warrants are exercisable for cash only, provided there is an effective
Registration Statement registering the shares exercisable upon exercise of the Warrant.
Pursuant
to the Purchase Agreement, the Company and the Purchasers entered into a registration rights agreement (the “Registration Rights
Agreement”), pursuant to which the Company agreed to file a registration statement to register the shares of common stock underlying
the Notes and the Warrants within ten (10) days after the closing and to have such registration statement effective within seventy (70)
days of the closing (or the second business day after the Company is notified by the Securities and Exchange Commission that such registration
statement will not be reviewed or subject to further review).
The
foregoing summary of the Purchase Agreement, the Notes, the Warrants and the Registration Rights Agreement are qualified by reference
to the full text of such documents, copies of which are filed as exhibits to this report and incorporated herein by reference.
Item 2.03 Creation of
a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The
information set forth in Item 1.01 and 9.01 of this Current Report on Form 8-K is incorporated herein by reference.
Item 3.02 Unregistered
Sales of Equity Securities
The
information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein reference, to the extent required. Based
in part upon the representations of the Investor and the Purchasers, to the Company, including that they are an “accredited investor”
as defined under Rule 501(a) of Regulation D, the shares of Common Stock issuable under the Purchase Agreement, upon conversion of the
Notes or upon exercise of the Warrant, will be exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.
Item 9.01 Financial Statements
and Exhibits.
(d) Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: May 7, 2024
SPLASH BEVERAGE GROUP,
INC. |
|
|
|
/s/
Robert Nistico |
|
Robert Nistico |
|
Chief Executive Officer |
|
EXHIBIT 4.1
NEITHER THE ISSUANCE AND SALE OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES. THE NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE LESS THAN THE AMOUNTS SET FORTH
ON THE FACE HEREOF PURSUANT TO SECTION 1(a) OF THIS WARRANT.
Splash
Beverage Group, Inc.
Form of Warrant To Purchase Common
Stock
Warrant No.: [--]
Date of Issuance: May 1, 2024 (“Issuance Date”)
Splash Beverage
Group, Inc., a Nevada corporation (the “Company”), hereby certifies that, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, [--], the registered holder hereof or its permitted assigns (the “Holder”),
is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect,
upon exercise of this Warrant to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or
replacement hereof, the “Warrant”), at any time or times on or after the six month and one day anniversary of the Issuance
Date (the “Initial Exercisability Date”), but not after 11:59 p.m., New York time, on the Expiration Date (as defined
below), [--] (subject to adjustment as provided herein) fully paid and non-assessable shares of Common Stock (as defined below) (the “Warrant
Shares”, and such number of Warrant Shares, the “Warrant Number”). Except as otherwise defined herein, capitalized
terms in this Warrant shall have the meanings set forth in Section 19. This Warrant is one of the Warrants to Purchase Common Stock (the
“SPA Warrants”) issued pursuant to Section 1 of that certain Securities Purchase Agreement, dated as of May 1, 2024
(the “Subscription Date”), by and among the Company and the investors (the “Buyers”) referred to
therein, as amended from time to time (the “Securities Purchase Agreement”).
(a) Mechanics
of Exercise. Subject to the terms and conditions hereof (including, without limitation, the limitations set forth in Section
1(f)), this Warrant may be exercised by the
Holder on any day on or after the Initial
Exercisability Date (an “Exercise Date”), in whole or in part, by delivery (whether via facsimile or otherwise) of
a written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s
election to exercise this Warrant. Within one (1) Trading Day following an exercise of this Warrant as aforesaid, the Holder shall deliver
payment to the Company of an amount equal to the Exercise Price in effect on the date of such exercise multiplied by the number of Warrant
Shares as to which this Warrant was so exercised (the “Aggregate Exercise Price”) in cash or via wire transfer of immediately
available funds if the Holder did not notify the Company in such Exercise Notice that such exercise was made pursuant to a Cashless Exercise
(as defined in Section 1(d)). The Holder shall not be required to deliver the original of this Warrant in order to effect an exercise
hereunder. Execution and delivery of an Exercise Notice with respect to less than all of the Warrant Shares shall have the same effect
as cancellation of the original of this Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number of
Warrant Shares. Execution and delivery of an Exercise Notice for all of the then-remaining Warrant Shares shall have the same effect as
cancellation of the original of this Warrant after delivery of the Warrant Shares in accordance with the terms hereof. On or before the
first (1st) Trading Day following the date on which the Company has received an Exercise Notice, the Company shall transmit
by facsimile or electronic mail an acknowledgment of confirmation of receipt of such Exercise Notice, in the form attached hereto as Exhibit
B, to the Holder and the Company’s transfer agent (the “Transfer Agent”), which confirmation shall constitute
an instruction to the Transfer Agent to process such Exercise Notice in accordance with the terms herein. On or before the second (2nd)
Trading Day following the date on which the Company has received such Exercise Notice (or such earlier date as required pursuant to the
1934 Act or other applicable law, rule or regulation for the settlement of a trade of such Warrant Shares initiated on the applicable
Exercise Date), the Company shall (X) provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”)
Fast Automated Securities Transfer Program, upon the request of the Holder, credit such aggregate number of shares of Common Stock to
which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through
its Deposit/Withdrawal at Custodian system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer
Program (“FAST”), upon the request of the Holder, issue and deliver (via reputable overnight courier) to the address
as specified in the Exercise Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of
Common Stock to which the Holder shall be entitled pursuant to such exercise. Upon delivery of an Exercise Notice, the Holder shall be
deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been
exercised, irrespective of the date such Warrant Shares are credited to the Holder’s DTC account or the date of delivery of the
certificates evidencing such Warrant Shares (as the case may be); provided, that the Holder shall be deemed to have waived any voting
rights of any such Warrant Shares that may arise with respect to any record date during the period commencing on such Exercise Date, through,
and including, such applicable Share Delivery Date (as defined below) (each, an “Exercise Period”), as necessary, such
that the aggregate voting rights of any Common Stock (including such Warrant Shares) beneficially owned by the Holder and/or any Attribution
Parties, collectively, on any such record date shall not exceed the Maximum Percentage (as defined below) as a result of any such exercise
of this Warrant. If this Warrant is submitted in connection with any exercise pursuant to this Section 1(a) and the number of Warrant
Shares represented by this Warrant submitted for exercise is greater than the number of
Warrant Shares being acquired upon an
exercise and upon surrender of this Warrant to the Company by the Holder, then, at the request of the Holder, the Company shall as soon
as practicable and in no event later than two (2) Business Days after any exercise and at its own expense, issue and deliver to the Holder
(or its designee) a new Warrant (in accordance with Section 7(d)) representing the right to purchase the number of Warrant Shares purchasable
immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised.
No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but rather the number of shares of Common Stock
to be issued shall be rounded up to the nearest whole number. The Company shall pay any and all transfer, stamp, issuance and similar
taxes, costs and expenses (including, without limitation, fees and expenses of the Transfer Agent) that may be payable with respect to
the issuance and delivery of Warrant Shares upon exercise of this Warrant. Notwithstanding the foregoing, except in the case where an
exercise of this Warrant is validly made pursuant to a Cashless Exercise, the Company’s failure to deliver Warrant Shares to the
Holder on or prior to the later of (i) two (2) Trading Days after receipt of the applicable Exercise Notice (or such earlier date as required
pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade of such Warrant Shares initiated on
the applicable Exercise Date) and (ii) one (1) Trading Day after the Company’s receipt of the Aggregate Exercise Price (or valid
notice of a Cashless Exercise) (such later date, the “Share Delivery Date”) shall not be deemed to be a breach of this
Warrant. Notwithstanding anything to the contrary contained in this Warrant or the Registration Rights Agreement, after the effective
date of the Registration Statement (as defined in the Registration Rights Agreement) and prior to the Holder’s receipt of the notice
of a Grace Period (as defined in the Registration Rights Agreement), the Company shall cause the Transfer Agent to deliver unlegended
shares of Common Stock to the Holder (or its designee) in connection with any sale of Registrable Securities (as defined in the Registration
Rights Agreement) with respect to which the Holder has entered into a contract for sale, and delivered a copy of the prospectus included
as part of the particular Registration Statement to the extent applicable, and for which the Holder has not yet settled. From the Issuance
Date through and including the Expiration Date, the Company shall maintain a transfer agent that participates in FAST.
(b) Exercise
Price. For purposes of this Warrant, “Exercise Price” means $0.85 subject to adjustment as provided herein.
(c) Company’s
Failure to Timely Deliver Securities. If the Company shall fail, for any reason or for no reason, on or prior to the Share
Delivery Date, either (I) if the Transfer Agent is not participating in FAST, to issue and deliver to the Holder (or its designee) a
certificate for the number of Warrant Shares to which the Holder is entitled and register such Warrant Shares on the Company’s
share register or, if the Transfer Agent is participating in FAST, to credit the balance account of the Holder or the Holder’s
designee with DTC for such number of Warrant Shares to which the Holder is entitled upon the Holder’s exercise of this Warrant
(as the case may be) or (II) if a Registration Statement covering the resale of the Warrant Shares that are the subject of the
Exercise Notice (the “Unavailable Warrant Shares”) is not available for the resale of such Unavailable Warrant
Shares and the Company fails to promptly, but in no event later than as required pursuant to the Registration Rights Agreement (x)
so notify the Holder and (y) deliver the Warrant Shares electronically without any restrictive legend by crediting such aggregate
number of Warrant Shares to which the Holder is entitled
pursuant to such exercise to the Holder’s
or its designee’s balance account with DTC through its Deposit/Withdrawal At Custodian system (the event described in the immediately
foregoing clause (II) is hereinafter referred as a “Notice Failure” and together with the event described in clause
(I) above, a “Delivery Failure”), then, in addition to all other remedies available to the Holder, (X) the Company
shall pay in cash to the Holder on each day after the Share Delivery Date and during such Delivery Failure an amount equal to 2% of the
product of (A) the sum of the number of shares of Common Stock not issued to the Holder on or prior to the Share Delivery Date and to
which the Holder is entitled, multiplied by (B) any trading price of the Common Stock selected by the Holder in writing as in effect at
any time during the period beginning on the applicable Exercise Date and ending on the applicable Share Delivery Date, and (Y) the Holder,
upon written notice to the Company, may void its Exercise Notice with respect to, and retain or have returned, as the case may be, any
portion of this Warrant that has not been exercised pursuant to such Exercise Notice; provided that the voiding of an Exercise Notice
shall not affect the Company’s obligations to make any payments which have accrued prior to the date of such notice pursuant to
this Section 1(c) or otherwise. In addition to the foregoing, if on or prior to the Share Delivery Date either (I) the Transfer Agent
is not participating in the DTC Fast Automated Securities Transfer Program, the Company shall fail to issue and deliver to the Holder
(or its designee) a certificate and register such shares of Common Stock on the Company’s share register or, if the Transfer Agent
is participating in the DTC Fast Automated Securities Transfer Program, the Transfer Agent shall fail to credit the balance account of
the Holder or the Holder’s designee with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s
exercise hereunder or pursuant to the Company’s obligation pursuant to clause (ii) below or (II) a Notice Failure occurs, and if
on or after such Share Delivery Date the Holder acquires (in an open market transaction, stock loan or otherwise) shares of Common Stock
corresponding to all or any portion of the number of shares of Common Stock issuable upon such exercise that the Holder is entitled to
receive from the Company and has not received from the Company in connection with such Delivery Failure or Notice Failure, as applicable
(a “Buy-In”), then, in addition to all other remedies available to the Holder, the Company shall, within two (2) Business
Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the
Holder’s total purchase price (including brokerage commissions, stock loan costs and other out-of-pocket expenses, if any) for the
shares of Common Stock so acquired (including, without limitation, by any other Person in respect, or on behalf, of the Holder) (the “Buy-In
Price”), at which point the Company’s obligation to so issue and deliver such certificate (and to issue such shares of
Common Stock) or credit the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the number of
Warrant Shares to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) (and to issue such Warrant
Shares) shall terminate, or (ii) promptly honor its obligation to so issue and deliver to the Holder a certificate or certificates representing
such Warrant Shares or credit the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the number
of Warrant Shares to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) and pay cash to the
Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of Warrant Shares multiplied
by (B) the lowest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date of the applicable
Exercise Notice and ending on the date of such issuance and payment under this clause (ii) (the “Buy-In Payment Amount”).
Nothing shall limit the Holder’s right to pursue any other remedies
available to it hereunder, at law or
in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s
failure to timely deliver certificates representing shares of Common Stock (or to electronically deliver such shares of Common Stock)
upon the exercise of this Warrant as required pursuant to the terms hereof. While this Warrant is outstanding, the Company shall cause
its transfer agent to participate in FAST. In addition to the foregoing rights, (i) if the Company fails to deliver the applicable number
of Warrant Shares upon an exercise pursuant to Section 1 by the applicable Share Delivery Date, then the Holder shall have the right to
rescind such exercise in whole or in part and retain and/or have the Company return, as the case may be, any portion of this Warrant that
has not been exercised pursuant to such Exercise Notice; provided that the rescission of an exercise shall not affect the Company’s
obligation to make any payments that have accrued prior to the date of such notice pursuant to this Section 1(c) or otherwise, and (ii)
if a registration statement covering the issuance or resale of the Warrant Shares that are subject to an Exercise Notice is not available
for the issuance or resale, as applicable, of such Warrant Shares and the Holder has submitted an Exercise Notice prior to receiving notice
of the non-availability of such registration statement and the Company has not already delivered the Warrant Shares underlying such Exercise
Notice electronically without any restrictive legend by crediting such aggregate number of Warrant Shares to which the Holder is entitled
pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit / Withdrawal At Custodian
system, the Holder shall have the option, by delivery of notice to the Company, to (x) rescind such Exercise Notice in whole or in part
and retain or have returned, as the case may be, any portion of this Warrant that has not been exercised pursuant to such Exercise Notice;
provided that the rescission of an Exercise Notice shall not affect the Company’s obligation to make any payments that have accrued
prior to the date of such notice pursuant to this Section 1(c) or otherwise, and/or (y) switch some or all of such Exercise Notice from
a cash exercise to a Cashless Exercise.
(d) Cashless
Exercise. Notwithstanding anything contained herein to the contrary (other than Section 1(f) below), if at the time of exercise hereof
a Registration Statement (as defined in the Registration Rights Agreement) is not effective (or the prospectus contained therein is not
available for use) for the resale by the Holder of all of the Warrant Shares, then the Holder may, in its sole discretion, exercise this
Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise
in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise the “Net Number” of Warrant Shares
determined according to the following formula (a “Cashless Exercise”):
Net Number = (A x B) - (A x C)
B
For purposes of the foregoing formula:
A= the total number of shares with respect
to which this Warrant is then being exercised.
B = as elected by the Holder: (i) the
VWAP of the shares of Common Stock on the Trading Day immediately preceding the date of the applicable Exercise Notice
if such Exercise Notice is (1)
both executed and delivered pursuant to Section 1(a) hereof on a day that is not a Trading Day or (2) both executed and delivered
pursuant to Section 1(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule
600(b)(64) 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 Exercise Notice or (z) the Bid Price of the
shares of Common Stock as of the time of the Holder’s execution of the applicable Exercise Notice if such Exercise Notice is
executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter pursuant to
Section 1(a) hereof, or (iii) the Closing Sale Price of the Common Stock on the date of
the applicable Exercise Notice if the date of such Exercise Notice is a Trading Day and such Exercise Notice is both executed and
delivered pursuant to Section 1(a) hereof after the close of “regular trading hours” on such Trading Day.
C = the Exercise
Price then in effect for the applicable Warrant Shares at the time of such exercise.
If the Warrant Shares
are issued in a Cashless Exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the 1933 Act, the Warrant
Shares take on the registered characteristics of the Warrants being exercised. For purposes of Rule 144(d) promulgated under the 1933
Act, as in effect on the Subscription Date, it is intended that the Warrant Shares issued in a Cashless Exercise shall be deemed to have
been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date this Warrant
was originally issued pursuant to the Securities Purchase Agreement.
(e) Disputes.
In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the number of Warrant Shares to
be issued pursuant to the terms hereof, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed
and resolve such dispute in accordance with Section 15.
| (f) | Limitations on Exercises. |
(i) Beneficial
Ownership. The Company shall not effect the exercise of any portion of this Warrant, and the Holder shall not have the right to exercise
any portion of this Warrant, pursuant to the terms and conditions of this Warrant and any such exercise shall be null and void and treated
as if never made, to the extent that after giving effect to such exercise, the Holder together with the other Attribution Parties collectively
would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the shares of Common Stock outstanding immediately
after giving effect to such exercise. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially
owned by the Holder and the other Attribution Parties shall include the number of shares of Common Stock held by the Holder and all other
Attribution Parties plus the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination
of such sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (A) exercise of the remaining,
unexercised portion of this Warrant beneficially owned by the Holder or any of the other
Attribution Parties and (B)
exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including, without
limitation, any convertible notes or convertible preferred stock or warrants, including other SPA Warrants) beneficially owned by
the Holder or any other Attribution Party subject to a limitation on conversion or exercise analogous to the limitation contained in
this Section 1(f)(i). For purposes of this Section 1(f)(i), beneficial ownership shall be calculated in accordance with Section
13(d) of the 1934 Act. For purposes of determining the number of outstanding shares of Common Stock the Holder may acquire upon the
exercise of this Warrant without exceeding the Maximum Percentage, the Holder may rely on the number of outstanding shares of Common
Stock as reflected in (x) the Company’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report
on Form 8-K or other public filing with the SEC, as the case may be, (y) a more recent public announcement by the Company or (z) any
other written notice by the Company or the Transfer Agent, if any, setting forth the number of shares of Common Stock outstanding
(the “Reported Outstanding Share Number”). If the Company receives an Exercise Notice from the Holder at a time
when the actual number of outstanding shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall (i)
notify the Holder in writing of the number of shares of Common Stock then outstanding and, to the extent that such Exercise Notice
would otherwise cause the Holder’s beneficial ownership, as determined pursuant to this Section 1(f)(i), to exceed the Maximum
Percentage, the Holder must notify the Company of a reduced number of Warrant Shares to be acquired pursuant to such Exercise Notice
(the number of shares by which such purchase is reduced, the “Reduction Shares”) and (ii) as soon as reasonably
practicable, the Company shall return to the Holder any exercise price paid by the Holder for the Reduction Shares. For any reason
at any time, upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in
writing or by electronic mail to the Holder the number of shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the
Company, including this Warrant, by the Holder and any other Attribution Party since the date as of which the Reported Outstanding
Share Number was reported. In the event that the issuance of shares of Common Stock to the Holder upon exercise of this Warrant
results in the Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum
Percentage of the number of outstanding shares of Common Stock (as determined under Section 13(d) of the 1934 Act), the number of
shares so issued by which the Holder’s and the other Attribution Parties’ aggregate beneficial ownership exceeds the
Maximum Percentage (the “Excess Shares”) shall be deemed null and void and shall be cancelled ab initio, and the
Holder shall not have the power to vote or to transfer the Excess Shares. As soon as reasonably practicable after the issuance of
the Excess Shares has been deemed null and void, the Company shall return to the Holder the exercise price paid by the Holder for
the Excess Shares. Upon delivery of a written notice to the Company, the Holder may from time to time increase (with such increase
not effective until the sixty-first (61st) day after delivery of such notice) or decrease the Maximum Percentage to any
other percentage not in excess of 9.99% as specified in such notice; provided that (i) any such increase in the Maximum Percentage
will not be effective until the sixty-first (61st) day after such notice is
delivered to the Company and (ii) any
such increase or decrease will apply only to the Holder and the other Attribution Parties and not to any other holder of SPA Warrants
that is not an Attribution Party of the Holder. For purposes of clarity, the shares of Common Stock issuable pursuant to the terms of
this Warrant in excess of the Maximum Percentage shall not be deemed to be beneficially owned by the Holder for any purpose including
for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to exercise this Warrant pursuant to this paragraph
shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of exercisability.
The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of
this Section 1(f)(i) to the extent necessary to correct this paragraph or any portion of this paragraph which may be defective or inconsistent
with the intended beneficial ownership limitation contained in this Section 1(f)(i) or to make changes or supplements necessary or desirable
to properly give effect to such limitation. The limitation contained in this paragraph may not be waived and shall apply to a successor
holder of this Warrant.
(ii) Principal
Market Regulation. The Company shall not issue any shares of Common Stock upon the exercise of this Warrant if the issuance of
such shares of Common Stock (taken together with the issuance of the Commitment Shares (as defined in the Securities Purchase
Agreement) and the issuance of such shares upon the exercise of the SPA Warrants and the conversion of the Notes or otherwise
pursuant to the terms of the Notes or the SPA Warrants) would exceed the aggregate number of shares of Common Stock which the
Company may issue upon exercise or conversion or otherwise pursuant to the terms of the Notes or the SPA Warrants (as the case may
be) of the Warrants and the Notes (taken together with the issuance of the Commitment Shares) without breaching the Company’s
obligations under the rules or regulations of the Principal Market (the number of shares which may be issued without violating such
rules and regulations, the “Exchange Cap”), except that such limitation shall not apply in the event that the
Company (A) obtains the approval of its stockholders as required by the applicable rules of the Principal Market for issuances of
shares of Common Stock in excess of such amount or (B) obtains a written opinion from outside counsel to the Company that such
approval is not required, which opinion shall be reasonably satisfactory to the Holder. Until such approval or such written opinion
is obtained, no Buyer shall be issued in the aggregate, upon conversion or exercise (as the case may be) of any Notes or any of the
SPA Warrants or otherwise pursuant to the terms of the Notes or the SPA Warrants, shares of Common Stock in an amount greater than
the product of (i) the Exchange Cap as of the Issuance Date multiplied by (ii)
the quotient of (1) the original principal amount of Notes issued to such Buyer pursuant to the Securities Purchase Agreement on the
Closing Date (as defined in the Securities Purchase Agreement) divided by (2) the aggregate original principal amount of all Notes
issued to the Buyers pursuant to the Securities Purchase Agreement on the Closing Date (with respect to each Buyer, the
“Exchange Cap Allocation”). In the event that any Buyer shall sell or otherwise transfer any of such
Buyer’s SPA Warrants, the transferee shall be allocated a pro rata portion of such Buyer’s Exchange Cap Allocation with
respect to such portion of such SPA Warrants so transferred, and the restrictions of the prior sentence shall apply to such
transferee with respect to the portion of the Exchange Cap
Allocation so allocated to such transferee.
Upon conversion and exercise in full of a holder’s Notes and SPA Warrants, the difference (if any) between such holder’s Exchange
Cap Allocation and the number of shares of Common Stock actually issued to such holder upon such holder’s conversion in full of
such Notes and such holder’s exercise in full of such SPA Warrants shall be allocated, to the respective Exchange Cap Allocations
of the remaining holders of Notes and related SPA Warrants on a pro rata basis in proportion to the shares of Common Stock underlying
the Notes and related SPA Warrants then held by each such holder of Notes and related SPA Warrants. In the event that the Company is then
prohibited from issuing any shares of Common Stock pursuant to this Section 1(f)(ii) (the “Exchange Cap Shares”), in
lieu of issuing and delivering such Exchange Cap Shares to the Holder, the Company shall pay cash to the Holder in exchange for the cancellation
of such portion of this Warrant exercisable into such Exchange Cap Shares (the “Exchange Cap Payment Amount”) at a
price equal to the sum of (x) the product of (A) such number of Exchange Cap Shares and (B) the greatest Closing Sale Price of the Common
Stock on any Trading Day during the period commencing on the date the Holder delivers the applicable Exercise Notice with respect to such
Exchange Cap Shares to the Company and ending on the date of such payment under this Section 1(f)(ii) and (y) to the extent the Holder
purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of Exchange
Cap Shares, any brokerage commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection therewith.
| (g) | Reservation of Shares. |
(i) Required
Reserve Amount. So long as this Warrant remains outstanding, the Company shall at all times keep reserved for issuance under this
Warrant a number of shares of Common Stock at least equal to 100% of the maximum number of shares of Common Stock as shall be necessary
to satisfy the Company’s obligation to issue shares of Common Stock under the SPA Warrants then outstanding (without regard to
any limitations on exercise) (the “Required Reserve Amount”); provided that at no time shall the number of shares
of Common Stock reserved pursuant to this Section 1(g)(i) be reduced other than proportionally in connection with any exercise or redemption
of SPA Warrants or such other event covered by Section 2(a) below. The Required Reserve Amount (including, without limitation, each increase
in the number of shares so reserved) shall be allocated pro rata among the holders of the SPA Warrants based on number of shares of Common
Stock issuable upon exercise of SPA Warrants held by each holder on the Closing Date (without regard to any limitations on exercise)
or increase in the number of reserved shares, as the case may be (the “Authorized Share Allocation”). In the event
that a holder shall sell or otherwise transfer any of such holder’s SPA Warrants, each transferee shall be allocated a pro rata
portion of such holder’s Authorized Share Allocation. Any shares of Common Stock reserved and allocated to any Person which ceases
to hold any SPA Warrants shall be allocated to the remaining holders of SPA Warrants, pro rata based on the number of shares of Common
Stock issuable upon exercise of the SPA Warrants then held by such holders (without regard to any limitations on exercise).
(ii) Insufficient
Authorized Shares. If, notwithstanding Section 1(g)(i) above, and not in limitation thereof, at any time while any of the SPA Warrants
remain outstanding, the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation
to reserve the Required Reserve Amount (an “Authorized Share Failure”), then the Company shall immediately take all
action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve
the Required Reserve Amount for all the SPA Warrants then outstanding. Without limiting the generality of the foregoing sentence, as soon
as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence
of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of
authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy statement
and shall use its best efforts to solicit its stockholders’ approval of such increase in authorized shares of Common Stock and to
cause its board of directors to recommend to the stockholders that they approve such proposal. Notwithstanding the foregoing, if any such
time of an Authorized Share Failure, the Company is able to obtain the written consent of a majority of the shares of its issued and outstanding
shares of Common Stock to approve the increase in the number of authorized shares of Common Stock, the Company may satisfy this obligation
by obtaining such consent and submitting for filing with the SEC an Information Statement on Schedule 14C. In the event that the Company
is prohibited from issuing shares of Common Stock upon an exercise of this Warrant due to the failure by the Company to have sufficient
shares of Common Stock available out of the authorized but unissued shares of Common Stock (such unavailable number of shares of Common
Stock, the “Authorization Failure Shares”), in lieu of delivering such Authorization Failure Shares to the Holder,
the Company shall pay cash in exchange for the cancellation of such portion of this Warrant exercisable into such Authorization Failure
Shares at a price equal to the sum of (i) the product of (x) such number of Authorization Failure Shares and (y) the greatest Closing
Sale Price of the Common Stock on any Trading Day during the period commencing on the date the Holder delivers the applicable Exercise
Notice with respect to such Authorization Failure Shares to the Company and ending on the date of such issuance and payment under this
Section 1(g); and (ii) to the extent the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Holder of Authorization Failure Shares, any Buy-In Payment Amount, brokerage commissions and other out-of-pocket
expenses, if any, of the Holder incurred in connection therewith. Nothing contained in this Section 1(g) shall limit any obligations of
the Company under any provision of the Securities Purchase Agreement.
| 2. | ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The |
Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 2.
(a) Stock
Dividends and Splits. Without limiting any provision of Section 2(b), Section 3 or Section 4, if the Company, at any time on or after
the Subscription Date, (i) pays a stock dividend on one or more classes of its then outstanding shares of Common Stock or
otherwise makes a distribution on
any class of capital stock that is payable in shares of Common Stock, (ii) subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its then outstanding shares of Common Stock into a larger number of shares or (iii)
combines (by combination, reverse stock split or otherwise) one or more classes of its then outstanding shares of Common Stock into
a smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the numerator shall
be the number of shares of Common Stock 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 clause (i) of this paragraph
shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or
distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the
effective date of such subdivision or combination. If any event requiring an adjustment under this paragraph occurs during the
period that an Exercise Price is calculated hereunder, then the calculation of such Exercise Price shall be adjusted appropriately
to reflect such event.
(b) Adjustment
Upon Issuance of Shares of Common Stock. If and whenever on or after the Subscription Date, the Company grants, issues or sells (or
enters into any agreement to grant, issue or sell), or in accordance with this Section 2 is deemed to have granted, issued or sold, any
shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but
excluding any Excluded Securities granted issued or sold or deemed to have been granted issued or sold) for a consideration per share
(the “New Issuance Price”) less than a price equal to the Exercise Price in effect immediately prior to such granting,
issuance or sale or deemed granting, issuance or sale (such Exercise Price then in effect is referred to herein as the “Applicable
Price”) (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the Exercise
Price then in effect shall be reduced to an amount equal to the New Issuance Price. For all purposes of the foregoing (including, without
limitation, determining the adjusted Exercise Price and the New Issuance Price under this Section 2(b)), the following shall be applicable:
(i) Issuance
of Options. If the Company in any manner grants, issues or sells (or enters into any agreement to grant, issue or sell) any Options
and the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Option or upon
conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the
terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued
and sold by the Company at the time of the granting, issuance or sale (or the time of execution of such agreement to grant, issue or sell,
as applicable) of such Option for such price per share. For purposes of this Section 2(b)(i), the “lowest price per share for which
one share of Common Stock is at any time issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any
Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof” shall be equal to (1)
the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one
share of Common Stock upon the granting, issuance or sale (or pursuant to the agreement to grant, issue or sell, as applicable) of such
Option, upon exercise of such Option and
upon conversion, exercise or exchange
of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof and (y) the lowest exercise
price set forth in such Option for which one share of Common Stock is issuable (or may become issuable assuming all possible market conditions)
upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of
any such Option or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Option
(or any other Person) upon the granting, issuance or sale (or the agreement to grant, issue or sell, as applicable) of such Option, upon
exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or
otherwise pursuant to the terms thereof plus the value of any other consideration received or receivable by, or benefit conferred on,
the holder of such Option (or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made
upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options or otherwise
pursuant to the terms of or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible
Securities.
(ii) Issuance
of Convertible Securities. If the Company in any manner issues or sells (or enters into any agreement to issue or sell) any
Convertible Securities and the lowest price per share for which one share of Common Stock is at any time issuable upon the
conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof is less than the Applicable Price, then such
share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance
or sale (or the time of execution of such agreement to issue or sell, as applicable) of such Convertible Securities for such price
per share. For the purposes of this Section 2(b)(ii), the “lowest price per share for which one share of Common Stock is at
any time issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof” shall be equal
to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect
to one share of Common Stock upon the issuance or sale (or pursuant to the agreement to issue or sell, as applicable) of the
Convertible Security and upon conversion, exercise or exchange of such Convertible Security or otherwise pursuant to the terms
thereof and (y) the lowest conversion price set forth in such Convertible Security for which one share of Common Stock is issuable
(or may become issuable assuming all possible market conditions) upon conversion, exercise or exchange thereof or otherwise pursuant
to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Convertible Security (or any other
Person) upon the issuance or sale (or the agreement to issue or sell, as applicable) of such Convertible Security plus the value of
any other consideration received or receivable by, or benefit conferred on, the holder of such Convertible Security (or any other
Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such
shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities or otherwise pursuant to the terms
thereof, and if any such issuance or sale of such Convertible Securities is made upon exercise of any Options for which adjustment
of this Warrant has been or is to be made pursuant to other provisions of this Section 2(b), except as contemplated
below, no further adjustment of the Exercise Price shall be made by reason of such issuance or sale.
(iii) Change
in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional consideration,
if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible
Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time (other than
proportional changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 2(a)), the Exercise
Price in effect at the time of such increase or decrease shall be adjusted to the Exercise Price which would have been in effect at such
time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or
increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold . For purposes of this Section
2(b)(i), if the terms of any Option or Convertible Security (including, without limitation, any Option or Convertible Security that was
outstanding as of the Subscription Date) are increased or decreased in the manner described in the immediately preceding sentence, then
such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall
be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 2(b) shall be made
if such adjustment would result in an increase of the Exercise Price then in effect.
(iv) Calculation
of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection with the issuance
or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the “Primary Security”,
and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary Securities”), together comprising
one integrated transaction, (or one or more transactions if such issuances or sales or deemed issuances or sales of securities of the
Company either (A) have at least one investor or purchaser in common, (B) are consummated in reasonable proximity to each other and/or
(C) are consummated under the same plan of financing) the aggregate consideration per share of Common Stock with respect to such Primary
Security shall be deemed to be equal to the difference of (x) the lowest price per share for which one share of Common Stock was issued
(or was deemed to be issued pursuant to Section 2(b)(i) or 2(b)(ii) above, as applicable) in such integrated transaction solely with
respect to such Primary Security, minus (y) with respect to such Secondary Securities, the sum of (I) the Black Scholes Consideration
Value of each such Option, if any, (II) the fair market value (as determined by the Holder in good faith) or the Black Scholes Consideration
Value, as applicable, of such Adjustment Right, if any, and (III) the fair market value (as determined by the Holder) of such Convertible
Security, if any, in each case, as determined on a per share basis in accordance with this Section 2(b)(iv). If any shares of Common
Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received
therefor (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security, but not for the
purpose of the calculation of the Black Scholes Consideration Value) will be deemed to be the net amount of consideration received by
the Company therefor. If any shares of
Common Stock, Options or
Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the
Company (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security, but not for
the purpose of the calculation of the Black Scholes Consideration Value) will be the fair value of such consideration, except where
such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for
such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately
preceding the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the
non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration
therefor (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security, but not for
the purpose of the calculation of the Black Scholes Consideration Value) will be deemed to be the fair value of such portion of the
net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible
Securities (as the case may be). The fair value of any consideration other than cash or publicly traded securities will be
determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10)
days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such
consideration will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event
by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be
final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the
Company.
(v) Record
Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B)
to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be
the date of the issuance or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase (as the case
may be).
(c) Number
of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to this Section 2(a), the number of Warrant Shares
that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment the
aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same as the aggregate Exercise Price
in effect immediately prior to such adjustment (without regard to any limitations on exercise contained herein).
(d) Other
Events. In the event that the Company (or any Subsidiary (as defined in the Securities Purchase Agreement)) shall take any action
to which the provisions hereof are not strictly applicable, or, if applicable, would not operate to protect the Holder from dilution
or if any event occurs of the type contemplated by the provisions of this Section 2 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other
rights with equity features), then the Company’s board of directors shall in good faith determine and implement an appropriate adjustment
in the Exercise Price and the number of Warrant Shares (if applicable) so as to protect the rights of the Holder, provided that no such
adjustment pursuant to this Section 2(d) will increase the Exercise Price or decrease the number of Warrant Shares as otherwise determined
pursuant to this Section 2, provided further that if the Holder does not accept such adjustments as appropriately protecting its interests
hereunder against such dilution, then the Company’s board of directors and the Holder shall agree, in good faith, upon an independent
investment bank of nationally recognized standing to make such appropriate adjustments, whose determination shall be final and binding
absent manifest error and whose fees and expenses shall be borne by the Company.
(e) Calculations.
All calculations under this Section 2 shall be made by rounding to the nearest cent or the nearest 1/100th of a share, as applicable.
The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the
Company, and the disposition of any such shares shall be considered an issuance or sale of Common Stock.
(f) Voluntary
Adjustment By Company. Subject to the rules and regulations of the Principal Market, the Company may at any time during the term of
this Warrant, with the prior written consent of the Required Holders (as defined in the Securities Purchase Agreement), reduce the then
current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of the Company.
(g) Exercise
Floor Price. Prior to the Stockholder Approval Date (as defined in the Securities Purchase Agreement), no adjustment pursuant to this
Section 2 shall cause the Exercise Price to be less than $0.32 (as adjusted for any stock dividend, stock split, stock combination, reclassification
or similar transaction occurring after the date of the Securities Purchase Agreement) (the “Exercise Floor Price”).
As of the Stockholder Approval Date, any Dilutive Issuances or other events that would have resulted in an adjustment to the Exercise
Price prior to the Stockholder Approval Date, but for the application of this Section 2(g), shall adjust the Exercise Price hereunder
as if such Dilutive Issuances and/or other events, as applicable, occurred on the Stockholder Approval Date.
3. RIGHTS
UPON DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant to Section 2 above or Section 4(a) below, 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,
options, evidence of indebtedness or any other assets by way of a dividend, spin off, reclassification, corporate rearrangement, scheme
of arrangement or other similar transaction) (a “Distribution”), 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 or restrictions on exercise of this Warrant, including without limitation, the Maximum Percentage) immediately before
the date on which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of
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 and the other Attribution Parties exceeding the
Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution to the extent of the Maximum Percentage
(and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership)
to the extent of any such excess) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such
time or times, if ever, as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage,
at which time or times the Holder shall be granted such Distribution (and any Distributions declared or made on such initial Distribution
or on any subsequent Distribution held similarly in abeyance) to the same extent as if there had been no such limitation).
| 4. | PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS. |
(a) Purchase
Rights. In addition to any adjustments pursuant to Sections 2 or 3 above, if at any time the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class
of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to
such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations or restrictions on exercise of this
Warrant, including without limitation, the Maximum Percentage) immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are
to be determined for the grant, issuance or sale of such Purchase Rights (provided, however, that to the extent that the
Holder’s right to participate in any such Purchase Right would result in the Holder and the other Attribution Parties exceeding
the Maximum Percentage, then the Holder shall not be entitled to participate in such Purchase Right to the extent of the Maximum Percentage
(and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Purchase Right (and beneficial ownership)
to the extent of any such excess) and such Purchase Right to such extent shall be held in abeyance for the benefit of the Holder until
such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum
Percentage, at which time or times the Holder shall be granted such right (and any Purchase Right granted, issued or sold on such initial
Purchase Right or on any subsequent Purchase Right held similarly in abeyance) to the same extent as if there had been no such limitation).
(b) Fundamental
Transactions. The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity assumes in
writing all of the obligations of the Company under this Warrant and the other Transaction Documents (as defined in the Securities Purchase
Agreement) in accordance with the provisions of this Section 4(b) pursuant to written agreements in form and substance satisfactory to
the Holder and approved by the Holder prior to such Fundamental Transaction, including agreements to deliver to the Holder in exchange
for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this
Warrant, including, without limitation, which is exercisable for a corresponding number of shares of capital stock equivalent to the shares
of
Common Stock acquirable and receivable
upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction,
and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative
value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such adjustments
to the number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant
immediately prior to the consummation of such Fundamental Transaction) and (ii) the Successor Entity (including its Parent Entity) is
a publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible Market. Upon the consummation of each
Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of the applicable
Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall
refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations
of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named
as the Company herein. Upon consummation of each Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation
that there shall be issued upon exercise of this Warrant at any time after the consummation of the applicable Fundamental Transaction,
in lieu of the shares of Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections
3 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of this Warrant prior to the applicable
Fundamental Transaction, such shares of publicly traded common stock (or its equivalent) of the Successor Entity (including its Parent
Entity) which the Holder would have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant
been exercised immediately prior to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this
Warrant), as adjusted in accordance with the provisions of this Warrant. Notwithstanding the foregoing, and without limiting Section 1(f)
hereof, the Holder may elect, at its sole option, by delivery of written notice to the Company to waive this Section 4(b) to permit the
Fundamental Transaction without the assumption of this Warrant. In addition to and not in substitution for any other rights hereunder,
prior to the consummation of each Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive
securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company
shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon an exercise of this Warrant
at any time after the consummation of the applicable Fundamental Transaction but prior to the Expiration Date, in lieu of the shares of
the Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 3 and 4(a) above,
which shall continue to be receivable thereafter)) issuable upon the exercise of the Warrant prior to such Fundamental Transaction, such
shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights)
which the Holder would have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant been
exercised immediately prior to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this Warrant).
Provision made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to the Holder.
(c) Black
Scholes Value. Notwithstanding the foregoing and the provisions of Section 4(b) above, at the request of the Holder delivered at
any time commencing on the earliest to occur of (x) the public disclosure of any Fundamental Transaction, (y) the consummation of any
Fundamental Transaction and (z) the Holder first becoming aware of any Fundamental Transaction through the date that is ninety (90) days
after the public disclosure of the consummation of such Fundamental Transaction by the Company pursuant to a Current Report on Form 8-K
filed with the SEC, the Company or the Successor Entity (as the case may be) shall purchase this Warrant from the Holder on the date
of such request by paying to the Holder cash in an amount equal to the Black Scholes Value. Payment of such amounts shall be made by
the Company (or at the Company’s direction) to the Holder on or prior to the later of (x) the second (2nd) Trading Day
after the date of such request and (y) the date of consummation of such Fundamental Transaction.
(d) Application.
The provisions of this Section 4 shall apply similarly and equally to successive Fundamental Transactions and Corporate Events and shall
be applied as if this Warrant (and any such subsequent warrants) were fully exercisable and without regard to any limitations on the exercise
of this Warrant (provided that the Holder shall continue to be entitled to the benefit of the Maximum Percentage, applied however with
respect to shares of capital stock registered under the 1934 Act and thereafter receivable upon exercise of this Warrant (or any such
other warrant)).
5. NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation (as defined in the
Securities Purchase Agreement), Bylaws (as defined in the Securities Purchase Agreement) or through any reorganization, transfer of assets,
consolidation, merger, scheme of arrangement, dissolution, issuance 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, and will at all times in good faith carry out all the provisions
of this Warrant and take all action as may be required to protect the rights of the Holder. Without limiting the generality of the foregoing,
the Company (a) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the
Exercise Price then in effect, and (b) shall take all such actions as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and non-assessable shares of Common Stock upon the exercise of this Warrant. Notwithstanding anything herein
to the contrary, if after the sixty (60) calendar day anniversary of the Issuance Date, the Holder is not permitted to exercise this Warrant
in full for any reason (other than pursuant to restrictions set forth in Section 1(f) hereof), the Company shall use its best efforts
to promptly remedy such failure, including, without limitation, obtaining such consents or approvals as necessary to permit such exercise
into shares of Common Stock.
6. WARRANT
HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein,
the Holder, solely in its capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the
holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the
Holder, solely in its capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to
vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation,
merger, conveyance or otherwise), receive
notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares
which it is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed
as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder
of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 6, the
Company shall provide the Holder with copies of the same notices and other information given to the stockholders of the Company generally,
contemporaneously with the giving thereof to the stockholders.
7.
REISSUANCE OF WARRANTS.
(a) Transfer
of Warrant. If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, whereupon the Company will
forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)), registered as the Holder may
request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less than the total number
of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in accordance with Section 7(d)) to the Holder representing
the right to purchase the number of Warrant Shares not being transferred.
(b) Lost,
Stolen or Mutilated Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant (as to which a written certification and the indemnification contemplated below shall suffice as such evidence),
and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary and reasonable
form and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall execute and deliver to the Holder
a new Warrant (in accordance with Section 7(d)) representing the right to purchase the Warrant Shares then underlying this Warrant.
(c) Exchangeable
for Multiple Warrants. This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company,
for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate the right to purchase the number of Warrant
Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion of such Warrant Shares
as is designated by the Holder at the time of such surrender; provided, however, no warrants for fractional shares of Common Stock shall
be given.
(d) Issuance
of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant (i)
shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase the
Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a) or Section 7(c), the
Warrant Shares designated by the Holder which, when added to the number of shares of Common Stock underlying the other new Warrants issued
in connection with such issuance, does not exceed the number of Warrant Shares then underlying this Warrant), (iii) shall have an issuance
date, as indicated on the face of such new Warrant which is the same as the Issuance Date, and (iv) shall have the same rights and conditions
as this Warrant.
8. NOTICES.
Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in accordance
with Section 9(f) of the Securities Purchase Agreement. The Company shall provide the Holder with prompt written notice of all actions
taken pursuant to this Warrant (other than the issuance of shares of Common Stock upon exercise in accordance with the terms hereof),
including in reasonable detail a description of such action and the reason therefor. Without limiting the generality of the foregoing,
the Company will give written notice to the Holder (i) immediately upon each adjustment of the Exercise Price and the number of Warrant
Shares, setting forth in reasonable detail, and certifying, the calculation of such adjustment(s), (ii) at least fifteen (15) days prior
to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of
Common Stock, (B) with respect to any grants, issuances or sales of any Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property to holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental
Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in
conjunction with such notice being provided to the Holder, and (iii) at least ten (10) Trading Days prior to the consummation of any Fundamental
Transaction. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the
Company or any of its Subsidiaries, the Company shall simultaneously file such notice with the SEC (as defined in the Securities Purchase
Agreement) pursuant to a Current Report on Form 8-K. If the Company or any of its Subsidiaries provides material non-public information
to the Holder that is not simultaneously filed in a Current Report on Form 8-K and the Holder has not agreed to receive such material
non-public information, the Company hereby covenants and agrees that the Holder shall not have any duty of confidentiality to the Company,
any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agents with respect to, or a duty to
any of the foregoing not to trade on the basis of, such material non-public information. It is expressly understood and agreed that the
time of execution specified by the Holder in each Exercise Notice shall be definitive and may not be disputed or challenged by the Company.
9. DISCLOSURE.
Upon delivery by the Company to the Holder (or receipt by the Company from the Holder) of any notice in accordance with the terms of this
Warrant, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, non-public
information relating to the Company or any of its Subsidiaries, the Company shall on or prior to 9:00 am, New York city time on the Business
Day immediately following such notice delivery date, publicly disclose such material, non-public information on a Current Report on Form
8-K or otherwise. In the event that the Company believes that a notice contains material, non-public information relating to the Company
or any of its Subsidiaries, the Company so shall indicate to the Holder explicitly in writing in such notice (or immediately upon receipt
of notice from the Holder, as applicable), and in the absence of any such written indication in such notice (or notification from the
Company immediately upon receipt of notice from the Holder), the Holder shall be entitled to presume that information contained in the
notice does not constitute material, non-public information relating to the Company or any of its Subsidiaries. Nothing contained in this
Section 9 shall limit any obligations of the Company, or any rights of the Holder, under Section 4(i) of the Securities Purchase Agreement.
10. ABSENCE
OF TRADING AND DISCLOSURE RESTRICTIONS. The Company acknowledges and agrees that the
Holder is not a fiduciary or agent of the Company and that the Holder shall have no obligation to (a) maintain the confidentiality
of any information provided by the Company or (b) refrain from trading any securities while in possession of such information in the
absence of a written non-disclosure agreement signed by an officer of the Holder that explicitly provides for such confidentiality
and trading restrictions. In the absence of such an executed, written non-disclosure agreement, the Company acknowledges that the
Holder may freely trade in any securities issued by the Company, may possess and use any information provided by the Company in
connection with such trading activity, and may disclose any such information to any third party.
11. AMENDMENT
AND WAIVER. Except as otherwise provided herein, the provisions of this Warrant (other than Section 1(f)) may be amended and the Company
may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained
the written consent of the Holder. No waiver shall be effective unless it is in writing and signed by an authorized representative of
the waiving party.
12. SEVERABILITY.
If any provision of this Warrant is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction,
the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that
it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining
provisions of this Warrant so long as this Warrant as so modified continues to express, without material change, the original intentions
of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question
does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the
benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited,
invalid or unenforceable provision(s).
13. GOVERNING
LAW. This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State of Nevada, without giving
effect to any provision of law or rule (whether of the State of Nevada or any other jurisdictions) that would cause the application of
the laws of any jurisdictions other than the State of Nevada. The Company hereby irrevocably waives personal service of process and consents
to process being served in any such suit, action or proceeding by mailing a copy thereof to the Company at the address set forth in Section
9(f) of the Securities Purchase Agreement and agrees that such service shall constitute good and sufficient service of process and notice
thereof. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Carson City,
Ormsby County, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or
that the venue of such suit, action or
proceeding is improper. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be
deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction
to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations,
or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE
TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS
WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.
14. CONSTRUCTION;
HEADINGS. This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any
Person as the drafter hereof. The headings of this Warrant are for convenience of reference and shall not form part of, or affect the
interpretation of, this Warrant. Terms used in this Warrant but defined in the other Transaction Documents shall have the meanings ascribed
to such terms on the Closing Date (as defined in the Securities Purchase Agreement) in such other Transaction Documents unless otherwise
consented to in writing by the Holder.
15.
DISPUTE RESOLUTION.
| (a) | Submission to Dispute Resolution. |
(i) In
the case of a dispute relating to the Exercise Price, the Closing Sale Price, the Bid Price, Black Scholes Consideration Value, Black
Scholes Value or fair market value or the arithmetic calculation of the number of Warrant Shares (as the case may be) (including, without
limitation, a dispute relating to the determination of any of the foregoing), the Company or the Holder (as the case may be) shall submit
the dispute to the other party via facsimile (A) if by the Company, within two (2) Business Days after the occurrence of the circumstances
giving rise to such dispute or (B) if by the Holder, at any time after the Holder learned of the circumstances giving rise to such dispute.
If the Holder and the Company are unable to promptly resolve such dispute relating to such Exercise Price, such Closing Sale Price, such
Bid Price, such Black Scholes Consideration Value, Black Scholes Value or such fair market value or such arithmetic calculation of the
number of Warrant Shares (as the case may be), at any time after the second (2nd) Business Day following such initial notice
by the Company or the Holder (as the case may be) of such dispute to the Company or the Holder (as the case may be), then the Holder may,
at its sole option, select an independent, reputable investment bank to resolve such dispute.
(ii) The
Holder and the Company shall each deliver to such investment bank (A) a copy of
the initial dispute submission so delivered in accordance with the first sentence of this Section 15 and (B) written documentation
supporting its position with respect to such dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth
(5th) Business Day immediately following the date on which the Holder selected such investment bank (the
“Dispute Submission Deadline”) (the documents referred to in the immediately preceding clauses (A) and (B) are
collectively referred to herein as the
“Required Dispute Documentation”)
(it being understood and agreed that if either the Holder or the Company fails to so deliver all of the Required Dispute Documentation
by the Dispute Submission Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer be
entitled to (and hereby waives its right to) deliver or submit any written documentation or other support to such investment bank with
respect to such dispute and such investment bank shall resolve such dispute based solely on the Required Dispute Documentation that was
delivered to such investment bank prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by both the Company
and the Holder or otherwise requested by such investment bank, neither the Company nor the Holder shall be entitled to deliver or submit
any written documentation or other support to such investment bank in connection with such dispute (other than the Required Dispute Documentation).
(iii) The
Company and the Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company and the Holder
of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline. The fees and expenses of
such investment bank shall be borne solely by the Company, and such investment bank’s resolution of such dispute shall be final
and binding upon all parties absent manifest error.
(b) Miscellaneous.
The Company expressly acknowledges and agrees that (i) this Section 15 constitutes an agreement to arbitrate between the Company and
the Holder (and constitutes an arbitration agreement) under § 38.206, et seq. of the Nevada Uniform Arbitration Act of 2000, as
amended (“NRS”), and that the Holder is authorized to apply for an order to compel arbitration pursuant to NRS §
38.221 in order to compel compliance with this Section 15, (ii) a dispute
relating to the Exercise Price includes, without limitation, disputes as to (A) whether an issuance or sale or deemed issuance or
sale of Common Stock occurred under Section 2(b), (B) the consideration per share at which an issuance or deemed issuance of Common
Stock occurred, (C) whether any issuance or sale or deemed issuance or sale of Common Stock was an issuance or sale or deemed
issuance or sale of Excluded Securities, (D) whether an agreement, instrument, security or the like constitutes and Option or
Convertible Security and (E) whether a Dilutive Issuance occurred, (iii) the terms of this Warrant and each other applicable
Transaction Document shall serve as the basis for the selected investment bank’s resolution of the applicable dispute, such
investment bank shall be entitled (and is hereby expressly authorized) to make all findings, determinations and the like that such
investment bank determines are required to be made by such investment bank in connection with its resolution of such dispute
(including, without limitation, determining (A) whether an issuance or sale or deemed issuance or sale of Common Stock occurred
under Section 2(b), (B) the consideration per share at which an issuance or deemed issuance of Common Stock occurred, (C) whether
any issuance or sale or deemed issuance or sale of Common Stock was an issuance or sale or deemed issuance or sale of Excluded
Securities, (D) whether an agreement, instrument, security or the like constitutes and Option or Convertible Security and (E)
whether a Dilutive Issuance occurred) and in resolving such dispute such investment bank shall apply such findings, determinations
and the like to the terms of this Warrant and any other applicable Transaction Documents, (iv) the Holder (and only the Holder), in
its sole discretion, shall have the right to submit any dispute described in this Section 15 to any state or federal court sitting
in Carson
City, Ormsby County in lieu of utilizing
the procedures set forth in this Section 15 and (v) nothing in this Section 15 shall limit the Holder from obtaining any injunctive relief
or other equitable remedies (including, without limitation, with respect to any matters described in this Section 15).
16.
REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE
RELIEF. The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this
Warrant and the other Transaction Documents, at law or in equity (including a decree of specific performance and/or other injunctive
relief), and nothing herein shall limit the right of the Holder to pursue actual and consequential damages for any failure by the
Company to comply with the terms of this Warrant. The Company covenants to the Holder that there shall be no characterization
concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to
payments, exercises and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not,
except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company
acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law
for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the
holder of this Warrant shall be entitled, in addition to all other available remedies, to specific performance and/or temporary,
preliminary and permanent injunctive or other equitable relief from any court of competent jurisdiction in any such case without the
necessity of proving actual damages and without posting a bond or other security. The Company shall provide all information and
documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the
terms and conditions of this Warrant (including, without limitation, compliance with Section 2 hereof). The issuance of shares and
certificates for shares as contemplated hereby upon the exercise of this Warrant shall be made without charge to the Holder or such
shares for any issuance tax or other costs in respect thereof, provided that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than the Holder
or its agent on its behalf.
17. PAYMENT
OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Warrant is placed in the
hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the holder otherwise
takes action to collect amounts due under this Warrant or to enforce the provisions of this Warrant or (b) there occurs any
bankruptcy, reorganization, receivership of the company or other proceedings affecting company creditors’ rights and involving
a claim under this Warrant, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action
or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation,
attorneys’ fees and disbursements.
18. TRANSFER.
This Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company, except as may otherwise be required
by Section 2(g) of the Securities Purchase Agreement.
19. CERTAIN
DEFINITIONS. For purposes of this Warrant, the following terms shall have the following meanings:
(a) “1933
Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
(b) “1934
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(c) “Adjustment
Right” means any right granted with respect to any securities issued in connection with, or with respect to, any issuance or
sale (or deemed issuance or sale in accordance with Section 2) of shares of Common Stock (other than rights of the type described in Section
3 and 4 hereof) that could result in a decrease in the net consideration received by the Company in connection with, or with respect to,
such securities (including, without limitation, any cash settlement rights, cash adjustment or other similar rights).
(d) “Affiliate”
means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control
with, such Person, it being understood for purposes of this definition that “control” of a Person means the power directly
or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors of such Person or direct
or cause the direction of the management and policies of such Person whether by contract or otherwise.
(e) “Approved
Stock Plan” means any employee benefit plan which has been approved by the board of directors of the Company prior to or subsequent
to the date hereof pursuant to which shares of Common Stock and standard options to purchase Common Stock may be issued to any employee,
officer or director for services provided to the Company in their capacity as such.
(f) “Attribution
Parties” means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder funds
or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly managed or advised by the Holder’s
investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder or any of the foregoing,
(iii) any Person acting or who could be deemed to be acting as a Group together with the Holder or any of the foregoing and (iv) any other
Persons whose beneficial ownership of the Company’s Common Stock would or could be aggregated with the Holder’s and the other
Attribution Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose of the foregoing is to subject collectively
the Holder and all other Attribution Parties to the Maximum Percentage.
(g) “Bid
Price” means, for any security as of the particular time of determination, the bid price for such security on the Principal
Market as reported by Bloomberg as of such time of determination, or, if the Principal Market is not the principal securities exchange
or trading market for such security, the bid price of such security on the principal securities exchange or trading market where such
security is listed or traded as reported by Bloomberg as of such time of determination, or if the foregoing does not apply, the bid price
of such security in the over- the-counter market on the electronic bulletin board for such security as reported by Bloomberg as of such
time of determination, or, if no bid price is reported for such security by Bloomberg as of such time of determination, the average of
the bid prices of any market makers for such security as reported in The Pink Open Market (or a similar organization or agency succeeding
to its
functions of reporting prices) as of
such time of determination. If the Bid Price cannot be calculated for a security as of the particular time of determination on any of
the foregoing bases, the Bid Price of such security as of such time of determination shall be the fair market value as mutually determined
by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such
dispute shall be resolved in accordance with the procedures in Section 15. All such determinations shall be appropriately adjusted for
any stock dividend, stock split, stock combination or other similar transaction during such period.
(h) “Black
Scholes Consideration Value” means the value of the applicable Option, Convertible Security or Adjustment Right (as the case
may be) as of the date of issuance thereof calculated using the Black Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg utilizing (i) an underlying price per share equal to the Closing Sale Price of the Common Stock on the Trading Day
immediately preceding the public announcement of the execution of definitive documents with respect to the issuance of such Option or
Convertible Security (as the case may be), (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to
the remaining term of such Option, Convertible Security or Adjustment Right (as the case may be) as of the date of issuance of such Option,
Convertible Security or Adjustment Right (as the case may be), (iii) a zero cost of borrow and (iv) an expected volatility equal to the
greater of 100% and the 30 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization
factor) as of the Trading Day immediately following the date of issuance of such Option, Convertible Security or Adjustment Right (as
the case may be).
(i) “Black
Scholes Value” means the value of the unexercised portion of this Warrant remaining on the date of the Holder’s
request pursuant to Section 4(c), which value is calculated using the Black Scholes Option Pricing Model obtained from the
“OV” function on Bloomberg utilizing (i) an underlying price per share equal to the greater of (1) the highest Closing
Sale Price of the Common Stock during the period beginning on the Trading Day immediately preceding the announcement of the
applicable Fundamental Transaction (or the consummation of the applicable Fundamental Transaction, if earlier) and ending on the
Trading Day of the Holder’s request pursuant to Section 4(c) and (2) the sum of the price per share being offered in cash in
the applicable Fundamental Transaction (if any) plus the value of the non-cash consideration being offered in the applicable
Fundamental Transaction (if any), (ii) a strike price equal to the Exercise Price in effect on the date of the Holder’s
request pursuant to Section 4(c), (iii) a risk-free interest rate corresponding
to the U.S. Treasury rate for a period equal to the greater of (1) the remaining term of this Warrant as of the date of the
Holder’s request pursuant to Section 4(c) and (2) the remaining term of this Warrant as of the date of consummation of the
applicable Fundamental Transaction or as of the date of the Holder’s request pursuant to Section 4(c) if such request is prior
to the date of the consummation of the applicable Fundamental Transaction, (iv) a zero cost of borrow and (v) an expected volatility
equal to the greater of 100% and the 30 day volatility obtained from the “HVT” function on Bloomberg (determined
utilizing a 365 day annualization factor) as of the Trading Day immediately following the earliest to occur of (A) the public
disclosure of the applicable Fundamental Transaction and (B) the date of the Holder’s request pursuant to Section 4(c).
(j)
“Bloomberg” means Bloomberg, L.P.
(k) “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.
(l) “Closing
Sale Price” means, for any security as of any date, the last closing trade price for such security on the Principal Market,
as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing
trade price, then the last trade price of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal
Market is not the principal securities exchange or trading market for such security, the last trade price of such security on the principal
securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing does not apply,
the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by
Bloomberg, or, if no last trade price is reported for such security by Bloomberg, the average of the ask prices of any market makers for
such security as reported in The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices).
If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price
of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and
the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the
procedures in Section 15. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination
or other similar transaction during such period.
(m) “Common
Stock” means (i) the Company’s shares of common stock, $0.0001 par value per share, and (ii) any capital stock into which
such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(n) “Convertible
Securities” means any stock or other security (other than Options) that is at any time and under any circumstances, directly
or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any shares
of Common Stock.
(o) “Eligible
Market” means The New York Stock Exchange, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market
or the Principal Market.
(p) “Excluded
Securities” means (i) shares of Common Stock or standard options to purchase Common Stock issued to directors, officers or employees
of the Company for services rendered to the Company in their capacity as such pursuant to an Approved Stock Plan (as defined above), provided
that (A) all such issuances (taking into account the shares of Common Stock issuable upon exercise of such options) after the Subscription
Date pursuant to this clause
(i) do not, in the aggregate, exceed
more than 5% of the Common Stock issued and outstanding immediately prior to the Subscription Date and (B) the exercise price of any such
options is not lowered, none of such options are amended to increase the number of shares issuable thereunder and none of the terms or
conditions of any such options are otherwise materially changed in any manner that adversely affects any of the Buyers; (ii) shares of
Common Stock issued upon the conversion or exercise of Convertible Securities (other than standard options to purchase Common Stock issued
pursuant to an Approved Stock Plan that are covered by clause (i) above) issued prior to the Subscription Date, provided that the conversion
price of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan
that are covered by clause (i) above) is not lowered, none of such Convertible Securities (other than standard options to purchase Common
Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are amended to increase the number of shares issuable
thereunder and none of the terms or conditions of any such Convertible Securities (other than standard options to purchase Common Stock
issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are otherwise materially changed in any manner that adversely
affects any of the Buyers; (iii) the shares of Common Stock issuable upon conversion of the Notes or otherwise pursuant to the terms of
the Notes; provided, that the terms of the Notes are not amended, modified or changed on or after the Subscription Date (other than antidilution
adjustments pursuant to the terms thereof in effect as of the Subscription Date) and (iv) the shares of Common Stock issuable upon exercise
of the SPA Warrants; provided, that the terms of the SPA Warrant are not amended, modified or changed on or after the Subscription Date
(other than antidilution adjustments pursuant to the terms thereof in effect as of the Subscription Date).
(q) “Expiration
Date” means the date that is the fifth (5th) anniversary of the Initial Exercisability Date or, if such date falls
on a day other than a Trading Day or on which trading does not take place on the Principal Market (a “Holiday”), the
next date that is not a Holiday.
(r) “Fundamental
Transaction” means (A) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or
otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving
corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation S-X)
to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject to
or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that is
accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of
Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with any
Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number of shares of
Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such
purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at
least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock
or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with
one or more Subject Entities whereby
all such Subject Entities, individually or in the aggregate, acquire, either (x) at least 50% of the outstanding shares of Common Stock,
(y) at least 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all the Subject Entities
making or party to, or Affiliated with any Subject Entity making or party to, such stock purchase agreement or other business combination
were not outstanding; or (z) such number of shares of Common Stock such that the Subject Entities become collectively the beneficial owners
(as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize
or reclassify its Common Stock, (B) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise,
in one or more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the
“beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase,
assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business
combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or
otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding
Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all
such Subject Entities as of the date of this Warrant calculated as if any shares of Common Stock held by all such Subject Entities were
not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock
or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger or other transaction
requiring other shareholders of the Company to surrender their shares of Common Stock without approval of the shareholders of the Company
or (C) directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance
of or the entering into any other instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this
definition in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms
of this definition to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent
with the intended treatment of such instrument or transaction.
(s) “Group”
means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.
(t) “Notes”
has the meaning ascribed to such term in the Securities Purchase Agreement, and shall include all notes issued in exchange therefor or
replacement thereof.
(u) “Options”
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
(v) “Parent
Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent
equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent
Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.
(w) “Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,
any other entity or a government or any department or agency thereof.
(x)
“Principal Market” means NYSE American.
(y) “Registration
Rights Agreement” means that certain registration rights agreement, dated as of the Closing Date, by and among the Company and
the initial holders of the Notes relating to, among other things, the registration of the resale of the Common Stock issuable upon conversion
of the Notes or otherwise pursuant to the terms of the Notes and exercise of the SPA Warrants, as may be amended from time to time.
(z) “SEC” means the United States Securities and Exchange Commission or
the successor thereto.
(aa) “Subject
Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.
(bb) “Successor
Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving any Fundamental
Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been
entered into.
(cc) “Trading
Day” means, as applicable, (x) with respect to all price or trading volume determinations relating to the Common Stock, any
day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the
Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded, provided that “Trading
Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours
or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange
or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00
p.m., New York time) unless such day is otherwise designated as a Trading Day in writing by the Holder or (y) with respect to all determinations
other than price or trading volume determinations relating to the Common Stock, any day on which The New York Stock Exchange (or any successor
thereto) is open for trading of securities.
(dd) “VWAP”
means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or, if the
Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market
on which such security is then traded), during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time,
as reported by Bloomberg through its “VAP” function (set to 09:30 start time and 16:00 end time) or, if the foregoing does
not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for
such security during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time, as reported by Bloomberg,
or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the
average of the highest closing bid price
and the lowest closing ask price of any of the market makers for such security as reported in The Pink Open Market (or a similar organization
or agency succeeding to its functions of reporting prices). If the VWAP cannot be calculated for such security on such date on any of
the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the Company and the
Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved
in accordance with the procedures in Section 15. All such determinations shall be appropriately adjusted for any stock dividend, stock
split, stock combination, recapitalization or other similar transaction during such period.
[signature page follows]
IN WITNESS WHEREOF,
the Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date set out above.
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SPLASH BEVERAGE GROUP, INC. |
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By: |
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Name: Robert Nistico |
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Title: Chief Executive Officer |
EXHIBIT A
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER
TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK
SPLASH BEVERAGE GROUP, INC.
The undersigned
holder hereby elects to exercise the Warrant to Purchase Common Stock No. (the “Warrant”) of Splash Beverage
Group, Inc., a Nevada corporation (the “Company”) as specified below. Capitalized terms used herein and not otherwise
defined shall have the respective meanings set forth in the Warrant.
1. Form of Exercise Price. The
Holder intends that payment of the Aggregate Exercise Price shall be made as:
☐ a “Cash
Exercise” with respect to Warrant Shares; and/or
☐ a “Cashless Exercise” with
respect to Warrant Shares.
In the event
that the Holder has elected a Cashless Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the
Holder hereby represents and warrants that (i) this Exercise Notice was executed by the Holder at ______[a.m.][p.m.] on the date set
forth below and (ii) if applicable, the Bid Price as of such time of execution of this Exercise Notice was $
____________.
2. Payment
of Exercise Price. In the event that the Holder has elected a Cash Exercise with respect to some or all of the Warrant Shares to
be issued pursuant hereto, the Holder shall pay the Aggregate Exercise Price in the sum of $______________to the Company in accordance with the terms
of the Warrant.
3. Delivery
of Warrant Shares. The Company shall deliver to Holder, or its designee or agent as specified below, ____________shares of Common Stock in
accordance with the terms of the Warrant. Delivery shall be made to Holder, or for its benefit, as follows:
☐ Check here
if requesting delivery as a certificate to the following name and to the following address:
Issue to: _______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
☐ Check here if requesting
delivery by Deposit/Withdrawal at Custodian as follows:
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DTC Participant:______________________________ |
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DTC Number:________________________________ |
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Account Number:_____________________________ |
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Date: ____________________, ________ |
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Name of Registered Holder |
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Tax ID:_____________________________ |
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Facsimile:___________________________ |
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E-mail Address:______________________ |
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EXHIBIT B
ACKNOWLEDGMENT
The Company
hereby acknowledges this Exercise Notice and hereby directs ___________ to issue the above
indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated ___________, 202 __, from the
Company and acknowledged and agreed to by ________________.
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SPLASH BEVERAGE GROUP, INC. |
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By: |
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Name: |
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Title: |
EXHIBIT 10.1
Form of
SECURITIES PURCHASE
AGREEMENT
This SECURITIES PURCHASE
AGREEMENT (the “Agreement”), dated as of May 1, 2024, is by and among Splash Beverage Group, Inc., a Nevada
corporation with offices located at 1314 E Las Olas Blvd, Suite 221, Fort Lauderdale, Florida 33301 (the
“Company”), and each of the investors listed on the Schedule of Buyers attached hereto (individually, a
“Buyer” and collectively, the “Buyers”).
RECITALS
A. On
September 29, 2023, the Company and certain of the Buyers (the “September Buyers”) executed and delivered that certain
Securities Purchase Agreement (the “September Securities Purchase Agreement”), pursuant to which, among other things,
the Company issued certain senior convertible notes (collectively the “September Notes”), shares of Common Stock (as
defined below) and warrants to purchase Common Stock (collectively the “September Warrants”) to such September Buyers
and granted certain registration rights with respect thereto pursuant to that certain registration rights agreement by and among the Company
and the September Buyers (the “September Registration Rights Agreement”).
B. The
Company and each Buyer is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded
by Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506(b) of Regulation D (“Regulation D”)
as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the 1933 Act.
C. The
Company has authorized a new series of senior convertible notes of the Company, in the aggregate original principal amount of $1,850,000,
substantially in the form attached hereto as Exhibit A (the “Notes”), which Notes shall be convertible
into shares of Common Stock (as defined below) (the shares of Common Stock issuable pursuant to the terms of the Notes, including, without
limitation, upon conversion or otherwise, collectively, the “Conversion Shares”), in accordance with the terms of the
Notes.
D. Each
Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, (i) a Note in the aggregate
original principal amount set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers, (ii) such aggregate number
of shares of Common Stock as set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers (which aggregate amount
for all Buyers shall be 925,000 shares of Common Stock and shall collectively be referred to herein as the “Commitment Shares”),
and (iii) a warrant to initially acquire up to that aggregate number of additional shares of Common Stock set forth opposite such Buyer’s
name in column (5) on the Schedule of Buyers, substantially in the form attached hereto as Exhibit B (the “Warrants”)
(as exercised, collectively, the “Warrant Shares”).
E. At
the Closing, the parties hereto shall execute and deliver a Registration Rights Agreement, in the form attached hereto as Exhibit
C (the “Registration Rights Agreement”), pursuant to which the Company has agreed to provide certain registration
rights with respect to the Registrable Securities (as defined in the Registration Rights Agreement), under the 1933 Act and the rules
and regulations promulgated thereunder, and applicable state securities laws.
F. The
Notes, the Conversion Shares, the Commitment Shares, the Warrants and the Warrant Shares are collectively referred to herein as the “Securities.”
AGREEMENT
NOW, THEREFORE, in consideration
of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and each Buyer hereby agree as follows:
1. PURCHASE
AND SALE OF NOTES, COMMITMENT SHARES AND WARRANTS.
(a) Purchase
of Notes, Commitment Shares and Warrants. Subject to the satisfaction (or waiver) of the conditions
set forth in Sections 6 and 7 below, the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees
to purchase from the Company on the Closing Date (as defined below) a Note in the original principal amount as is set forth opposite
such Buyer’s name in column (3) on the Schedule of Buyers, (ii) such aggregate number of Commitment Shares as is set forth opposite
such Buyer’s name in column (4) on the Schedule of Buyers and (iii) Warrants to initially acquire up to that aggregate number of
Warrant Shares as is set forth opposite such Buyer’s name in column (5) on the Schedule of Buyers.
(b) Closing.
The closing (the “Closing”) of the purchase of the Notes, Commitment Shares and the Warrants by the Buyers shall occur
at the offices of Kelley Drye & Warren LLP, 3 World Trade Center, 175 Greenwich Street, New York, NY 10007. The date and time of the
Closing (the “Closing Date”) shall be 10:00 a.m., New York time, on the first (1st) Business Day on which the conditions
to the Closing set forth in Sections 6 and 7 below are satisfied or waived (or such other date as is mutually agreed to by the Company
and each Buyer). As used herein “Business Day” means any day other than Saturday, Sunday or other day on which commercial
banks in The City of New York are authorized or required by law to remain closed; provided,
however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay
at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the
closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems
(including for wire transfers) of commercial banks in The City of New York generally are open for use by customers on such day.
(c) Purchase
Price. The aggregate purchase price for the Notes, the Commitment Shares and the Warrants to be purchased
by each Buyer (the “Purchase Price”) shall be the amount set forth opposite such Buyer’s name in column (6)
on the Schedule of Buyers. Each Buyer shall pay approximately $1,000 for each $1,000 of principal amount of Notes and related Commitment
Shares and Warrants to be purchased by such Buyer at the Closing. Each Buyer and the Company agree that the Notes, the Commitment Shares
and the Warrants constitute an “investment unit” for purposes of Section 1273(c)(2) of the Internal Revenue Code of 1986,
as amended (the “Code”). The Buyers and the Company mutually agree that the allocation of the issue price of such
investment unit between the Notes, the Commitment Shares and the Warrants in accordance with Section 1273(c)(2) of the Code and Treasury
Regulation Section 1.1273-2(h) shall be as mutually agreed by the parties, and neither the Buyers nor the Company shall take any position
inconsistent with such allocation in any tax return or in any judicial or administrative proceeding in respect of taxes.
(d) Form
of Payment. On the Closing Date, (i) each Buyer shall pay its respective Purchase Price (less, in the
case of any Buyer, the amounts withheld pursuant to Section 4(g)) to the Company for the Notes, Commitment Shares and the Warrants
to be issued and sold to such Buyer at the Closing, by wire transfer of immediately available funds in accordance with the Flow of Funds
Letter (as defined below) and (ii) the Company shall deliver to each Buyer (A) a Note in the aggregate original principal amount
as is set forth opposite such Buyer’s name in column (3) of the Schedule of Buyers, (B) a stock certificate of the Company for such
aggregate number of Commitment Shares as is set forth opposite such Buyer’s name in column (4) of the Schedule of Buyers and (C)
a Warrant pursuant to which such Buyer shall have the right to initially acquire up to such aggregate number of Warrant Shares as is set
forth opposite such Buyer’s name in column (5) of the Schedule of Buyers, in each case, duly executed on behalf of the Company and
registered in the name of such Buyer or its designee.
(e) Acknowledgement
and Consent. Each September Buyer, severally, acknowledges, consents and agrees that, from and after the Closing Date: (i) the Notes
shall be Permitted Indebtedness (as defined in the September Notes), (ii) Registrable Securities (as defined in the September Registration
Rights Agreement) shall include the Registrable Securities (as defined in the Registration Rights Agreement), (iii) the Notes shall rank
pari passu with the September Notes, (iv) the Securities shall be deemed to be Excluded Securities (as defined in the September Securities
Purchase Agreement) with respect to the September Securities Purchase Agreement and not with respect to any other Transaction Document
(as defined in the September Purchase Agreement) and (v) solely with respect to the September Warrants, each of (A) the shares of Common
Stock issuable upon conversion of the Notes or otherwise pursuant to the terms of the Notes; provided, that the terms of the Notes are
not amended, modified or changed on or after the Closing Date (other than antidilution adjustments pursuant to the terms thereof in effect
as of the date hereof), and (B) the shares of Common Stock issuable upon exercise of the Warrants; provided, that the terms of the Warrants
are not amended, modified or changed on or after the Closing Date (other than antidilution adjustments pursuant to the terms thereof
in effect as of the date hereof), in each case, shall be deemed to be Excluded Securities thereunder.
2. BUYER’S
REPRESENTATIONS AND WARRANTIES.
Each Buyer, severally and not jointly,
represents and warrants to the Company with respect to only itself that, as of the date hereof and as of the Closing Date:
(a) Organization;
Authority. Such Buyer is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its
organization with the requisite power and authority to enter into and to consummate the transactions contemplated by the Transaction
Documents (as defined below) to which it is a party and otherwise to carry out its obligations hereunder and thereunder.
(b) No
Public Sale or Distribution. Such Buyer (i) is acquiring its Note, Commitment Shares and Warrants,
(ii) upon conversion of its Note will acquire the Conversion Shares issuable upon conversion thereof, and (iii) upon exercise of
its Warrants (other than pursuant to a Cashless Exercise (as defined in the Warrants)) will acquire the Warrant Shares issuable upon
exercise thereof, in each case, for its own account and not with a view towards, or for resale in connection with, the public sale or
distribution thereof in violation of applicable securities laws, except pursuant to sales registered or exempted under the 1933 Act;
provided, however, by making the representations herein, such Buyer does not agree, or make any representation or warranty, to hold any
of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance
with or pursuant to a registration statement or an exemption from registration under the 1933 Act. Such Buyer does not presently have
any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities in violation of applicable
securities laws. For purposes of this Agreement, “Person” means an individual, a limited liability company, a partnership,
a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any Governmental Entity or any department
or agency thereof.
(c) Accredited
Investor Status. Such Buyer is an “accredited investor” as that term is defined in Rule
501(a) of Regulation D.
(d) Reliance
on Exemptions. Such Buyer understands that the Securities are being offered and sold to it in reliance
on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is
relying in part upon the truth and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility
of such Buyer to acquire the Securities.
(e) Information.
Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Securities that have been requested by such Buyer. Such Buyer and its advisors,
if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigations
conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect such Buyer’s right to rely
on the Company’s representations and warranties contained herein. Such Buyer understands that its investment in the Securities
involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an
informed investment decision with respect to its acquisition of the Securities.
(f) No
Governmental Review. Such Buyer understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability
of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.
(g) Transfer
or Resale. Such Buyer understands that except as provided in the Registration Rights Agreement and
Section 4(h) hereof: (i) the Securities have not been and are not being registered under the 1933 Act or any state securities laws,
and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall
have delivered to the Company (if requested by the Company) an opinion of counsel, in a form reasonably acceptable to the Company,
to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption
from such registration, or (C) such Buyer provides the Company with reasonable assurance that such Securities can be sold,
assigned
or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act (or a successor rule thereto) (collectively,
“Rule 144”); (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the
terms of Rule 144, and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller
(or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may
require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC promulgated thereunder; and
(iii) neither the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any exemption thereunder. Notwithstanding the foregoing, the
Securities may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the
Securities and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and
no Buyer effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Transaction Document (as defined in Section 3(b)), including,
without limitation, this Section 2(g).
(h) Validity;
Enforcement. This Agreement and the Registration Rights Agreement have been duly and validly authorized,
executed and delivered on behalf of such Buyer and shall constitute the legal, valid and binding obligations of such Buyer enforceable
against such Buyer in accordance with their respective terms, except as such enforceability may be limited by general principles of equity
or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally,
the enforcement of applicable creditors’ rights and remedies.
(i) No
Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the Registration
Rights Agreement and the consummation by such Buyer of the transactions contemplated hereby and thereby will not (i) result in a violation
of the organizational documents of such Buyer, or (ii) conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which such Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii)
above, for such conflicts, defaults, rights or violations which could not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the ability of such Buyer to perform its obligations hereunder.
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
The Company represents and warrants
to each of the Buyers that, as of the date hereof and as of the Closing Date:
(a) Organization
and Qualification. Each of the Company and each of its Subsidiaries are entities duly organized and
validly existing and in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authority
to own their properties and to carry on their business as now being conducted and as presently proposed to be conducted. Each of the Company
and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which
its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that
the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect (as defined below).
As used in this Agreement, “Material Adverse Effect” means any material adverse effect on (i) the business, properties,
assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any Subsidiary,
individually or taken as a whole, (ii) the transactions contemplated hereby or in any of the other Transaction Documents or any other
agreements or instruments to be entered into in connection herewith or therewith or (iii) the authority or ability of the Company or any
of its Subsidiaries to perform any of their respective obligations under any of the Transaction Documents (as defined below). Other than
the Persons (as defined below) set forth on Schedule 3(a), the Company has no Subsidiaries. “Subsidiaries” means
any Person in which the Company, directly or indirectly, (I) owns any of the outstanding capital stock or holds any equity or similar
interest of such Person or (II) controls or operates all or any part of the business, operations or administration of such Person, and
each of the foregoing, is individually referred to herein as a “Subsidiary.”
(b) Authorization;
Enforcement; Validity. The Company has the requisite power and authority to enter into and perform
its obligations under this Agreement and the other Transaction Documents and to issue the Securities in accordance with the terms hereof
and thereof. The execution and delivery of this Agreement and the other Transaction Documents by the Company, and the consummation by
the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Notes and the reservation
for issuance and issuance of the Conversion Shares issuable upon conversion of the Notes, the issuances of the Commitment Shares and the
issuance of the Warrants and the reservation for issuance and issuance of the Warrant Shares issuable upon exercise of the Warrants) have
been duly authorized by the Company’s board of directors and (other than the Stockholder Approval, the filing with the SEC of one
or more Registration Statements in accordance with the requirements of the Registration Rights Agreement, a Form D with the SEC and any
other filings as may be required by any state securities agencies) no further filing, consent or authorization is required by the Company,
its Subsidiaries, their respective boards of directors or their stockholders or other governing body. This Agreement has been, and the
other Transaction Documents to which it is a party will be prior to the Closing, duly executed and delivered by the Company, and each
constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its respective
terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and
remedies and except as rights to indemnification and to contribution may be limited by federal or state securities law. “Transaction
Documents” means, collectively, this Agreement, the Notes, the Commitment Shares the Warrants, the Registration Rights Agreement,
the Irrevocable Transfer Agent Instructions (as defined below) and each of the other agreements and instruments entered into or delivered
by any of the parties hereto in connection with the transactions contemplated hereby and thereby, as may be amended from time to time.
(c) Issuance
of Securities. The issuance of the Notes and the Warrants are duly authorized and upon issuance in accordance
with the terms of the Transaction Documents shall be validly issued, fully paid and non-assessable and free from all preemptive or similar
rights, mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security interests and other
encumbrances (collectively “Liens”) with respect to the issuance thereof. As of the Closing, the Company shall have
reserved from its duly authorized capital stock not less than the sum of (i) 200% the maximum number of Conversion Shares issuable upon
conversion of the Notes (assuming for purposes hereof that (x) the Notes are convertible at the Alternate Conversion Price (as defined
in the Notes) assuming an Alternate Conversion Date (as defined in the Note) as of the date hereof, (y) interest on the Notes shall accrue
through the eighteen month anniversary of the Closing Date and will be converted in shares of Common Stock at a conversion price equal
to the Alternate Conversion Price assuming an Alternate Conversion Date as of the date hereof and (z) any such conversion shall not take
into account any limitations on the conversion of the Notes set forth in the Notes), and (ii) 100% of the maximum number of Warrant Shares
initially issuable upon exercise of the Warrants (without taking into account any limitations on the exercise of the Warrants set forth
therein). The issuance of the Commitment Shares are duly authorized and upon issuance in accordance with the terms of the Transaction
Documents shall be validly issued, fully paid and non-assessable and free from all preemptive or similar rights or Liens with respect
to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. Upon issuance or conversion
in accordance with the Notes or exercise in accordance with the Warrants (as the case may be), the Conversion Shares and the Warrant Shares,
respectively, when issued, will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights or Liens
with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. Subject to the
accuracy of the representations and warranties of the Buyers in this Agreement, the offer and issuance by the Company of the Securities
is exempt from registration under the 1933 Act.
(d) No
Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and
the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the
Notes, the Commitment Shares, the Warrants, the Conversion Shares and the Warrant Shares and the reservation for issuance of the Conversion
Shares and the Warrant Shares) will not (i) result in a violation of the Articles of Incorporation (as defined below) (including, without
limitation, any certificate of designation contained therein), Bylaws (as defined below), certificate of formation, memorandum of association,
articles of association, bylaws or other organizational documents of the Company or any of its Subsidiaries, or any capital stock or
other securities of the Company or any of its Subsidiaries, (ii) subject to the Company’s obtaining the consent of Decathlon Alpha,
IV L.P., which consent shall be obtained on or prior to the Closing Date,
conflict with, or
constitute a default (or an event which with notice or lapse of time or both would become a default) in any respect under, or give to
others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company
or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including,
without limitation, foreign, federal and state securities laws and regulations and the rules and regulations of NYSE American (the “Principal
Market”) and including all applicable foreign, federal and state laws, rules and regulations) applicable to the Company or
any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected.
(e) Consents.
Neither the Company nor any Subsidiary is required to obtain any consent from, authorization or order of, or make any filing or
registration with (other than the Stockholder Approval, the filing with the SEC of one or more Registration Statements in accordance
with the requirements of the Registration Rights Agreement, a Form D with the SEC and any other filings as may be required by any
state securities agencies), any Governmental Entity (as defined below) or any regulatory or self-regulatory agency or any other
Person subject to the Company’s obtaining the consent of Decathlon Alpha, IV, L.P. ,which consent shall be obtained on or
prior to the Closing Date, in order for it to execute, deliver or perform any of its respective obligations under or contemplated by
the Transaction Documents, in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders,
filings and registrations which the Company or any Subsidiary is required to obtain pursuant to the preceding sentence have been or
will be obtained or effected on or prior to the Closing Date, and neither the Company nor any of its Subsidiaries are aware of any
facts or circumstances which might prevent the Company or any of its Subsidiaries from obtaining or effecting any of the
registration, application or filings contemplated by the Transaction Documents. The Company is not in violation of the requirements
of the Principal Market and has no knowledge of any facts or circumstances which could reasonably lead to delisting or suspension of
the Common Stock in the foreseeable future. “Governmental Entity” means any nation, state, county, city, town,
village, district, or other political jurisdiction of any nature, federal, state, local, municipal, foreign, or other government,
governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal), multi-national organization or body; or body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature or instrumentality
of any of the foregoing, including any entity or enterprise owned or controlled by a government or a public international
organization or any of the foregoing.
(f) Acknowledgment
Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that each Buyer
is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated
hereby and thereby and that no Buyer is (i) an officer or director of the Company or any of its Subsidiaries, (ii) an “affiliate”
(as defined in Rule 144) of the Company or any of its Subsidiaries or (iii) to its knowledge, a “beneficial owner” of more
than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the
“1934 Act”)). The Company further acknowledges that no Buyer is acting as a financial advisor or fiduciary of the Company
or any of its Subsidiaries (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby
and thereby, and any advice given by a Buyer or any of its representatives or agents in connection with the Transaction Documents and
the transactions contemplated hereby and thereby is merely incidental to such Buyer’s purchase of the Securities. The Company further
represents to each Buyer that the Company’s and each Subsidiary’s decision to enter into the Transaction Documents to which
it is a party has been based solely on the independent evaluation by the Company, each Subsidiary and their respective representatives.
(g) No
General Solicitation; Placement Agent’s Fees. Neither the Company, nor any of its Subsidiaries
or affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within
the meaning of Regulation D) in connection with the offer or sale of the Securities. The Company shall be responsible for the payment
of any placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for Persons engaged by any Buyer
or its investment advisor) relating to or arising out of the transactions contemplated hereby, including, without limitation, placement
agent fees payable to Alexander Capital LP, as placement agent (the “Placement Agent”) in connection with the sale
of the Securities. The fees and expenses of the Placement Agent to be paid by the Company or any of its Subsidiaries are as set forth
on Schedule 3(g) attached hereto. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including,
without limitation, attorney’s fees and out-of-pocket expenses) arising in connection with any such claim. The Company acknowledges
that it has engaged the Placement Agent in connection with the sale of the Securities. Other than the Placement Agent, neither the Company
nor any of its Subsidiaries has engaged any placement agent or other agent in connection with the offer or sale of the Securities.
(h) No
Integrated Offering. None of the Company, its Subsidiaries or any of their affiliates, nor any Person
acting on 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 require registration of the issuance of any of the Securities under the 1933 Act, whether through integration
with prior offerings or otherwise, or cause this offering of the Securities to require approval of stockholders of the Company for purposes
of the 1933 Act or under any applicable stockholder approval provisions, including, without limitation, under the rules and regulations
of any exchange or automated quotation system on which any of the securities of the Company are listed or designated for quotation. None
of the Company, its Subsidiaries, their affiliates nor any Person acting on their behalf will take any action or steps that would require
registration of the issuance of any of the Securities under the 1933 Act or cause the offering of any of the Securities to be integrated
with other offerings of securities of the Company.
(i) Dilutive
Effect. The Company understands and acknowledges that the number of Conversion Shares and Warrant Shares
will increase in certain circumstances. The Company further acknowledges that its obligation to issue the Conversion Shares pursuant to
the terms of the Notes in accordance with this Agreement and the Notes and the Warrant Shares upon exercise of the Warrants in accordance
with this Agreement, the Notes and the Warrants is, in each case, absolute and unconditional regardless of the dilutive effect that such
issuance may have on the ownership interests of other stockholders of the Company.
(j) Application
of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary
action, if any, in order to render inapplicable any control share acquisition, interested stockholder, business combination, poison pill
(including, without limitation, any distribution under a rights agreement), stockholder rights plan or other similar anti-takeover provision
under the Articles of Incorporation, Bylaws or other organizational documents or the laws of the jurisdiction of its incorporation or
otherwise which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement, including,
without limitation, the Company’s issuance of the Securities and any Buyer’s ownership of the Securities. The Company and
its board of directors have taken all necessary action, if any, in order to render inapplicable any stockholder rights plan or similar
arrangement relating to accumulations of beneficial ownership of shares of Common Stock or a change in control of the Company or any of
its Subsidiaries.
(k) SEC
Documents; Financial Statements. Except as disclosed on Schedule 3(k), during the two (2) years prior
to the date hereof, the Company has timely filed all reports, schedules, forms, proxy statements, statements and other documents required
to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date hereof
and all exhibits and appendices included therein and financial statements, notes and schedules thereto and documents incorporated by reference
therein being hereinafter referred to as the “SEC Documents”). The Company has delivered or has made available to the
Buyers or their respective representatives true, correct and complete copies of each of the SEC Documents not available on the EDGAR system.
As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules
and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were
filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As
of their respective dates, the financial statements of the Company included in the SEC Documents complied in all material respects with
applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as in effect as of the time
of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”),
consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes
thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results
of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments
which will not be material, either individually or in the aggregate). The reserves, if any, established by the Company or the lack of
reserves, if applicable, are reasonable based upon facts and circumstances known by the Company on the date hereof and there are no loss
contingencies that are required to be accrued by the Statement of Financial Accounting Standard No. 5 of the Financial Accounting Standards
Board which are not provided for by the Company in its financial statements or otherwise. No other information provided by or on behalf
of the Company to any of the Buyers which is not included in the SEC Documents (including, without limitation,
information referred to
in Section 2(e) of this Agreement or in the disclosure schedules to this Agreement) contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the statements therein not misleading, in the light of the circumstance
under which they are or were made. The Company is not currently contemplating to amend or restate any of the financial statements (including,
without limitation, any notes or any letter of the independent accountants of the Company with respect thereto) included in the SEC Documents
(the “Financial Statements”), nor is the Company currently aware of facts or circumstances which would require the
Company to amend or restate any of the Financial Statements, in each case, in order for any of the Financials Statements to be in compliance
with GAAP and the rules and regulations of the SEC. The Company has not been informed by its independent accountants that they recommend
that the Company amend or restate any of the Financial Statements or that there is any need for the Company to amend or restate any of
the Financial Statements.
(l) Absence
of Certain Changes. Since the date of the Company’s most recent audited financial statements contained
in a Form 10-K, there has been no material adverse change and no material adverse development in the business, assets, liabilities, properties,
operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any of its Subsidiaries. Since
the date of the Company’s most recent audited financial statements contained in a Form 10-K, neither the Company nor any of its
Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, outside of the ordinary course
of business or (iii) made any capital expenditures, individually or in the aggregate, outside of the ordinary course of business. Neither
the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any law or statute relating to bankruptcy,
insolvency, reorganization, receivership, liquidation or winding up, nor does the Company or any Subsidiary have any knowledge or reason
to believe that any of their respective creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any
fact which would reasonably lead a creditor to do so. The Company and its Subsidiaries, individually and on a consolidated basis, are
not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at the Closing, will not be Insolvent
(as defined below). For purposes of this Section 3(l), “Insolvent” means, (i) with respect to the Company and its Subsidiaries,
on a consolidated basis, (A) the present fair saleable value of the Company’s and its Subsidiaries’ assets is less than the
amount required to pay the Company’s and its Subsidiaries’ total Indebtedness (as defined below), (B) the Company and its
Subsidiaries are unable to pay their debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured or (C) the Company and its Subsidiaries intend to incur or believe that they will incur debts that would be beyond
their ability to pay as such debts mature; and (ii) with respect to the Company and each Subsidiary, individually, (A) the present fair
saleable value of the Company’s or such Subsidiary’s (as the case may be) assets is less than the amount required to pay its
respective total Indebtedness, (B) the Company or such Subsidiary (as the case may be) is unable to pay its respective debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured or (C) the Company or such Subsidiary
(as the case may be) intends to incur or believes that it will incur debts that would be beyond its respective ability to pay as such
debts mature. Neither the Company nor any of its Subsidiaries has engaged in any business or in any transaction, and is not about to engage
in any business or in any transaction, for which the Company’s or such Subsidiary’s remaining assets constitute unreasonably
small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.
(m) No
Undisclosed Events, Liabilities, Developments or Circumstances. No event, liability, development or
circumstance has occurred or exists, or is reasonably expected to exist or occur with respect to the Company, any of its Subsidiaries
or any of their respective businesses, properties, liabilities, prospects, operations (including results thereof) or condition (financial
or otherwise), that (i) would be required to be disclosed by the Company under applicable securities laws on a registration statement
on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly announced,
(ii) could have a material adverse effect on any Buyer’s investment hereunder or (iii) could have a Material Adverse Effect.
(n) Conduct
of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of
any term of or in default under its Articles of Incorporation, any certificate of designation, preferences or rights of any other outstanding
series of preferred stock of the Company or any of its Subsidiaries or Bylaws or their organizational charter, certificate of formation,
memorandum of association, articles of association, Articles of Incorporation or certificate of incorporation or bylaws, respectively.
Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct its business in
violation of any of the foregoing,
except in all cases for possible violations which could not, individually or in the aggregate, have
a Material Adverse Effect. Without limiting the generality of the foregoing, the Company is not in violation of any of the rules, regulations
or requirements of the Principal Market and has no knowledge of any facts or circumstances that could reasonably lead to delisting or
suspension of the Common Stock by the Principal Market in the foreseeable future. During the two years prior to the date hereof, (i) the
Common Stock has been listed or designated for quotation on the Principal Market, (ii) trading in the Common Stock has not been suspended
by the SEC or the Principal Market and (iii) the Company has received no communication, written or oral, from the SEC or the Principal
Market regarding the suspension or delisting of the Common Stock from the Principal Market. The Company and each of its Subsidiaries possess
all certificates, authorizations and permits issued by the appropriate regulatory authorities necessary to conduct their respective businesses,
except where the failure to possess such certificates, authorizations or permits would not have, individually or in the aggregate, a Material
Adverse Effect, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification
of any such certificate, authorization or permit. There is no agreement, commitment, judgment, injunction, order or decree binding upon
the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries is a party which has or would reasonably be
expected to have the effect of prohibiting or materially impairing any business practice of the Company or any of its Subsidiaries, any
acquisition of property by the Company or any of its Subsidiaries or the conduct of business by the Company or any of its Subsidiaries
as currently conducted other than such effects, individually or in the aggregate, which have not had and would not reasonably be expected
to have a Material Adverse Effect on the Company or any of its Subsidiaries.
(o) Foreign
Corrupt Practices. Neither the Company, the Company’s subsidiary or any director, officer, agent,
employee, nor any other person acting for or on behalf of the foregoing (individually and collectively, a “Company Affiliate”)
have violated the U.S. Foreign Corrupt Practices Act (the “FCPA”) or any other applicable anti-bribery or anti-corruption
laws, nor has any Company Affiliate offered, paid, promised to pay, or authorized the payment of any money, or offered, given, promised
to give, or authorized the giving of anything of value, to any officer, employee or any other person acting in an official capacity for
any Governmental Entity to any political party or official thereof or to any candidate for political office (individually and collectively,
a “Government Official”) or to any person under circumstances where such Company Affiliate knew or was aware of a
high probability that all or a portion of such money or thing of value would be offered, given or promised, directly or indirectly, to
any Government Official, for the purpose of:
(i) (A)
influencing any act or decision of such Government Official in his/her official capacity, (B) inducing such Government Official to do
or omit to do any act in violation of his/her lawful duty, (C) securing any improper advantage, or (D) inducing such Government Official
to influence or affect any act or decision of any Governmental Entity, or
(ii) assisting
the Company or its Subsidiaries in obtaining or retaining business for or with, or directing business to, the Company or its Subsidiaries.
(p) Sarbanes-Oxley
Act. The Company and each Subsidiary is in compliance with any and all applicable requirements of the
Sarbanes-Oxley Act of 2002, as amended, and any and all applicable rules and regulations promulgated by the SEC thereunder.
(q) Transactions
With Affiliates. Except as disclosed on Schedule 3(q), no current or former employee, partner, director,
officer or stockholder (direct or indirect) of the Company or its Subsidiaries, or any associate, or, to the knowledge of the Company,
any affiliate of any thereof, or any relative with a relationship no more remote than first cousin of any of the foregoing, is presently,
or has ever been, (i) a party to any transaction with the Company or its Subsidiaries (including any contract, agreement or other arrangement
providing for the furnishing of services by, or rental of real or personal property from, or otherwise requiring payments to, any such
director, officer or stockholder or such associate or affiliate or relative Subsidiaries (other than for ordinary course services as employees,
officers or directors of the Company or any of its Subsidiaries)) or (ii) the direct or indirect owner of an interest in any corporation,
firm, association or business organization which is a competitor, supplier or customer of the Company or its Subsidiaries (except for
a passive investment (direct or indirect) in less than 5% of the common stock of a company whose securities are traded on or quoted through
an Eligible Market (as defined in the Notes)),
nor does any such Person receive income from any source other than the Company or its Subsidiaries
which relates to the business of the Company or its Subsidiaries or should properly accrue to the Company or its Subsidiaries. No employee,
officer, stockholder or director of the Company or any of its Subsidiaries or member of his or her immediate family is indebted to the
Company or its Subsidiaries, as the case may be, nor is the Company or any of its Subsidiaries indebted (or committed to make loans or
extend or guarantee credit) to any of them, other than (i) for payment of salary for services rendered, (ii) reimbursement for reasonable
expenses incurred on behalf of the Company, and (iii) for other standard employee benefits made generally available to all employees or
executives (including stock option agreements outstanding under any stock option plan approved by the Board of Directors of the Company).
(r) Equity
Capitalization.
(i) Definitions:
(A) “Common
Stock” means (x) the Company’s shares of common stock, $0.001 par value per share, and (y) any capital stock into
which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(B) “Preferred
Stock” means (x) the Company’s blank check preferred stock, $0.001 par value per share, the terms of which may be designated
by the board of directors of the Company in a certificate of designations and (y) any capital stock into which such preferred stock shall
have been changed or any share capital resulting from a reclassification of such preferred stock (other than a conversion of such preferred
stock into Common Stock in accordance with the terms of such certificate of designations).
(ii) Authorized
and Outstanding Capital Stock. As of the date hereof, the authorized capital stock of the Company consists of (A) 300,000,000 shares
of Common Stock, of which, 46,631,088 are issued and outstanding and 4,473,283 shares are reserved for issuance pursuant to Convertible
Securities (as defined below) (other than the Notes and the Warrants) exercisable or exchangeable for, or convertible into, shares of
Common Stock and (B) 5,000,000 shares of Preferred Stock, none of which are issued and outstanding. No shares of Common Stock are held
in the treasury of the Company. “Convertible Securities” means any capital stock or other security of the Company or
any of its Subsidiaries that is at any time and under any circumstances directly or indirectly convertible into, exercisable or exchangeable
for, or which otherwise entitles the holder thereof to acquire, any capital stock or other security of the Company (including, without
limitation, Common Stock) or any of its Subsidiaries.
(iii) Valid
Issuance; Available Shares; Affiliates. All of such outstanding shares are duly authorized and have been, or upon issuance will be,
validly issued and are fully paid and nonassessable. Schedule 3(r)(iii) sets forth the number of shares of Common Stock that are
(A) reserved for issuance pursuant to Convertible Securities (as defined below) (other than the Notes and the Warrants) and (B) that are,
as of the date hereof, owned by Persons who are “affiliates” (as defined in Rule 405 of the 1933 Act and calculated based
on the assumption that only officers, directors and holders of at least 10% of the Company’s issued and outstanding Common Stock
are “affiliates” without conceding that any such Persons are “affiliates” for purposes of federal securities laws)
of the Company or any of its Subsidiaries. To the Company’s knowledge, no Person owns 10% or more of the Company’s issued
and outstanding shares of Common Stock (calculated based on the assumption that all Convertible Securities (as defined below), whether
or not presently exercisable or convertible, have been fully exercised or converted (as the case may be) taking account of any
limitations on exercise or conversion (including “blockers”) contained therein without conceding that such identified Person
is a 10% stockholder for purposes of federal securities laws).
(iv) Existing
Securities; Obligations. Except as disclosed in the SEC Documents: (A) none of the Company’s or any Subsidiary’s shares,
interests or capital stock is subject to preemptive rights or any other similar rights or Liens suffered or permitted by the Company or
any Subsidiary; (B) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into,
or exercisable or exchangeable for, any shares, interests or capital stock of the
Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to issue additional shares, interests or capital stock of the Company or any of its Subsidiaries or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into,
or exercisable or exchangeable for, any shares, interests or capital stock of the Company or any of its Subsidiaries; (C) except as set
forth on Schedule 3(r)(iv)(C), there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated
to register the sale of any of their securities under the 1933 Act (except pursuant to the Registration Rights Agreement); (D) there are
no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions,
and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries; (E) there are no securities or instruments containing anti-dilution
or similar provisions that will be triggered by the issuance of the Securities; and (F) neither the Company nor any Subsidiary has any
stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement.
(v) Organizational
Documents. The Company has furnished to the Buyers true, correct and complete copies of the Company’s Articles of Incorporation,
as amended and as in effect on the date hereof (the “Articles of Incorporation”), and the Company’s bylaws, as
amended and as in effect on the date hereof (the “Bylaws”), and the terms of all Convertible Securities and the material
rights of the holders thereof in respect thereto.
(s) Indebtedness
and Other Contracts. Neither the Company nor any of its Subsidiaries, (i) except as disclosed on Schedule 3(s),
has any outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing
Indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound, (ii)
is a party to any contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract,
agreement or instrument could reasonably be expected to result in a Material Adverse Effect, (iii) has any financing statements securing
obligations in any amounts filed in connection with the Company or any of its Subsidiaries; (iv) is in violation of any term of, or in
default under, any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults would not
result, individually or in the aggregate, in a Material Adverse Effect, or (v) is a party to any contract, agreement or instrument relating
to any Indebtedness, the performance of which, in the judgment of the Company’s officers, has or is expected to have a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries have any liabilities or obligations required to be disclosed in the SEC
Documents which are not so disclosed in the SEC Documents, other than those incurred in the ordinary course of the Company’s or
its Subsidiaries’ respective businesses and which, individually or in the aggregate, do not or could not have a Material Adverse
Effect. For purposes of this Agreement: (x) “Indebtedness” of any Person means, without duplication (A) all indebtedness
for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including,
without limitation, “capital leases” in accordance with GAAP) (other than trade payables entered into in the ordinary course
of business consistent with past practice), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds
and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations
so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets
acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement
which, in connection with GAAP, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness
referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien upon or in any property or assets (including accounts and contract rights) owned by any Person,
even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H)
all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above;
and (y) “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise,
of that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent
of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such
liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability
will be protected (in whole or in part) against loss with respect thereto.
(t) Litigation.
There is no action, suit, arbitration, proceeding, inquiry or investigation before or by the Principal Market, any court, public board,
other Governmental Entity, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting
the Company or any of its Subsidiaries, the Common Stock or any of the Company’s or its Subsidiaries’ officers or directors,
whether of a civil or criminal nature or otherwise, in their capacities as such, except as set forth in Schedule 3(t). To the Company’s
knowledge, no director, officer or employee of the Company or any of its subsidiaries has willfully violated 18 U.S.C. §1519 or engaged
in spoliation in reasonable anticipation of litigation. Without limitation of the foregoing, there has not been, and to the knowledge
of the Company, there is not pending or contemplated, any investigation by the SEC involving the Company, any of its Subsidiaries or any
current or former director or officer of the Company or any of its Subsidiaries. The SEC has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by the Company under the 1933 Act or the 1934 Act. After reasonable inquiry
of its employees, the Company is not aware of any fact which might result in or form the basis for any such action, suit, arbitration,
investigation, inquiry or other proceeding. Neither the Company nor any of its Subsidiaries is subject to any order, writ, judgment, injunction,
decree, determination or award of any Governmental Entity.
(u) Insurance.
The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries
are engaged. Neither the Company nor any such Subsidiary has been refused any insurance coverage sought or applied for, and neither the
Company nor any such Subsidiary has any reason to believe that it will be unable to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect.
(v) Employee
Relations. Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement
or employs any member of a union. Except as set forth in Schedule 3(v), the Company and its Subsidiaries believe that their relations
with their employees are good. No executive officer (as defined in Rule 501(f) promulgated under the 1933 Act) or other key employee of
the Company or any of its Subsidiaries has notified the Company or any such Subsidiary that such officer intends to leave the Company
or any such Subsidiary or otherwise terminate such officer’s employment with the Company or any such Subsidiary. No current (or
former) executive officer or other key employee of the Company or any of its Subsidiaries is, or is now expected to be, in violation of
any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement,
or any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer or other key
employee (as the case may be) 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 federal, state, local and foreign laws and regulations respecting
labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure
to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
(w) Title.
(i) Real
Property. Each of the Company and its Subsidiaries holds good title to all real property, leases in real property, facilities or other
interests in real property owned or held by the Company or any of its Subsidiaries (the “Real Property”) owned by the
Company or any of its Subsidiaries (as applicable). The Real Property is free and clear of all Liens and is not subject to any rights
of way, building use restrictions, exceptions, variances, reservations, or limitations of any nature except for (a) Liens for current
taxes not yet due and (b) zoning laws and other land use restrictions that do not impair the present or anticipated use of the property
subject thereto. Any Real Property held under lease by the Company or any of its Subsidiaries are held by them under valid, subsisting
and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such
property and buildings by the Company or any of its Subsidiaries.
(ii) Fixtures
and Equipment. Except as set forth on Schedule 3(w)(ii)(1), each of the Company and its Subsidiaries (as applicable) has good title
to, or a valid leasehold interest in, the tangible personal property, equipment, improvements, fixtures, and other personal property and
appurtenances that are used by the Company or its Subsidiary in connection with the conduct of its business (the “Fixtures and
Equipment”). The Fixtures and Equipment are structurally sound, are in good operating condition and repair, are adequate for
the uses to which they are being put, are not in need of maintenance or repairs except for ordinary, routine maintenance and repairs and
are sufficient for the conduct of the Company’s and/or its Subsidiaries’ businesses (as applicable) in the manner as conducted
prior to the Closing. Except as set forth on Schedule 3(w)(ii)(2), each of the Company and its Subsidiaries owns all of its Fixtures and
Equipment free and clear of all Liens except for (a) liens for current taxes not yet due and (b) zoning laws and other land use restrictions
that do not impair the present or anticipated use of the property subject thereto.
(x) Intellectual
Property Rights. Except as disclosed on Schedule 3(x), the Company and its Subsidiaries own or possess
adequate rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, original works
of authorship, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and other
intellectual property rights and all applications and registrations therefor (“Intellectual Property Rights”) necessary
to conduct their respective businesses as now conducted and presently proposed to be conducted. Each of patents owned by the Company or
any of its Subsidiaries is listed on Schedule 3(x)(ii). Except as set forth in Schedule 3(x)(iii), none of the Company’s Intellectual
Property Rights have expired or terminated or have been abandoned or are expected to expire or terminate or are expected to be abandoned,
within three years from the date of this Agreement. The Company does not have any knowledge of any infringement by the Company or its
Subsidiaries of Intellectual Property Rights of others. There is no claim, action or proceeding being made or brought, or to the knowledge
of the Company or any of its Subsidiaries, being threatened, against the Company or any of its Subsidiaries regarding its Intellectual
Property Rights. Neither the Company nor any of its Subsidiaries is aware of any facts or circumstances which might give rise to any of
the foregoing infringements or claims, actions or proceedings. The Company and its Subsidiaries have taken reasonable security measures
to protect the secrecy, confidentiality and value of all of their Intellectual Property Rights.
(y) Environmental Laws(i) .
(i) The Company and its Subsidiaries (A) are in compliance with any and all Environmental Laws (as defined below), (B) have received all
permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (C)
are in compliance with all terms and conditions of any such permit, license or approval where, in each of the foregoing clauses (A), (B)
and (C), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. The
term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection of human
health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata),
including, without limitation, 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.
(ii) No
Hazardous Materials:
(A) have
been disposed of or otherwise released from any Real Property of the Company or any of its Subsidiaries in violation of any Environmental
Laws; or
(B) are
present on, over, beneath, in or upon any Real Property or any portion thereof in quantities that would constitute a violation of any
Environmental Laws. No prior use by the Company or any of its Subsidiaries of any Real Property has occurred that violates any Environmental
Laws, which violation would have a material adverse effect on the business of the Company or any of its Subsidiaries.
(iii) Neither
the Company nor any of its Subsidiaries knows of any other person who or entity which has stored, treated, recycled, disposed of or otherwise
located on any Real Property any Hazardous Materials, including, without limitation, such substances as asbestos and polychlorinated biphenyls.
(iv) None
of the Real Properties are on any federal or state “Superfund” list or Liability Information System (“CERCLIS”)
list or any state environmental agency list of sites under consideration for CERCLIS, nor subject to any environmental related Liens.
(z) Subsidiary
Rights. The Company or one of its Subsidiaries has the unrestricted right to vote, and (subject to limitations
imposed by applicable law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company
or such Subsidiary.
(aa) Tax Status.
The Company and each of its Subsidiaries (i) has timely made or filed all foreign, federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject, (ii) has timely paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested
in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to
the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by
the taxing authority of any jurisdiction, and the officers of the Company and its Subsidiaries know of no basis for any such claim. The
Company is not operated in such a manner as to qualify as a passive foreign investment company, as defined in Section 1297 of the Code.
The net operating loss carryforwards (“NOLs”) for United States federal income tax purposes of the consolidated group
of which the Company is the common parent, if any, shall not be adversely effected by the transactions contemplated hereby. The transactions
contemplated hereby do not constitute an “ownership change” within the meaning of Section 382 of the Code, thereby preserving
the Company’s ability to utilize such NOLs.
(bb) Internal Accounting
and Disclosure Controls. Except as disclosed on Schedule 3(bb)(i), the Company and each of its Subsidiaries
maintains internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the 1934 Act) that is effective to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles, including that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities
is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets
and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect
to any difference. Except as disclosed on Schedule 3(bb)(ii), the Company maintains disclosure controls and procedures (as such term is
defined in Rule 13a-15(e) under the 1934 Act) that are effective in ensuring that information required to be disclosed by the Company
in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified
in the rules and forms of the SEC, including, without limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the 1934 Act is accumulated and communicated to the Company’s
management, including its principal executive officer or officers and its principal financial officer or officers, as appropriate, to
allow timely decisions regarding required disclosure. Except as disclosed on Schedule 3(bb)(iii), neither the Company nor any of its Subsidiaries
has received any notice or correspondence from any accountant, Governmental Entity or other Person relating to any potential material
weakness or significant deficiency in any part of the internal controls over financial reporting of the Company or any of its Subsidiaries.
(cc) Off Balance Sheet Arrangements.
There is no transaction, arrangement, or other relationship between the Company or any of its Subsidiaries and an unconsolidated or other
off balance sheet entity that is required to be disclosed by the Company in its 1934 Act filings and is not so disclosed or that otherwise
could be reasonably likely to have a Material Adverse Effect.
(dd) Investment Company Status.
The Company is not, and upon consummation of the sale of the Securities will not be, an “investment company,” an affiliate
of an “investment company,” a company controlled by an “investment company” or an “affiliated person”
of, or “promoter” or “principal underwriter” for, an “investment company” as such terms are defined
in the Investment Company Act of 1940, as amended.
(ee) Acknowledgement Regarding
Buyers’ Trading Activity. It is understood and acknowledged by the Company that (i) following
the public disclosure of the transactions contemplated by the Transaction Documents, in accordance with the terms thereof, none of the
Buyers have been asked by the Company or any of its Subsidiaries to agree, nor has any Buyer agreed with the Company or any of its Subsidiaries,
to desist from effecting any transactions in or with respect to (including, without limitation, purchasing or selling, long and/or short)
any securities of the Company, or “derivative” securities based on securities issued by the Company or to hold any of the
Securities for any specified term; (ii) any Buyer, and counterparties in “derivative” transactions to which any such Buyer
is a party, directly or indirectly, presently may have a “short” position in the Common Stock which was established prior
to such Buyer’s knowledge of the transactions contemplated by the Transaction Documents; (iii) each Buyer shall not be deemed to
have any affiliation with or control over any arm’s length counterparty in any “derivative” transaction; and (iv) each
Buyer may rely on the Company’s obligation to timely deliver shares of Common Stock upon conversion, exercise or exchange, as applicable,
of the Securities as and when required pursuant to the Transaction Documents for purposes of effecting trading in the Common Stock of
the Company. The Company further understands and acknowledges that following the public disclosure of the transactions contemplated by
the Transaction Documents pursuant to the Press Release (as defined below) one or more Buyers may engage in hedging and/or trading activities
(including, without limitation, the location and/or reservation of borrowable shares of Common Stock) at various times during the period
that the Securities are outstanding, including, without limitation, during the periods that the value and/or number of the Warrant Shares
or Conversion Shares, as applicable, deliverable with respect to the Securities are being determined and such hedging and/or trading activities
(including, without limitation, the location and/or reservation of borrowable shares of Common Stock), if any, can reduce the value of
the existing stockholders’ equity interest in the Company both at and after the time the hedging and/or trading activities are being
conducted. The Company acknowledges that such aforementioned hedging and/or trading activities do not constitute a breach of this Agreement,
the Notes, the Warrants or any other Transaction Document or any of the documents executed in connection herewith or therewith.
(ff) Manipulation of Price.
Neither the Company nor any of its Subsidiaries has, and, to the knowledge of the Company, no Person acting on their behalf has, directly
or indirectly, (i) taken any action designed to cause or to result in the stabilization or manipulation of the price of any security of
the Company or any of its Subsidiaries to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid
any compensation for soliciting purchases of, any of the Securities (other than the Placement Agent), (iii) paid or agreed to pay to any
Person any compensation for soliciting another to purchase any other securities of the Company or any of its Subsidiaries or (iv) paid
or agreed to pay any Person for research services with respect to any securities of the Company or any of its Subsidiaries.
(gg) U.S. Real Property Holding
Corporation. Neither the Company nor any of its Subsidiaries is, or has ever been, and so long as any
of the Securities are held by any of the Buyers, shall become, a U.S. real property holding corporation within the meaning of Section 897
of the Code, and the Company and each Subsidiary shall so certify upon any Buyer’s request.
(hh) Registration Eligibility.
The Company is eligible to register the Registrable Securities (defined in the Registration Rights Agreement) for resale by the Buyers
using Form S-1 promulgated under the 1933 Act.
(ii) Transfer
Taxes. On the Closing Date, all stock transfer or other taxes (other than income or similar taxes) which
are required to be paid in connection with the issuance, sale and transfer of the Securities to be sold to each Buyer hereunder will be,
or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.
(jj) Bank Holding Company
Act. Neither the Company nor any of its Subsidiaries is subject to the Bank Holding Company Act of 1956,
as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal
Reserve”). Neither the Company nor any of its Subsidiaries or affiliates owns or controls, directly or indirectly, five percent
(5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a
bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries
or affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and
to regulation by the Federal Reserve.
(kk)
[Intentionally Omitted]
(ll)
Illegal or Unauthorized Payments; Political Contributions. Neither the Company
nor any of its Subsidiaries nor, to the best of the Company’s knowledge (after reasonable inquiry of its officers and
directors), any of the officers, directors, employees, agents or other representatives of the Company or any of its Subsidiaries or
any other business entity or enterprise with which the Company or any Subsidiary is or has been affiliated or associated, has,
directly or indirectly, made or authorized any payment, contribution or gift of money, property, or services, whether or not in
contravention of applicable law, (i) as a kickback or bribe to any Person or (ii) to any political organization, or the holder of or
any aspirant to any elective or appointive public office except for personal political contributions not involving the direct or
indirect use of funds of the Company or any of its Subsidiaries.
(mm) Money Laundering.
The Company and its Subsidiaries are in compliance with, and have not previously violated, the USA Patriot Act of 2001 and all other applicable
U.S. and non-U.S. anti-money laundering laws and regulations, including, without limitation, the laws, regulations and Executive Orders
and sanctions programs administered by the U.S. Office of Foreign Assets Control, including, but not limited, to (i) Executive Order 13224
of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or
Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter V.
(nn) Management.
Except as set forth in Schedule 3(nn) hereto, during the past five year period, to the Company’s knowledge, no current
or former officer or director or, to the knowledge of the Company, no current ten percent (10%) or greater stockholder of the Company
or any of its Subsidiaries has been the subject of:
(i) a
petition under bankruptcy laws or any other insolvency or moratorium law or the appointment by a court of a receiver, fiscal agent or
similar officer for such Person, or any partnership in which such person was a general partner at or within two years before the filing
of such petition or such appointment, or any corporation or business association of which such person was an executive officer at or within
two years before the time of the filing of such petition or such appointment;
(ii) a
conviction in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations that do not relate
to driving while intoxicated or driving under the influence);
(iii) any
order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining any such person from, or otherwise limiting, the following activities:
(1) Acting
as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction
merchant, any other person regulated by the United States Commodity Futures Trading Commission or an associated person of any of the foregoing,
or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment
company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with
such activity;
(2) Engaging
in any particular type of business practice; or
(3) Engaging
in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of securities
laws or commodities laws;
(iv) any
order, judgment or decree, not subsequently reversed, suspended or vacated, of any authority barring, suspending or otherwise limiting
for more than sixty (60) days the right of any such person to engage in any activity described in the preceding sub paragraph, or to be
associated with persons engaged in any such activity;
(v) a
finding by a court of competent jurisdiction in a civil action or by the SEC or other authority to have violated any securities law, regulation
or decree and the judgment in such civil action or finding by the SEC or any other authority has not been subsequently reversed, suspended
or vacated; or
(vi) a
finding by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal
commodities law, and the judgment in such civil action or finding has not been subsequently reversed, suspended or vacated.
(oo) Stock Option Plans(b) .
Each stock option granted by the Company was granted (i) in accordance with the terms of the applicable stock option plan of the Company
and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date such stock option would be considered
granted under GAAP and applicable law. No stock option granted under the Company’s stock option plan has been backdated. The Company
has not knowingly granted, and there is no and has been no policy or practice of the Company to knowingly grant, stock options prior to,
or otherwise knowingly coordinate the grant of stock options with, the release or other public announcement of material information regarding
the Company or its Subsidiaries or their financial results or prospects.
(pp) No Disagreements with
Accountants and Lawyers(c) . There are no material disagreements of any kind presently existing,
or reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed
by the Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s
ability to perform any of its obligations under any of the Transaction Documents. In addition, on or prior to the date hereof, the Company
had discussions with its accountants about its financial statements previously filed with the SEC. Based on those discussions, the Company
has no reason to believe that it will need to restate any such financial statements or any part thereof.
(qq) No Disqualification
Events(d) . With respect to Securities to be offered and sold hereunder in reliance on Rule 506(b)
under the 1933 Act (“Regulation D Securities”), none of the Company, any of its predecessors, any affiliated issuer,
any director, executive officer, other officer of the Company participating in the offering contemplated hereby, 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 1933 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 1933 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 Buyers a copy of any disclosures provided thereunder.
(rr) Other Covered Persons(e) .
The Company is not aware of any Person (other than the Placement Agent) that has been or will be paid (directly or indirectly) remuneration
for solicitation of Buyers or potential purchasers in connection with the sale of any Regulation D Securities.
(ss) No Additional Agreements.
The Company does not have any agreement or understanding with any Buyer with respect to the transactions contemplated by the Transaction
Documents other than as specified in the Transaction Documents.
(tt) Public Utility Holding
Act. None of the Company nor any of its Subsidiaries is a “holding company,” or an “affiliate”
of a “holding company,” as such terms are defined in the Public Utility Holding Act of 2005.
(uu) Federal Power Act.
None of the Company nor any of its Subsidiaries is subject to regulation as a “public utility” under the Federal Power Act,
as amended.
(vv) Ranking of Notes.
Except as disclosed on Schedule 3(vv), no Indebtedness of the Company, at the Closing, will be senior to, or pari passu
with, the Notes in right of payment, whether with respect to payment or redemptions, interest, damages, upon liquidation or dissolution
or otherwise.
(ww) Disclosure.
The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their agents or counsel
with any information that constitutes or could reasonably be expected to constitute material, non-public information concerning the Company
or any of its Subsidiaries, other than the existence of the transactions contemplated by this Agreement and the other Transaction Documents.
The Company understands and confirms that each of the Buyers will rely on the foregoing representations in effecting transactions in securities
of the Company. All disclosure provided to the Buyers regarding the Company and its Subsidiaries, their businesses and the transactions
contemplated hereby, including the schedules to this Agreement, furnished by or on behalf of the Company or any of its Subsidiaries is
true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to
make the statements made therein, in the light of the circumstances under which they were made, not misleading. All of the written information
furnished after the date hereof by or on behalf of the Company or any of its Subsidiaries to each Buyer pursuant to or in connection with
this Agreement and the other Transaction Documents, taken as a whole, will be true and correct in all material respects as of the date
on which such information is so provided and will 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.
Each press release issued by the Company or any of its Subsidiaries during the twelve (12) months preceding the date of this Agreement
did not at the time of release 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 are made, not misleading.
No event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries or its or their business,
properties, liabilities, prospects, operations (including results thereof) or conditions (financial or otherwise), which, under applicable
law, rule or regulation, requires public disclosure at or before the date hereof or announcement by the Company but which has not been
so publicly disclosed. All financial projections and forecasts that have been prepared by or on behalf of the Company or any of its Subsidiaries
and made available to you have been prepared in good faith based upon reasonable assumptions and represented, at the time each such financial
projection or forecast was delivered to each Buyer, the Company’s best estimate of future financial performance (it being recognized
that such financial projections or forecasts are not to be viewed as facts and that the actual results during the period or periods covered
by any such financial projections or forecasts may differ from the projected or forecasted results). The Company acknowledges and agrees
that no Buyer makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those
specifically set forth in Section 2.
4. COVENANTS.
(a) Best
Efforts. Each Buyer shall use its best efforts to timely satisfy each of the covenants hereunder and
conditions to be satisfied by it as provided in Section 6 of this Agreement. The Company shall use its best efforts to timely satisfy
each of the covenants hereunder and conditions to be satisfied by it as provided in Section 7 of this Agreement.
(b) Form
D and Blue Sky. The Company shall file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof to each Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such
action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to, qualify the Securities for sale
to the Buyers at the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the
United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyers
on or prior to the Closing Date. Without limiting any other obligation of the Company under this Agreement, the Company shall timely make
all filings and reports relating to the offer and sale of the Securities required under all applicable securities laws (including, without
limitation, all applicable federal securities laws and all applicable “Blue Sky” laws), and the Company shall comply with
all applicable foreign, federal, state and local laws, statutes, rules, regulations and the like relating to the offering and sale of
the Securities to the Buyers.
(c) Reporting
Status. Until the date on which the Buyers shall have sold all of the Registrable Securities (the “Reporting
Period”), the Company shall timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company
shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations
thereunder would no longer require or otherwise permit such termination.
(d) Use
of Proceeds. The Company will use the proceeds from the sale of the Securities for general corporate
purposes, but not, directly or indirectly, for (i) except as set forth on Schedule 4(d), the satisfaction of any indebtedness of the Company
or any of its Subsidiaries, (ii) the redemption or repurchase of any securities of the Company or any of its Subsidiaries, or (iii) the
settlement of any outstanding litigation.
(e) Financial
Information. The Company agrees to send the following to each Investor (as defined in the Registration
Rights Agreement) during the Reporting Period (i) unless the following are filed with the SEC through EDGAR and are available to the public
through the EDGAR system, within one (1) Business Day after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K
and Quarterly Reports on Form 10-Q, any interim reports or any consolidated balance sheets, income statements, stockholders’ equity
statements and/or cash flow statements for any period other than annual, any Current Reports on Form 8-K and any registration statements
(other than on Form S-8) or amendments filed pursuant to the 1933 Act, (ii) unless the following are either filed with the SEC through
EDGAR or are otherwise widely disseminated via a recognized news release service (such as PR Newswire), on the same day as the release
thereof, e-mail copies of all press releases issued by the Company or any of its Subsidiaries and (iii) unless the following are filed
with the SEC through EDGAR, copies of any notices and other information made available or given to the stockholders of the Company generally,
contemporaneously with the making available or giving thereof to the stockholders.
(f) Listing.
The Company shall promptly secure the listing or designation for quotation (as the case may be) of all of the Registrable Securities upon
each national securities exchange and automated quotation system, if any, upon which the Common Stock is then listed or designated for
quotation (as the case may be) (subject to official notice of issuance) and shall maintain such listing or designation for quotation (as
the case may be) of all Registrable Securities from time to time issuable under the terms of the Transaction Documents on such national
securities exchange or automated quotation system. The Company shall maintain the Common Stock’s listing or authorization for quotation
(as the case may be) on the Principal Market, The New York Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market or the
Nasdaq Global Select Market (each, an “Eligible Market”). Neither the Company nor any of its Subsidiaries shall take
any action which could be reasonably expected to result in the delisting or suspension of the Common Stock on an Eligible Market. The
Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(f).
(g) Fees.
The Company shall reimburse the lead Buyer for all costs and expenses incurred by it or its affiliates in connection with the structuring,
documentation, negotiation and closing of the transactions contemplated by the Transaction Documents (including, without limitation, as
applicable, a non-accountable amount of $65,000.00 for the fees of outside counsel and disbursements of Kelley Drye & Warren LLP,
counsel to the lead Buyer, any other reasonable fees and expenses in connection with the structuring, documentation, negotiation and closing
of the transactions contemplated by the Transaction Documents and due diligence and regulatory filings in connection therewith) (the “Transaction
Expenses”) and shall be withheld by the lead Buyer from its Purchase Price at the Closing; provided, that the Company shall
promptly reimburse Kelley Drye & Warren LLP on demand for all Transaction Expenses not so reimbursed through such withholding at the
Closing. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees (other than those
engaged by the Buyer), transfer agent fees, DTC (as defined below) fees or broker’s commissions (other than for Persons engaged
by any Buyer) relating to or arising out of the transactions contemplated hereby (including, without limitation, any fees or commissions
payable to the Placement Agent, who is the Company’s sole placement agent in connection with the transactions contemplated by this
Agreement). The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation,
reasonable attorneys’ fees and out-of-pocket expenses) arising in connection with any claim relating to any such payment. Except
as otherwise set forth in the Transaction Documents, each party to this Agreement shall bear its own expenses in connection with the sale
of the Securities to the Buyers.
(h) Pledge
of Securities. Notwithstanding anything to the contrary contained in this Agreement, the Company acknowledges
and agrees that the Securities may be pledged by an Investor in connection with a bona fide margin agreement or other loan or financing
arrangement that is secured by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and no Investor effecting a pledge of Securities shall be required to provide the Company with any notice thereof
or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document, including, without limitation,
Section 2(g) hereof; provided that an Investor and its pledgee shall be required to comply with the provisions of Section 2(g)
hereof in order to effect a sale, transfer or assignment of Securities to such pledgee. The Company hereby agrees to execute and deliver
such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such pledgee
by a Buyer.
(i) Disclosure
of Transactions and Other Material Information.
(i) Disclosure
of Transaction. The Company shall, on or before 9:00 a.m., New York time, on the fourth (4th) Business Day after the
date of this Agreement, the Company shall file a Current Report on Form 8-K describing all the material terms of the transactions contemplated
by the Transaction Documents in the form required by the 1934 Act and attaching all the material Transaction Documents (including, without
limitation, this Agreement (and all schedules to this Agreement), the form of Notes, the form of the Warrants and the form of the Registration
Rights Agreement) (including all attachments, the “8-K Filing”). From and after the filing of the 8-K Filing, the Company
shall have disclosed all material, non-public information (if any) provided to any of the Buyers by the Company or any of its Subsidiaries
or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction
Documents. In addition, effective upon the filing of the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality
or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective
officers, directors, affiliates, employees or agents, on the one hand, and any of the Buyers or any of their affiliates, on the other
hand, shall terminate.
(ii) Limitations
on Disclosure. The Company shall not, and the Company shall cause each of its Subsidiaries and each of its and their respective officers,
directors, employees and agents not to, provide any Buyer with any material, non-public information regarding the Company or any of its
Subsidiaries from and after the date hereof without the express prior written consent of such Buyer (which may be granted or withheld
in such Buyer’s sole discretion). In the event of a breach of any of the foregoing covenants, or any of the covenants or agreements
contained in any other Transaction Document, by the Company, any of its Subsidiaries, or any of its or their respective officers, directors,
employees and agents (as determined in the reasonable good faith judgment of such Buyer), in addition to any other remedy provided herein
or in the Transaction Documents, such Buyer shall have the right to make a public disclosure, in the form of a press release, public advertisement
or otherwise, of such breach or such material, non-public information, as applicable, without the prior approval by the Company, any of
its Subsidiaries, or any of its or their respective officers, directors, employees or agents. No Buyer shall have any liability to the
Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees, affiliates, stockholders or agents,
for any such disclosure. To the extent that the Company delivers any material, non-public information to a Buyer without such Buyer’s
consent, the Company hereby covenants and agrees that such Buyer shall not have any duty of confidentiality with respect to, or a duty
not to trade on the basis of, such material, non-public information. Subject to the foregoing, neither the Company, its Subsidiaries nor
any Buyer shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided,
however, the Company shall be entitled, without the prior approval of any Buyer, to make the Press Release and any press release or other
public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously therewith
and (ii) as is required by applicable law and regulations (provided that in the case of clause (i) each Buyer shall be consulted by the
Company in connection with any such press release or other public disclosure prior to its release). Without the prior written consent
of the applicable Buyer (which may be granted or withheld in such Buyer’s sole discretion), the Company shall not (and shall cause
each of its Subsidiaries and affiliates to not) disclose the name of such Buyer in any filing, announcement, release or otherwise. Notwithstanding
anything contained in this Agreement to the contrary and without implication that the contrary would otherwise be true, the Company expressly
acknowledges and agrees that no Buyer shall have (unless expressly agreed to by a particular Buyer after the date hereof in a written
definitive and binding agreement executed by the Company and such particular Buyer (it being understood and agreed that no Buyer may bind
any other Buyer with respect thereto)), any duty of confidentiality with respect to, or a duty not to trade on the basis of, any material,
non-public information regarding the Company or any of its Subsidiaries.
(iii) Other
Confidential Information. Disclosure Failures; Disclosure Delay Payments. In addition to other remedies set forth in this Section
4(i), and without limiting anything set forth in any other Transaction Document, at any time after the Closing Date if the Company, any
of its Subsidiaries, or any of their respective officers, directors, employees or agents, provides any Buyer with material non-public
information relating to the Company or any of its Subsidiaries (each, the “Confidential Information”),
the Company
shall, on or prior to the applicable Required Disclosure Date (as defined below), publicly disclose such Confidential Information on a
Current Report on Form 8-K or otherwise (each, a “Disclosure”). From and after such Disclosure, the Company shall have
disclosed all Confidential Information provided to such Buyer by the Company or any of its Subsidiaries or any of their respective officers,
directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon
such Disclosure, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether
written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, affiliates, employees or
agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall terminate. In the event that the Company
fails to effect such Disclosure on or prior to the Required Disclosure Date and such Buyer shall have possessed Confidential Information
for at least ten (10) consecutive Trading Days (each, a “Disclosure Failure”), then, as partial relief for the damages
to such Buyer by reason of any such delay in, or reduction of, its ability to buy or sell shares of Common Stock after such Required Disclosure
Date (which remedy shall not be exclusive of any other remedies available at law or in equity), the Company shall pay to such Buyer an
amount in cash equal to the greater of (I) two percent (2%) of the aggregate Purchase Price and (II) the applicable Disclosure Restitution
Amount, on each of the following dates (each, a “Disclosure Delay Payment Date”): (i) on the date of such Disclosure
Failure and (ii) on every thirty (30) day anniversary such Disclosure Failure until the earlier of (x) the date such Disclosure Failure
is cured and (y) such time as all such non-public information provided to such Buyer shall cease to be Confidential Information (as evidenced
by a certificate, duly executed by an authorized officer of the Company to the foregoing effect) (such earlier date, as applicable, a
“Disclosure Cure Date”). Following the initial Disclosure Delay Payment for any particular Disclosure Failure, without
limiting the foregoing, if a Disclosure Cure Date occurs prior to any thirty (30) day anniversary of such Disclosure Failure, then such
Disclosure Delay Payment (prorated for such partial month) shall be made on the second (2nd) Business Day after such Disclosure Cure Date.
The payments to which an Investor shall be entitled pursuant to this Section 4(i)(iii) are referred to herein as “Disclosure
Delay Payments.” In the event the Company fails to make Disclosure Delay Payments in a timely manner in accordance with the
foregoing, such Disclosure Delay Payments shall bear interest at the rate of two percent (2%) per month (prorated for partial months)
until paid in full.
(iv) For
the purpose of this Agreement the following definitions shall apply:
(1)
“Disclosure Failure Market Price” means, as of any Disclosure Delay Payment Date, the price computed as the quotient
of (I) the sum of the five (5) highest VWAPs (as defined in the Warrants) of the Common Stock during the applicable Disclosure Restitution
Period (as defined below), divided by (II) five (5) (such period, the “Disclosure Failure Measuring Period”). All such
determinations to be appropriately adjusted for any share dividend, share split, share combination, reclassification or similar transaction
that proportionately decreases or increases the Common Stock during such Disclosure Failure Measuring Period.
(2) “Disclosure
Restitution Amount” means, as of any Disclosure Delay Payment Date, the product of (x) difference of (I) the Disclosure Failure
Market Price less (II) the lowest purchase price, per share of Common Stock, of any Common Stock issued or issuable to such Buyer pursuant
to this Agreement or any other Transaction Documents, multiplied by (y) 10% of the aggregate daily dollar trading volume (as reported
on Bloomberg (as defined in the Warrants)) of the Common Stock on the Principal Market for each Trading Day (as defined in the Warrants)
either (1) with respect to the initial Disclosure Delay Payment Date, during the period commencing on the applicable Required Disclosure
Date through and including the Trading Day immediately prior to the initial Disclosure Delay Payment Date or (2) with respect to each
other Disclosure Delay Payment Date, during the period commencing the immediately preceding Disclosure Delay Payment Date through and
including the Trading Day immediately prior to such applicable Disclosure Delay Payment Date (such applicable period, the “Disclosure
Restitution Period”).
(3) “Required
Disclosure Date” means (x) if such Buyer authorized the delivery of such Confidential Information, either (I) if the Company
and such Buyer have mutually agreed upon a date (as evidenced by an e-mail or other writing) of Disclosure of such Confidential Information,
such agreed upon date or (II) otherwise, the seventh (7th) calendar day after the date such Buyer first received any Confidential
Information or (y) if such Buyer did not authorize the delivery of such Confidential Information, the first (1st) Business
Day after such Buyer’s receipt of such Confidential Information.
(j) Additional
Registration Statements. Until the Applicable Date (as defined below) and at any time thereafter while
any Registration Statement is not effective or the prospectus contained therein is not available for use or any Current Public Information
Failure (as defined in the Registration Rights Agreement) exists, the Company shall not file a registration statement or an offering statement
under the 1933 Act relating to securities that are not the Registrable Securities (other than a registration statement on Form S-8 or
such supplements or amendments to registration statements that are outstanding and have been declared effective by the SEC as of the date
hereof (solely to the extent necessary to keep such registration statements effective and available and not with respect to any Subsequent
Placement)). “Applicable Date” means the earlier of (x) the first date on which the resale by the Buyers of all the
Registrable Securities required to be filed on the initial Registration Statement (as defined in the Registration Rights Agreement) pursuant
to the Registration Rights Agreement is declared effective by the SEC (and each prospectus contained therein is available for use on such
date) or (y) the first date on which all of the Registrable Securities are eligible to be resold by the Buyers pursuant to Rule 144 (or,
if a Current Public Information Failure has occurred and is continuing, such later date after which the Company has cured such Current
Public Information Failure).
(k) Additional
Issuance of Securities. So long as any Buyer beneficially owns any Securities, the Company will not,
without the prior written consent of the Required Holders, issue any Notes (other than to the Buyers as contemplated hereby) and the Company
shall not issue any other securities that would cause a breach or default under the Notes or the Warrants. The Company agrees that for
the period commencing on the date hereof and ending on the date immediately following the 90th Trading Day after the Applicable
Date (provided that such period shall be extended by the number of calendar days during such period and any extension thereof contemplated
by this proviso on which any Registration Statement is not effective or any prospectus contained therein is not available for use or any
Current Public Information Failure exists) (the “Restricted Period”), neither the Company nor any of its Subsidiaries
shall directly or indirectly issue, offer, sell, grant any option or right to purchase, or otherwise dispose of (or announce any issuance,
offer, sale, grant of any option or right to purchase or other disposition of) any equity security or any equity-linked or related security
(including, without limitation, any “equity security” (as that term is defined under Rule 405 promulgated under the 1933 Act),
any Convertible Securities (as defined below), any debt, any preferred stock or any purchase rights) (any such issuance, offer, sale,
grant, disposition or announcement (whether occurring during the Restricted Period or at any time thereafter) is referred to as a “Subsequent
Placement”). Notwithstanding the foregoing, this Section 4(k) shall not apply in respect of the issuance of (i) shares of Common
Stock or standard options to purchase Common Stock to directors, officers or employees of the Company in their capacity as such pursuant
to an Approved Stock Plan (as defined below), provided that (1) all such issuances (taking into account the shares of Common Stock issuable
upon exercise of such options) after the date hereof pursuant to this clause (i) do not, in the aggregate, exceed more than 5% of the
Common Stock issued and outstanding immediately prior to the date hereof and (2) the exercise price of any such options is not lowered,
none of such options are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any such
options are otherwise materially changed in any manner that adversely affects any of the Buyers; (ii) shares of Common Stock issued upon
the conversion or exercise of Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved
Stock Plan that are covered by clause (i) above) issued prior to the date hereof, provided that the conversion, exercise or other method
of issuance (as the case may be) of any such Convertible Security is made solely pursuant to the conversion, exercise or other method
of issuance (as the case may be) provisions of such Convertible Security that were in effect on the date immediately prior to the date
of this Agreement, the conversion, exercise or issuance price of any such Convertible Securities (other than standard options to purchase
Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) is not lowered, none of such Convertible
Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause
(i) above) are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any such Convertible
Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause
(i) above) are otherwise materially changed in any manner that adversely affects any of the Buyers; (iii) the Conversion Shares; (iv)
the Warrant Shares; (v) any shares of Common Stock issued or issuable in connection with any bona fide strategic or commercial alliances,
acquisitions, mergers, licensing arrangements, and strategic partnerships, provided, that (1) the primary purpose of such issuance is
not to raise capital as reasonably determined, and (2) the purchaser or acquirer or recipient of the securities in such issuance solely
consists of either (I) the actual participants in such strategic or commercial alliance, strategic or commercial licensing arrangement
or strategic or commercial partnership, (II) the actual owners of such assets or securities acquired in such acquisition or merger or
(III) the stockholders, partners,
employees, consultants, officers, directors or members of the foregoing Persons, in each case, which
is, itself or through its subsidiaries, an operating company or an owner of an asset, in a business synergistic with the business of the
Company and shall provide to the Company additional benefits in addition to the investment of funds, and (IV) the number or amount of
securities issued to such Persons by the Company shall not be disproportionate to each such Person’s actual participation in (or
fair market value of the contribution to) such strategic or commercial alliance or strategic or commercial partnership or ownership of
such assets or securities to be acquired by the Company, as applicable (each of the foregoing in clauses (i) through (v), collectively
the “Excluded Securities”); and (vi) a bone fide public offering of at least $2 million of Common Stock. “Approved
Stock Plan” means any employee benefit plan which has been approved by the board of directors of the Company prior to or subsequent
to the date hereof pursuant to which shares of Common Stock and standard options to purchase Common Stock may be issued to any employee,
officer or director for services provided to the Company in their capacity as such.
(l) Reservation
of Shares. So long as any of the Notes or Warrants remain outstanding, the Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of issuance, no less than the sum of (i) 200% of the maximum number
of shares of Common Stock issuable upon conversion of all the Notes then outstanding (assuming for purposes hereof that (x) the Notes
are convertible at the Alternate Conversion Price assuming an Alternate Conversion Date as of such applicable date of determination, (y)
interest on the Notes shall accrue through the eighteen month anniversary of the Closing Date and will be converted in shares of Common
Stock at a conversion price equal to the Alternate Conversion Price assuming an Alternate Conversion Date as of such applicable date of
determination and (z) any such conversion shall not take into account any limitations on the conversion of the Notes set forth in the
Notes), and (ii) 100% of the maximum number of Warrant Shares issuable upon exercise of all the Warrants then outstanding (without regard
to any limitations on the exercise of the Warrants set forth therein) (collectively, the “Required Reserve Amount”);
provided that at no time shall the number of shares of Common Stock reserved pursuant to this Section 4(l) be reduced other than proportionally
in connection with any conversion, exercise and/or redemption, as applicable of Notes and Warrants. If at any time the number of shares
of Common Stock authorized and reserved for issuance is not sufficient to meet the Required Reserve Amount, the Company will promptly
take all corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation, calling a special
meeting of stockholders to authorize additional shares to meet the Company’s obligations pursuant to the Transaction Documents,
in the case of an insufficient number of authorized shares, obtain stockholder approval of an increase in such authorized number of shares,
and voting the management shares of the Company in favor of an increase in the authorized shares of the Company to ensure that the number
of authorized shares is sufficient to meet the Required Reserve Amount.
(m) Conduct
of Business. The business of the Company and its Subsidiaries shall not be conducted in violation of
any law, ordinance or regulation of any Governmental Entity, except where such violations would not reasonably be expected to result,
either individually or in the aggregate, in a Material Adverse Effect.
(n) Other
Notes; Variable Securities. So long as any Notes remain outstanding, the Company and each Subsidiary
shall be prohibited from effecting or entering into an agreement to effect any Subsequent Placement involving a Variable Rate Transaction.
“Variable Rate Transaction” means a transaction in which the Company or any Subsidiary (i) issues or sells any Convertible
Securities either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices
of or quotations for the shares of Common Stock at any time after the initial issuance of such Convertible Securities, or (B) with a conversion,
exercise or exchange price that is subject to being reset at some future date after the initial issuance of such Convertible Securities
or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for
the Common Stock, other than pursuant to a customary “weighted average” anti-dilution provision or (ii) enters into any agreement
(including, without limitation, an equity line of credit or an “at-the-market” offering) whereby the Company or any Subsidiary
may sell securities at a future determined price (other than standard and customary “preemptive” or “participation”
rights). Each Buyer shall be entitled to obtain injunctive relief against the Company and its Subsidiaries to preclude any such issuance,
which remedy shall be in addition to any right to collect damages.
(o) Dilutive
Issuances. For so long as any Notes or Warrants remain outstanding, the Company shall not, in any manner,
enter into or affect any Dilutive Issuance (as defined in the Notes) if the effect of such Dilutive Issuance is to cause the Company to
be required to issue upon conversion of any Notes or exercise of any Warrant any shares of Common Stock in excess of that number of shares
of Common Stock which the Company may issue upon conversion of the Notes and exercise of the Warrants without breaching the Company’s
obligations under the rules or regulations of the Principal Market.
(p) Passive
Foreign Investment Company. The Company shall conduct its business, and shall cause its Subsidiaries
to conduct their respective businesses, in such a manner as will ensure that the Company will not be deemed to constitute a passive foreign
investment company within the meaning of Section 1297 of the Code.
(q) Restriction
on Redemption and Cash Dividends. So long as any Notes are outstanding, the Company shall not, directly
or indirectly, redeem, or declare or pay any cash dividend or distribution on, any securities of the Company without the prior express
written consent of the Buyers.
(r) Corporate
Existence. So long as any Buyer beneficially owns any Notes or Warrants, the Company shall not be party
to any Fundamental Transaction (as defined in the Notes) unless the Company is in compliance with the applicable provisions governing
Fundamental Transactions set forth in the Notes and the Warrants.
(s) Conversion
and Exercise Procedures. Each of the form of Exercise Notice (as defined in the Warrants) included in the Warrants and the form of
Conversion Notice (as defined in the Notes) included in the Notes set forth the totality of the procedures required of the Buyers in order
to exercise the Warrants or convert the Notes. Except as provided in Section 5(d), no additional legal opinion, other information or instructions
shall be required of the Buyers to exercise their Warrants or convert their Notes. The Company shall honor exercises of the Warrants and
conversions of the Notes and shall deliver the Conversion Shares and Warrant Shares in accordance with the terms, conditions and time
periods set forth in the Notes and Warrants. Without limiting the preceding sentences, no ink-original Conversion Notice or Exercise Notice
shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Conversion Notice or Exercise
Notice form be required in order to convert the Notes and Warrants.
(t) Regulation
M. The Company will not take any action prohibited by Regulation M under the 1934 Act, in connection
with the distribution of the Securities contemplated hereby.
(u) General Solicitation(f) .
None of the Company, any of its affiliates (as defined in Rule 501(b) under the 1933 Act) or any person acting on behalf of the Company
or such affiliate will solicit any offer to buy or offer or sell the Securities by means of any form of general solicitation or general
advertising within the meaning of Regulation D, including: (i) any advertisement, article, notice or other communication published
in any newspaper, magazine or similar medium or broadcast over television or radio; and (ii) any seminar or meeting whose attendees have
been invited by any general solicitation or general advertising.
(v) Integration(g) .
None of the Company, any of its affiliates (as defined in Rule 501(b) under the 1933 Act), or any person acting on behalf of the Company
or such affiliate will sell, offer for sale, or solicit offers to buy or otherwise negotiate in respect of any security (as defined in
the 1933 Act) which will be integrated with the sale of the Securities in a manner which would require the registration of the Securities
under the 1933 Act or require stockholder approval under the rules and regulations of the Principal Market and the Company will take all
action that is appropriate or necessary to assure that its offerings of other securities will not be integrated for purposes of the 1933
Act or the rules and regulations of the Principal Market, with the issuance of Securities contemplated hereby.
(w) Notice of Disqualification
Events(a) . The Company will notify the Buyers 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, become a Disqualification Event relating
to any Issuer Covered Person.
(x) Restrictions on Transfer
or Exchange of Permitted Senior Indebtedness(b) . At any time any Notes remain outstanding, the Company
shall not (a) assist, directly or indirectly, the assignment or transfer, directly or indirectly, of any Permitted Senior Indebtedness
(as defined in the Notes) to any Person or (b) exchange (or otherwise permit the exchange) of any Permitted Senior Indebtedness into any
securities of the Company without providing the Buyers the right, pro rata, to acquire such Permitted Senior Indebtedness (or securities
to be issued in exchange for such Permitted Senior Indebtedness), upon no less than five (5) Trading Days written notice prior to such
assignment, transfer or exchange, on substantially the same terms as such assignment, transfer and/or exchange (in all material respects,
but excluding any restrictions on transfer of any securities of the Company and/or any required amendment, modifications or waivers to
any securities of the Company and/or any other agreement with the Company or any other Person, as applicable), but in no event at a purchase
price greater than the prepayment price under the Permitted Senior Indebtedness as of such date of determination (and,
in the event of
an exchange, with such applicable purchase price being used to prepay the Permitted Senior Indebtedness in full). For the avoidance of
doubt, if the Senior Lender (as defined in the Notes) refuses to assign or transfer the Notes to the Buyers, the Buyers shall have the
right to require the Company to prepay the Permitted Senior Indebtedness in full and issue new Indebtedness in the form of the Permitted
Senior Indebtedness or additional Notes to such Buyers (as each of the participating Buyers may elect at their option) with an aggregate
initial principal amount equal to the prepayment amount of the Senior Indebtedness.
(y) Reserved.
(z) Participation
Right. Until the earlier of (x) the 90th calendar day after the Closing Date and (y) such time that
the Company shall have consummated an additional offering of Notes, Commitment Shares and Warrants with a gross purchase price of at least
$2.75 million with the Buyers, neither the Company nor any of its Subsidiaries shall, directly or indirectly, effect any Subsequent Placement
unless the Company shall have first complied with this Section 4(z). The Company acknowledges and agrees that the right set forth
in this Section 4(z) is a right granted by the Company, separately, to each Buyer.
(i) At
least five (5) Trading Days prior to any proposed or intended Subsequent Placement, the Company shall deliver to each Buyer a written
notice (each such notice, a “Pre-Notice”), which Pre-Notice shall not contain any information (including, without limitation,
material, non-public information) other than: (A) if the proposed Offer Notice (as defined below) constitutes or contains material, non-public
information, a statement asking whether the Investor is willing to accept material non-public information or (B) if the proposed Offer
Notice does not constitute or contain material, non-public information, (x) a statement that the Company proposes or intends to effect
a Subsequent Placement, (y) a statement that the statement in clause (x) above does not constitute material, non-public information and
(z) a statement informing such Buyer that it is entitled to receive an Offer Notice (as defined below) with respect to such Subsequent
Placement upon its written request. Upon the written request of a Buyer within three (3) Trading Days after the Company’s delivery
to such Buyer of such Pre-Notice, and only upon a written request by such Buyer, the Company shall promptly, but no later than one (1)
Trading Day after such request, deliver to such Buyer an irrevocable written notice (the “Offer Notice”) of any proposed
or intended issuance or sale or exchange (the “Offer”) of the securities being offered (the “Offered Securities”)
in a Subsequent Placement, which Offer Notice shall (A) identify and describe the Offered Securities, (B) describe the price and other
terms upon which they are to be issued, sold or exchanged, and the number or amount of the Offered Securities to be issued, sold or exchanged,
(C) identify the Persons (if known) to which or with which the Offered Securities are to be offered, issued, sold or exchanged and (D)
offer to issue and sell to or exchange with such Buyer in accordance with the terms of the Offer such Buyer’s pro rata portion of
100% of the Offered Securities, provided that the number of Offered Securities which such Buyer shall have the right to subscribe for
under this Section 4(z) shall be (x) based on such Buyer’s pro rata portion of the aggregate original principal amount of the Notes
purchased hereunder by all Buyers (the “Basic Amount”), and (y) with respect to each Buyer that elects to purchase
its Basic Amount, any additional portion of the Offered Securities attributable to the Basic Amounts of other Buyers as such Buyer shall
indicate it will purchase or acquire should the other Buyers subscribe for less than their Basic Amounts (the “Undersubscription
Amount”), which process shall be repeated until each Buyer shall have an opportunity to subscribe for any remaining Undersubscription
Amount.
(ii) To
accept an Offer, in whole or in part, such Buyer must deliver a written notice to the Company prior to the end of the fifth (5th)
Business Day after such Buyer’s receipt of the Offer Notice (the “Offer Period”), setting forth the portion of
such Buyer’s Basic Amount that such Buyer elects to purchase and, if such Buyer shall elect to purchase all of its Basic Amount,
the Undersubscription Amount, if any, that such Buyer elects to purchase (in either case, the “Notice of Acceptance”).
If the Basic Amounts subscribed for by all Buyers are less than the total of all of the Basic Amounts, then each Buyer who has set forth
an Undersubscription Amount in its Notice of Acceptance shall be entitled to purchase, in addition to the Basic Amounts subscribed for,
the Undersubscription Amount it has subscribed for; provided, however, if the Undersubscription Amounts subscribed for exceed the difference
between the total of all the Basic Amounts and the Basic Amounts subscribed for (the “Available Undersubscription Amount”),
each Buyer who has subscribed for any Undersubscription Amount shall be entitled to purchase only that portion of the Available Undersubscription
Amount as the Basic Amount of such Buyer bears to the total Basic Amounts of all Buyers that have subscribed for Undersubscription Amounts,
subject to rounding by the Company to the extent it deems reasonably necessary. Notwithstanding the foregoing, if the Company desires
to modify or amend the terms and conditions of the Offer prior to the expiration of the Offer Period, the Company may deliver to each
Buyer a new Offer Notice and the Offer Period shall expire on the fifth (5th) Business Day after such Buyer’s receipt
of such new Offer Notice.
(iii) The
Company shall have five (5) Business Days from the expiration of the Offer Period above (A) to offer, issue, sell or exchange all or any
part of such Offered Securities as to which a Notice of Acceptance has not been given by a Buyer (the “Refused Securities”)
pursuant to a definitive agreement(s) (the “Subsequent Placement Agreement”), but only to the offerees described in
the Offer Notice (if so described therein) and only upon terms and conditions (including, without limitation, unit prices and interest
rates) that are not more favorable to the acquiring Person or Persons or less favorable to the Company than those set forth in the Offer
Notice and (B) to publicly announce (x) the execution of such Subsequent Placement Agreement, and (y) either (I) the consummation of the
transactions contemplated by such Subsequent Placement Agreement or (II) the termination of such Subsequent Placement Agreement, which
shall be filed with the SEC on a Current Report on Form 8-K with such Subsequent Placement Agreement and any documents contemplated therein
filed as exhibits thereto.
(iv) In
the event the Company shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the terms specified
in Section 4(z)(iii) above), then each Buyer may, at its sole option and in its sole discretion, withdraw its Notice of Acceptance
or reduce the number or amount of the Offered Securities specified in its Notice of Acceptance to an amount that shall be not less than
the number or amount of the Offered Securities that such Buyer elected to purchase pursuant to Section 4(z)(ii) above multiplied
by a fraction, (i) the numerator of which shall be the number or amount of Offered Securities the Company actually proposes to issue,
sell or exchange (including Offered Securities to be issued or sold to Buyers pursuant to this Section 4(z) prior to such reduction)
and (ii) the denominator of which shall be the original amount of the Offered Securities. In the event that any Buyer so elects to reduce
the number or amount of Offered Securities specified in its Notice of Acceptance, the Company may not issue, sell or exchange more than
the reduced number or amount of the Offered Securities unless and until such securities have again been offered to the Buyers in accordance
with Section 4(z)(i) above.
(v) Upon
the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, such Buyer shall acquire from the Company,
and the Company shall issue to such Buyer, the number or amount of Offered Securities specified in its Notice of Acceptance, as reduced
pursuant to Section 4(z)(iv) above if such Buyer has so elected, upon the terms and conditions specified in the Offer. The purchase
by such Buyer of any Offered Securities is subject in all cases to the preparation, execution and delivery by the Company and such Buyer
of a separate purchase agreement relating to such Offered Securities reasonably satisfactory in form and substance to such Buyer and its
counsel.
(vi) Any
Offered Securities not acquired by a Buyer or other Persons in accordance with this Section 4(z) may not be issued, sold or exchanged
until they are again offered to such Buyer under the procedures specified in this Agreement.
(vii) The
Company and each Buyer agree that if any Buyer elects to participate in the Offer, (x) neither the Subsequent Placement Agreement with
respect to such Offer nor any other transaction documents related thereto (collectively, the “Subsequent Placement Documents”)
shall include any term or provision whereby such Buyer shall be required to agree to any restrictions on trading as to any securities
of the Company or be required to consent to any amendment to or termination of, or grant any waiver, release or the like under or in connection
with, any agreement previously entered into with the Company or any instrument received from the Company, and (y) any registration rights
set forth in such Subsequent Placement Documents shall be similar in all material respects to the registration rights contained in the
Registration Rights Agreement.
(viii) Notwithstanding
anything to the contrary in this Section 4(z) and unless otherwise agreed to by such Buyer, the Company shall either confirm in writing
to such Buyer that the transaction with respect to the Subsequent Placement has been abandoned or shall publicly disclose its intention
to issue the Offered Securities, in either case, in such a manner such that such Buyer will not be in possession of any material, non-public
information, by the fifth (5th) Business Day following delivery of the Offer Notice. If by such fifth (5th) Business
Day, no public disclosure regarding a transaction with respect to the Offered Securities has been made, and no notice regarding the abandonment
of such transaction has been received by such Buyer, such transaction shall be deemed to have been abandoned and such Buyer shall not
be in possession of any material, non-public information with respect to the Company or any of its Subsidiaries. Should the Company decide
to pursue such transaction with respect to the Offered Securities, the Company shall provide such Buyer with another Offer Notice and
such Buyer will again have the right of participation set forth in this Section 4(z). The Company shall not be permitted to deliver more
than one such Offer Notice to such Buyer in any sixty (60) day period, except as expressly contemplated by the last sentence of Section
4(z)(ii).
(ix) The
restrictions contained in this Section 4(z) shall not apply in connection with the issuance of any Excluded Securities. The Company shall
not circumvent the provisions of this Section 4(z) by providing terms or conditions to one Buyer that are not provided to all.
(aa) Closing Documents.
On or prior to fourteen (14) calendar days after the Closing Date, the Company agrees to deliver, or cause to be delivered, to each Buyer
and Kelley Drye & Warren LLP a complete closing set of the executed Transaction Documents, Securities and any other document required
to be delivered to any party pursuant to Section 7 hereof or otherwise.
(bb) Stockholder
Approval. The Company shall either (x) if the Company shall have obtained the prior written consent of the requisite stockholders
(the “Stockholder Consent”) to obtain the Stockholder Approval (as defined below), inform the stockholders of the
Company of the receipt of the Stockholder Consent by preparing and filing with the SEC, as promptly as practicable after the date hereof,
but prior to the forty-fifth (45th) calendar day after the Closing Date (or, if such filing is delayed by a court or regulatory agency,
in no event later than 90 calendar days after the Closing), an information statement with respect thereto or (y) provide each stockholder
entitled to vote at an annual or special meeting of stockholders of the Company (the “Stockholder Meeting”), which
shall be promptly called and held not later than July 31, 2024 (the “Stockholder Meeting Deadline”), a proxy statement,
in each case, in a form reasonably acceptable to the Buyers. The proxy statement, if any, shall solicit each of the Company’s stockholder’s
affirmative vote at the Stockholder Meeting for approval of resolutions (“Stockholder Resolutions”) providing for
the approval of the issuance of all of the Securities in compliance with the rules and regulations of the Principal Market (without regard
to any limitations on conversion or exercise set forth in the Notes or Warrants, respectively) (such affirmative approval being referred
to herein as the “Stockholder Approval”, and the date such Stockholder Approval is obtained, the “Stockholder
Approval Date”), and the Company shall use its reasonable best efforts to solicit its stockholders’ approval of such
resolutions and to cause the Board of Directors of the Company to recommend to the stockholders that they approve such resolutions. The
Company shall be obligated to seek to obtain the Stockholder Approval by the Stockholder Meeting Deadline. If, despite the Company’s
reasonable best efforts the Stockholder Approval is not obtained on or prior to the Stockholder Meeting Deadline, the Company shall cause
an additional Stockholder Meeting to be held on or prior to October 31, 2024. If, despite the Company’s reasonable best efforts
the Stockholder Approval is not obtained after such subsequent stockholder meetings, and provided Stockholder Approval is required under
the rules or regulations of the Eligible Market, the Company shall cause an additional Stockholder Meeting to be held semi-annually thereafter
until such Stockholder Approval is obtained. For avoidance of doubt the Company’s obligations under this Section 4(bb) shall
terminate if the Stockholder Approval is no longer required under the rules or regulations of the Eligible Market and Section 2(g) of
the Warrants has been waived or amended such that it shall have no further force and effect.
5. REGISTER;
TRANSFER AGENT INSTRUCTIONS; LEGEND.
(a) Register.
The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice
to each holder of Securities), a register for the Notes and the Warrants in which the Company shall record the name and address of the
Person in whose name the Notes and the Warrants have been issued (including the name and address of each transferee), the principal amount
of the Notes held by such Person, the number of Conversion Shares issuable pursuant to the terms of the Notes and the number of Warrant
Shares issuable upon exercise of the Warrants held by such Person. The Company shall keep the register open and available at all times
during business hours for inspection of any Buyer or its legal representatives.
(b) Transfer
Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent and any subsequent
transfer agent (as applicable, the “Transfer Agent”) in a form acceptable to each of the Buyers (the “Irrevocable
Transfer Agent Instructions”) to issue certificates or credit shares to the applicable balance accounts at The Depository Trust
Company (“DTC”), registered in the name of each Buyer or its respective nominee(s), for the Conversion Shares, Commitment
Shares and the Warrant Shares in such amounts as specified from time to time by each Buyer to the Company upon conversion of the Notes
or the exercise of the Warrants (as the case may be). The Company represents and warrants that no instruction other than the Irrevocable
Transfer Agent Instructions referred to in this Section 5(b), and stop transfer instructions to give effect to Section 2(g) hereof,
will be given by the Company to its transfer agent with respect to the Securities, and that the Securities shall otherwise be freely transferable
on the books and records of the Company, as applicable, to the extent provided in this Agreement and the other Transaction Documents.
If a Buyer effects a sale, assignment or transfer of the Securities in accordance with Section 2(g), the Company shall permit the transfer
and shall promptly instruct its transfer agent to issue one or more certificates or credit shares to the applicable balance accounts at
DTC in such name and in such denominations as specified by such Buyer to effect such sale, transfer or assignment. In the event that such
sale, assignment or transfer involves Conversion Shares, Commitment Shares or Warrant Shares sold, assigned or transferred pursuant to
an effective registration statement or in compliance with Rule 144, the transfer agent shall issue such shares to such Buyer, assignee
or transferee (as the case may be) without any restrictive legend in accordance with Section 5(d) below. The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to a Buyer. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 5(b) will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Section 5(b), that a Buyer shall be entitled,
in addition to all other
available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity
of showing economic loss and without any bond or other security being required. The Company shall cause its counsel to issue the legal
opinion referred to in the Irrevocable Transfer Agent Instructions to the Company’s transfer agent on each Effective Date (as defined
in the Registration Rights Agreement). Any fees (with respect to the transfer agent, counsel to the Company or otherwise) associated with
the issuance of such opinion or the removal of any legends on any of the Securities shall be borne by the Company.
(c) Legends.
Each Buyer understands that the Securities have been issued (or will be issued in the case of the Conversion Shares and the Warrant Shares)
pursuant to an exemption from registration or qualification under the 1933 Act and applicable state securities laws, and except as set
forth below, the Securities shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend
in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):
[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE BEEN][THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY),
IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
(d) Removal
of Legends. Certificates evidencing Securities shall not be required to contain the legend set forth
in Section 5(c) above or any other legend (i) while a registration statement (including a Registration Statement) covering the resale
of such Securities is effective under the 1933 Act, (ii) following any sale of such Securities pursuant to Rule 144 (assuming the transferor
is not an affiliate of the Company), (iii) if such Securities are eligible to be sold, assigned or transferred under Rule 144 (provided
that a Buyer provides the Company with reasonable assurances that such Securities are eligible for sale, assignment or transfer under
Rule 144 which shall not include an opinion of Buyer’s counsel), (iv) in connection with a sale, assignment or other transfer (other
than under Rule 144), provided that such Buyer provides the Company with an opinion of counsel to such Buyer, in a generally acceptable
form, to the effect that such sale, assignment or transfer of the Securities may be made without registration under the applicable requirements
of the 1933 Act or (v) if such legend is not required under applicable requirements of the 1933 Act (including, without limitation, controlling
judicial interpretations and pronouncements issued by the SEC). If a legend is not required pursuant to the foregoing, the Company shall
no later than two (2) Trading Days (or such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation
for the settlement of a trade initiated on the date such Buyer delivers such legended certificate representing such Securities to the
Company) following the delivery by a Buyer to the Company or the transfer agent (with notice to the Company) of a legended certificate
representing such Securities (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect
the reissuance and/or transfer, if applicable), together with any other deliveries from such Buyer as may be required above in this Section 5(d),
as directed by such Buyer, either: (A) provided that the Company’s transfer agent is participating in the DTC Fast Automated Securities
Transfer Program (“FAST”) and such Securities are Conversion Shares, Commitment Shares or Warrant Shares, credit the
aggregate number of shares of Common Stock to which such Buyer shall be entitled to such Buyer’s or its designee’s balance
account with DTC through its Deposit/Withdrawal at Custodian system or (B) if the Company’s transfer agent is not participating
in FAST, issue and deliver (via reputable overnight courier) to such Buyer, a certificate representing such Securities that is free from
all restrictive and other legends, registered in the name of such Buyer or its designee (the date by which such credit is so required
to be made to the balance account of such Buyer’s or such Buyer’s designee with DTC or such certificate is required to be
delivered to such Buyer pursuant to the foregoing is referred to herein as the “Required Delivery Date”, and the date
such shares of Common Stock are actually delivered without restrictive legend to such Buyer or such Buyer’s designee with DTC, as
applicable, the “Share Delivery Date”). The Company shall be responsible for any transfer agent fees or DTC fees with
respect to any issuance of Securities or the removal of any legends with respect to any Securities in accordance herewith.
(e) Failure
to Timely Deliver; Buy-In. If the Company fails to fail, for any reason or for no reason, to issue and
deliver (or cause to be delivered) to a Buyer (or its designee) by the Required Delivery Date, either (I) if the Transfer Agent is not
participating in FAST, a certificate for the number of Conversion Shares, Commitment Shares or Warrant Shares (as the case may be) to
which such Buyer is entitled and register such Conversion Shares, Commitment Shares or Warrant Shares (as the case may be) on the Company’s
share register or, if the Transfer Agent is participating in FAST, to credit the balance account of such Buyer or such Buyer’s designee
with DTC for such number of Conversion Shares or Warrant Shares (as the case may be) submitted for legend removal by such Buyer pursuant
to Section 5(d) above or (II) if the Registration Statement covering the resale of the Conversion Shares, Commitment Shares or Warrant
Shares (as the case may be) submitted for legend removal by such Buyer pursuant to Section 5(d) above (the “Unavailable Shares”)
is not available for the resale of such Unavailable Shares and the Company fails to promptly, but in no event later than as required pursuant
to the Registration Rights Agreement (x) so notify such Buyer and (y) deliver the Conversion Shares, Commitment Shares or Warrant Shares,
as applicable, electronically without any restrictive legend by crediting such aggregate number of Conversion Shares, Commitment Shares
or Warrant Shares (as the case may be) submitted for legend removal by such Buyer pursuant to Section 5(d) above to such Buyer’s
or its designee’s balance account with DTC through its Deposit/Withdrawal At Custodian system (the event described in the immediately
foregoing clause (II) is hereinafter referred as a “Notice Failure” and together with the event described in clause
(I) above, a “Delivery Failure”), then, in addition to all other remedies available to such Buyer, the Company shall
pay in cash to such Buyer on each day after the Share Delivery Date and during such Delivery Failure an amount equal to 2% of the product
of (A) the sum of the number of shares of Common Stock not issued to such Buyer on or prior to the Required Delivery Date and to which
such Buyer is entitled, and (B) any trading price of the Common Stock selected by such Buyer in writing as in effect at any time during
the period beginning on the date of the delivery by such Buyer to the Company of the applicable Conversion Shares, Commitment Shares or
Warrant Shares (as the case may be) and ending on the applicable Share Delivery Date. In addition to the foregoing, if on or prior to
the Required Delivery Date either (I) if the Transfer Agent is not participating in FAST, the Company shall fail to issue and deliver
a certificate to a Buyer and register such shares of Common Stock on the Company’s share register or, if the Transfer Agent is participating
in FAST, credit the balance account of such Buyer or such Buyer’s designee with DTC for the number of shares of Common Stock to
which such Buyer submitted for legend removal by such Buyer pursuant to Section 5(d) above (ii) below or (II) a Notice Failure occurs,
and if on or after such Trading Day such Buyer purchases (in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by such Buyer of shares of Common Stock submitted for legend removal by such Buyer pursuant to Section 5(d)
above that such Buyer is entitled to receive from the Company (a “Buy-In”), then the Company shall, within two (2)
Trading Days after such Buyer’s request and in such Buyer’s discretion, either (i) pay cash to such Buyer in an amount equal
to such Buyer’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any, for the shares of
Common Stock so purchased) (the “Buy-In Price”), at which point the Company’s obligation to so deliver such certificate
or credit such Buyer’s balance account shall terminate and such shares shall be cancelled, or (ii) promptly honor its obligation
to so deliver to such Buyer a certificate or certificates or credit the balance account of such Buyer or such Buyer’s designee with
DTC representing such number of shares of Common Stock that would have been so delivered if the Company timely complied with its obligations
hereunder and pay cash to such Buyer in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number
of shares of Conversion Shares, Commitment Shares or Warrant Shares (as the case may be) that the Company was required to deliver to such
Buyer by the Required Delivery Date multiplied by (B) the lowest Closing Sale Price (as defined in the Warrants) of the Common Stock on
any Trading Day during the period commencing on the date of the delivery by such Buyer to the Company of the applicable Conversion Shares,
Commitment Shares or Warrant Shares (as the case may be) and ending on the date of such delivery and payment under this clause (ii). Nothing
shall limit such Buyer’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation,
a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing
shares of Common Stock (or to electronically deliver such shares of Common Stock) as required pursuant to the terms hereof. Notwithstanding
anything herein to the contrary, with respect to any given Notice Failure and/or Delivery Failure, this Section 5(e) shall not apply to
the applicable Buyer the extent the Company has already paid such amounts in full to such Buyer with respect to such Notice Failure and/or
Delivery Failure, as applicable, pursuant to the analogous sections of the Note or Warrant, as applicable, held by such Buyer.
(f) FAST
Compliance. While any Warrants remain outstanding, the Company shall maintain a transfer agent that participates in FAST.
6. CONDITIONS
TO THE COMPANY’S OBLIGATION TO SELL.
(a) The
obligation of the Company hereunder to issue and sell the Notes, Commitment Shares and the related Warrants to each Buyer at the Closing
is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are
for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with
prior written notice thereof:
(i) Such
Buyer shall have executed each of the other Transaction Documents to which it is a party and delivered the same to the Company.
(ii) Such
Buyer and each other Buyer shall have delivered to the Company the Purchase Price (less, in the case of any Buyer, the amounts withheld
pursuant to Section 4(g)) for the Note, Commitment Shares and the related Warrants being purchased by such Buyer at the Closing by
wire transfer of immediately available funds in accordance with the Flow of Funds Letter.
(iii) The
representations and warranties of such Buyer shall be true and correct in all material respects as of the date when made and as of the
Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which
shall be true and correct as of such specific date), and such Buyer shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Buyer at
or prior to the Closing Date.
7.
CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.
(a) The
obligation of each Buyer hereunder to purchase its Note, Commitment Shares and its related Warrants at the Closing is subject to the satisfaction,
at or before the Closing Date, of each of the following conditions, provided that these conditions are for each Buyer’s sole benefit
and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:
(i) The
Company shall have duly executed and delivered to such Buyer each of the Transaction Documents to which it is a party and the Company
shall have duly executed and delivered to such Buyer (A) a Note in such original principal amount as is set forth across from such Buyer’s
name in column (3) of the Schedule of Buyers, (B) such aggregate number of Commitment Shares as set forth across from such Buyer’s
name in column (4) of the Schedule of Buyers, and (B) Warrants initially exercisable for such aggregate number of Warrant Shares as is
set forth across from such Buyer’s name in column (5) of the Schedule of Buyers, in each case, as being purchased by such Buyer
at the Closing pursuant to this Agreement.
(ii) The
Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form acceptable to such Buyer,
which instructions shall have been delivered to and acknowledged in writing by the Company’s transfer agent.
(iii) The
Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company issued by the Secretary
of State of Nevada as of a date within ten (10) days of the Closing Date.
(iv) The
Company shall have delivered to such Buyer a certificate evidencing the Company’s qualification as a foreign corporation and good
standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the Company conducts business and is required
to so qualify, as of a date within fifteen (15) days of the Closing Date.
(v) The
Company shall have delivered to such Buyer a certified copy of the Articles of Incorporation as certified by the Nevada Secretary of State
within ten (10) days of the Closing Date.
(vi) The
Company shall have delivered to such Buyer a certificate, in the form acceptable to such Buyer, executed by the Secretary of the Company
and dated as of the Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Company’s board
of directors in a form reasonably acceptable to such Buyer, (ii) the Articles of Incorporation of the Company and (iii) the Bylaws
of the Company, each as in effect at the Closing.
(vii) Each
and every representation and warranty of the Company shall be true and correct as of the date when made and as of the Closing Date as
though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and
correct as of such specific date) and the Company shall have performed, satisfied and complied in all respects with the covenants, agreements
and conditions required to be performed, satisfied or complied with by the Company at or prior to the Closing Date. Such Buyer shall have
received a certificate, duly executed by the Chief Executive Officer of the Company, dated as of the Closing Date, to the foregoing effect
and as to such other matters as may be reasonably requested by such Buyer in the form acceptable to such Buyer.
(viii) The
Company shall have delivered to such Buyer a letter from the Company’s transfer agent certifying the number of shares of Common
Stock outstanding on the Closing Date immediately prior to the Closing.
(ix) The
Common Stock (A) shall be designated for quotation or listed (as applicable) on the Principal Market and (B) shall not have been suspended,
as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC or the
Principal Market have been threatened, as of the Closing Date, either (I) in writing by the SEC or the Principal Market or (II) by falling
below the minimum maintenance requirements of the Principal Market.
(x) The
Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the
Securities, including without limitation, those required by the Principal Market, if any.
(xi) No
statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by
any court or Governmental Entity of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by
the Transaction Documents.
(xii) Since
the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would have or result in a Material
Adverse Effect.
(xiii) The
Company shall have obtained approval of the Principal Market to list or designate for quotation (as the case may be) the Conversion Shares,
the Commitment Shares and the Warrant Shares.
(xiv) Within
two (2) Business Days prior to the Closing, the Company shall have delivered or caused to be delivered to each Buyer certified copies
of requests for copies of information on Form UCC-11, listing all effective financing statements which name as debtor the Company or any
of its Subsidiaries.
(xv) Such
Buyer shall have received a letter on the letterhead of the Company, duly executed by the Chief Executive Officer of the Company, setting
forth the wire amounts of each Buyer and the wire transfer instructions of the Company (the “Flow of Funds Letter”).
(xvi) The Company shall have obtained the consent of Decathlon Alpha, IV, L.P. to the transactions contemplated by the
September Securities Purchase Agreement and the other Transaction Documents (as defined in the September Securities Purchase
Agreement) and transactions contemplated by this Agreement and the other Transaction Documents (as defined herein), and shall have
delivered to such Buyer evidence thereof.
(xvii) The
Company and its Subsidiaries shall have delivered to such Buyer such other documents, instruments or certificates relating to the transactions
contemplated by this Agreement as such Buyer or its counsel may reasonably request.
8. TERMINATION.
In the event that the Closing shall
not have occurred with respect to a Buyer within five (5) days of the date hereof, then such Buyer shall have the right to terminate its
obligations under this Agreement with respect to itself at any time on or after the close of business on such date without liability of
such Buyer to any other party; provided, however, (i) the right to terminate this Agreement under this Section 8 shall not be available
to such Buyer if the failure of the transactions contemplated by this Agreement to have been consummated by such date is the result of
such Buyer’s breach of this Agreement and (ii) the abandonment of the sale and purchase of the Notes, the Commitment Shares and
the Warrants shall be applicable only to such Buyer providing such written notice, provided further that no such termination shall affect
any obligation of the Company under this Agreement to reimburse such Buyer for the expenses described in Section 4(g) above. Nothing
contained in this Section 8 shall be deemed to release any party from any liability for any breach by such party of the terms and
provisions of this Agreement or the other Transaction Documents or to impair the right of any party to compel specific performance by
any other party of its obligations under this Agreement or the other Transaction Documents.
9. MISCELLANEOUS.
(a) Governing
Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the State of Nevada, without giving effect to any provision
of law or rule (whether of the State of Nevada or any other jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of Nevada. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting
in Carson City, for the adjudication of any dispute hereunder or in connection herewith or under any of the other Transaction Documents
or with any transaction contemplated hereby or thereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service
of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted
by law. Nothing contained herein shall be deemed or operate to preclude any Buyer from bringing suit or taking other legal action against
the Company in any other jurisdiction to collect on the Company’s obligations to such Buyer or to enforce a judgment or other court
ruling in favor of such Buyer. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL
FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT,
ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
(b) Counterparts.
This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature
is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature
page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed)
with the same force and effect as if such signature page were an original thereof.
(c) Headings;
Gender. The headings of this Agreement are for convenience of reference and shall not form part of,
or affect the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to
include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,”
“include” and words of like import shall be construed broadly as if followed by the words “without limitation.”
The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement
instead of just the provision in which they are found.
(d) Severability;
Maximum Payment Amounts. If any provision of this Agreement is prohibited by law or otherwise determined
to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable
shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability
of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified
continues to express,
without material change, the original intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal
obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties
will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the
effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s). Notwithstanding anything
to the contrary contained in this Agreement or any other Transaction Document (and without implication that the following is required
or applicable), it is the intention of the parties that in no event shall amounts and value paid by the Company and/or any of its Subsidiaries
(as the case may be), or payable to or received by any of the Buyers, under the Transaction Documents (including without limitation, any
amounts that would be characterized as “interest” under applicable law) exceed amounts permitted under any applicable law.
Accordingly, if any obligation to pay, payment made to any Buyer, or collection by any Buyer pursuant the Transaction Documents is finally
judicially determined to be contrary to any such applicable law, such obligation to pay, payment or collection shall be deemed to have
been made by mutual mistake of such Buyer, the Company and its Subsidiaries and such amount shall be deemed to have been adjusted with
retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by the applicable law.
Such adjustment shall be effected, to the extent necessary, by reducing or refunding, at the option of such Buyer, the amount of interest
or any other amounts which would constitute unlawful amounts required to be paid or actually paid to such Buyer under the Transaction
Documents. For greater certainty, to the extent that any interest, charges, fees, expenses or other amounts required to be paid to or
received by such Buyer under any of the Transaction Documents or related thereto are held to be within the meaning of “interest”
or another applicable term to otherwise be violative of applicable law, such amounts shall be pro-rated over the period of time to which
they relate.
(e) Entire
Agreement; Amendments. This Agreement, the other Transaction Documents and the schedules and exhibits
attached hereto and thereto and the instruments referenced herein and therein supersede all other prior oral or written agreements between
the Buyers, the Company, its Subsidiaries, their affiliates and Persons acting on their behalf, including, without limitation, any transactions
by any Buyer with respect to Common Stock or the Securities, and the other matters contained herein and therein, and this Agreement, the
other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein
contain the entire understanding of the parties solely with respect to the matters covered herein and therein; provided, however, nothing
contained in this Agreement or any other Transaction Document shall (or shall be deemed to) (i) have any effect on any agreements any
Buyer has entered into with, or any instruments any Buyer has received from, the Company or any of its Subsidiaries prior to the date
hereof with respect to any prior investment made by such Buyer in the Company or (ii) waive, alter, modify or amend in any respect any
obligations of the Company or any of its Subsidiaries, or any rights of or benefits to any Buyer or any other Person, in any agreement
entered into prior to the date hereof between or among the Company and/or any of its Subsidiaries and any Buyer, or any instruments any
Buyer received from the Company and/or any of its Subsidiaries prior to the date hereof, and all such agreements and instruments shall
continue in full force and effect. Except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. For clarification purposes, the Recitals are part of this Agreement. No
provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the Required Holders (as defined
below), and any amendment to any provision of this Agreement made in conformity with the provisions of this Section 9(e) shall be
binding on all Buyers and holders of Securities, as applicable; provided that no such amendment shall be effective to the extent that
it (A) applies to less than all of the holders of the Securities then outstanding or (B) imposes any obligation or liability on any Buyer
without such Buyer’s prior written consent (which may be granted or withheld in such Buyer’s sole discretion). No waiver shall
be effective unless it is in writing and signed by an authorized representative of the waiving party, provided that the Required Holders
may waive any provision of this Agreement, and any waiver of any provision of this Agreement made in conformity with the provisions of
this Section 9(e) shall be binding on all Buyers and holders of Securities, as applicable, provided that no such waiver shall be
effective to the extent that it (1) applies to less than all of the holders of the Securities then outstanding (unless a party gives a
waiver as to itself only) or (2) imposes any obligation or liability on any Buyer without such Buyer’s prior written consent (which
may be granted or withheld in such Buyer’s sole discretion). No consideration (other than reimbursement of legal fees) shall be
offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless
the same consideration also is offered to all of the parties to the Transaction Documents, all holders of the Notes or all holders of
the Warrants (as the case may be). From the date hereof and while any Notes or Warrants are outstanding,
the Company shall not be permitted
to receive any consideration from a Buyer or a holder of Notes or Warrants that is not otherwise contemplated by the Transaction Documents
in order to, directly or indirectly, induce the Company or any Subsidiary (i) to treat such Buyer or holder of Notes or Warrants in a
manner that is more favorable than to other similarly situated Buyers or holders of Notes or Warrants, as applicable, or (ii) to treat
any Buyer(s) or holder(s) of Notes or Warrants in a manner that is less favorable than the Buyer or holder of Notes or Warrants that is
paying such consideration; provided, however, that the determination of whether a Buyer has been treated more or less favorably than another
Buyer shall disregard any securities of the Company purchased or sold by any Buyer. The Company has not, directly or indirectly, made
any agreements with any Buyers relating to the terms or conditions of the transactions contemplated by the Transaction Documents except
as set forth in the Transaction Documents. Without limiting the foregoing, the Company confirms that, except as set forth in this Agreement,
no Buyer has made any commitment or promise or has any other obligation to provide any financing to the Company, any Subsidiary or otherwise.
As a material inducement for each Buyer to enter into this Agreement, the Company expressly acknowledges and agrees that (x) no due diligence
or other investigation or inquiry conducted by a Buyer, any of its advisors or any of its representatives shall affect such Buyer’s
right to rely on, or shall modify or qualify in any manner or be an exception to any of, the Company’s representations and warranties
contained in this Agreement or any other Transaction Document and (y) unless a provision of this Agreement or any other Transaction Document
is expressly preceded by the phrase “except as disclosed in the SEC Documents,” nothing contained in any of the SEC Documents
shall affect such Buyer’s right to rely on, or shall modify or qualify in any manner or be an exception to any of, the Company’s
representations and warranties contained in this Agreement or any other Transaction Document. “Required Holders” means
(I) prior to the Closing Date, each Buyer entitled to purchase Notes, Commitment Shares and Warrants at the Closing and (II) on or after
the Closing Date, holders of a majority of the Registrable Securities as of such time (excluding any Registrable Securities held by the
Company or any of its Subsidiaries as of such time) issued or issuable hereunder or pursuant to the Notes and/or the Warrants (or the
Buyers, with respect to any waiver or amendment of Section 4(o)); provided, that such majority must include [--] as long as it
holds any Notes, Commitment Shares or Warrants.
(f) Notices.
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by electronic
mail (provided that such sent email is kept on file (whether electronically or otherwise) by the sending party and the sending party does
not receive an automatically generated message from the recipient’s email server that such e-mail could not be delivered to such
recipient); or (iii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each case,
properly addressed to the party to receive the same. The mailing addresses and e-mail addresses for such communications shall be:
If to the Company:
Splash Beverage Group, Inc.
1314 E Las Olas Blvd, Suite 221
Fort Lauderdale, Florida 33301
Telephone: (954) 745-5815
Attention: Robert Nistico, Chief Executive Officer
E-Mail: Robert@splashbeveragegroup.com
With a copy (for informational purposes only) to:
Sichenzia Ross Ference Carmel LLP
1185 Avenue of the Americas, 31st Floor
New York, New York 10036
Telephone: (212) 930-9700
Attention: Darrin Ocasio
E-Mail: dmocasio@srfc.law
If to the Transfer Agent:
Vstock Transfer
18 Lafayette Place
Woodmere, New York 11598
Telephone: (212) 828-8436
Attention:
E-Mail: action@vstocktransfer.com
If to a Buyer, to its mailing address and e-mail address
set forth on the Schedule of Buyers, with copies to such Buyer’s representatives as set forth on the Schedule of Buyers,
with a copy (for informational purposes only) to:
Kelley Drye & Warren LLP
3 World Trade Center
175 Greenwich Street
New York, NY 10007
Telephone: (212) 808-7540
Attention: Michael A. Adelstein, Esq.
E-mail: madelstein@kelleydrye.com
or to such other mailing address and/or e-mail address
and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5)
days prior to the effectiveness of such change, provided that Kelley Drye & Warren LLP shall only be provided copies of notices sent
to the lead Buyer. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication,
(B) mechanically or electronically generated by the sender’s e-mail containing the time, date and recipient’s e-mail or (C)
provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by e-mail or receipt from an overnight
courier service in accordance with clause (i), (ii) or (iii) above, respectively.
(g) Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns, including any purchasers of any of the Notes, Commitment Shares and Warrants (other than purchasers
of Commitment Shares in open market transactions). The Company shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Required Holders, including, without limitation, by way of a Fundamental Transaction (as defined
in the Warrants) (unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the
Warrants) or a Fundamental Transaction (as defined in the Notes) (unless the Company is in compliance with the applicable provisions governing
Fundamental Transactions set forth in the Notes). A Buyer may assign some or all of its rights hereunder in connection with any transfer
of any of its Securities without the consent of the Company, in which event such assignee shall be deemed to be a Buyer hereunder with
respect to such assigned rights.
(h) No
Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their
respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person,
other than the Indemnitees referred to in Section 9(k).
(i) Survival.
The representations, warranties, agreements and covenants shall survive the Closing. Each Buyer shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.
(j) Further
Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts
and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.
(k) Indemnification.
In consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder and
in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect, indemnify
and hold harmless each Buyer and each holder of any Securities and all of their stockholders, partners, members, officers, directors,
employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses
in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought),
and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee
as a result of, or arising out of, or relating to (i) any misrepresentation or breach of any representation or warranty made by the Company
or any Subsidiary in any of the Transaction Documents, (ii) any breach of any covenant, agreement or obligation of the Company or any
Subsidiary contained in any of the Transaction Documents or (iii) any cause of action, suit, proceeding or claim brought or made against
such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company or any Subsidiary)
or which otherwise involves such Indemnitee that arises out of or results from (A) the execution, delivery, performance or enforcement
of any of the Transaction Documents, (B) any transaction financed or to be financed in whole or in part, directly or indirectly, with
the proceeds of the issuance of the Securities, (C) any disclosure properly made by such Buyer pursuant to Section 4(i), or (D) the
status of such Buyer or holder of the Securities either as an investor in the Company pursuant to the transactions contemplated by the
Transaction Documents or as a party to this Agreement (including, without limitation, as a party in interest or otherwise in any action
or proceeding for injunctive or other equitable relief). To the extent that the foregoing undertaking by the Company may be unenforceable
for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities
which is permissible under applicable law. Except as otherwise set forth herein, the mechanics and procedures with respect to the rights
and obligations under this Section 9(k) shall be the same as those set forth in Section 6 of the Registration Rights Agreement.
(l) Construction.
The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules
of strict construction will be applied against any party. No specific representation or warranty shall limit the generality or applicability
of a more general representation or warranty. Each and every reference to share prices, shares of Common Stock and any other numbers in
this Agreement that relate to the Common Stock shall be automatically adjusted for any stock splits, stock dividends, stock combinations,
recapitalizations or other similar transactions that occur with respect to the Common Stock after the date of this Agreement. Notwithstanding
anything in this Agreement to the contrary, for the avoidance of doubt, nothing contained herein shall constitute a representation or
warranty against, or a prohibition of, any actions with respect to the borrowing of, arrangement to borrow, identification of the availability
of, and/or securing of, securities of the Company in order for such Buyer (or its broker or other financial representative) to effect
short sales or similar transactions in the future.
(m) Remedies.
Each Buyer and in the event of assignment by Buyer of its rights and obligations hereunder, each holder of Securities, shall have all
rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted at any time
under any other agreement or contract and all of the rights which such holders have under any law. Any Person having any rights under
any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover
damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. Furthermore, the Company
recognizes that in the event that it or any Subsidiary fails to perform, observe, or discharge any or all of its or such Subsidiary’s
(as the case may be) obligations under the Transaction Documents, any remedy at law would inadequate relief to the Buyers. The Company
therefore agrees that the Buyers shall be entitled to specific performance and/or temporary, preliminary and permanent injunctive or other
equitable relief from any court of competent jurisdiction in any such case without the necessity of proving actual damages and without
posting a bond or other security. The remedies provided in this Agreement and the other Transaction Documents shall be cumulative and
in addition to all other remedies available under this Agreement and the other Transaction Documents, at law or in equity (including a
decree of specific performance and/or other injunctive relief).
(n) Withdrawal
Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions
of) the Transaction Documents, whenever any Buyer exercises a right, election, demand or option under a Transaction Document and the Company
or any Subsidiary does not timely perform its related obligations within the periods therein provided, then such Buyer may rescind or
withdraw, in its sole discretion from time to time upon written notice to the Company or such Subsidiary (as the case may be), any relevant
notice, demand or election in whole or in part without prejudice to its future actions and rights.
(o) Payment
Set Aside; Currency. To the extent that the Company makes a payment or payments to any Buyer hereunder
or pursuant to any of the other Transaction Documents or any of the Buyers enforce or exercise their rights hereunder or thereunder, and
such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to
be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to
the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, foreign, state
or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred. Unless otherwise expressly indicated, all dollar amounts referred to in this Agreement and the other Transaction
Documents are in United States Dollars (“U.S. Dollars”), and all amounts owing under this Agreement and all other Transaction
Documents shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar
equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation
to any amount of currency to be converted into U.S. Dollars pursuant to this Agreement, the U.S. Dollar exchange rate as published in
the Wall Street Journal on the relevant date of calculation.
(p) Judgment
Currency.
(i) If
for the purpose of obtaining or enforcing judgment against the Company in connection with this Agreement or any other Transaction Document
in any court in any jurisdiction it becomes necessary to convert into any other currency (such other currency being hereinafter in this
Section 9(p) referred to as the “Judgment Currency”) an amount due in US Dollars under this Agreement, the conversion
shall be made at the Exchange Rate prevailing on the Trading Day immediately preceding:
(1) the
date actual payment of the amount due, in the case of any proceeding in the courts of Nevada or in the courts of any other jurisdiction
that will give effect to such conversion being made on such date: or
(2) the
date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as of which
such conversion is made pursuant to this Section 9(p)(i)(2) being hereinafter referred to as the “Judgment Conversion Date”).
(ii) If
in the case of any proceeding in the court of any jurisdiction referred to in Section 9(p)(i)(2) above, there is a change in the
Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable party shall
pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the Exchange Rate
prevailing on the date of payment, will produce the amount of US Dollars which could have been purchased with the amount of Judgment Currency
stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion Date.
(iii) Any
amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being obtained
for any other amounts due under or in respect of this Agreement or any other Transaction Document.
(q) Independent
Nature of Buyers’ Obligations and Rights. The obligations of each Buyer under the Transaction
Documents are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance
of the obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document, and
no action taken by any Buyer pursuant hereto or thereto,
shall be deemed to constitute the Buyers as, and the Company acknowledges that
the Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption
that the Buyers are in any way acting in concert or as a group or entity, and the Company shall not assert any such claim with respect
to such obligations or the transactions contemplated by the Transaction Documents or any matters, and the Company acknowledges that the
Buyers are not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or the
transactions contemplated by the Transaction Documents. The decision of each Buyer to purchase Securities pursuant to the Transaction
Documents has been made by such Buyer independently of any other Buyer. Each Buyer acknowledges that no other Buyer has acted as agent
for such Buyer in connection with such Buyer making its investment hereunder and that no other Buyer will be acting as agent of such Buyer
in connection with monitoring such Buyer’s investment in the Securities or enforcing its rights under the Transaction Documents.
The Company and each Buyer confirms that each Buyer has independently participated with the Company and its Subsidiaries in the negotiation
of the transaction contemplated hereby with the advice of its own counsel and advisors. Each Buyer shall be entitled to independently
protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other Transaction
Documents, and it shall not be necessary for any other Buyer to be joined as an additional party in any proceeding for such purpose. The
use of a single agreement to effectuate the purchase and sale of the Securities contemplated hereby was solely in the control of the Company,
not the action or decision of any Buyer, and was done solely for the convenience of the Company and its Subsidiaries and not because it
was required or requested to do so by any Buyer. It is expressly understood and agreed that each provision contained in this Agreement
and in each other Transaction Document is between the Company, each Subsidiary and a Buyer, solely, and not between the Company, its Subsidiaries
and the Buyers collectively and not between and among the Buyers.
[signature pages follow]
IN WITNESS WHEREOF, each
Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written above.
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COMPANY: |
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SPLASH BEVERAGE GROUP, INC. |
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By: |
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Name: Robert Nistico |
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Title: Chief Executive Officer |
IN WITNESS WHEREOF, each
Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written above.
40
EXHIBIT 10.2
FORM OF
SENIOR CONVERTIBLE NOTE
NEITHER THE ISSUANCE AND SALE OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTIONS 3(c)(iii) AND 17(a)
HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN
THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii) OF THIS NOTE.
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL
ISSUE DISCOUNT (“OID”). PURSUANT TO TREASURY REGULATION §1.1275-3(b)(1), ROBERT NISTICO, A REPRESENTATIVE OF THE COMPANY
HEREOF WILL, BEGINNING TEN DAYS AFTER THE ISSUANCE DATE OF THIS NOTE, PROMPTLY MAKE AVAILABLE TO THE HOLDER UPON REQUEST THE INFORMATION
DESCRIBED IN TREASURY REGULATION §1.1275-3(b)(1)(i). ROBERT NISTICO MAY BE REACHED AT TELEPHONE NUMBER (954) 745-5815.
Splash
Beverage Group, Inc.
Senior
Convertible Note
Issuance Date: May 1, 2024 |
Original Principal Amount: U.S. $[--] |
FOR VALUE
RECEIVED, Splash Beverage Group, Inc., a Nevada corporation (the “Company”),
hereby promises to pay to the order of [--] or its registered assigns (“Holder”)
the amount set forth above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion
or otherwise, the “Principal”) when due, whether upon the Maturity Date, or upon acceleration, redemption or otherwise
(in each case in accordance with the terms hereof) and to pay interest (“Interest”) on any outstanding Principal at
the applicable Interest Rate (as defined below) from the date set forth above as the Issuance Date (the “Issuance Date”)
until the same becomes due and payable, whether upon the Maturity Date or upon acceleration,
conversion, redemption or otherwise (in each case in accordance with the terms hereof). This Senior Convertible Note (including all Senior
Convertible Notes issued in exchange, transfer or replacement hereof, this “Note”) is one of an issue of Senior Convertible
Notes issued pursuant to the Securities Purchase Agreement, dated as of May 1, 2024 (the “Subscription Date”), by and
among the Company and the investors (the “Buyers”) referred to therein, as amended from time to time (collectively,
the “Notes”, and such other Senior Convertible Notes, the “Other Notes”). Certain capitalized terms
used herein are defined in Section 30.
1. PAYMENTS
OF PRINCIPAL. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding Principal,
accrued and unpaid Interest and accrued and unpaid Late Charges (as defined in Section 23(c)) on such Principal and Interest. Other than
as specifically permitted by this Note, the Company may not prepay any portion of the outstanding Principal, accrued and unpaid Interest
or accrued and unpaid Late Charges on Principal and Interest, if any.
2.
INTEREST; INTEREST RATE.
(a) Interest
on this Note shall commence accruing on the Issuance Date and shall be computed on the basis of a 360-day year and twelve 30-day months
and shall be payable in arrears for on the first calendar day of each calendar month (each, an “Interest Date”) with
the first Interest Date being November 1, 2024. Interest shall be payable on each Interest Date, to the record holder of this Note on
the applicable Interest Date, in shares of Common Stock (“Interest Shares”) so long as there has been no Equity Conditions
Failure; provided however, that the Company may, at its option following notice to the Holder, pay Interest on any Interest Date in cash
(“Cash Interest”) or in a combination of Cash Interest and Interest Shares. The Company shall deliver a written notice
(each, an “Interest Election Notice”) to each holder of the Notes on or prior to the Interest Notice Due Date (the
date such notice is delivered to all of the holder, the “Interest Notice Date”) which notice (i) either (A) confirms
that Interest to be paid on such Interest Date shall be paid entirely in Interest Shares or (B) elects to pay Interest as Cash Interest
or a combination of Cash Interest and Interest Shares and specifies the amount of Interest that shall be paid as Cash Interest and the
amount of Interest, if any, that shall be paid in Interest Shares and (ii) certifies that there has been no Equity Conditions Failure.
If an Equity Conditions Failure has occurred as of the Interest Notice Date, then unless the Company has elected to pay such Interest
as Cash Interest, the Interest Notice shall indicate that unless the Holder waives the Equity Conditions Failure, the Interest shall
be paid as Cash Interest. Notwithstanding anything herein to the contrary, if no Equity Conditions Failure has occurred as of the Interest
Notice Date but an Equity Conditions Failure occurs at any time prior to the Interest Date, (A) the Company shall provide the Holder
a subsequent notice to that effect and (B) unless the Holder waives the Equity Conditions Failure, the Interest shall be paid in cash.
Interest to be paid on an Interest Date in Interest Shares shall be paid in a number of fully paid and nonassessable shares (rounded
to the nearest whole share in accordance with Section 3(a)) of Common Stock equal to the quotient
of (1) the amount of Interest payable on such Interest Date less any Cash Interest paid and (2) the Conversion Price in effect on the
applicable Interest Date.
(b) When
any Interest Shares are to be paid on an Interest Date, the Company shall (i) (A) provided that the Company’s transfer agent (the
“Transfer Agent”) is participating in the Depository Trust Company (“DTC”) Fast Automated Securities
Transfer Program, credit such aggregate number of Interest Shares to which the Holder shall be entitled to the Holder’s or its designee’s
balance account with DTC through its Deposit/Withdrawal at Custodian system, or (B) if the Transfer Agent is not participating in the
DTC Fast Automated Securities Transfer Program, issue and deliver on the applicable Interest Date, to the address set forth in the register
maintained by the Company for such purpose pursuant to the Securities Purchase Agreement or to such address as specified by the Holder
in writing to the Company at least two (2) Business Days prior to the applicable Interest Date, a certificate, registered in the name
of the Holder or its designee, for the number of Interest Shares to which the Holder shall be entitled and (ii) with respect to each Interest
Date, pay to the Holder, in cash by wire transfer of immediately available funds, the amount of any Cash Interest.
(c) Prior
to the payment of Interest on an Interest Date, Interest on this Note shall accrue at the Interest Rate and be payable by way of inclusion
of the Interest in the Conversion Amount on each Conversion Date in accordance with Section 3(b)(i) or upon any redemption in accordance
with Section 11 or any required payment upon any Bankruptcy Event of Default. From and after the occurrence and during the continuance
of any Event of Default,
the Interest Rate shall automatically be increased to eighteen percent (18.0%) per annum (the “Default
Rate”). In the event that such Event of Default is subsequently cured (and no other Event of Default then exists, including,
without limitation, for the Company’s failure to pay such Interest at the Default Rate on the applicable Interest Date), the adjustment
referred to in the preceding sentence shall cease to be effective as of the calendar day immediately following the date of such cure;
provided that the Interest as calculated and unpaid at such increased rate during the continuance of such Event of Default shall continue
to apply to the extent relating to the days after the occurrence of such Event of Default through and including the date of such cure
of such Event of Default.
3. CONVERSION
OF NOTES. At any time after the Issuance Date, this Note shall be convertible into validly issued, fully paid and non-assessable shares
of Common Stock (as defined below), on the terms and conditions set forth in this Section 3.
(a) Conversion
Right. Subject to the provisions of Section 3(d), at any time or times on or after the Issuance Date, the Holder shall be
entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into validly issued, fully paid
and non-assessable shares of Common Stock in accordance with Section 3(c), at the Conversion Rate (as defined below). The Company
shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a
fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share.
The Company shall pay any and all transfer, stamp, issuance and similar taxes,
costs and expenses (including, without limitation, fees and expenses of the Transfer Agent (as defined below)) that may be payable
with respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount.
(b) Conversion
Rate. The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to Section 3(a) shall be determined
by dividing (x) such Conversion Amount by (y) the Conversion Price (the “Conversion Rate”).
(i) “Conversion
Amount” means the sum of ( portion of the Principal of this Note to be converted, redeemed or otherwise with respect to which
this determination is being made, (B) accrued and unpaid Interest with respect to such Principal of this Note, (D) accrued and unpaid
Late Charges with respect to such Principal of this Note and Interest, and (E) any other unpaid amounts pursuant to the Transaction Documents,
if any.
(ii) “Conversion
Price” means, as of any Conversion Date or other date of determination, $0.40, subject to adjustment as provided herein.
(c)
Mechanics of Conversion.
(i) Optional
Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion Date”), the
Holder shall deliver (whether via electronic mail or otherwise), for receipt on or prior to 11:59 p.m., New York
time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (each, a “Conversion
Notice”) to the Company. If required by Section 3(c)(iii), within two (2) Trading Days following a conversion of this Note as
aforesaid, the Holder shall surrender this Note to a nationally recognized overnight delivery service for delivery to the Company (or
an indemnification undertaking with respect to this Note in the case of its loss, theft or destruction as contemplated by Section 17(b)).
On or before the first (1st) Trading Day following the date of receipt of a Conversion Notice, the Company shall transmit by electronic
mail an acknowledgment, in the form attached hereto as Exhibit II,
of
confirmation of receipt of such Conversion Notice and representation as to whether such shares of Common Stock may then be resold
pursuant to Rule 144 or an effective and available registration statement (each, an “Acknowledgement”) to the
Holder and the Transfer Agent which confirmation shall constitute an instruction to the Transfer Agent to process such Conversion
Notice in accordance with the terms herein. On or before the second (2nd) Trading Day following the date on which the Company has
received a Conversion Notice (or such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation
for the settlement of a trade initiated on the applicable Conversion Date of such shares of Common Stock issuable pursuant to such
Conversion Notice) (the “Share Delivery Deadline”), the Company shall (1) provided that the Transfer Agent is
participating in The Depository Trust Company’s (“DTC”) Fast Automated Securities Transfer Program
(“FAST”), credit such aggregate number of shares of Common
Stock to which the Holder shall be entitled pursuant to such conversion to the Holder’s or its designee’s balance
account with DTC through its Deposit/Withdrawal at Custodian system or (2) if the Transfer Agent is not participating in FAST, upon
the request of the Holder, issue and deliver (via reputable overnight courier) to the address as specified in the Conversion Notice,
a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder
shall be entitled pursuant to such conversion. If this Note is physically surrendered for conversion pursuant to Section 3(c)(iii)
and the outstanding Principal of this Note is greater than the Principal portion of the
Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than two (2) Business
Days after receipt of this Note and at its own expense, issue and deliver to the Holder (or its designee) a new Note (in accordance
with Section 17(d)) representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of
Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such
shares of Common Stock (the “Conversion Shares”) on the Conversion Date; provided, that the Holder shall be
deemed to have waived any voting rights of any such Conversion Shares that may arise with respect to any record date during the
period commencing on such Conversion Date, through, and including, such applicable Share Delivery Deadline (each, an
“Conversion Period”), as necessary, such that the aggregate voting rights of any Common Stock (including such
Conversion Shares) beneficially owned by the Holder and/or any Attribution Parties, collectively, on any such record date shall not
exceed the Maximum Percentage (as defined below) as a result of any such conversion of this Note. Notwithstanding anything to the
contrary contained in this Note or the Registration Rights Agreement, after the effective date of the Registration Statement (as
defined in the Registration Rights Agreement) and prior to the Holder’s receipt of the notice of a Grace Period (as defined in
the Registration Rights Agreement), the Company shall cause the Transfer Agent to deliver unlegended shares of Common Stock to the
Holder (or its designee) in connection with any sale of Registrable Securities (as defined in the Registration Rights Agreement)
with respect to which the Holder has entered into a contract for sale, and delivered a copy of the prospectus included as part of
the particular Registration Statement to the extent applicable, and for which the Holder has not yet settled.
(ii) Company’s
Failure to Timely Convert. If the Company shall fail, for any reason or for no reason, on or prior to the applicable Share Delivery
Deadline, either (I) if the Transfer Agent is not participating in FAST, to issue and deliver to the Holder (or its designee) a certificate
for the number of shares of Common Stock to which the Holder is entitled and register such shares of Common Stock on the Company’s
share register or, if the Transfer Agent is participating in FAST, to credit the balance account of the Holder or the Holder’s designee
with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion of this Note (as
the case may be) or (II) if the Registration Statement covering the resale of the shares of Common Stock that are the subject of the Conversion
Notice (the “Unavailable Conversion Shares”) is not available for the
resale of such Unavailable
Conversion Shares and the Company fails to promptly, but in no event later than as required pursuant to the Registration Rights
Agreement (x) so notify the Holder and (y) deliver the shares of Common Stock electronically without any restrictive legend by
crediting such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to such conversion to the
Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal At Custodian system (the event
described in the immediately foregoing clause (II) is hereinafter referred as a “Notice Failure” and together
with the event described in clause (I) above, a “Conversion Failure”), then, in addition to all other remedies
available to the Holder, (1) the Company shall pay in cash to the Holder on each day
after such Share Delivery Deadline that the issuance of such shares of Common Stock is not timely effected an amount equal to 2% of
the product of (A) the sum of the number of shares of Common Stock not issued to the Holder on or prior to the Share Delivery
Deadline and to which the Holder is entitled, multiplied by (B) any trading price of the Common Stock selected by the Holder in
writing as in effect at any time during the period beginning on the applicable Conversion Date and ending on the applicable Share
Delivery Deadline and (2) the Holder, upon written notice to the Company, may void its Conversion Notice with respect to, and retain
or have returned (as the case may be) any portion of this Note that has not been converted pursuant to such Conversion Notice,
provided that the voiding of a Conversion Notice shall not affect the Company’s obligations to make any payments which have
accrued prior to the date of such notice pursuant to this Section 3(c)(ii) or otherwise. In addition to the foregoing, if on or
prior to the Share Delivery Deadline either (A) if the Transfer Agent is not participating in FAST, the Company shall fail to issue
and deliver to the Holder (or its designee) a certificate and register such shares of Common Stock on the Company’s share
register or, if the Transfer Agent is participating in FAST, the Transfer Agent shall fail to credit the balance account of the
Holder or the Holder’s designee with DTC for the number of shares of Common Stock to which the Holder is entitled upon the
Holder’s conversion hereunder or pursuant to the Company’s obligation pursuant to clause (II) below or (B) a Notice
Failure occurs, and if on or after such Share Delivery Deadline the Holder acquires (in an open market transaction, stock loan or
otherwise) shares of Common Stock corresponding to all or any portion of the number of shares of Common Stock issuable upon such
conversion that the Holder is entitled to receive from the Company and has not received from the Company in connection with such
Conversion Failure or Notice Failure, as applicable (a “Buy-In”), then, in addition to all other remedies
available to the Holder, the Company shall, within two (2) Business Days after receipt of the Holder’s request and in the
Holder’s discretion, either: (I) pay cash to the Holder in an amount equal to the Holder’s total purchase price
(including brokerage commissions, stock loan costs and other out-of-pocket expenses, if any) for the shares of Common Stock so
acquired (including, without limitation, by any other Person in respect, or on behalf, of the Holder) (the “Buy-In
Price”), at which point the Company’s obligation to so issue and deliver such certificate (and to issue such shares
of Common Stock) or credit the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the
number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder (as the case may be) (and to
issue such shares of Common Stock) shall terminate, or (II) promptly honor its obligation to so issue and deliver to the Holder a
certificate or certificates representing such shares of Common Stock or credit the balance account of such Holder or such
Holder’s designee, as applicable, with DTC for the number of shares of Common Stock to which the Holder is entitled upon the
Holder’s conversion hereunder (as the case may be) and pay cash to the Holder in an amount equal to the excess (if any) of the
Buy-In Price over the product of (x) such number of shares of Common Stock multiplied by (y) the lowest Closing Sale Price of the
Common Stock on any Trading Day during the period commencing on the date of the applicable Conversion Notice and ending on the date
of such issuance and payment under this clause (II) (the “Buy- In Payment Amount”). Nothing shall limit the
Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a
decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates
representing shares of Common Stock (or to electronically deliver such shares of Common Stock) upon the conversion of this Note as
required pursuant to the terms hereof.
(iii) Registration;
Book-Entry. The Company shall maintain a register (the “Register”) for the recordation of the names and
addresses of the holders of each Note and the principal amount of the Notes held by such holders (the “Registered
Notes”). The entries in the Register shall be conclusive and binding for all purposes absent manifest error. The Company
and the holders of the Notes shall treat each Person whose name is recorded in the Register as the owner of a Note for all purposes
(including, without limitation, the right to receive payments of Principal and Interest hereunder) notwithstanding notice to the
contrary. A Registered Note may be assigned, transferred or sold in whole or in part only by registration of such assignment or sale
on the Register. Upon its receipt of a written request to assign, transfer or sell all or part of any Registered Note by the holder
thereof, the Company shall record the information contained therein in the Register and issue one or more new Registered Notes in
the same aggregate principal amount as the principal amount of the surrendered Registered Note to the designated assignee or
transferee pursuant to Section 17, provided that if the Company does not so record an assignment, transfer or sale (as the case may
be) of all or part of any Registered Note within two (2) Business Days of such a request, then the Register shall be automatically
deemed updated to reflect such assignment, transfer or sale (as the case may be). Notwithstanding anything to the contrary set forth
in this Section 3, following conversion of any portion of this Note in accordance with the terms hereof, the Holder shall not be
required to physically surrender this Note to the Company unless (A) the full Conversion Amount represented by this Note is being
converted (in which event this Note shall be delivered to the Company following conversion thereof as contemplated by Section
3(c)(i)) or (B) the Holder has provided the Company with prior written notice
(which notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. The
Holder and the Company shall maintain records showing the Principal, Interest and Late Charges converted and/or paid (as the case
may be) and the dates of such conversions, and/or payments (as the case may be) or shall use such other
method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon conversion.
If the Company does not update the Register to record such Principal, Interest and Late Charges
converted and/or paid (as the case may be) and the dates of such conversions, and/or payments (as the case may be) within two
(2) Business Days of such occurrence, then the Register shall be automatically deemed updated to reflect such occurrence.
(iv) Pro
Rata Conversion; Disputes. In the event that the Company receives a Conversion Notice from more than one holder of Notes for the same
Conversion Date and the Company can convert some, but not all, of such portions of the Notes submitted for conversion, the Company, subject
to Section 3(d), shall convert from each holder of Notes electing to have Notes converted on such date a pro rata amount of such holder’s
portion of its Notes submitted for conversion based on the principal amount of Notes submitted for conversion on such date by such holder
relative to the aggregate principal amount of all Notes submitted for conversion on such date. In the event of a dispute as to the number
of shares of Common Stock issuable to the Holder in connection with a conversion of this Note, the Company shall issue to the Holder the
number of shares of Common Stock not in dispute and resolve such dispute in accordance with Section 22.
(d)
Limitations on Conversions.
(i) Beneficial
Ownership. The Company shall not effect the conversion of any portion of this Note, and the Holder shall not have the right to convert
any portion of this Note pursuant to the terms and conditions of this Note and any such conversion shall be null and void and treated
as if never made, to the extent that after giving effect to such conversion, the Holder together with the other Attribution Parties collectively
would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the shares of Common Stock outstanding immediately
after giving effect to such conversion. For purposes of the foregoing sentence,
the
aggregate number of shares of Common Stock beneficially owned by the Holder and the other Attribution Parties shall include the
number of shares of Common Stock held by the Holder and all other Attribution Parties plus the number of shares of Common Stock
issuable upon conversion of this Note with respect to which the determination of such sentence is being made, but shall exclude
shares of Common Stock which would be issuable upon (A) conversion of the
remaining, nonconverted portion of this Note beneficially owned by the Holder or any of the other Attribution Parties and (B)
exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without
limitation, any convertible notes or convertible preferred stock or warrants, including, without limitation, the Warrants)
beneficially owned by the Holder or any other Attribution Party subject to a limitation on conversion or exercise analogous to the
limitation contained in this Section 3(d)(i). For purposes of this Section 3(d)(i), beneficial ownership shall be calculated in
accordance with Section 13(d) of the 1934 Act. For purposes of determining the number of outstanding shares of Common Stock the
Holder may acquire upon the conversion of this Note without exceeding the Maximum
Percentage, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most
recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with the SEC, as
the case may be, (y) a more recent public announcement by the Company or (z) any other written notice by the Company or the Transfer
Agent, if any, setting forth the number of shares of Common Stock outstanding (the “Reported Outstanding Share
Number”). If the Company receives a Conversion Notice from the Holder at a time when the actual number of outstanding
shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall notify the Holder in writing of the
number of shares of Common Stock then outstanding and, to the extent that such Conversion Notice would otherwise cause the
Holder’s beneficial ownership, as determined pursuant to this Section 3(d)(i), to exceed the Maximum Percentage, the Holder
must notify the Company of a reduced number of shares of Common Stock to be purchased pursuant to such Conversion Notice. For any
reason at any time, upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and
in writing or by electronic mail to the Holder the number of shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the
Company, including this Note, by the Holder and any other Attribution Party since the date as of which the Reported Outstanding
Share Number was reported. In the event that the issuance of shares of Common Stock to the Holder upon conversion of this Note
results in the Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum
Percentage of the number of outstanding shares of Common Stock (as determined under Section 13(d) of the 1934 Act), the number of
shares so issued by which the Holder’s and the other Attribution Parties’ aggregate beneficial ownership exceeds the
Maximum Percentage (the “Excess Shares”) shall be deemed null and void and shall be cancelled ab initio, and the
Holder shall not have the power to vote or to transfer the Excess Shares. Upon delivery of a written notice to the Company, the
Holder may from time to time increase (with such increase not effective until the sixty- first (61st) day after delivery
of such notice) or decrease the Maximum Percentage to any other percentage not in excess of 9.99% as specified in such notice;
provided that (i) any such increase in the Maximum Percentage will not be effective
until the sixty- first (61st) day after such notice is delivered to the Company and (ii) any such increase or decrease
will apply only to the Holder and the other Attribution Parties and not to any other holder of Notes that is not an Attribution
Party of the Holder. For purposes of clarity, the shares of Common Stock issuable pursuant to the terms of this Note in excess of
the Maximum Percentage shall not be deemed to be beneficially owned by the Holder for any purpose including for purposes of Section
13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to convert this Note pursuant to this paragraph shall have any effect
on the applicability of the provisions of this paragraph with respect to any subsequent determination of convertibility. The
provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of
this Section 3(d)(i) to the extent necessary to correct this paragraph (or any portion of this paragraph) which may be defective or
inconsistent with the intended
beneficial ownership limitation contained
in this Section 3(d)(i) or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitation
contained in this paragraph may not be waived and shall apply to a successor holder of this Note.
(ii) Principal
Market Regulation The Company shall not issue any shares of Common Stock upon conversion of this Note or otherwise pursuant to
the terms of this Note (taken together with the issuance of the Commitment Shares (as defined in the Securities Purchase Agreement)
and the issuance of such shares upon the exercise of the Warrants) if the issuance of such shares of Common Stock would exceed the
aggregate number of shares of Common Stock which the Company may issue upon conversion of the Notes or otherwise pursuant to the
terms of this Note or the Warrants (as the case may be) (together with the issuance of the Commitment Shares pursuant to the
Securities Purchase Agreement) without breaching the Company’s obligations under the rules or regulations of the Principal
Market (the number of shares which may be issued without violating such rules and regulations, including rules related to the
aggregate of offerings under the rules and regulations of the Principal Market, the “Exchange Cap”), except that
such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders as required by the
applicable rules of the Principal Market for issuances of shares of Common Stock in excess of such amount or (B) obtains a written
opinion from counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the
Holder. Until such approval or such written opinion is obtained, no Buyer shall be issued in the aggregate, upon conversion or
exercise (as the case may be) of any Notes or any of the Warrants or otherwise pursuant to the terms of the Notes or the Warrants,
shares of Common Stock in an amount greater than the product of (i) the Exchange Cap as of the Issuance Date multiplied by (ii) the
quotient of (1) the original principal amount of Notes issued to such Buyer pursuant to the Securities Purchase Agreement on the
Closing Date (as defined in the Securities Purchase Agreement) divided by (2) the aggregate original principal amount of all Notes
issued to the Buyers pursuant to the Securities Purchase Agreement on the Closing Date (with respect to each Buyer, the
“Exchange Cap Allocation”). In the event that any Buyer shall sell or otherwise transfer any of such
Buyer’s Notes, the transferee shall be allocated a pro rata portion of such Buyer’s Exchange Cap Allocation with respect
to such portion of such Notes so transferred, and the restrictions of the prior sentence shall apply to such transferee with respect
to the portion of the Exchange Cap Allocation so allocated to such transferee. Upon conversion and exercise in full of a
holder’s Notes and Warrants, the difference (if any) between such holder’s Exchange Cap Allocation and the number of
shares of Common Stock actually issued to such holder upon such holder’s conversion in full of such Notes and such
holder’s exercise in full of such Warrants shall be allocated, to the respective Exchange Cap Allocations of the remaining
holders of Notes and related Warrants on a pro rata basis in proportion to the shares of Common Stock underlying the Notes and
related Warrants then held by each such holder of Notes and related Warrants. At any time after the Stockholder Meeting Deadline (as
defined in the Securities Purchase Agreement), in the event that the Company is prohibited from
issuing shares of Common Stock pursuant to this Section 3(d)(i) (the “Exchange Cap Shares”), the Company shall
pay cash in exchange for the cancellation of such portion of this Note convertible into such Exchange Cap Shares at a price equal to
the sum of (i) the product of (x) such number of Exchange Cap Shares and (y) the greatest Closing Sale Price of the Common Stock on
any Trading Day during the period commencing on the date the Holder delivers the applicable Conversion Notice with respect to such
Exchange Cap Shares to the Company and ending on the date of such issuance and payment under this Section 3(d)(i) and (ii) to the
extent of any Buy-In related thereto, any Buy-In Payment Amount, any brokerage commissions and other out-of-pocket expenses, if any,
of the Holder incurred in connection therewith (collectively, the “Exchange Cap Share Cancellation Amount”).
(e)
Right of Alternate Conversion Upon an Event of Default.
(i)
General.
(1) Alternate
Conversion Upon an Event of Default. Subject to Section 3(d), at any time during an Event of Default Redemption Right Period (as
defined below) (regardless of whether such Event of Default has been cured, or if the Company has delivered an Event of Default Notice
to the Holder or if the Holder has delivered an Event of Default Redemption Notice to the Company or otherwise notified the Company that
an Event of Default has occurred), the Holder may, at the Holder’s option, convert (each, an “Alternate Conversion”,
and the date of such Alternate Conversion, each, an “Alternate Conversion Date”) all, or any part of, the Conversion
Amount (such portion of the Conversion Amount subject to such Alternate Conversion, the “Alternate Conversion Amount”)
into shares of Common Stock at the Alternate Conversion Price.
(ii) Mechanics
of Alternate Conversion. On any Alternate Conversion Date, the Holder may voluntarily convert any Alternate Conversion Amount pursuant
to Section 3(c) (with “Alternate Conversion Price” replacing “Conversion Price” for all purposes hereunder with
respect to such Alternate Conversion and with “Redemption Premium of the Conversion Amount” replacing “Conversion Amount”
in clause (x) of the definition of Conversion Rate above with respect to such Alternate Conversion) by designating in the Conversion Notice
delivered pursuant to this Section 3(e) of this Note that the Holder is electing to use the Alternate Conversion Price for such conversion.
Notwithstanding anything to the contrary in this Section 3(e), but subject to Section 3(d), until the Company delivers shares of Common
Stock representing the applicable Alternate Conversion Amount to the Holder, such Alternate Conversion Amount may be converted by the
Holder into shares of Common Stock pursuant to Section 3(c) without regard to this Section 3(e).
4. RIGHTS
UPON EVENT OF DEFAULT.
(a) Event
of Default. Each of the following events shall constitute an “Event of
Default” and each of the events in clauses (ix), (x) and (xi) shall constitute a “Bankruptcy Event of
Default”:
(i) the
failure of the applicable Registration Statement (as defined in the Registration Rights Agreement) to be filed with the SEC on or prior
to the date that is five (5) days after the applicable Filing Deadline (as defined in the Registration Rights
Agreement) or the failure of the applicable Registration Statement to be declared effective by the SEC on or prior to the date
that is five (5) days after the applicable Effectiveness Deadline (as defined in the Registration Rights Agreement);
(ii) while
the applicable Registration Statement is required to be maintained effective pursuant to the terms of the Registration Rights Agreement,
the effectiveness of the applicable Registration Statement lapses for any reason (including, without limitation, the issuance of a stop
order) or such Registration Statement (or the prospectus contained therein) is unavailable to any holder of Registrable Securities (as
defined in the Registration Rights Agreement) for sale of all of such holder’s Registrable Securities in accordance with the terms
of the Registration Rights Agreement, and such lapse or unavailability continues for a period of five (5) consecutive days or for more
than an aggregate of ten (10) days in any 365-day period (excluding days during an Allowable Grace Period (as defined in the Registration
Rights Agreement));
(iii) the
suspension (or threatened suspension) from trading or the failure (or threatened failure) of the Common Stock to be trading or listed
(as applicable) on an Eligible Market for a period of five (5) consecutive Trading Days;
(iv) the
Company’s (A) failure to cure a Conversion Failure or a Delivery Failure (as defined in the Warrants) by delivery of the required
number of shares of Common Stock within five (5) Trading Days after the applicable Conversion Date or exercise date (as the case may be)
or (B) notice, written or oral, to any holder of the Notes or Warrants, including, without limitation, by way of public announcement or
through any of its agents, at any time, of its intention not to comply, as required, with a request for conversion of any Notes into shares
of Common Stock that is requested in accordance with the provisions of the Notes, other than pursuant to Section 3(d), or a request for
exercise of any Warrants for shares of Common Stock in accordance with the provisions of the Warrants;
(v) except
to the extent the Company is in compliance with Section 10(b) below, at any time following the tenth (10th) consecutive day
that the Holder’s Authorized Share Allocation (as defined in Section 10(a) below) is less than the sum of (A) the number of shares
of Common Stock that the Holder would be entitled to receive upon a conversion of the full Conversion Amount of this Note (without regard
to any limitations on conversion set forth in Section 3(d) or otherwise), and (B) the number of shares of Common Stock that the Holder
would be entitled to receive upon exercise in full of the Holder’s Warrants (without regard to any limitations on exercise set forth
in the Warrants);
(vi) the
Company’s or any Subsidiary’s failure to pay to the Holder any amount of Principal, Interest, Late Charges or other amounts
when and as due under this Note (including, without limitation, the Company’s or any Subsidiary’s failure to pay any redemption
payments or amounts hereunder) or any other Transaction Document (as defined in the Securities Purchase Agreement) or any other agreement,
document, certificate or other instrument delivered in connection with the transactions contemplated hereby and thereby, except, in the
case of a failure to pay Interest and Late Charges when and as due, in which case only if such failure remains uncured for a period of
at least two (2) Trading Days;
(vii) the
Company fails to remove any restrictive legend on any certificate or any Commitment Shares or any shares of Common Stock issued to the
Holder upon conversion or exercise (as the case may be) of any Securities (as defined in the Securities Purchase Agreement) acquired by
the Holder under the Securities Purchase Agreement (including this Note) as and when required by such Securities or the Securities Purchase
Agreement, unless otherwise then prohibited by applicable federal securities laws, and any such failure remains uncured for at least five
(5) days;
(viii) the
occurrence of any default under, redemption of or acceleration prior to maturity of at least an aggregate of $750,000 of Indebtedness
(as defined in the Securities Purchase Agreement) of the Company or any of its Subsidiaries, other than with respect to any Other Notes;
(ix) bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by or against
the Company or any Subsidiary and, if instituted against the Company or any Subsidiary by a third party, shall not be dismissed within
thirty (30) days of their initiation;
(x) the
commencement by the Company or any Subsidiary of a voluntary case or proceeding under any applicable federal, state or foreign bankruptcy,
insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent
by it to the entry of a decree,
order,
judgment or other similar document in respect of the Company or any Subsidiary in an involuntary case or proceeding under any
applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable federal, state or foreign law, or the consent by it to the filing of such petition or
to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or any Subsidiary or of any substantial part of its property, or the making by it of an assignment for the
benefit of creditors, or the execution of a composition of debts, or the occurrence of any other similar federal, state or foreign
proceeding, or the admission by it in writing of its inability to pay its debts generally as they become due, the taking of
corporate action by the Company or any Subsidiary in furtherance of any such action or the taking of any action by any Person to
commence a Uniform Commercial Code foreclosure sale or any other similar action
under federal, state or foreign law;
(xi) the
entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any Subsidiary of a voluntary
or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar
law or (ii) a decree, order, judgment or other similar document adjudging the Company or any Subsidiary as bankrupt or insolvent, or approving
as properly filed a petition seeking liquidation, reorganization, arrangement, adjustment or composition of or in respect of the Company
or any Subsidiary under any applicable federal, state or foreign law or (iii) a decree, order, judgment or other similar document appointing
a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any
substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree, order,
judgment or other similar document or any such other decree, order, judgment or other similar document unstayed and in effect for a period
of thirty (30) consecutive days;
(xii) a
final judgment or judgments for the payment of money aggregating in excess of $750,000 are rendered against the Company and/or any of
its Subsidiaries and which judgments are not, within thirty (30) days after the entry thereof, bonded, discharged, settled or stayed pending
appeal, or are not discharged within thirty (30) days after the expiration of such stay; provided, however, any judgment which is covered
by insurance or an indemnity from a credit worthy party shall not be included in calculating the $750,000 amount set forth above so long
as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably
satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company or such Subsidiary
(as the case may be) will receive the proceeds of such insurance or indemnity within thirty (30) days of the issuance of such judgment;
(xiii) the
Company and/or any Subsidiary, individually or in the aggregate, either (i) fails to pay, when due, or within any applicable grace
period, any payment with respect to any Indebtedness in excess of $750,000 due to any third party (other than, with respect to
unsecured Indebtedness only, payments contested by the Company and/or such Subsidiary (as the case may be) in good faith by proper
proceedings and with respect to which adequate reserves have been set aside for the payment thereof in accordance with GAAP) or is
otherwise in breach or violation of any agreement for monies owed or owing in an amount in excess of $750,000, which breach or
violation permits the other party thereto to declare a default or otherwise accelerate amounts due thereunder, or (ii) suffer to
exist any other circumstance or event that would, with or without the passage of time or the giving of notice, result in a default
or event of default under any agreement binding the Company or any Subsidiary, which default or event of default would or is likely
to have a material adverse effect on the business, assets, operations (including results thereof), liabilities, properties,
condition (including financial condition) or prospects of the Company or any of
its Subsidiaries, individually or in the aggregate;
(xiv) other
than as specifically set forth in another clause of this Section 4(a), the Company or any Subsidiary breaches any representation or warranty,
in any material respect (other than representations or warranties subject to material adverse effect or materiality, which may not be
breached in any respect) or any covenant or other term or condition of any Transaction Document, except, in the case of a breach of a
covenant or other term or condition that is curable, only if such breach remains uncured for a period of two (2) consecutive Trading Days;
(xv) a
false or inaccurate certification (including a false or inaccurate deemed certification) by the Company that either (A) the Equity Conditions
are satisfied, (B) there has been no Equity Conditions Failure, or (C) as to whether any Event of Default has occurred;
(xvi) any
breach or failure in any respect by the Company or any Subsidiary to comply with any provision of Section 13 of this Note;
(xvii) any
Material Adverse Effect (as defined in the Securities Purchase Agreement) occurs;
(xviii) any
Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes.
(b) Notice
of an Event of Default; Redemption Right. Upon the occurrence of an Event of Default with respect to this Note or any Other
Note, the Company shall within one (1) Business Day deliver written notice thereof via electronic mail and overnight courier (with
next day delivery specified) (an “Event of Default Notice”) to the Holder. At any time after the earlier of the
Holder’s receipt of an Event of Default Notice and the Holder becoming aware of an Event of Default (such earlier date, the
“Event of Default Right Commencement Date”) and ending (such ending date, the “Event of Default Right
Expiration Date”, and each such period, an “Event of Default Redemption Right Period”) on the twentieth
(20th) Trading Day after the later of (x) the date such Event of Default is cured and (y) the Holder’s receipt of
an Event of Default Notice that includes (I) a reasonable description of the applicable Event of Default, (II) a certification as to
whether, in the opinion of the Company, such Event of Default is capable of being cured and, if applicable, a reasonable description
of any existing plans of the Company to cure such Event of Default and (III) a certification as to the date the Event of Default
occurred and, if cured on or prior to the date of such Event of Default Notice, the applicable Event of Default Right Expiration
Date, the Holder may require the Company to redeem (regardless of whether such Event of Default has been cured on or prior to the
Event of Default Right Expiration Date) all or any portion of this Note by delivering written notice thereof (the “Event of
Default Redemption Notice”) to the Company, which Event of Default Redemption Notice shall indicate the portion of this
Note the Holder is electing to redeem. Each portion of this Note subject to redemption by the Company pursuant to this Section 4(b)
shall be redeemed by the Company at a price equal to the greater of (i) the product
of (A) the Conversion Amount to be redeemed multiplied by (B) the Redemption Premium and (ii) the product of (X) the Conversion Rate
with respect to the Conversion Amount in effect at such time as the Holder delivers an Event of Default Redemption Notice multiplied
by (Y) the product of (1) the Redemption Premium multiplied by (2) the greatest Closing Sale Price of the Common Stock on any
Trading Day during the period commencing on the date immediately preceding such Event of Default and ending on the date the Company
makes the entire payment required to be made under this Section 4(b) (the “Event of Default Redemption Price”).
Redemptions required by this Section 4(b) shall be made in accordance with the provisions of Section 11. To the extent redemptions
required by this Section 4(b) are deemed or determined by a court of competent jurisdiction to be prepayments of this Note by the
Company, such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section
3(e), but subject to Section 3(d), until the Event of Default Redemption Price (together with any Late Charges thereon) is paid in
full,
the Conversion Amount submitted for redemption under this Section 4(b) (together with any Late Charges thereon) may be
converted, in whole or in part, by the Holder into Common Stock pursuant to the terms of this Note. In the event of the
Company’s redemption of any portion of this Note under this Section 4(b), the Holder’s damages would be uncertain and
difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty of the
availability of a suitable substitute investment opportunity for the Holder. Accordingly, any redemption premium due under this
Section 4(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its
investment opportunity and not as a penalty. Any redemption upon an Event of Default shall not constitute an election of remedies by
the Holder, and all other rights and remedies of the Holder shall be preserved.
(c) Mandatory
Redemption upon Bankruptcy Event of Default. Notwithstanding anything to the contrary herein, and notwithstanding any conversion that
is then required or in process, upon any Bankruptcy Event of Default, whether occurring prior to or following the Maturity Date, the Company
shall immediately pay to the Holder an amount in cash representing (i) all outstanding Principal, accrued and unpaid Interest and accrued
and unpaid Late Charges on such Principal and Interest, multiplied by (ii) the Redemption Premium, in addition to any and all other amounts
due hereunder, without the requirement for any notice or demand or other action by the Holder or any other person or entity, provided
that the Holder may, in its sole discretion, waive such right to receive payment upon a Bankruptcy Event of Default, in whole or in part,
and any such waiver shall not affect any other rights of the Holder hereunder, including any other rights in respect of such Bankruptcy
Event of Default, any right to conversion, and any right to payment of the Event of Default Redemption Price or any other Redemption Price,
as applicable.
5.
RIGHTS UPON FUNDAMENTAL TRANSACTION.
(a) Assumption.
The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity assumes in writing all of
the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions
of this Section 5(a) pursuant to written agreements in form and substance satisfactory to the Holder and approved by the Holder
prior to such Fundamental Transaction, including agreements to deliver to each holder of Notes in exchange for such Notes a security
of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Notes, including,
without limitation, having a principal amount and interest rate equal to the principal amounts then outstanding and the interest
rates of the Notes held by such holder, having similar conversion rights as the Notes and having similar ranking and security to the
Notes, and satisfactory to the Holder and (ii) the Successor Entity (including its Parent Entity) is a publicly traded corporation
whose common stock is quoted on or listed for trading on an Eligible Market. Upon the occurrence of any Fundamental Transaction, the
Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the
provisions of this Note and the other Transaction Documents referring to the “Company” shall refer instead to the
Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company
under this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company
herein. Upon consummation of a Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there
shall be issued upon conversion or redemption of this Note at any time after the consummation of such Fundamental Transaction, in
lieu of the shares of Common Stock (or other securities, cash, assets or other property (except such items still issuable under
Sections 6 and 14, which shall continue to be receivable thereafter)) issuable upon the conversion or redemption of the Notes prior
to such Fundamental Transaction, such shares of the publicly traded common stock (or their equivalent) of the Successor Entity
(including its Parent Entity) which the Holder would have been entitled to receive upon the happening of such Fundamental
Transaction had this Note been converted immediately prior to such Fundamental Transaction (without regard to any limitations on the
conversion of this Note),
as adjusted in accordance with the provisions of this Note. Notwithstanding the foregoing, the Holder may
elect, at its sole option, by delivery of written notice to the Company to waive this Section 5(a) to permit the Fundamental
Transaction without the assumption of this Note. The provisions of this Section 5 shall apply similarly and equally to successive
Fundamental Transactions and shall be applied without regard to any limitations on the conversion of this Note.
(b) Notice
of a Change of Control; Redemption Right. No sooner than twenty (20) Trading
Days nor later than ten (10) Trading Days prior to the consummation of a Change of Control (the “Change of Control
Date”), but not prior to the public announcement of such Change of Control, the Company shall deliver written notice
thereof via electronic mail and overnight courier to the Holder (a “Change of Control Notice”). At any time
during the period beginning after the Holder’s receipt of a Change of Control Notice or the Holder becoming aware of a Change
of Control if a Change of Control Notice is not delivered to the Holder in accordance with the immediately preceding sentence (as
applicable) and ending on twenty (20) Trading Days after the later of (A) the date of consummation of such Change of Control or (B)
the date of receipt of such Change of Control Notice or (C) the date of the announcement of such Change of Control, the Holder may
require the Company to redeem all or any portion of this Note by delivering written notice thereof (“Change of Control
Redemption Notice”) to the Company, which Change of Control Redemption Notice shall indicate the Conversion Amount the
Holder is electing to redeem. The portion of this Note subject to redemption pursuant to this Section 5 shall be redeemed by the
Company in cash at a price equal to the greatest of (i) the product of (w) the Change
of Control Redemption Premium multiplied by (y) the Conversion Amount being redeemed, (ii) the product of (x) the Change of Control
Redemption Premium multiplied by (y) the product of (A) the Conversion Amount being redeemed multiplied by (B)
the quotient determined by dividing (I) the greatest Closing Sale Price of the shares of Common Stock during the period beginning on
the date immediately preceding the earlier to occur of (1) the consummation of the applicable Change of Control and (2) the public
announcement of such Change of Control and ending on the date the Holder delivers the Change of Control Redemption Notice by (II)
the Conversion Price then in effect and (iii) the product of (y) the Change of Control Redemption Premium multiplied by (z) the
product of (A) the Conversion Amount being redeemed multiplied by (B) the quotient of (I)
the aggregate cash consideration and the aggregate cash value of any non-cash consideration per share of Common Stock to be paid to
the holders of the shares of Common Stock upon consummation of such Change of Control (any such non-cash consideration constituting
publicly-traded securities shall be valued at the highest of the Closing Sale Price of such securities as of the Trading Day
immediately prior to the consummation of such Change of Control, the Closing Sale Price of such securities on the Trading Day
immediately following the public announcement of such proposed Change of Control and the Closing Sale Price of such securities on
the Trading Day immediately prior to the public announcement of such proposed Change of Control) divided by (II) the Conversion
Price then in effect (the “Change of Control Redemption Price”). Redemptions required by this Section 5 shall be
made in accordance with the provisions of Section 11 and shall have priority to payments to stockholders in connection with such
Change of Control. To the extent redemptions required by this Section 5(b) are deemed or determined by a court of competent
jurisdiction to be prepayments of this Note by the Company, such redemptions shall be deemed to be voluntary prepayments.
Notwithstanding anything to the contrary in this Section 5, but subject to Section 3(d), until the Change of Control Redemption
Price (together with any Late Charges thereon) is paid in full, the Conversion Amount submitted for redemption under this Section
5(b) (together with any Late Charges thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant to
Section 3. In the event of the Company’s redemption of any portion of this Note under this Section 5(b), the Holder’s
damages would be uncertain and difficult to estimate because of the parties’ inability to predict future interest rates and
the uncertainty of the availability of a suitable substitute investment opportunity for the
Holder. Accordingly, any redemption premium due under this Section 5(b) is intended by the parties to be, and shall be
deemed, a reasonable estimate of the Holder’s actual loss of its investment opportunity and not as a penalty.
6. RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER
CORPORATE EVENTS.
(a) Purchase
Rights. In addition to any adjustments pursuant to Sections 7 or 14 below, if at any time the Company grants, issues or sells any
Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to all or substantially all
of the record holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had
held the number of shares of Common Stock acquirable upon complete conversion of this Note (without taking into account any limitations
or restrictions on the convertibility of this Note and assuming for such purpose that the Note was converted at the Alternate Conversion
Price as of the applicable record date) immediately prior to the date on which a record is taken for the grant, issuance or sale of such
Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined
for the grant, issue or sale of such Purchase Rights (provided, however, that to the extent that the Holder’s right
to participate in any such Purchase Right would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage,
then the Holder shall not be entitled to participate in such Purchase Right to the extent of the Maximum Percentage (and shall not be
entitled to beneficial ownership of such shares of Common Stock as a result of such Purchase Right (and beneficial ownership) to the extent
of any such excess) and such Purchase Right to such extent shall be held in abeyance (and, if such Purchase Right has an expiration date,
maturity date or other similar provision, such term shall be extended by such number of days held in abeyance, if applicable) for the
benefit of the Holder until such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution
Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such right (and any Purchase Right granted,
issued or sold on such initial Purchase Right or on any subsequent Purchase Right held similarly in abeyance (and, if such Purchase Right
has an expiration date, maturity date or other similar provision, such term shall be extended by such number of days held in abeyance,
if applicable)) to the same extent as if there had been no such limitation).
(b) Other
Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any
Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with
respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate
provision to ensure that the Holder will thereafter have the right to receive upon a conversion of this Note, at the Holder’s
option (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the
Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder
upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of
this Note) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets
received by the holders of shares of Common Stock in connection with the
consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Note initially been
issued with conversion rights for the form of such consideration (as opposed to shares of Common Stock) at a conversion rate for
such consideration commensurate with the Conversion Rate. Provision made pursuant to the preceding sentence shall be in a form and
substance satisfactory to the Holder. The provisions of this Section 6 shall apply similarly and equally to successive Corporate
Events and shall be applied without regard to any limitations on the conversion or redemption of this Note.
7.
RIGHTS UPON ISSUANCE OF OTHER SECURITIES.
(a) Adjustment
of Conversion Price upon Issuance of Common Stock. If and whenever on or after the Subscription Date the Company grants, issues or
sells (or enters into any agreement to grant, issue or sell), or in accordance with this Section 7(a) is deemed to have granted, issued
or sold, any shares of Common Stock (including the granting,
issuance or sale of shares of Common Stock owned or held by or for the account
of the Company, but excluding any Excluded Securities granted, issued or sold or deemed to have been granted, issued or sold) for a consideration
per share (the “New Issuance Price”) less than a price equal to the Conversion Price in effect immediately prior to
such granting, issuance or sale or deemed granting, issuance or sale (such Conversion Price then in effect is referred to herein as the
“Applicable Price”) (the foregoing a “Dilutive Issuance”), then, immediately after such Dilutive
Issuance, the Conversion Price then in effect shall be reduced to an amount equal to the New Issuance Price. For all purposes of the foregoing
(including, without limitation, determining the adjusted Conversion Price and the New Issuance Price under this Section 7(a)), the following
shall be applicable:
(i) Issuance
of Options. If the Company in any manner grants, issues or sells (or enters into any agreement to grant, issue or sell) any
Options and the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such
Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise
pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding
and to have been issued and sold by the Company at the time of the granting, issuance or sale of such Option for such price per
share. For purposes of this Section 7(a)(i), the “lowest price per share for which one share of Common Stock is at any time
issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon
exercise of any such Option or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the
lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon
the granting, issuance or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any
Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof and (y) the lowest exercise
price set forth in such Option for which one share of Common Stock is issuable (or may become issuable assuming all possible market
conditions) upon the exercise of any such Options or upon conversion, exercise
or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof,
minus (2) the sum of all amounts paid or payable to the holder of such Option (or any other Person) with respect to any one share of
Common Stock upon the granting, issuance or sale of such Option, upon exercise of such Option and upon conversion, exercise or
exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof plus the value
of any other consideration (including, without limitation, consideration consisting of cash, debt forgiveness, assets or any other
property) received or receivable by, or benefit conferred on, the holder of such Option (or any other Person). Except as
contemplated below, no further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common
Stock or of such Convertible Securities upon the exercise of such Options or otherwise pursuant to the terms thereof or upon the
actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities.
(ii) Issuance
of Convertible Securities. If the Company in any manner issues or sells (or enters into any agreement to issue or sell) any
Convertible Securities and the lowest price per share for which one share of Common Stock is at any time issuable upon the
conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof is less than the Applicable Price, then such
share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance
or sale (or the time of execution of such agreement to issue or sell, as applicable) of such Convertible Securities for such price
per share. For the purposes of this Section 7(a)(ii), the “lowest price per share for which one share of Common Stock is at
any time issuable upon the conversion,
exercise or exchange thereof or otherwise pursuant to the terms thereof” shall be equal
to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect
to one share of Common Stock upon the issuance or sale (or pursuant to the agreement to issue or sell, as applicable) of the
Convertible Security and upon conversion, exercise or exchange of such Convertible Security or otherwise pursuant to the terms
thereof and (y) the lowest conversion price set forth in such Convertible Security for which one share of Common Stock is issuable
(or may become issuable assuming all possible market conditions) upon conversion, exercise or exchange thereof or otherwise pursuant
to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Convertible Security (or any other
Person) with respect to any one share of Common Stock upon the issuance or sale (or the agreement to issue or sell, as applicable)
of such Convertible Security plus the value of any other consideration received or receivable (including, without limitation, any
consideration consisting of cash, debt forgiveness, assets or other property) by, or benefit conferred on, the holder of such
Convertible Security (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price shall be
made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities or
otherwise pursuant to the terms thereof, and if any such issuance or sale of such Convertible Securities is made upon exercise of any
Options for which adjustment of the Conversion Price has been or is to be made pursuant to other provisions of this Section 7(a),
except as contemplated below, no further adjustment of the Conversion Price shall be made by reason of such issuance or sale.
(iii) Change
in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional consideration,
if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities
are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time (other than proportional
changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 7(b) below), the Conversion
Price in effect at the time of such increase or decrease shall be adjusted to the Conversion Price which would have been in effect at
such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration
or increased or decreased conversion rate (as the case may be) at the time initially granted, issued or sold. For purposes of this Section
7(a)(i), if the terms of any Option or Convertible Security (including, without limitation, any Option or Convertible Security that was
outstanding as of the Subscription Date) are increased or decreased in the manner described in the immediately preceding sentence, then
such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall
be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 7(a) shall be made if
such adjustment would result in an increase of the Conversion Price then in effect.
(iv) Calculation
of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection with the issuance
or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the “Primary Security”,
and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary Securities”), together comprising
one integrated transaction (or one or more transactions if such issuances or sales or deemed issuances or sales of securities of the Company
either (A) have at least one investor or purchaser in common, (B) are consummated in reasonable proximity to each other and/or (C) are
consummated under the same plan of financing), the aggregate consideration per share of Common Stock with respect to such Primary Security
shall be deemed to be equal to the difference of (x) the lowest price per share for which one share of Common Stock was issued (or was
deemed to be issued pursuant to Section 7(a)(i) or 7(a)(ii) above,
as
applicable) in such integrated transaction solely with respect to such Primary Security, minus (y) with respect to such Secondary
Securities, the sum of (I) the Black Scholes Consideration Value of each such Option, if any, (II) the fair market value (as
determined by the Holder in good faith) or the Black Scholes Consideration Value, as applicable, of such Adjustment Right, if any,
and (III) the fair market value (as determined by the Holder) of such Convertible Security, if any, in each case, as determined on a
per share basis in accordance with this Section 7(a)(iv). If any shares of Common Stock, Options or Convertible
Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor (for the purpose
of determining the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the
calculation of the Black Scholes Consideration Value) will be deemed to be the net amount of consideration received by the Company
therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash,
the amount of such consideration received by the Company (for the purpose of determining the consideration paid for such Common
Stock, Option or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be
the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the
amount of consideration received by the Company for such securities will be the arithmetic average of the VWAPs of such security for
each of the five (5) Trading Days immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible
Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving
entity, the amount of consideration therefor (for the purpose of determining the consideration paid for such Common Stock, Option or
Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be deemed to be the
fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common
Stock, Options or Convertible Securities (as the case may be). The fair value of any consideration other than cash or publicly
traded securities will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten
(10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such
consideration will be determined within five (5) Trading Days after the tenth
(10th) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the
Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and
expenses of such appraiser shall be borne by the Company.
(v) Record
Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive a dividend
or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase shares
of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issuance or sale of the
shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase (as the case may be).
(b) Adjustment
of Conversion Price upon Subdivision or Combination of Common Stock. Without limiting any provision of Section 6, Section 14 or
Section 7(a), if the Company at any time on or after the Subscription Date subdivides (by any stock split, stock dividend, stock
combination, recapitalization or other similar transaction) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Conversion Price in effect immediately prior to
such subdivision will be proportionately reduced. Without limiting any provision of Section 6, Section 14 or Section 7(a), if the
Company at any time on or after the Subscription Date combines (by any stock split, stock dividend, stock combination,
recapitalization or other similar transaction) one or more classes of its outstanding shares of Common Stock into a smaller number
of shares,
the Conversion Price in effect immediately prior to such combination will be proportionately increased. Any adjustment
pursuant to this Section 7(b) shall become effective immediately after the effective date of such subdivision or combination. If any
event requiring an adjustment under this Section 7(b) occurs during the period that a Conversion Price is calculated hereunder, then
the calculation of such Conversion Price shall be adjusted appropriately to reflect such event.
(c) Other
Events. In the event that the Company (or any Subsidiary) shall take any action to which the provisions hereof are not strictly applicable,
or, if applicable, would not operate to protect the Holder from dilution or if any event occurs of the type contemplated by the provisions
of this Section 7 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the Company’s board of directors shall in good faith determine
and implement an appropriate adjustment in the Conversion Price so as to protect the rights of the Holder, provided that no such adjustment
pursuant to this Section 7(c) will increase the Conversion Price as otherwise determined pursuant to this Section 7, provided further
that if the Holder does not accept such adjustments as appropriately protecting its interests hereunder against such dilution, then the
Company’s board of directors and the Holder shall agree, in good faith, upon an independent investment bank of nationally recognized
standing to make such appropriate adjustments, whose determination shall be final and binding absent manifest error and whose fees and
expenses shall be borne by the Company.
(d) Calculations.
All calculations under this Section 7 shall be made by rounding to the nearest cent or the nearest 1/100th of a share, as applicable.
The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the
Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.
(e) Voluntary
Adjustment by Company. Subject to the rules and regulations of the Principal Market, the Company may at any time during the term of
this Note, with the prior written consent of the Required Holders (as defined in the Securities Purchase Agreement), reduce the then current
Conversion Price of each of the Notes to any amount and for any period of time deemed appropriate by the board of directors of the Company.
8.
REDEMPTIONS AT THE COMPANY’S ELECTION.
(a) Company
Optional Redemption. At any time after the Issuance Date, the Company shall have the right to redeem all, or any part, of the
Conversion Amount then remaining under this Note (the “Company Optional Redemption Amount”) on the Company
Optional Redemption Date (each as defined below) (a “Company Optional Redemption”).
The portion of this Note subject to redemption pursuant to this Section 8(a) shall be redeemed by the Company in cash at a price
(the “Company Optional Redemption Price”) equal to 115% of the greater of (i) the Conversion Amount being
redeemed as of the Company Optional Redemption Date and (ii) the product of (1) the Conversion Rate with respect to the Conversion
Amount being redeemed as of the Company Optional Redemption Date multiplied by (2) the greatest Closing Sale Price of the Common
Stock on any Trading Day during the period commencing on the date immediately preceding such Company Optional Redemption Notice Date
and ending on the Trading Day immediately prior to the date the Company makes the entire payment required to be made under this
Section 8(a). The Company may exercise its right to require redemption under this Section 8(a) by delivering a written notice
thereof by electronic mail and overnight courier to all, but not less than all, of the holders of Notes (the “Company
Optional Redemption Notice” and the date all of the holders of Notes received such notice is referred to as the
“Company Optional Redemption Notice Date”). The Company may deliver only one Company Optional Redemption Notice
hereunder and such Company Optional Redemption Notice shall be irrevocable. The Company Optional Redemption Notice shall (x) state
the date on which the Company Optional Redemption shall occur (the “Company Optional Redemption Date”) which date
shall not be less than ten (10) Trading Days nor more than twenty (20) Trading Days following the Company Optional Redemption Notice
Date,
and (y) state the aggregate Conversion Amount of the Notes which is being redeemed in such Company Optional Redemption from
the Holder and all of the other holders of the Notes pursuant to this Section 8(a) (and analogous provisions under the Other Notes)
on the Company Optional Redemption Date. Notwithstanding anything herein to the contrary, at any time prior to the date the Company
Optional Redemption Price is paid, in full, the Company Optional Redemption Amount may be converted, in whole or in part, by the
Holder into shares of Common Stock pursuant to Section 3. All Conversion Amounts converted by the Holder after the Company Optional
Redemption Notice Date shall reduce the Company Optional Redemption Amount of this Note required to be redeemed on the Company
Optional Redemption Date. Redemptions made pursuant to this Section 8(a) shall be made in accordance with Section 11. In the event
of the Company’s redemption of any portion of this Note under this Section 8(a), the Holder’s damages would be uncertain
and difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty of the
availability of a suitable substitute investment opportunity for the Holder. Accordingly, any redemption premium due under this
Section 8(a) is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its
investment opportunity and not as a penalty. For the avoidance of doubt, the Company shall have no right to effect a Company
Optional Redemption if any Event of Default has occurred and continuing, but any Event of Default shall have no effect upon the
Holder’s right to convert this Note in its discretion.
(b) Pro
Rata Redemption Requirement. If the Company elects to cause a Company Optional Redemption of this Note pursuant to Section 8(a), then
it must simultaneously take the same action with respect to all of the Other Notes.
9. NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not, by amendment
of its Certificate of Incorporation (as defined in the Securities Purchase Agreement), Bylaws (as defined in the Securities Purchase
Agreement) or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or
sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this
Note, and will at all times in good faith carry out all of the provisions of this Note and take all action as may be required to
protect the rights of the Holder of this Note. Without limiting the generality of the foregoing or any other provision of this Note
or the other Transaction Documents, the Company (a) shall not increase the par value of any shares of Common Stock receivable upon
conversion of this Note above the Conversion Price then in effect, and (b) shall take all such actions as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the
conversion of this Note. Notwithstanding anything herein to the contrary, if after the sixty (60) calendar day anniversary of the
Issuance Date, the Holder is not permitted to convert this Note in full for any reason (other than pursuant to restrictions set
forth in Section 3(d) hereof), the Company shall use its best efforts to promptly remedy such failure, including, without
limitation, obtaining such consents or approvals as necessary to permit such conversion into shares of Common Stock.
10.
RESERVATION OF AUTHORIZED SHARES.
(a) Reservation.
So long as any Notes remain outstanding, the Company shall at all times reserve at least 200% of the number of shares of Common Stock
as shall from time to time be necessary to effect the conversion, including without limitation, Alternate Conversions, of all of the Notes
then outstanding (without regard to any limitations on conversions and assuming such Notes remain outstanding until the Maturity Date)
at the Alternate Conversion Price then in effect (the “Required Reserve Amount”). The Required Reserve Amount (including,
without limitation, each increase in the number of shares so reserved) shall be allocated pro rata among the holders of the Notes based
on the original principal amount of the Notes held by each holder on the Closing Date or increase in the number of reserved shares, as
the case may be (the “Authorized Share Allocation”). In the event that a holder shall sell or otherwise transfer any
of such holder’s Notes, each transferee shall be allocated a pro rata portion of such holder’s Authorized Share Allocation.
Any shares of Common Stock reserved and allocated to any Person which ceases to hold any Notes shall be allocated to the remaining holders
of Notes, pro rata based on the principal amount of the Notes then held by such holders.
(b) Insufficient
Authorized Shares. If, notwithstanding Section 10(a), and not in limitation thereof, at any time while any of the Notes remain
outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its
obligation to reserve for issuance upon conversion of the Notes at least a number of shares of Common Stock equal to the Required
Reserve Amount (an “Authorized Share Failure”), then the Company shall immediately take all action necessary to
increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required
Reserve Amount for the Notes then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable
after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence of
such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of
authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy
statement and shall use its best efforts to solicit its stockholders’ approval of such increase in authorized shares of Common
Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal. In the event that the
Company is prohibited from issuing shares of Common Stock pursuant to the terms of this Note due to the failure by the Company to
have sufficient shares of Common Stock available out of the authorized but unissued shares of Common Stock (such unavailable number
of shares of Common Stock, the “Authorized Failure Shares”), in lieu of delivering such Authorized Failure Shares
to the Holder, the Company shall pay cash in exchange for the redemption of such portion of the Conversion Amount convertible into
such Authorized Failure Shares at a price equal to the sum of (i) the product of (x) such number of Authorized Failure Shares and
(y) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date the Holder
delivers the applicable Conversion Notice with respect to such Authorized Failure Shares to the Company and ending on the date of
such issuance and payment under this Section 10(a); and (ii) to the extent the Holder purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of Authorized Failure Shares, any brokerage
commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection therewith. Nothing contained in Section
10(a) or this Section 10(b) shall limit any obligations of the Company under any provision of the Securities Purchase Agreement.
11.
REDEMPTIONS.
(a) Mechanics.
The Company shall deliver the applicable Event of Default Redemption Price to the Holder in cash within five (5) Business Days after the
Company’s receipt of the Holder’s Event of Default Redemption Notice. If the Holder has submitted a Change of Control Redemption
Notice in accordance with Section 5(b), the Company shall deliver the applicable Change of Control Redemption Price to the Holder in cash
concurrently with the consummation of such Change of Control if such notice is received prior to the consummation of such Change of Control
and within five (5) Business Days after the Company’s receipt of such notice otherwise. The Company shall deliver the applicable
Company Optional Redemption Price to the Holder in cash on the applicable Company Optional Redemption Date. Notwithstanding anything herein
to the contrary, in connection with any redemption hereunder at a time the Holder is entitled to receive a cash payment under any of the
other Transaction Documents, at the option of the Holder delivered in writing to the Company, the applicable Redemption Price hereunder
shall be increased by the amount of such cash payment owed to the Holder under such other Transaction Document and, upon payment in full
or conversion in accordance herewith, shall satisfy the Company’s payment obligation under such other Transaction Document. In the
event of a redemption of less than all of the Conversion Amount of this Note, the Company shall promptly cause to be issued and delivered
to the Holder a new Note (in
accordance with Section 17(d)) representing
the outstanding Principal which has not been redeemed. In the event that the Company does not pay the applicable Redemption Price to the
Holder within the time period required, at any time thereafter and until the Company pays such unpaid Redemption Price in full, the Holder
shall have the option, in lieu of redemption, to require the Company to promptly return to the Holder all or any portion of this Note
representing the Conversion Amount that was submitted for redemption and for which the applicable Redemption Price (together with any
Late Charges thereon) has not been paid. Upon the Company’s receipt of such notice, (x) the applicable Redemption Notice shall be
null and void with respect to such Conversion Amount, (y) the Company shall immediately return this Note, or issue a new Note (in accordance
with Section 17(d)), to the Holder, and in each case the principal amount of this Note or such new Note (as the case may be) shall be
increased by an amount equal to the difference between (1) the applicable Redemption Price (as the case may be, and as adjusted pursuant
to this Section 11, if applicable) minus (2) the Principal portion of the Conversion Amount submitted for redemption and (z) the Conversion
Price of this Note or such new Notes (as the case may be) shall be automatically adjusted with respect to each conversion effected thereafter
by the Holder to the lowest of (A) the Conversion Price as in effect on the date on which the applicable Redemption Notice is voided,
(B) 75% of the lowest Closing Bid Price of the Common Stock during the period beginning on and including the date on which the applicable
Redemption Notice is delivered to the Company and ending on and including the date on which the applicable Redemption Notice is voided
and (C) 75% of the quotient of (I) the sum of the five (5) lowest VWAPs of the Common Stock during the twenty (20) consecutive Trading
Day period ending and including the applicable Conversion Date divided by (II) five (5) (it being understood and agreed that all such
determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during
such period). The Holder’s delivery of a notice voiding a Redemption Notice and exercise of its rights following such notice shall
not affect the Company’s obligations to make any payments of Late Charges which have accrued prior to the date of such notice with
respect to the Conversion Amount subject to such notice.
(b) Redemption
by Other Holders. Upon the Company’s receipt of notice from any of the holders of the Other Notes for redemption or
repayment as a result of an event or occurrence substantially similar to the events or occurrences described in Section 4(b) or
Section 5(b) (each, an “Other Redemption Notice”), the Company shall immediately, but no later than one (1)
Business Day of its receipt thereof, forward to the Holder by facsimile or electronic mail a copy of such notice. If the Company
receives a Redemption Notice and one or more Other Redemption Notices, during the seven (7) Business Day period beginning on and
including the date which is two (2) Business Days prior to the Company’s receipt of the Holder’s applicable Redemption
Notice and ending on and including the date which is two (2) Business Days after the Company’s receipt of the Holder’s
applicable Redemption Notice and the Company is unable to redeem all principal, interest and other amounts designated in such
Redemption Notice and such Other Redemption Notices received during such seven (7) Business Day period, then the Company shall
redeem a pro rata amount from each holder of the Notes (including the Holder) based on the principal amount of the Notes submitted
for redemption pursuant to such Redemption Notice and such Other Redemption
Notices received by the Company during such seven (7) Business Day period.
12. VOTING
RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law (including, without limitation,
Chapter 78 of the Nevada Revised Statute) and as expressly provided in this Note.
13. COVENANTS.
Until all of the Notes have been converted, redeemed or otherwise satisfied in accordance with their terms:
(a) Rank.
All payments due under this Note (a) shall rank pari passu with all Other Notes and (b) shall be senior to all other Indebtedness
of the Company and its Subsidiaries (other than Permitted Senior Indebtedness and any other Permitted Indebtedness secured by Permitted
Liens).
(b) Incurrence
of Indebtedness. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, incur
or guarantee, assume or suffer to exist any Indebtedness (other than (i) the Indebtedness evidenced by this Note and the Other Notes and
(ii) other Permitted Indebtedness).
(c) Existence
of Liens. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, allow or suffer
to exist any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts
and contract rights) owned by the Company or any of its Subsidiaries (collectively, “Liens”) other than Permitted Liens.
(d) Restricted
Payments and Investments. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or
indirectly, redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in
whole or in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of
any Indebtedness (other than the Notes and Permitted Senior Indebtedness) whether by way of payment in respect of principal of (or
premium, if any) or interest on, such Indebtedness or make any Investment, as applicable, if at the time such payment with respect
to such Indebtedness and/or Investment, as applicable, is due or is otherwise made or, after giving effect to such payment, (i) an
event constituting an Event of Default has occurred and is continuing or (ii) an
event that with the passage of time and without being cured would constitute an Event of Default has occurred and is continuing.
(e) Restriction
on Redemption and Cash Dividends. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or
indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on any of its capital stock.
(f) Restriction
on Transfer of Assets. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or
indirectly, sell, lease, license, assign, transfer, spin-off, split-off, close, convey or otherwise dispose of any assets or
rights of the Company or any Subsidiary owned or hereafter acquired whether in a single transaction or a series of related
transactions, other than (i) sales, leases, licenses, assignments, transfers, conveyances and other dispositions of such assets or
rights by the Company and its Subsidiaries in the ordinary course of business consistent with its past practice and (ii) sales of
inventory and product in the ordinary course of business.
(g) Maturity
of Indebtedness. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, permit
any Indebtedness of the Company or any of its Subsidiaries to mature or accelerate prior to the Maturity Date.
(h) Change
in Nature of Business. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
engage in any material line of business substantially different from those lines of business conducted by or publicly contemplated to
be conducted by the Company and each of its Subsidiaries on the Subscription Date or any business substantially related or incidental
thereto. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, modify its or their
corporate structure or purpose.
(i) Preservation
of Existence, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its existence,
rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and in good standing
in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes
such qualification necessary.
(j) Maintenance
of Properties, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its
properties which are necessary or useful in the proper conduct of its business in good working order and condition, ordinary wear and
tear excepted, and comply, and cause each of its Subsidiaries to comply, at all times with the provisions of all leases to which it is
a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof or thereunder.
(k) Maintenance
of Intellectual Property. The Company will, and will cause each of its Subsidiaries to, take all action necessary or advisable to
maintain all of the Intellectual Property Rights (as defined in the Securities Purchase Agreement) of the Company and/or any of its Subsidiaries
that are necessary or material to the conduct of its business in full force and effect.
(l) Maintenance
of Insurance. The Company shall maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and
reputable insurance companies or associations (including, without limitation, comprehensive general liability, hazard, rent and
business interruption insurance) with respect to its properties (including all real properties leased or owned by it) and business,
in such amounts and covering such risks as is required by any governmental authority having jurisdiction with respect thereto or as
is carried generally in accordance with sound business practice by companies in similar businesses
similarly situated.
(m) Transactions
with Affiliates. The Company shall not, nor shall it permit any of its Subsidiaries to, enter into, renew, extend or be a party to,
any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange of property
or assets of any kind or the rendering of services of any kind) with any affiliate, except transactions in the ordinary course of business
in a manner and to an extent consistent with past practice and necessary or desirable for the prudent operation of its business, for fair
consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable arm’s length transaction
with a Person that is not an affiliate thereof.
(n) Restricted
Issuances. The Company shall not, directly or indirectly, without the prior written consent of the holders of a majority in aggregate
principal amount of the Notes then outstanding, (i) issue any Notes (other than as contemplated by the Securities Purchase Agreement and
the Notes) or (ii) issue any other securities that would cause a breach or default under the Notes or the Warrants.
(o) Stay,
Extension and Usury Laws. To the extent that it may lawfully do so, the Company (A) agrees that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law (wherever or whenever enacted
or in force) that may affect the covenants or the performance of this Note; and (B) expressly waives all benefits or advantages of any
such law and agrees that it will not, by resort to any such law, hinder, delay or impede the execution of any power granted to the Holder
by this Note, but will suffer and permit the execution of every such power as though no such law has been enacted.
(p) Taxes.
The Company and its Subsidiaries shall pay when due all taxes, fees or other charges of any nature whatsoever (together with any related
interest or penalties) now or hereafter imposed or assessed against the Company and its Subsidiaries or their respective assets or upon
their ownership, possession, use, operation or disposition thereof or upon their rents, receipts or earnings arising therefrom (except
where the failure to pay would not, individually or in the aggregate, have a material effect on the Company or any of its Subsidiaries).
The Company and its Subsidiaries shall file on or before the due date therefor all personal property tax returns (except where the failure
to file would not, individually or in the aggregate, have a material effect on the Company or any of its Subsidiaries). Notwithstanding
the foregoing, the Company and its Subsidiaries may contest, in good faith and by appropriate proceedings, taxes for which they maintain
adequate reserves therefor in accordance with GAAP.
(q) Independent
Investigation. At the request of the Holder either (x) at any time when an Event of Default has occurred and is continuing, (y)
upon the occurrence of an event that with the passage of time or giving of notice would constitute an Event of Default or (z) at any
time the Holder reasonably believes an Event of Default may have occurred or be continuing, the Company shall hire an independent,
reputable investment bank selected by the Company and approved by the Holder to investigate as to whether any breach
of this Note has occurred (the “Independent Investigator”). If the Independent Investigator determines that such
breach of this Note has occurred, the Independent Investigator shall notify the Company of such
breach and the Company shall deliver written notice to each holder of a Note of such breach. In connection with such
investigation, the Independent Investigator may, during normal business hours, inspect all contracts, books, records, personnel,
offices and other facilities and properties of the Company and its Subsidiaries and, to the extent available to the Company after
the Company uses reasonable efforts to obtain them, the records of its legal advisors and accountants (including the
accountants’ work papers) and any books of account, records, reports and other papers not contractually required of the
Company to be confidential or secret, or subject to attorney- client or other evidentiary privilege, and the Independent
Investigator may make such copies and inspections thereof as the Independent Investigator may reasonably request. The Company shall
furnish the Independent Investigator with such financial and operating data and other information with respect to the business and
properties of the Company as the Independent Investigator may reasonably request. The Company shall permit the Independent
Investigator to discuss the affairs, finances and accounts of the Company with, and to make proposals and furnish advice with
respect thereto to, the Company’s officers, directors, key employees and independent public accountants or any of them (and by
this provision the Company authorizes said accountants to discuss with such Independent Investigator the finances and affairs of the
Company and any Subsidiaries), all at such reasonable times, upon reasonable notice, and as often as may be reasonably
requested.
14. DISTRIBUTION
OF ASSETS. In addition to any adjustments pursuant to Sections 6(a) or 7, if the Company shall declare or make any dividend or other
distributions of its assets (or rights to acquire its assets) to any or all holders of shares of Common Stock, by way of return of capital
or otherwise (including without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend,
spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (the “Distributions”),
then the Holder will be entitled to such Distributions as if the Holder had held the number of shares of Common Stock acquirable upon
complete conversion of this Note (without taking into account any limitations or restrictions on the convertibility of this Note and assuming
for such purpose that the Note was converted at the Alternate Conversion Price as of the applicable record date) immediately prior to
the date on which a record is taken for such Distribution or, if no such record is taken, the date as of which the record holders of Common
Stock are to be determined for such Distributions (provided, however, that to the extent that the Holder’s right to participate
in any such Distribution would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder
shall not be entitled to participate in such Distribution to the extent of the Maximum Percentage (and shall not be entitled to beneficial
ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to the extent of any such excess)
and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time or times, if ever, as its
right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times
the Holder shall be granted such Distribution (and any Distributions declared or made on such initial Distribution or on any subsequent
Distribution held similarly in abeyance) to the same extent as if there had been no such limitation).
15. AMENDING
THE TERMS OF THIS NOTE. Except for Section 3(d), which may not be amended, modified or waived by the parties hereto, the prior written
consent of the Holder shall be required for any change, waiver or amendment to this Note.
16. TRANSFER.
This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by the Holder
without the consent of the Company, subject only to the provisions of Section 2(g) of the Securities Purchase Agreement.
17.
REISSUANCE OF THIS NOTE.
(a) Transfer.
If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue and
deliver upon the order of the Holder a new Note (in accordance with Section 17(d)), registered as the Holder may request, representing
the outstanding Principal being transferred by the Holder and, if less than the entire outstanding Principal is being transferred, a new
Note (in accordance with Section 17(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and any
assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Section 3(c)(iii) following conversion
or redemption of any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal stated on
the face of this Note.
(b) Lost,
Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Note (as to which a written certification and the indemnification contemplated below shall suffice as such evidence),
and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary and reasonable
form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder
a new Note (in accordance with Section 17(d)) representing the outstanding Principal.
(c) Note
Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal office
of the Company, for a new Note or Notes (in accordance with Section 17(d) and in principal amounts of at least $1,000) representing in
the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding Principal
as is designated by the Holder at the time of such surrender.
(d) Issuance
of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall
be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining
outstanding (or in the case of a new Note being issued pursuant to Section 17(a) or Section 17(c), the Principal designated by the
Holder which, when added to the principal represented by the other new Notes issued in connection with such issuance, does not
exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an
issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights
and conditions as this Note, and (v) shall represent accrued and unpaid Interest and Late Charges on the Principal and Interest of
this Note, from the Issuance Date.
18. REMEDIES,
CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The
remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and any of the other
Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein
shall limit the Holder’s right to pursue actual and consequential damages for any failure by the Company to comply with the terms
of this Note. No failure on the part of the Holder to exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise by the Holder of any right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy. In addition, the exercise of any right or remedy of
the Holder at law or equity or under this Note or any of the documents shall not be deemed to be an election of Holder’s rights
or remedies under such documents or at law or equity. The Company covenants to the Holder that there shall be no characterization concerning
this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion
and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided
herein,
be subject to any other obligation of the Company (or the performance
thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and
that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or
threatened breach, the Holder shall be entitled, in addition to all other available remedies, to specific performance and/or
temporary, preliminary and permanent injunctive or other equitable relief from any court of competent jurisdiction in any such case
without the necessity of proving actual damages and without posting a bond or other security. The Company shall provide all
information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s
compliance with the terms and conditions of this Note (including, without limitation, compliance with Section 7).
19.
PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a)
this Note is placed in the hands of an
attorney for collection or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to
collect amounts due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership
of the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company
shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements. The Company expressly acknowledges
and agrees that no amounts due under this Note shall be affected, or limited, by the fact that the purchase price paid for this Note was
less than the original Principal amount hereof.
20. CONSTRUCTION;
HEADINGS. This Note shall be deemed to be jointly drafted by the Company and the initial Holder and shall not be construed against
any such Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of,
or affect the interpretation of, this Note. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include
the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include”
and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,”
“hereunder,” “hereof” and words of like import refer to this entire Note instead of just the provision in which
they are found. Unless expressly indicated otherwise, all section references are to sections of this Note. Terms used in this Note and
not otherwise defined herein, but defined in the other Transaction Documents, shall have the meanings ascribed to such terms on the Closing
Date in such other Transaction Documents unless otherwise consented to in writing by the Holder.
21. FAILURE
OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing and signed by an authorized
representative of the waiving party. Notwithstanding the foregoing, nothing contained in this Section 21 shall permit any waiver of any
provision of Section 3(d).
22.
DISPUTE RESOLUTION.
(a)
Submission to Dispute Resolution.
(i) In
the case of a dispute relating to a Closing Bid Price, a Closing Sale Price, a Conversion Price, an Alternate Conversion Price, a Black-Scholes
Consideration Value, a VWAP or a fair market value or the arithmetic calculation of a Conversion Rate, or the applicable Redemption Price
(as the case may be) (including, without limitation, a dispute relating to the determination of any of the foregoing),
the Company or
the Holder (as the case may be) shall submit the dispute to the other party via electronic mail (A)
if by the Company, within two (2) Business Days after the occurrence of the circumstances giving rise to such dispute or (B) if
by the Holder at any time after the Holder learned of the circumstances giving rise to such dispute. If the Holder and the Company are
unable to promptly resolve such dispute relating to such Closing Bid Price, such Closing Sale Price, such Conversion Price, such Alternate
Conversion Price, such Black-Scholes Consideration Value, such VWAP or such fair market value, or the arithmetic calculation of such Conversion
Rate or such applicable Redemption Price (as the case may be), at any time after the second (2nd) Business Day following such
initial notice by the Company or the Holder (as the case may be) of such dispute to the Company or the Holder (as the case may be), then
the Holder may, at its sole option, select an independent, reputable investment bank to resolve such dispute.
(ii) The
Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered in
accordance with the first sentence of this Section 22 and (B) written documentation supporting its position with respect to such
dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following the
date on which the Holder selected such investment bank (the “Dispute
Submission Deadline”) (the documents referred to in the immediately preceding clauses (A) and (B) are collectively
referred to herein as the “Required Dispute Documentation”) (it being understood and agreed that if either the
Holder or the Company fails to so deliver all of the Required Dispute Documentation by the Dispute Submission Deadline, then the
party who fails to so submit all of the Required Dispute Documentation shall no longer be entitled to (and hereby waives its right
to) deliver or submit any written documentation or other support to such investment bank with respect to such dispute and such
investment bank shall resolve such dispute based solely on the Required Dispute Documentation that was delivered to such investment
bank prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by both the Company and the Holder or
otherwise requested by such investment bank, neither the Company nor the Holder shall be entitled to deliver or submit any written
documentation or other support to such investment bank in connection with such dispute (other than the Required Dispute Documentation).
(iii) The
Company and the Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company and the Holder
of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline. The fees and expenses of
such investment bank shall be borne solely by the Company, and such investment bank’s resolution of such dispute shall be final
and binding upon all parties absent manifest error.
(b) Miscellaneous.
The Company expressly acknowledges and agrees that (i) this Section 22
constitutes an agreement to arbitrate between the Company and the Holder (and constitutes an arbitration agreement) under §
38.206, et seq. of the Nevada Uniform Arbitration Act of 2000, as amended (“NRS”), and that the Holder is
authorized to apply for an order to compel arbitration pursuant to NRS § 38.221 in order to compel compliance with this Section
22, (ii) a dispute relating to a Conversion Price includes, without limitation, disputes as to (A) whether an issuance or sale or
deemed issuance or sale of Common Stock occurred under Section 7(a), (B) the consideration per share at which an issuance or deemed
issuance of Common Stock occurred, (C) whether any issuance or sale or deemed issuance
or sale of Common Stock was an issuance or sale or deemed issuance or sale of Excluded Securities, (D) whether an agreement,
instrument, security or the like constitutes and Option or Convertible Security and (E) whether a Dilutive Issuance occurred,
(iii) the terms of this Note and
each other applicable Transaction Document shall serve as the basis for the selected investment bank’s resolution of the
applicable dispute, such investment bank shall be entitled (and is hereby expressly authorized) to make all findings, determinations
and the like that such investment bank determines are required to be made by such investment bank in connection with its resolution
of such dispute and in resolving such dispute such investment bank shall apply such findings, determinations and the like to the
terms of this Note and any other applicable Transaction Documents, (iv) the Holder (and only the Holder), in its sole discretion,
shall have the right to submit any dispute described in this Section 22 to any state or federal court sitting in Carson City, Ormsby
County in lieu of utilizing the procedures set forth in this Section 22 and (v) nothing in this Section 22 shall limit the Holder
from obtaining any injunctive relief or other equitable remedies (including, without
limitation, with respect to any matters described in this Section 22).
23.
NOTICES; CURRENCY; PAYMENTS.
(a) Notices.
Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with
Section 9(f) of the Securities Purchase Agreement. The Company shall provide the Holder with prompt written notice of all actions taken
pursuant to this Note, including in reasonable detail a description of such action and the reason therefore. Without limiting the generality
of the foregoing, the Company will give written notice to the Holder (i) immediately upon any adjustment of the Conversion Price, setting
forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least fifteen (15) days prior to the date on
which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with
respect to any grant, issuances, or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or
other property to holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction,
dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with
such notice being provided to the Holder.
(b) Currency.
All dollar amounts referred to in this Note are in United States Dollars (“U.S. Dollars”), and all amounts owing
under this Note shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S.
Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means,
in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Note, the U.S. Dollar exchange rate as
published in the Wall Street Journal on the relevant date of calculation (it being understood and agreed that where an amount is
calculated with reference to, or over, a period of time, the date of calculation shall be the final date of such period of
time).
(c) Payments.
Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, unless otherwise expressly set forth
herein, such payment shall be made in lawful money of the United States of America by a certified check drawn on the account of the
Company and sent via overnight courier service to such Person at such address as previously provided to the Company in writing
(which address, in the case of each of the Buyers, shall initially be as set forth on the Schedule of Buyers attached to the
Securities Purchase Agreement), provided that the Holder may elect to receive a payment of cash via wire transfer of immediately
available funds by providing the Company with prior written notice setting out such request and the Holder’s wire transfer
instructions. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the
same shall instead be due on the next succeeding day which is a Business Day. Any amount of Principal or other amounts due under the
Transaction Documents which is not paid when due shall result in a late charge being incurred and payable by the Company in an
amount equal to interest on such amount at the rate of eighteen percent (18%) per annum from the date such amount was due until the
same is paid in full (“Late Charge”).
24. CANCELLATION.
After all Principal, accrued Interest, Late Charges and other amounts at any time owed on this Note have been paid in full, this Note
shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.
25. WAIVER
OF NOTICE. To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest and all other
demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Securities
Purchase Agreement.
26. GOVERNING
LAW. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation
and performance of this Note shall be governed by, the internal laws of the State of Nevada, without giving effect to any provision of
law or rule (whether of the State of Nevada or any other jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of Nevada. Except as otherwise required by Section 22 above, the Company hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in Carson City, Ormsby County for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such
suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein (i) shall be
deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction
to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations,
or to enforce a judgment or other court ruling in favor of the Holder or (ii) shall limit, or shall be deemed or construed to limit,
any provision of Section 22. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL
FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.
27.
JUDGMENT CURRENCY.
(a) If
for the purpose of obtaining or enforcing judgment against the Company in any court in any jurisdiction it becomes necessary to convert
into any other currency (such other currency being hereinafter in this Section 27 referred to as the “Judgment Currency”)
an amount due in U.S. dollars under this Note, the conversion shall be made at the Exchange Rate prevailing on the Trading Day immediately
preceding:
(i) the
date actual payment of the amount due, in the case of any proceeding in the courts of Nevada or in the courts of any other jurisdiction
that will give effect to such conversion being made on such date: or
(ii) the
date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as of which
such conversion is made pursuant to this Section 27(a)(ii) being hereinafter referred to as the “Judgment Conversion Date”).
(b) If
in the case of any proceeding in the court of any jurisdiction referred to in Section 27(a)(ii) above, there is a change in the Exchange
Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable party shall pay
such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the Exchange Rate
prevailing on the date of payment, will produce the amount of US dollars which could have been purchased with the amount of Judgment Currency
stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion Date.
(c) Any
amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being obtained
for any other amounts due under or in respect of this Note.
28. SEVERABILITY.
If any provision of this Note is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction,
the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that
it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining
provisions of this Note so long as this Note as so modified continues to express, without material change, the original intentions of
the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question
does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the
benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited,
invalid or unenforceable provision(s).
29. MAXIMUM
PAYMENTS. Without limiting Section 9(d) of the Securities Purchase Agreement, nothing contained herein shall be deemed to establish
or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that
the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of
such maximum shall be credited against amounts owed by the Company to the Holder and thus refunded to the Company.
30. CERTAIN
DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:
(a) “1933
Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
(b) “1934
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(c) “Adjustment
Right” means any right granted with respect to any securities issued in connection with, or with respect to, any issuance or
sale (or deemed issuance or sale in accordance with Section 7) of shares of Common Stock (other than rights of the type described in Section
6(a) hereof) that could result in a decrease in the net consideration received by the Company in connection with, or with respect to,
such securities (including, without limitation, any cash settlement rights, cash adjustment or other similar rights).
(d) “Affiliate”
means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control
with, such Person, it being understood for purposes of this definition that “control” of a Person means the power directly
or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors of such Person or direct
or cause the direction of the management and policies of such Person whether by contract or otherwise.
(e) “Alternate
Conversion Price” means, with respect to any Alternate Conversion that price which shall be the lowest of (i) the applicable
Conversion Price as in effect on the applicable Conversion Date of the applicable Alternate Conversion, (ii) 80% of the VWAP of the Common
Stock as of the Trading Day immediately preceding the delivery or deemed delivery of the applicable Conversion Notice, (iii) 80% of the
VWAP of the Common Stock as of the Trading Day of the delivery or deemed delivery of the applicable Conversion Notice and (iv) 80% of
the price computed as the quotient of (I) the sum of the VWAP of the Common Stock for each of the three (3) Trading Days with the lowest
VWAP of the Common Stock during the fifteen (15) consecutive Trading Day period ending and including the Trading Day immediately preceding
the delivery or deemed delivery of the applicable Conversion Notice, divided by (II) three (3) (such
period, the “Alternate Conversion Measuring Period”). All such determinations to be appropriately adjusted for
any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases
the Common Stock during such Alternate Conversion Measuring Period.
(f) “Approved
Stock Plan” means any employee benefit plan which has been approved by the board of directors of the Company prior to or subsequent
to the Subscription Date pursuant to which shares of Common Stock and standard options to purchase Common Stock may be issued to any employee,
officer or director for services provided to the Company in their capacity as such.
(g) “Attribution
Parties” means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder
funds or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly managed or advised by the
Holder’s investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder or
any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together with the Holder or any of the
foregoing and (iv) any other Persons whose beneficial ownership of the Company’s Common Stock would or could be aggregated
with the Holder’s and the other Attribution Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose of
the foregoing is to subject collectively the Holder and all other Attribution Parties to the Maximum Percentage.
(h) “Black
Scholes Consideration Value” means the value of the applicable Option, Convertible Security or Adjustment Right (as the case
may be) as of the date of issuance thereof calculated using the Black Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg utilizing (i) an underlying price per share equal to the Closing Sale Price of the Common Stock on the Trading Day
immediately preceding the public announcement of the execution of definitive documents with respect to the issuance of such Option, Convertible
Security or Adjustment Right (as the case may be), (ii) a risk- free interest rate corresponding to the U.S. Treasury rate for a period
equal to the remaining term of such Option, Convertible Security or Adjustment Right (as the case may be) as of the date of issuance of
such Option, Convertible Security or Adjustment Right (as the case may be), (iii) a zero cost of borrow and (iv) an expected volatility
equal to the greater of 100% and the 100 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing
a 365 day annualization factor) as of the Trading Day immediately following the date of issuance of such Option, Convertible Security
or Adjustment Right (as the case may be).
(i)
“Bloomberg” means Bloomberg, L.P.
(j) “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.
(k) “Change
of Control” means any Fundamental Transaction other than (i) any merger of the Company or any of its, direct or indirect, wholly-owned
Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization or reclassification of the shares of
Common Stock in which holders of the Company’s voting power immediately prior to such reorganization, recapitalization or reclassification
continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly,
are, in all material respects, the holders of the voting power of the surviving entity (or entities with the authority or voting power
to elect the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities) after such
reorganization, recapitalization or reclassification, or (iii) pursuant to a migratory merger effected solely for the purpose of changing
the jurisdiction of incorporation of the Company or any of its Subsidiaries.
(l)
“Change of Control Redemption Premium” means 125%.
(m) “Closing
Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price
and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the
Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade
price (as the case may be) then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m., New
York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such
security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing
bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for
such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security
by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in
The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices). If the Closing Bid Price
or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid
Price or the Closing Sale Price (as the case may be) of such security on such date shall be the fair market value as mutually
determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such
security, then such dispute shall be resolved in accordance with the procedures in Section 22. All such determinations shall be
appropriately adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions
during such period.
(n) “Closing
Date” shall have the meaning set forth in the Securities Purchase Agreement, which date is the date the Company initially issued
Notes pursuant to the terms of the Securities Purchase Agreement.
(o)
“Common Stock” means (i) the Company’s shares of common stock,
$0.001 par value per share, and (ii)
any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such
common stock.
(p) “Convertible
Securities” means any stock or other security (other than Options) that is at any time and under any circumstances, directly
or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any shares
of Common Stock.
(q) “Eligible
Market” means The New York Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Select Market, the Nasdaq Global Market
or the Principal Market.
(r) “Equity
Conditions” means, with respect to an given date of determination: (i) on each day during the period beginning thirty
calendar days prior to such applicable date of determination and ending on and including such applicable date of determination
either (x) one or more Registration Statements filed pursuant to the Registration Rights Agreement shall be effective and the
prospectus contained therein shall be available on such applicable date of
determination (with, for the avoidance of doubt, any shares of Common Stock previously sold pursuant to such prospectus deemed
unavailable) for the resale of all shares of Common Stock to be issued in connection with the event requiring this determination (or
issuable upon conversion of the Conversion Amount being redeemed,
as applicable,
in the event requiring this determination at the Alternate Conversion Price then in effect (without regard to any limitations on
conversion set forth herein)) (each, a “Required Minimum Securities Amount”), in each case, in accordance with
the terms of the Registration Rights Agreement and there shall not have been during such period any Grace Periods (as defined in the
Registration Rights Agreement) or (y) all Registrable Securities shall be eligible for sale pursuant to Rule 144 (as defined in the
Securities Purchase Agreement) without the need for registration under any applicable federal or state securities laws (in each
case, disregarding any limitation on conversion of the Notes, other issuance of securities with respect to the Notes and exercise of
the Warrants) and no Current Public Information Failure (as defined in the Registration Rights Agreement) exists or is continuing;
(ii) on each day during the period beginning thirty calendar days prior to the applicable date of determination and ending on and
including the applicable date of determination (the “Equity Conditions Measuring Period”), the Common Stock
(including all Registrable Securities) is listed or designated for quotation (as applicable) on an Eligible Market and shall not
have been suspended from trading on an Eligible Market (other than suspensions of not more than two (2) days and occurring prior to
the applicable date of determination due to business announcements by the Company) nor shall delisting or suspension by an Eligible
Market have been threatened (with a reasonable prospect of delisting occurring after giving effect to all applicable notice, appeal,
compliance and hearing periods) or reasonably likely to occur or pending as evidenced by (A) a writing by such Eligible Market or
(B) the Company falling below the minimum listing maintenance requirements of the Eligible Market on which the Common Stock is then
listed or designated for quotation (as applicable); (iii) during the Equity Conditions Measuring Period, the Company shall have
delivered all shares of Common Stock issuable upon conversion of this Note on a timely basis as set forth in Section 3 hereof and
all other shares of capital stock required to be delivered by the Company on a timely basis as set forth in the other Transaction
Documents; (iv) any shares of Common Stock to be issued in connection with the event requiring determination (or issuable upon
conversion of the Conversion Amount being redeemed in the event requiring this determination) may be issued in full without
violating Section 3(d) hereof; (v) any shares of Common Stock to be issued in connection with the event requiring determination (or
issuable upon conversion of the Conversion Amount being redeemed in the event requiring this determination (without regards to any
limitations on conversion set forth herein)) may be issued in full without violating the rules or regulations of the Eligible Market
on which the Common Stock is then listed or designated for quotation (as applicable); (vi) on each day during the Equity Conditions
Measuring Period, no public announcement of a pending, proposed or intended Fundamental Transaction shall have occurred which has
not been abandoned, terminated or consummated; (vii) the Company shall have no knowledge of any fact that would reasonably be
expected to cause (1) any Registration Statement required to be filed pursuant to the Registration Rights Agreement to not be
effective or the prospectus contained therein to not be available for the resale of the
applicable Required Minimum Securities Amount of Registrable Securities in accordance with the terms of the Registration Rights
Agreement or (2) any Registrable Securities to not be eligible for sale pursuant to Rule 144 without the need for registration under
any applicable federal or state securities laws (in each case, disregarding any limitation on conversion of the Notes, other
issuance of securities with respect to the Notes and exercise of the Warrants) and no Current Public Information Failure exists or
is continuing; (viii) the Holder shall not be in (and no other holder of Notes shall be in) possession of any material, non-public
information provided to any of them by the Company, any of its Subsidiaries or any of their respective affiliates, employees,
officers, representatives, agents or the like; (ix) on each day during the Equity Conditions Measuring Period, the Company otherwise
shall have been in compliance with each, and shall not have breached any representation or warranty in any material respect (other
than representations or warranties subject to material adverse effect or materiality, which may not be breached in any respect) or
any covenant or other term or condition of any Transaction Document, including, without limitation,
the Company shall not have
failed to timely make any payment pursuant to any Transaction Document; (x) on each Trading Day during the Equity Conditions
Measuring Period, there shall not have occurred any Volume Failure or Price Failure as of such applicable date of determination;
(xi) on the applicable date of determination (A) no Authorized Share Failure shall exist or be continuing and the applicable
Required Minimum Securities Amount of shares of Common Stock are available under the certificate of incorporation of the Company and
reserved by the Company to be issued pursuant to the Notes and (B) all shares of Common Stock to be issued in connection with the
event requiring this determination (or issuable upon conversion of the Conversion Amount being redeemed in the event requiring this
determination (without regards to any limitations on conversion set forth herein)) may be issued in full without resulting in an
Authorized Share Failure; (xii) on each day during the Equity Conditions Measuring Period, there shall not have occurred and there
shall not exist an Event of Default or an event that with the passage of time or giving of notice would constitute an Event of
Default; (xiii) no bone fide dispute shall exist, by and between any of holder of Notes or Warrants, the Company, the Principal
Market (or such applicable Eligible Market in which the Common Stock of the Company is then principally trading) and/or FINRA with
respect to any term or provision of any Note or any other Transaction Document and (xiv) the shares of Common Stock issuable
pursuant the event requiring the satisfaction of the Equity Conditions are duly authorized and listed and eligible for trading
without restriction on an Eligible Market.
(s) “Equity
Conditions Failure” means that (i) on any day during the period commencing twenty (20) Trading Days prior to the applicable
Interest Notice Date through the applicable Interest Date, the Equity Conditions have not been satisfied (or waived in writing by the
Holder).
(t) “Excluded
Securities” means (i) shares of Common Stock or standard options to purchase Common Stock issued to directors, officers or
employees of the Company for services rendered to the Company in their capacity as such pursuant to an Approved Stock Plan (as
defined above), provided that (A) all such issuances (taking into account the
shares of Common Stock issuable upon exercise of such options) after the Subscription Date pursuant to this clause (i) do not, in
the aggregate, exceed more than 5% of the Common Stock issued and outstanding immediately prior to the Subscription Date and (B) the
exercise price of any such options is not lowered, none of such options are amended to increase the number of shares issuable
thereunder and none of the terms or conditions of any such options are otherwise materially changed in any manner that adversely
affects any of the Buyers; (ii) shares of Common Stock issued upon the conversion or exercise of Convertible Securities or Options
(other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i)
above) issued prior to the Subscription Date, provided that the conversion price of any such Convertible Securities (other than
standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) is not
lowered, none of such Convertible Securities or Options (other than standard options to purchase Common Stock issued pursuant to an
Approved Stock Plan that are covered by clause (i) above) are amended to increase the number of shares issuable thereunder and none
of the terms or conditions of any such Convertible Securities or Options (other than standard options to purchase Common Stock
issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are otherwise materially changed in any manner that
adversely affects any of the Buyers; (iii) the shares of Common Stock issuable upon conversion of the Notes or otherwise pursuant to
the terms of the Notes; provided, that the terms of the Notes are not amended, modified or changed on or after the Subscription Date
(other than antidilution adjustments pursuant to the terms thereof in effect as of the Subscription Date), and (iv) the shares of
Common Stock issuable upon exercise of the Warrants; provided, that the terms of the Warrants are not amended, modified or changed
on or after the Subscription Date (other than antidilution adjustments pursuant to the terms thereof in effect as of the
Subscription Date).
(u) “Fundamental
Transaction” means (A) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or
otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving
corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation S-X)
to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject to
or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that is
accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of
Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with any
Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number of shares of
Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such
purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at
least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually or in the
aggregate, acquire, either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of
Common Stock calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any
Subject Entity making or party to, such stock purchase agreement or other business combination were not outstanding; or (z) such
number of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3
under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its
Common Stock, (B) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or
more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the
“beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition,
purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger,
consolidation, business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization,
recapitalization or reclassification or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary
voting power represented by issued and outstanding Common Stock, (y) at least 50% of the aggregate ordinary voting power represented
by issued and outstanding Common Stock not held by all such Subject Entities as of the date of this Note calculated as if any shares
of Common Stock held by all such Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting power
represented by issued and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow such
Subject Entities to effect a statutory short form merger or other transaction requiring other stockholders of the Company to
surrender their shares of Common Stock without approval of the stockholders of the Company or (C) directly or indirectly, including
through subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other
instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition in which case
this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition
to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent with the
intended treatment of such instrument or transaction.
(v) “GAAP”
means United States generally accepted accounting principles, consistently applied.
(w) “Group”
means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.
(x) “Holder
Pro Rata Amount” means a fraction (i) the numerator of which is the original Principal amount of this Note on the Closing Date
and (ii) the denominator of which is the aggregate original principal amount of all Notes issued to the initial purchasers pursuant to
the Securities Purchase Agreement on the Closing Date.
(y) “Indebtedness”
shall have the meaning ascribed to such term in the Securities Purchase Agreement.
(z) “Interest
Date” means, with respect to any given calendar month, the first Trading Day of such calendar month.
(aa) “Interest
Rate” means twelve percent (12%) per annum, as may be adjusted from time to time in accordance with Section 2.
(bb) “Investment”
means any beneficial ownership (including stock, partnership or limited liability company interests) of or in any Person, or any loan,
advance or capital contribution to any Person or the acquisition of all, or substantially all, of the assets of another Person or the
purchase of any assets of another Person for greater than the fair market value of such assets.
(cc) “Maturity
Date” shall mean November 1, 2025; provided, however, the Maturity Date may be extended at the option of the Holder (i) in the
event that, and for so long as, an Event of Default shall have occurred and be continuing or any event shall have occurred and be continuing
that with the passage of time and the failure to cure would result in an Event of Default or (ii) through the date that is twenty (20)
Business Days after the consummation of a Fundamental Transaction in the event that a Fundamental Transaction is publicly announced or
a Change of Control Notice is delivered prior to the Maturity Date, provided further that if a Holder elects to convert some or all of
this Note pursuant to Section 3 hereof, and the Conversion Amount would be limited pursuant to Section 3(d) hereunder, the Maturity Date
shall automatically be extended until such time as such provision shall not limit the conversion of this Note.
(dd) “Options”
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
(ee) “Parent
Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent
equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent
Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.
(ff) “Permitted
Indebtedness” means (i) Indebtedness evidenced by this Note and the Other Notes, (ii) Indebtedness set forth on Schedule 3(s)
to the Securities Purchase Agreement, as in effect as of the Subscription Date, (iii) Indebtedness secured by Permitted Liens or unsecured
but as described in clauses (iv) and (v) of the definition of Permitted Liens, (iv) Permitted Senior Indebtedness and (v) Permitted Subordinated
Indebtedness.
(gg) “Permitted
Liens” means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by appropriate proceedings for
which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising in the ordinary course of business
by operation of law with respect to a liability that is not yet due or delinquent, (iii) any Lien created by operation of law, such as
materialmen’s liens,
mechanics’ liens and other similar
liens, arising in the ordinary course of business with respect to a liability that is not yet due or delinquent or that are being contested
in good faith by appropriate proceedings, (iv) Liens (A) upon or in any equipment acquired or held by the Company or any of its Subsidiaries
to secure the purchase price of such equipment or Indebtedness incurred solely for the purpose of financing the acquisition or lease of
such equipment, or (B) existing on such equipment at the time of its acquisition, provided that the Lien is confined solely to the property
so acquired and improvements thereon, and the proceeds of such equipment, (v) Liens incurred in connection with the extension, renewal
or refinancing of the Indebtedness secured by Liens of the type described in clause (iv) above, provided that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the Indebtedness being extended,
renewed or refinanced does not increase, (vi) Liens in favor of customs and revenue authorities arising as a matter of law to secure payments
of custom duties in connection with the importation of goods, (vii) Liens arising from judgments, decrees or attachments in circumstances
not constituting an Event of Default under Section 4(a)(xii) and (viii) Liens securing Permitted Senior Indebtedness.
(hh) “Permitted
Senior Indebtedness” means any Indebtedness arising pursuant to that certain Revenue Loan and Security Agreement, dated December
24, 2020, by and among Robert Nistico, the Company, certain Subsidiaries of the Company, as guarantors, and Decathlon Alpha IV, L.P. (the
“Senior Lender”), as in effect as of the date hereof, in an aggregate amount not to exceed $1.7 million.
(ii) “Permitted
Subordinated Indebtedness” means Indebtedness (other than Convertible Securities) incurred by the Company that is made expressly
subordinate in right of payment to the Indebtedness evidenced by this Note, as reflected in a written agreement reasonably acceptable
to the Holder, which does not include any equity or equity-linked features or the issuance or transfer of any securities (including, with
limitation, any Options or the right to convert, exchange or otherwise satisfy the payment of such Indebtedness with any equity security
of the Company or any of its Subsidiaries) and which Indebtedness does not provide at any time for (1) the payment, prepayment, repayment,
repurchase or defeasance, directly or indirectly, of any principal or premium, if any, thereon until at least ninety-one (91) days after
the Maturity Date and (2) total interest and fees at a rate in excess of 12% per annum.
(jj) “Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,
any other entity or a government or any department or agency thereof.
(kk) “Price
Failure” means, with respect to a particular date of determination, the VWAP of the Common Stock on any Trading Day during
the twenty (20) Trading Day period ending on the Trading Day immediately preceding such date of determination fails to exceed $0.25 (as
adjusted for stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions occurring after the Subscription
Date). All such determinations to be appropriately adjusted for any stock splits, stock dividends, stock combinations, recapitalizations
or other similar transactions during any such measuring period.
(ll) “Principal
Market” means the NYSE American.
(mm)
“Redemption Notices” means, collectively, the Event of Default Redemption
Notices, the Company Optional Redemption Notices and the Change of Control Redemption Notices, and each of the foregoing,
individually, a “Redemption Notice.”
(nn) “Redemption
Premium” means 125%.
(oo) “Redemption
Prices” means, collectively, Event of Default Redemption Prices, the Company Optional Redemption Prices, the Change of Control
Redemption Prices, and each of the foregoing, individually, a “Redemption Price.”
(pp) “Registration
Rights Agreement” means that certain registration rights agreement, dated as of the Closing Date, by and among the Company and
the initial holders of the Notes relating to, among other things, the registration of the resale of the Commitment Shares and the Common
Stock issuable upon conversion of the Notes or otherwise pursuant to the terms of the Notes and exercise of the Warrants, as may be amended
from time to time.
(qq) “SEC”
means the United States Securities and Exchange Commission or the successor thereto.
(rr) “Securities
Purchase Agreement” means that certain securities purchase agreement, dated as of the Subscription Date, by and among the Company
and the initial holders of the Notes pursuant to which the Company issued the Notes, the Commitment Shares and the Warrants, as may be
amended from time to time.
(ss) “Subscription
Date” means May 1, 2024.
(tt) “Subsidiaries”
means, as of any date of determination, collectively, all Current Subsidiaries and all New Subsidiaries, and each of the foregoing, individually,
a “Subsidiary.”
(uu) “Subject
Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.
(vv) “Successor
Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving any Fundamental
Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been
entered into.
(ww)
“Trading Day” means, as applicable, (x) with respect to all price or trading volume determinations relating to
the Common Stock, any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then
traded, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such
exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of
trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such
exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as a Trading
Day in writing by the Holder or (y) with respect to all determinations other than price determinations relating to the Common Stock,
any day on which The New York Stock Exchange (or any successor thereto) is open for trading of securities.
(xx) “Volume
Failure” means, with respect to a particular date of determination, the aggregate daily dollar trading volume (as reported on
Bloomberg) of the Common Stock on the Principal Market on any Trading Day during the twenty (20) Trading Day period ending on the Trading
Day immediately preceding such date of determination (such period, the “Volume Failure Measuring Period”), is less
than $25,000 (as adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions occurring
after the Subscription Date).
(yy) “VWAP”
means, for any security as of any date, the dollar volume- weighted average price for such security on the Principal Market (or, if the
Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market
on which such security is then traded), during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time,
as reported by Bloomberg through its “VAP” function (set to 09:30 start time and 16:00 end time) or, if the foregoing does
not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for
such security during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time, as reported by Bloomberg,
or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing
bid price and the lowest closing ask price of any of the market makers for such security as reported in The Pink Open Market (or a similar
organization or agency succeeding to its functions of reporting prices). If the VWAP cannot be calculated for such security on such date
on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the Company
and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall
be resolved in accordance with the procedures in Section 22. All such determinations shall be appropriately adjusted for any stock dividend,
stock split, stock combination, recapitalization or other similar transaction during such period.
(zz) “Warrants”
has the meaning ascribed to such term in the Securities Purchase Agreement, and shall include all warrants issued in exchange therefor
or replacement thereof.
31. DISCLOSURE.
Upon delivery by the Company to the Holder (or receipt by the Company from the
Holder) of any notice in accordance with the terms of this Note, unless the Company has in good faith determined that the matters
relating to such notice do not constitute material, non-public information relating to the Company or any of its Subsidiaries, the
Company shall on or prior to 9:00 am, New York city time on the Business Day immediately following such notice delivery date,
publicly disclose such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company
believes that a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company so
shall indicate to the Holder explicitly in writing in such notice (or immediately upon receipt of notice from the Holder, as
applicable), and in the absence of any such written indication in such notice (or notification from the Company immediately upon
receipt of notice from the Holder), the Holder shall be entitled to presume that information contained in the notice does not
constitute material, non-public information relating to the Company or any of its Subsidiaries. Nothing contained in this Section 31
shall limit any obligations of the Company, or any rights of the Holder, under Section 4(i) of the Securities Purchase
Agreement.
32. ABSENCE
OF TRADING AND DISCLOSURE RESTRICTIONS. The Company acknowledges and agrees
that the Holder is not a fiduciary or agent of the Company and that the Holder shall have no obligation to (a) maintain the
confidentiality of any information provided by the Company or (b) refrain from trading any securities while in possession of such
information in the absence of a written non-disclosure agreement signed by an officer of the Holder that explicitly provides for
such confidentiality and trading restrictions. In the absence of such an executed, written non-disclosure agreement, the Company
acknowledges that the Holder may freely trade in any securities issued by the Company, may possess and use any information provided
by the Company in connection with such trading activity, and may disclose any such information to any third party.
[signature page follows]
IN WITNESS WHEREOF, the
Company has caused this Note to be duly executed as of the Issuance Date set out above.
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SPLASH BEVERAGE GROUP, INC. |
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By: |
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Name: Robert Nistico |
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Title: Chief Executive Officer |
Senior Convertible Note - Signature Page
EXHIBIT I
SPLASH BEVERAGE GROUP, INC. CONVERSION
NOTICE
Reference is made
to the Senior Convertible Note (the “Note”) issued to the undersigned by Splash Beverage Group, Inc., a Nevada corporation
(the “Company”). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion
Amount (as defined in the Note) of the Note indicated below into shares of Common Stock, $0.001 par value per share (the “Common
Stock”), of the Company, as of the date specified below. Capitalized terms not defined herein shall have the meaning as set
forth in the Note.
Date of
Conversion: _____________________________________________________________________________ |
Aggregate
Principal to be converted: _______________________________________________________ |
Aggregate accrued and unpaid Interest
and accrued and unpaid Late Charges with respect to such portion of the Aggregate Principal and such
Aggregate Interest
to be converted: ________________________________________________________ |
AGGREGATE CONVERSION
AMOUNT
TO BE CONVERTED: ____________________________________________________________ |
Please confirm the following information:
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Conversion
Price: _______________________________________________________________________ |
Number of shares of Common
Stock to be issued: _______________________________________________________________________ |
☐ If this Conversion Notice is being
delivered with respect to an Alternate Conversion, check here if Holder is electing to use the following Alternate Conversion Price: __________________
Please issue the Common Stock into which the Note is being converted
to Holder, or for its benefit, as follows:
☐ Check here if requesting
delivery as a certificate to the following name and to the following address: |
Issue to: ________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
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DTC Participant ___________________________________________________________
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DTC
Number: ____________________________________________________________
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Account Number:
_____________________________________________________________ |
Date: ____________________, ________ |
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Name of Registered Holder |
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E-mail Address:
Exhibit
II
ACKNOWLEDGMENT
The Company hereby
(a) acknowledges this Conversion Notice, (b) certifies that the above indicated number of shares of Common Stock [are][are not] eligible
to be resold by the Holder either (i) pursuant to Rule 144 (subject to the Holder’s execution and delivery to the Company of a customary
144 representation letter) or (ii) an effective and available registration statement and
(c) hereby directs to issue the above
indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated ,
20 from the Company and acknowledged and agreed to by .
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Splash Beverage Group, Inc. |
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By: |
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Name: |
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Title: |
EXHIBIT 10.3
FORM OF
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS
AGREEMENT (this “Agreement”), dated as of May 1, 2024, is by and among Splash Beverage Group, Inc., a Nevada
corporation with offices located at 1314 E Las Olas Blvd, Suite 221, Fort Lauderdale, Florida 33301 (the
“Company”), and the undersigned buyers (each, a “Buyer,” and collectively, the
“Buyers”).
RECITALS
A. In
connection with the Securities Purchase Agreement by and among the parties hereto, dated as of May 1, 2024 (the “Securities
Purchase Agreement”), the Company has agreed, upon the terms and subject to the conditions of the Securities Purchase Agreement,
to issue and sell to each Buyer (i) the Notes (as defined in the Securities Purchase Agreement) which will be convertible into Conversion
Shares (as defined in the Securities Purchase Agreement) in accordance with the terms of the Notes, (ii) Commitment Shares (as defined
in the Securities Purchase Agreement) and (ii) the Warrants (as defined in the Securities Purchase Agreement) which will be exercisable
to purchase Warrant Shares (as defined in the Securities Purchase Agreement) in accordance with the terms of the Warrants.
B. To
induce the Buyers to consummate the transactions contemplated by the Securities Purchase Agreement, the Company has agreed to provide
certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor
statute (collectively, the “1933 Act”), and applicable state securities laws.
AGREEMENT
NOW, THEREFORE, in consideration
of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and each of the Buyers hereby agree as follows:
1. Definitions.
Capitalized terms used herein
and not otherwise defined herein shall have the respective meanings set forth in the Securities Purchase Agreement. As used in this Agreement,
the following terms shall have the following meanings:
(a) “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.
(b) “Closing
Date” shall have the meaning set forth in the Securities Purchase Agreement.
(c) “Effective
Date” means the date that the applicable Registration Statement has been declared effective by the SEC.
(d) “Effectiveness
Deadline” means (i) with respect to the initial Registration Statement required to be filed pursuant to Section 2(a), the
earlier of the (A) 70th calendar day after the Closing Date and (B) 2nd Business Day after the date the Company is notified
(orally or in writing, whichever is earlier) by the SEC that such Registration Statement will not be reviewed or will not be subject to
further review and (ii) with respect to any additional Registration Statements that may be required to be filed by the Company pursuant
to this Agreement, the earlier of the (A) 90th calendar day following the date on which the Company was required to file such
additional Registration Statement and (B) 2nd Business Day after the date the Company is notified (orally or in writing, whichever
is earlier) by the SEC that such Registration Statement will not be reviewed or will not be subject to further review.
(e) “Filing
Deadline” means (i) with respect to the initial Registration Statement required to be filed pursuant to Section 2(a), the
10th calendar day after the Closing Date and (ii) with respect to any additional Registration Statements that may be required
to be filed by the Company pursuant to this Agreement, the date on which the Company was required to file such additional Registration
Statement pursuant to the terms of this Agreement.
(f) “Investor”
means a Buyer or any transferee or assignee of any Registrable Securities, Notes, Commitment Shares or Warrants, as applicable, to whom
a Buyer assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with
Section 9 and any transferee or assignee thereof to whom a transferee or assignee of any Registrable Securities, Notes, Commitment
Shares or Warrants, as applicable, assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement
in accordance with Section 9.
(g) “Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization
or a government or any department or agency thereof.
(h) “register,”
“registered,” and “registration” refer to a registration effected by preparing and filing one or
more Registration Statements in compliance with the 1933 Act and pursuant to Rule 415 and the declaration of effectiveness of such Registration
Statement(s) by the SEC.
(i) “Registrable
Securities” means (i) the Conversion Shares, (ii) Commitment Shares, (iii) the Warrant Shares and (ii) any capital stock of
the Company issued or issuable with respect to the Commitment Shares, Conversion Shares, the Warrant Shares, the Notes or the Warrants,
including, without limitation, (1) as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise
and (2) shares of capital stock of the Company into which the shares of Common Stock (as defined in the Notes) are converted or exchanged
and shares of capital stock of a Successor Entity (as defined in the Warrants) into which the shares of Common Stock are converted or
exchanged, in each case, without regard to any limitations on conversion of the Notes or exercise of the Warrants.
(j) “Registration
Statement” means a registration statement or registration statements of the Company filed under the 1933 Act covering Registrable
Securities.
(k) “Required
Holders” shall have the meaning as set forth in the Securities Purchase Agreement.
(l) “Required
Registration Amount” means, as of any time of determination, the sum of (i) 100% of the Commitment Shares, (ii) 250% of the
maximum number of Conversion Shares issuable upon conversion of the Notes (assuming for purposes hereof that (x) the Notes are convertible
at the Alternate Conversion Price (as defined in the Notes) assuming an Alternate Conversion Date (as defined in the Notes) as of such
time of determination, (y) interest on the Notes shall accrue through the eighteen month anniversary of the Closing Date and will be converted
in shares of Common Stock at the Alternate Conversion Price assuming an Alternate Conversion Date as of such time of determination and
(z) any such conversion shall not take into account any limitations on the conversion of the Notes set forth in the Notes) and (iii) 250%
of the maximum number of Warrant Shares issuable upon exercise of the Warrants (without taking into account any limitations on the exercise
of the Warrants set forth therein), all subject to adjustment as provided in Section 2(d) and/or Section 2(f).
(m) “Rule
144” means Rule 144 promulgated by the SEC under the 1933 Act, as such rule may be amended from time to time, or any other similar
or successor rule or regulation of the SEC that may at any time permit the Investors to sell securities of the Company to the public without
registration.
(n) “Rule
415” means Rule 415 promulgated by the SEC under the 1933 Act, as such rule may be amended from time to time, or any other similar
or successor rule or regulation of the SEC providing for offering securities on a continuous or delayed basis.
(o) “SEC”
means the United States Securities and Exchange Commission or any successor thereto.
2. Registration.
(a) Mandatory
Registration. The Company shall prepare and, as soon as practicable, but in no event later than the Filing Deadline, file with the
SEC an initial Registration Statement on Form S-3 covering the resale of all of the Registrable Securities, provided that such initial
Registration Statement shall register for resale at least the number of shares of Common Stock equal to the Required Registration Amount
as of the date such Registration Statement is initially filed with the SEC; provided further that if Form S-3 is unavailable for such
a registration, the Company shall use such other form as is required by Section 2(c). Such initial Registration Statement, and each other
Registration Statement required to be filed pursuant to the terms of this Agreement, shall contain (except if otherwise directed by the
Required Holders) the “Selling Stockholders” and “Plan of Distribution” sections in substantially
the form attached hereto as Exhibit B. The Company shall use its best efforts to have such initial Registration Statement, and
each other Registration Statement required to be filed pursuant to the terms of this Agreement, declared effective by the SEC as soon
as practicable, but in no event later than the applicable Effectiveness Deadline for such Registration Statement.
(b) Legal
Counsel. Subject to Section 5 hereof, Kelley Drye & Warren LLP, counsel solely to the lead investor (“Legal Counsel”)
shall review and oversee any registration, solely on behalf of the lead investor, pursuant to this Section 2.
(c) Ineligibility
to Use Form S-3. In the event that Form S-3 is not available for the registration of the resale of Registrable Securities hereunder,
the Company shall (i) register the resale of the Registrable Securities on Form S-1 or another appropriate form reasonably acceptable
to the Required Holders and (ii) undertake to register the resale of the Registrable Securities on Form S-3 as soon as such form
is available, provided that the Company shall maintain the effectiveness of all Registration Statements then in effect until such time
as a Registration Statement on Form S-3 covering the resale of all the Registrable Securities has been declared effective by the SEC and
the prospectus contained therein is available for use.
(d) Sufficient
Number of Shares Registered. In the event the number of shares available under any Registration Statement is insufficient to cover
all of the Registrable Securities required to be covered by such Registration Statement or an Investor’s allocated portion of the
Registrable Securities pursuant to Section 2(h), the Company shall amend such Registration Statement (if permissible), or file with
the SEC a new Registration Statement (on the short form available therefor, if applicable), or both, so as to cover at least the Required
Registration Amount as of the Trading Day immediately preceding the date of the filing of such amendment or new Registration Statement,
in each case, as soon as practicable, but in any event not later than fifteen (15) days after the necessity therefor arises (but taking
account of any Staff position with respect to the date on which the Staff will permit such amendment to the Registration Statement and/or
such new Registration Statement (as the case may be) to be filed with the SEC). The Company shall use its best efforts to cause such amendment
to such Registration Statement and/or such new Registration Statement (as the case may be) to become effective as soon as practicable
following the filing thereof with the SEC, but in no event later than the applicable Effectiveness Deadline for such Registration Statement.
For purposes of the foregoing provision, the number of shares available under a Registration Statement shall be deemed “insufficient
to cover all of the Registrable Securities” if at any time the number of shares of Common Stock available for resale under the applicable
Registration Statement is less than the product determined by multiplying (i) the Required Registration Amount as of such time by (ii)
0.90. The calculation set forth in the foregoing sentence shall be made without regard to any limitations on conversion, amortization
and/or redemption of the Notes or exercise of the Warrants (and such calculation shall assume (A) that the Notes are then convertible
in full into shares of Common Stock at the then prevailing Conversion Rate (as defined in the Notes), (B) the initial outstanding principal
amount of the Notes remains outstanding through the scheduled Maturity Date (as defined in the Notes) and no redemptions of the Notes
occur prior to the scheduled Maturity Date and (C) the Warrants are then exercisable in full into shares of Common Stock at the then prevailing
Exercise Price (as defined in the Warrants)).
(e) Effect
of Failure to File and Obtain and Maintain Effectiveness of any Registration Statement. If (i) a Registration Statement covering the
resale of all of the Registrable Securities required to be covered thereby (disregarding any reduction pursuant to Section 2(f))
and required to be filed by the Company pursuant to this Agreement is (A) not filed with the SEC on or before the Filing Deadline for
such Registration Statement (a “Filing Failure”) (it being understood that if the Company files a Registration Statement
without affording each Investor and Legal Counsel the opportunity to review and comment on the same as required by Section 3(c) hereof,
the Company shall be deemed to not have satisfied this clause (i)(A) and such event shall be deemed to be a Filing Failure) or (B)
not declared effective by the SEC on or before the Effectiveness Deadline for such Registration Statement (an “Effectiveness
Failure”) (it being understood that if on the Business Day immediately following the Effective Date for such Registration Statement
the Company shall not have filed a “final” prospectus for such Registration Statement with the SEC under Rule 424(b) in accordance
with Section 3(b) (whether or not such a prospectus is technically required by such rule),
the Company shall be deemed to not have
satisfied this clause (i)(B) and such event shall be deemed to be an Effectiveness Failure), (ii) other than during an Allowable Grace
Period (as defined below), on any day after the Effective Date of a Registration Statement sales of all of the Registrable Securities
required to be included on such Registration Statement (disregarding any reduction pursuant to Section 2(f)) cannot be made pursuant
to such Registration Statement (including, without limitation, because of a failure to keep such Registration Statement effective, a failure
to disclose such information as is necessary for sales to be made pursuant to such Registration Statement, a suspension or delisting of
(or a failure to timely list) the shares of Common Stock on the Principal Market (as defined in the Securities Purchase Agreement) or
any other limitations imposed by the Principal Market, or a failure to register a sufficient number of shares of Common Stock or by reason
of a stop order) or the prospectus contained therein is not available for use for any reason (a “Maintenance Failure”),
or (iii) if a Registration Statement is not effective for any reason or the prospectus contained therein is not available for use for
any reason, and either (x) the Company fails for any reason to satisfy the requirements of Rule 144(c)(1), including,
without limitation,
the failure to satisfy the current public information requirement under Rule 144(c) or (y) the Company has ever been an issuer described
in Rule 144(i)(1)(i) or becomes such an issuer in the future, and the Company shall fail to satisfy any condition set forth in Rule 144(i)(2)
(a “Current Public Information Failure”) as a result of which any of the Investors are unable to sell Registrable Securities
without restriction under Rule 144 (including, without limitation, volume restrictions), then, as partial relief for the damages
to any holder by reason of any such delay in, or reduction of, its ability to sell the underlying shares of Common Stock (which remedy
shall not be exclusive of any other remedies available at law or in equity, including, without limitation, specific performance), the
Company shall pay to each holder of Registrable Securities relating to such Registration Statement an amount in cash equal to two percent
(2%) of such Investor’s original principal amount stated in such Investor’s Note on the Closing Date (1) on the date of such
Filing Failure, Effectiveness Failure, Maintenance Failure or Current Public Information Failure, as applicable, and (2) on every thirty
(30) day anniversary of (I) a Filing Failure until such Filing Failure is cured; (II) an Effectiveness Failure until such Effectiveness
Failure is cured; (III) a Maintenance Failure until such Maintenance Failure is cured; and (IV) a Current Public Information Failure
until the earlier of (i) the date such Current Public Information Failure is cured and (ii) such time that such public information is
no longer required pursuant to Rule 144 (in each case, pro rated for periods totaling less than thirty (30) days). The payments to
which a holder of Registrable Securities shall be entitled pursuant to this Section 2(e) are referred to herein as “Registration
Delay Payments.” Following the initial Registration Delay Payment for any particular event or failure (which shall be paid on
the date of such event or failure, as set forth above), without limiting the foregoing, if an event or failure giving rise to the Registration
Delay Payments is cured prior to any thirty (30) day anniversary of such event or failure, then such Registration Delay Payment shall
be made on the third (3rd) Business Day after such cure. In the event the Company fails to make Registration Delay Payments
in a timely manner in accordance with the foregoing, such Registration Delay Payments shall bear interest at the rate of two percent (2%)
per month (prorated for partial months) until paid in full. Notwithstanding the foregoing, no Registration Delay Payments shall be owed
to an Investor (other than with respect to a Maintenance Failure resulting from a suspension or delisting of (or a failure to timely list)
the shares of Common Stock on the Principal Market) with respect to any period during which all of such Investor’s Registrable Securities
may be sold by such Investor without restriction under Rule 144 (including, without limitation, volume restrictions) and without the need
for current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable).
(f) Offering.
Notwithstanding anything to the contrary contained in this Agreement, but subject to the payment of the Registration Delay Payments pursuant
to Section 2(e), in the event the staff of the SEC (the “Staff”) or the SEC seeks to characterize any offering
pursuant to a Registration Statement filed pursuant to this Agreement as constituting an offering of securities by, or on behalf
of, the Company, or in any other manner, such that the Staff or the SEC do not permit such Registration Statement to become
effective and used for resales in a manner that does not constitute such an offering and that permits the continuous resale at the market
by the Investors participating therein (or as otherwise may be acceptable to each Investor) without being named therein as an
“underwriter,” then the Company shall reduce the number of shares to be included in such Registration Statement by all Investors
until such time as the Staff and the SEC shall so permit such Registration Statement to become effective as aforesaid. In making
such reduction, the Company shall reduce the number of shares to be included by all Investors on a pro rata basis (based upon the number
of Registrable Securities otherwise required to be included for each Investor) unless the inclusion of shares by a particular Investor
or a particular set of Investors are resulting in the Staff or the SEC’s “by or on behalf of the Company” offering position,
in which event the shares held by such Investor or set of Investors shall be the only shares subject to reduction (and if by a set of
Investors on a pro rata basis by such Investors or on such other basis as would result in the exclusion of the least number of shares
by all such Investors); provided, that, with respect to such pro rata portion allocated to any Investor, such Investor may elect the allocation
of such pro rata portion among the Registrable Securities of such Investor. In addition, in the event that the Staff or the SEC requires
any Investor seeking to sell securities under a Registration Statement filed pursuant to this Agreement to be specifically identified
as an “underwriter” in order to permit such Registration Statement to become effective,
and such Investor does not consent
to being so named as an underwriter in such Registration Statement, then, in each such case, the Company shall reduce the total
number of Registrable Securities to be registered on behalf of such Investor, until such time as the Staff or the SEC does
not require such identification or until such Investor accepts such identification and the manner thereof. Any reduction pursuant to this
paragraph will first reduce all Registrable Securities other than those issued pursuant to the Securities Purchase Agreement. In
the event of any reduction in Registrable Securities pursuant to this paragraph, an affected Investor shall have the right to
require, upon delivery of a written request to the Company signed by such Investor, the Company to file a registration statement within
twenty (20) days of such request (subject to any restrictions imposed by Rule 415 or required by the Staff or the SEC) for resale
by such Investor in a manner acceptable to such Investor, and the Company shall following such request cause to be and keep effective
such registration statement in the same manner as otherwise contemplated in this Agreement for registration statements hereunder,
in each case until such time as: (i) all Registrable Securities held by such Investor have been registered and sold pursuant to an
effective Registration Statement in a manner acceptable to such Investor or (ii) all Registrable Securities may be resold by such
Investor without restriction (including, without limitation, volume limitations) pursuant to Rule 144 (taking account of any Staff
position with respect to “affiliate” status) and without the need for current public information required by Rule 144(c)(1)
(or Rule 144(i)(2), if applicable) or (iii) such Investor agrees to be named as an underwriter in any such Registration Statement in a
manner acceptable to such Investor as to all Registrable Securities held by such Investor and that have not theretofore been included
in a Registration Statement under this Agreement (it being understood that the special demand right under this sentence may be exercised
by an Investor multiple times and with respect to limited amounts of Registrable Securities in order to permit the resale thereof by such
Investor as contemplated above).
(g) Piggyback
Registrations. Without limiting any obligation of the Company hereunder or under the Securities Purchase Agreement, if there is not
an effective Registration Statement covering all of the Registrable Securities or the prospectus contained therein is not available for
use and the Company shall determine to prepare and file with the SEC a registration statement or offering statement relating to an offering
for its own account or the account of others under the 1933 Act of any of its equity securities (other than on Form S-4 or Form S-8 (each
as promulgated under the 1933 Act) or their then equivalents relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in connection with the Company’s stock option or other employee
benefit plans), then the Company shall deliver to each Investor a written notice of such determination and, if within fifteen (15)
days after the date of the delivery of such notice, any such Investor shall so request in writing, the Company shall include in such registration
statement or offering statement all or any part of such Registrable Securities such Investor requests to be registered; provided, however,
the Company shall not be required to register any Registrable Securities pursuant to this Section 2(g) that are eligible for resale
pursuant to Rule 144 without restriction (including, without limitation, volume restrictions) and without the need for current public
information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or that are the subject of a then-effective Registration
Statement.
(h) Allocation
of Registrable Securities. The initial number of Registrable Securities included in any Registration Statement and any increase in
the number of Registrable Securities included therein shall be allocated pro rata among the Investors based on the number of Registrable
Securities held by each Investor at the time such Registration Statement covering such initial number of Registrable Securities or increase
thereof is declared effective by the SEC. In the event that an Investor sells or otherwise transfers any of such Investor’s Registrable
Securities, each transferee or assignee (as the case may be) that becomes an Investor shall be allocated a pro rata portion of the then-remaining
number of Registrable Securities included in such Registration Statement for such transferor or assignee (as the case may be). Any shares
of Common Stock included in a Registration Statement and which remain allocated to any Person which ceases to hold any Registrable Securities
covered by such Registration Statement shall be allocated to the remaining Investors, pro rata based on the number of Registrable Securities
then held by such Investors which are covered by such Registration Statement.
(i) No
Inclusion of Other Securities. Except for such securities as set forth on Schedule 2(i), the Company shall in no event include any
securities other than Registrable Securities on any Registration Statement filed in accordance herewith without the prior written consent
of the Required Holders; provided, that, in the event of any reduction in the aggregate number of securities included on the applicable
Registration Statement required by the SEC (or as necessary to prevent one or more Investors being deemed an underwriter under such applicable
Registration Statement), the aggregate number of securities as set forth on Schedule 2(i) shall be reduced on such Registration Statement,
pro rata, prior to any reduction of any of the Registrable Securities included in such Registration Statement. Until the Applicable Date
(as defined in the Securities Purchase Agreement), the Company shall not enter into any agreement providing any registration rights to
any of its security holders, except as otherwise permitted under the Securities Purchase Agreement.
3. Related
Obligations.
The Company shall use its best
efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof, and, pursuant
thereto, the Company shall have the following obligations:
(a) The
Company shall promptly prepare and file with the SEC a Registration Statement with respect to all the Registrable Securities (but in no
event later than the applicable Filing Deadline) and use its best efforts to cause such Registration Statement to become effective as
soon as practicable after such filing (but in no event later than the Effectiveness Deadline). Subject to Allowable Grace Periods, the
Company shall keep each Registration Statement effective (and the prospectus contained therein available for use) pursuant to Rule 415
for resales by the Investors on a delayed or continuous basis at then-prevailing market prices (and not fixed prices) at all times until
the earlier of (i) the date as of which all of the Investors may sell all of the Registrable Securities required to be covered by such
Registration Statement (disregarding any reduction pursuant to Section 2(f)) without restriction pursuant to Rule 144 (including,
without limitation, volume restrictions) and without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2),
if applicable) or (ii) the date on which the Investors shall have sold all of the Registrable Securities covered by such Registration
Statement (the “Registration Period”). Notwithstanding anything to the contrary contained in this Agreement, the Company
shall ensure that, when filed and at all times while effective, each Registration Statement (including, without limitation, all amendments
and supplements thereto) and the prospectus (including, without limitation, all amendments and supplements thereto) used in connection
with such Registration Statement (1) shall not contain any untrue statement of a material fact or omit to state a material fact required
to be stated therein, or necessary to make the statements therein (in the case of prospectuses, in the light of the circumstances in which
they were made) not misleading and (2) will disclose (whether directly or through incorporation by reference to other SEC filings to the
extent permitted) all material information regarding the Company and its securities. The Company shall submit to the SEC, within one (1)
Business Day after the later of the date that (i) the Company learns that no review of a particular Registration Statement will be made
by the Staff or that the Staff has no further comments on a particular Registration Statement (as the case may be) and (ii) the consent
of Legal Counsel is obtained pursuant to Section 3(c) (which consent shall be immediately sought), a request for acceleration of
effectiveness of such Registration Statement to a time and date not later than twenty-four (24) hours after the submission of such
request. The Company shall respond in writing to comments made by the SEC in respect of a Registration Statement as soon as practicable,
but in no event later than fifteen (15) days after the receipt of comments by or notice from the SEC that an amendment is required in
order for a Registration Statement to be declared effective.
(b) Subject
to Section 3(r) of this Agreement, the Company shall prepare and file with the SEC such amendments (including, without limitation,
post-effective amendments) and supplements to each Registration Statement and the prospectus used in connection with each such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to keep each such
Registration Statement effective at all times during the Registration Period for such Registration Statement, and, during such period,
comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company required to be
covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance
with the intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement; provided, however,
by 8:30 a.m. (New York time) on the Business Day immediately following each Effective Date, the Company shall file with the SEC in accordance
with Rule 424(b) under the 1933 Act the final prospectus to be used in connection with sales pursuant to the applicable Registration Statement
(whether or not such a prospectus is technically required by such rule). In the case of amendments and supplements to any Registration
Statement which are required to be filed pursuant to this Agreement (including, without limitation, pursuant to this Section 3(b))
by reason of the Company filing a report on Form 8-K, Form 10-Q or Form 10-K or any analogous report under the Securities Exchange Act
of 1934, as amended (the “1934 Act”), the Company shall, if permitted under the applicable rules and regulations of
the SEC, have incorporated such report by reference into such Registration Statement, if applicable, or shall file such amendments or
supplements with the SEC on the same day on which the 1934 Act report is filed which created the requirement for the Company to amend
or supplement such Registration Statement.
(c) The
Company shall (A) permit Legal Counsel and legal counsel for each other Investor to review and comment upon (i) each Registration Statement
at least five (5) Business Days prior to its filing with the SEC and (ii) all amendments and supplements to each Registration Statement
(including, without limitation, the prospectus contained therein) (except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K, and any similar or successor reports) within a reasonable number of days prior to their filing with the SEC,
and (B) not file any Registration Statement or amendment or supplement thereto in a form to which Legal Counsel or any legal counsel for
any other Investor reasonably objects. The Company shall not submit a request for acceleration of the effectiveness of a Registration
Statement or any amendment or supplement thereto or to any prospectus contained therein without the prior consent of Legal Counsel, which
consent shall not be unreasonably withheld. The Company shall promptly furnish to Legal Counsel and legal counsel for each other Investor,
without charge, (i) copies of any correspondence from the SEC or the Staff to the Company or its representatives relating to each Registration
Statement, provided that such correspondence shall not contain any material, non-public information regarding the Company or any of its
Subsidiaries (as defined in the Securities Purchase Agreement), (ii) after the same is prepared and filed with the SEC, one (1) copy
of each Registration Statement and any amendment(s) and supplement(s) thereto, including, without limitation, financial statements and
schedules, all documents incorporated therein by reference, if requested by an Investor, and all exhibits and (iii) upon the effectiveness
of each Registration Statement, one (1) copy of the prospectus included in such Registration Statement and all amendments and supplements
thereto. The Company shall reasonably cooperate with Legal Counsel and legal counsel for each other Investor in performing the Company’s
obligations pursuant to this Section 3.
(d) The
Company shall promptly furnish to each Investor whose Registrable Securities are included in any Registration Statement, without charge,
(i) after the same is prepared and filed with the SEC, at least one (1) copy of each Registration Statement and any amendment(s) and supplement(s)
thereto, including, without limitation, financial statements and schedules, all documents incorporated therein by reference, if requested
by an Investor, all exhibits and each preliminary prospectus, (ii) upon the effectiveness of each Registration Statement, ten (10)
copies of the prospectus included in such Registration Statement and all amendments and supplements thereto (or such other number of copies
as such Investor may reasonably request from time to time) and (iii) such other documents, including, without limitation, copies of any
preliminary or final prospectus, as such Investor may reasonably request from time to time in order to facilitate the disposition of the
Registrable Securities owned by such Investor.
(e) The
Company shall use its best efforts to (i) register and qualify, unless an exemption from registration and qualification applies, the resale
by Investors of the Registrable Securities covered by a Registration Statement under such other securities or “blue sky” laws
of all applicable jurisdictions in the United States, (ii) prepare and file in those jurisdictions, such amendments (including, without
limitation, post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness
thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications
in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, the Company shall not be required in connection therewith or
as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this
Section 3(e), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process
in any such jurisdiction. The Company shall promptly notify Legal Counsel, legal counsel for each other Investor and each Investor who
holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification
of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.
(f) The
Company shall notify Legal Counsel, legal counsel for each other Investor and each Investor in writing of the happening of any event,
as promptly as practicable after becoming aware of such event, as a result of which the prospectus included in a Registration Statement,
as then in effect, may include an untrue statement of a material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (provided that
in no event shall such notice contain any material, non-public information regarding the Company or any of its Subsidiaries), and, subject
to Section 3(r), promptly prepare a supplement or amendment to such Registration Statement and such prospectus contained therein
to correct such untrue statement or omission and deliver ten (10) copies of such supplement or amendment to Legal Counsel, legal counsel
for each other Investor and each Investor (or such other number of copies as Legal Counsel, legal counsel for each other Investor or such
Investor may reasonably request). The Company shall also promptly notify Legal Counsel,
legal counsel for each other Investor and each
Investor in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, when a Registration
Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to Legal Counsel,
legal counsel for each other Investor and each Investor by e-mail on the same day of such effectiveness and by overnight mail), and when
the Company receives written notice from the SEC that a Registration Statement or any post-effective amendment will be reviewed by the
SEC, (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information,
(iii) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate;
and (iv) of the receipt of any request by the SEC or any other federal or state governmental authority for any additional information
relating to the Registration Statement or any amendment or supplement thereto or any related prospectus. The Company shall respond as
promptly as practicable to any comments received from the SEC with respect to each Registration Statement or any amendment thereto (it
being understood and agreed that the Company’s response to any such comments shall be delivered to the SEC no later than fifteen (15)
Business Days after the receipt thereof).
(g) The
Company shall (i) use its best efforts to prevent the issuance of any stop order or other suspension of effectiveness of each Registration
Statement or the use of any prospectus contained therein, or the suspension of the qualification, or the loss of an exemption from qualification,
of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal
of such order or suspension at the earliest possible moment and (ii) notify Legal Counsel, legal counsel for each other Investor and each
Investor who holds Registrable Securities of the issuance of such order and the resolution thereof or its receipt of actual notice of
the initiation or threat of any proceeding for such purpose.
(h) If
any Investor may be required under applicable securities law to be described in any Registration Statement as an underwriter and such
Investor consents to so being named an underwriter, at the request of any Investor, the Company shall furnish to such Investor, on the
date of the effectiveness of such Registration Statement and thereafter from time to time on such dates as an Investor may reasonably
request (i) a letter, dated such date, from the Company’s independent certified public accountants in form and substance as is customarily
given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the Investors, and
(ii) an opinion, dated as of such date, of counsel representing the Company for purposes of such Registration Statement, in form, scope
and substance as is customarily given in an underwritten public offering, addressed to the Investors.
(i) If
any Investor may be required under applicable securities law to be described in any Registration Statement as an underwriter and such
Investor consents to so being named an underwriter, upon the written request of such Investor, the Company shall make available for inspection
by (i) such Investor, (ii) legal counsel for such Investor and (iii) one (1) firm of accountants or other agents retained by such Investor
(collectively, the “Inspectors”), all pertinent financial and other records, and pertinent corporate documents and
properties of the Company (collectively, the “Records”), as shall be reasonably deemed necessary by each Inspector,
and cause the Company’s officers, directors and employees to supply all information which any Inspector may reasonably request;
provided, however, each Inspector shall agree in writing to hold in strict confidence and not to make any disclosure (except to such Investor)
or use of any Record or other information which the Company’s board of directors determines in good faith to be confidential, and
of which determination the Inspectors are so notified, unless (1) the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in any Registration Statement or is otherwise required under the 1933 Act, (2) the release of such Records is ordered pursuant
to a final, non-appealable subpoena or order from a court or government body of competent jurisdiction, or (3) the information in such
Records has been made generally available to the public other than by disclosure in violation of this Agreement or any other Transaction
Document (as defined in the Securities Purchase Agreement). Such Investor agrees that it shall, upon learning that disclosure of such
Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company
and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for,
the Records deemed confidential. Nothing herein (or in any other confidentiality agreement between the Company and such Investor, if any)
shall be deemed to limit any Investor’s ability to sell Registrable Securities in a manner which is otherwise consistent with applicable
laws and regulations.
(j) The
Company shall hold in confidence and not make any disclosure of information concerning an Investor 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 avoid or correct a misstatement or omission in any Registration Statement or is otherwise required to be disclosed in such
Registration Statement pursuant to the 1933 Act, (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 Transaction Document. The Company agrees that it shall,
upon learning that disclosure of such information concerning an Investor is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt written notice to such Investor and allow such Investor, at such Investor’s expense,
to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.
(k) Without
limiting any obligation of the Company under the Securities Purchase Agreement, the Company shall use its best efforts either to (i) cause
all of the Registrable Securities covered by each Registration Statement to be listed on each securities exchange on which securities
of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted
under the rules of such exchange, (ii) secure designation and quotation of all of the Registrable Securities covered by each Registration
Statement on an Eligible Market (as defined in the Securities Purchase Agreement), or (iii) if, despite the Company’s best efforts
to satisfy the preceding clauses (i) or (ii) the Company is unsuccessful in satisfying the preceding clauses (i) or (ii), without
limiting the generality of the foregoing, to use its best efforts to arrange for at least two market makers to register with the Financial
Industry Regulatory Authority (“FINRA”) as such with respect to such Registrable Securities. In addition, the Company
shall cooperate with each Investor and any broker or dealer through which any such Investor proposes to sell its Registrable Securities
in effecting a filing with FINRA pursuant to FINRA Rule 5110 as requested by such Investor. The Company shall pay all fees and expenses
in connection with satisfying its obligations under this Section 3(k).
(l) The
Company shall cooperate with the Investors who hold Registrable Securities being offered and, to the extent applicable, facilitate the
timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered
pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts (as the case may be) as the Investors
may reasonably request from time to time and registered in such names as the Investors may request.
(m) If
requested by an Investor, the Company shall as soon as practicable after receipt of notice from such Investor and subject to Section 3(r)
hereof, (i) incorporate in a prospectus supplement or post-effective amendment such information as an Investor reasonably requests to
be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect
to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering
of the Registrable Securities to be sold in such offering; (ii) make all required filings of such prospectus supplement or post-effective
amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii)
supplement or make amendments to any Registration Statement or prospectus contained therein if reasonably requested by an Investor holding
any Registrable Securities.
(n) The
Company shall use its best efforts to cause the Registrable Securities covered by a Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities.
(o) The
Company shall make generally available to its security holders as soon as practical, but not later than ninety (90) days after the close
of the period covered thereby, an earnings statement (in form complying with, and in the manner provided by, the provisions of Rule 158
under the 1933 Act) covering a twelve-month period beginning not later than the first day of the Company’s fiscal quarter next following
the applicable Effective Date of each Registration Statement.
(p) The
Company shall otherwise use its best efforts to comply with all applicable rules and regulations of the SEC in connection with any registration
hereunder.
(q) Within
one (1) Business Day after a Registration Statement which covers Registrable Securities is declared effective by the SEC, the Company
shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies
to the Investors whose Registrable Securities are included in such Registration Statement) confirmation that such Registration Statement
has been declared effective by the SEC in the form attached hereto as Exhibit A.
(r) Notwithstanding
anything to the contrary herein (but subject to the last sentence of this Section 3(r)), at any time after the Effective Date of
a particular Registration Statement, the Company may delay the disclosure of material, non-public information concerning the Company or
any of its Subsidiaries the disclosure of which at the time is not, in the good faith opinion of the board of directors of the Company,
in the best interest of the Company and, in the opinion of counsel to the Company, otherwise required (a “Grace Period”),
provided that the Company shall promptly notify the Investors in writing of the (i) existence of material, non-public information giving
rise to a Grace Period (provided that in each such notice the Company shall not disclose the content of such material, non-public information
to any of the Investors) and the date on which such Grace Period will begin and (ii) date on which such Grace Period ends, provided
further that (I) no Grace Period shall exceed ten (10) consecutive days and during any three hundred sixty five (365) day period all such
Grace Periods shall not exceed an aggregate of thirty (30) days, (II) the first day of any Grace Period must be at least five (5)
Trading Days after the last day of any prior Grace Period and (III) no Grace Period may exist during the sixty (60) Trading Day period
immediately following the Effective Date of such Registration Statement (provided that such sixty (60) Trading Day period shall be extended
by the number of Trading Days during such period and any extension thereof contemplated by this proviso during which such Registration
Statement is not effective or the prospectus contained therein is not available for use) (each, an “Allowable Grace Period”).
For purposes of determining the length of a Grace Period above, such Grace Period shall begin on and include the date the Investors receive
the notice referred to in clause (i) above and shall end on and include the later of the date the Investors receive the notice referred
to in clause (ii) above and the date referred to in such notice. The provisions of Section 3(g) hereof shall not be applicable during
the period of any Allowable Grace Period. Upon expiration of each Grace Period, the Company shall again be bound by the first sentence
of Section 3(f) with respect to the information giving rise thereto unless such material, non-public information is no longer applicable.
Notwithstanding anything to the contrary contained in this Section 3(r), the Company shall cause its transfer agent to deliver unlegended
shares of Common Stock to a transferee of an Investor in accordance with the terms of the Securities Purchase Agreement in connection
with any sale of Registrable Securities with respect to which such Investor has entered into a contract for sale, and delivered a copy
of the prospectus included as part of the particular Registration Statement to the extent applicable, prior to such Investor’s receipt
of the notice of a Grace Period and for which the Investor has not yet settled.
(s) The
Company shall take all other reasonable actions necessary to expedite and facilitate disposition by each Investors of its Registrable
Securities pursuant to each Registration Statement.
(t) Neither
the Company nor any Subsidiary or affiliate thereof shall identify any Investor as an underwriter in any public disclosure or filing with
the SEC, the Principal Market or any Eligible Market and any Buyer being deemed an underwriter by the SEC shall not relieve the Company
of any obligations it has under this Agreement or any other Transaction Document (as defined in the Securities Purchase Agreement); provided,
however, that the foregoing shall not prohibit the Company from including the disclosure found in the “Plan of Distribution”
section attached hereto as Exhibit B in the Registration Statement.
(u) Neither
the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or after
the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights
granted to the Buyers in this Agreement or otherwise conflicts with the provisions hereof.
4. Obligations
of the Investors.
(a) At
least five (5) Business Days prior to the first anticipated filing date of each Registration Statement, the Company shall notify each
Investor in writing of the information the Company requires from each such Investor with respect to such Registration Statement. It shall
be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such Investor shall furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably
required to effect and maintain the effectiveness of the registration of such Registrable Securities and shall execute such documents
in connection with such registration as the Company may reasonably request.
(b) Each
Investor, by such Investor’s acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested
by the Company in connection with the preparation and filing of each Registration Statement hereunder, unless such Investor has notified
the Company in writing of such Investor’s election to exclude all of such Investor’s Registrable Securities from such Registration
Statement.
(c) Each
Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(g)
or the first sentence of 3(f), such Investor will immediately discontinue disposition of Registrable Securities pursuant to any Registration
Statement(s) covering such Registrable Securities until such Investor’s receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(g) or the first sentence of Section 3(f) or receipt of notice that no supplement or amendment is required.
Notwithstanding anything to the contrary in this Section 4(c), the Company shall cause its transfer agent to deliver unlegended shares
of Common Stock to a transferee of an Investor in accordance with the terms of the Securities Purchase Agreement in connection with any
sale of Registrable Securities with respect to which such Investor has entered into a contract for sale prior to the Investor’s
receipt of a notice from the Company of the happening of any event of the kind described in Section 3(g) or the first sentence of
Section 3(f) and for which such Investor has not yet settled.
5. Expenses
of Registration.
All reasonable expenses, other
than underwriting discounts and commissions, incurred in connection with registrations, filings or qualifications pursuant to Sections 2
and 3, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, FINRA filing fees
(if any) and fees and disbursements of counsel for the Company shall be paid by the Company. The Company shall reimburse Legal Counsel
for its fees and disbursements in connection with registration, filing or qualification pursuant to Sections 2 and 3 of this Agreement
which amount shall be limited to $5,000 for each such registration, filing or qualification.
6. Indemnification.
(a) To
the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend each Investor and each of
its directors, officers, shareholders, members, partners, employees, agents, advisors, representatives (and any other Persons with a functionally
equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title) and each Person, if any, who
controls such Investor within the meaning of the 1933 Act or the 1934 Act and each of the directors, officers, shareholders, members,
partners, employees, agents, advisors, representatives (and any other Persons with a functionally equivalent role of a Person holding
such titles notwithstanding the lack of such title or any other title) of such controlling Persons (each, an “Indemnified Person”),
against any losses, obligations, claims, damages, liabilities, contingencies, judgments, fines, penalties, charges, costs (including,
without limitation, court costs, reasonable attorneys’ fees and costs of defense and investigation), amounts paid in settlement
or expenses, joint or several, (collectively, “Claims”) incurred in investigating, preparing or defending any action,
claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative
or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an Indemnified Person is or may be a party
thereto (“Indemnified Damages”), to which any of them may become subject insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement
of a material fact in a Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification
of the offering under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered
(“Blue Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained
in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus
(as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged
omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading or (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act,
any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or
sale of the Registrable Securities pursuant to a Registration Statement or (iv) any violation of this Agreement (the matters in the foregoing
clauses (i) through (iv) being, collectively, “Violations”). Subject to Section 6(c), the Company shall reimburse
the Indemnified Persons,
promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses
incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein,
the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising out
of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by such
Indemnified Person for such Indemnified Person expressly for use in connection with the preparation of such Registration Statement or
any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section 3(d);
and (ii) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of
the Company, which consent shall not be unreasonably withheld or delayed. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of any of the Registrable Securities
by any of the Investors pursuant to Section 9.
(b) In
connection with any Registration Statement in which an Investor is participating, such Investor agrees to severally and not jointly indemnify,
hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors,
each of its officers who signs the Registration Statement and each Person, if any, who controls the Company within the meaning of the
1933 Act or the 1934 Act (each, an “Indemnified Party”), against any Claim or Indemnified Damages to which any of them
may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based
upon any Violation, in each case, to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity
with written information furnished to the Company by such Investor expressly for use in connection with such Registration Statement; and,
subject to Section 6(c) and the below provisos in this Section 6(b), such Investor will reimburse an Indemnified Party any legal
or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such Claim; provided,
however, the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in Section 7
shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Investor,
which consent shall not be unreasonably withheld or delayed, provided further that such Investor shall be liable under this Section 6(b)
for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result of the applicable
sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of any of the Registrable Securities
by any of the Investors pursuant to Section 9.
(c) Promptly
after receipt by an Indemnified Person or Indemnified Party (as the case may be) under this Section 6 of notice of the commencement
of any action or proceeding (including, without limitation, any governmental action or proceeding) involving a Claim, such Indemnified
Person or Indemnified Party (as the case may be) shall, if a Claim in respect thereof is to be made against any indemnifying party under
this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly
noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person
or the Indemnified Party (as the case may be); provided, however, an Indemnified Person or Indemnified Party (as the case may be) shall
have the right to retain its own counsel with the fees and expenses of such counsel to be paid by the indemnifying party if: (i) the indemnifying
party has agreed in writing to pay such fees and expenses; (ii) the indemnifying party shall have failed promptly to assume the defense
of such Claim and to employ counsel reasonably satisfactory to such Indemnified Person or Indemnified Party (as the case may be) in any
such Claim; or (iii) the named parties to any such Claim (including, without limitation, any impleaded parties) include both such Indemnified
Person or Indemnified Party (as the case may be) and the indemnifying party, and such Indemnified Person or such Indemnified Party (as
the case may be) shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent
such Indemnified Person or such Indemnified Party and the indemnifying party (in which case, if such Indemnified Person or such Indemnified
Party (as the case may be) notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the
indemnifying party, then the indemnifying party shall not have the right to assume the defense thereof and such counsel shall be at the
expense of the indemnifying party, provided further that in the case of clause (iii) above the indemnifying party shall not be responsible
for the reasonable fees and expenses of more than one (1) separate legal counsel for such Indemnified Person or Indemnified Party (as
the case may be). The Indemnified Party or Indemnified Person (as the case may be) shall reasonably cooperate with the indemnifying party
in connection with any negotiation or defense of any such action or Claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the Indemnified Party or Indemnified Person (as the case may be) which relates to such action
or Claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person (as the case may be) reasonably apprised at all
times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any
settlement of any action,
claim or proceeding effected without its prior written consent; provided, however, the indemnifying party shall
not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Indemnified
Party or Indemnified Person (as the case may be), consent to entry of any judgment or enter into any settlement or other compromise which
does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person
(as the case may be) of a release from all liability in respect to such Claim or litigation, and such settlement shall not include any
admission as to fault on the part of the Indemnified Party. Following indemnification as provided for hereunder, the indemnifying party
shall be subrogated to all rights of the Indemnified Party or Indemnified Person (as the case may be) with respect to all third parties,
firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying
party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party (as the case may be) under this Section 6, except to the extent that the indemnifying party
is materially and adversely prejudiced in its ability to defend such action.
(d) The
indemnification required by this Section 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 Indemnified Damages are incurred.
(e) The indemnity and contribution agreements contained herein shall be in addition to (i) any cause of action or similar right of
the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.
7. Contribution.
To the extent any indemnification
by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however:
(i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards
set forth in Section 6 of this Agreement, (ii) no Person involved in the sale of Registrable Securities which Person is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in connection with such sale shall be entitled to contribution
from any Person involved in such sale of Registrable Securities who was not guilty of fraudulent misrepresentation; and (iii) contribution
by any seller of Registrable Securities shall be limited in amount to the amount of net proceeds received by such seller from the applicable
sale of such Registrable Securities pursuant to such Registration Statement. Notwithstanding the provisions of this Section 7, no
Investor shall be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received
by such Investor from the applicable sale of the Registrable Securities subject to the Claim exceeds the amount of any damages that such
Investor has otherwise been required to pay, or would otherwise be required to pay under Section 6(b), by reason of such untrue or
alleged untrue statement or omission or alleged omission.
8. Reports
Under the 1934 Act.
With a view to making available
to the Investors the benefits of Rule 144, the Company agrees to:
(a) make
and keep public information available, as those terms are understood and defined in Rule 144;
(b) file
with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements (it being understood and agreed that nothing herein shall limit any obligations of the
Company under the Securities Purchase Agreement) and the filing of such reports and other documents is required for the applicable provisions
of Rule 144; and
(c) furnish
to each Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company,
if true, that it has complied with the reporting, submission and posting requirements of Rule 144, the 1933 Act and the 1934 Act, (ii)
a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company with
the SEC if such reports are not publicly available via EDGAR, and (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without registration.
9. Assignment
of Registration Rights.
All or any portion of the rights
under this Agreement shall be automatically assignable by each Investor to any transferee or assignee (as the case may be) of all or any
portion of such Investor’s Registrable Securities, Notes or Warrants if: (i) such Investor agrees in writing with such transferee
or assignee (as the case may be) to assign all or any portion of such rights, and a copy of such agreement is furnished to the Company
within a reasonable time after such transfer or assignment (as the case may be); (ii) the Company is, within a reasonable time after such
transfer or assignment (as the case may be), furnished with written notice of (a) the name and address of such transferee or assignee
(as the case may be), and (b) the securities with respect to which such registration rights are being transferred or assigned (as the
case may be); (iii) immediately following such transfer or assignment (as the case may be) the further disposition of such securities
by such transferee or assignee (as the case may be) is restricted under the 1933 Act or applicable state securities laws if so required;
(iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence such transferee or assignee
(as the case may be) agrees in writing with the Company to be bound by all of the provisions contained herein; (v) such transfer or assignment
(as the case may be) shall have been made in accordance with the applicable requirements of the Securities Purchase Agreement, the Notes
and the Warrants (as the case may be); and (vi) such transfer or assignment (as the case may be) shall have been conducted in accordance
with all applicable federal and state securities laws.
10. Amendment
of Registration Rights.
Provisions
of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of the Company and the Required Holders; provided that any such amendment or waiver that
complies with the foregoing, but that disproportionately, materially and adversely affects the rights and obligations of any Investor
relative to the comparable rights and obligations of the other Investors shall require the prior written consent of such adversely affected
Investor. Any amendment or waiver effected in accordance with this Section 10 shall be binding upon each Investor and the Company, provided
that no such amendment shall be effective to the extent that it (1) applies to less than all of the holders of Registrable Securities
or (2) imposes any obligation or liability on any Investor without such Investor’s prior written consent (which may be granted or
withheld in such Investor’s sole discretion). No waiver shall be effective unless it is in writing and signed by an authorized representative
of the waiving party. No consideration 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 (other than the reimbursement of legal fees) also is offered to all of the parties to
this Agreement.
11. Miscellaneous.
(a) Solely
for purposes of this Agreement, a Person is deemed to be a holder of Registrable Securities whenever such Person owns, or is deemed to
own, of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more Persons
with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from
such record owner of such Registrable Securities.
(b) Any
notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by electronic mail
(provided that such sent email is kept on file (whether electronically or otherwise) by the sending party and the sending party does not
receive an automatically generated message from the recipient’s email server that such e-mail could not be delivered to such recipient);
or (iii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly
addressed to the party to receive the same. The mailing addresses and e-mail addresses for such communications shall be:
If to the Company:
Splash Beverage Group, Inc..
1314 E Las Olas Blvd, Suite 221
Fort Lauderdale, Florida 33301
Telephone: (954) 745-5815
Attention: Robert Nistico, Chief Executive Officer
E-Mail: Robert@splashbeveragegroup.com
With a copy (for informational purposes only) to:
Sichenzia Ross Ference Carmel LLP
1185 Avenue of the Americas, 31st Floor
New York, New York 10036
Telephone: (212) 930-9700
Attention: Darrin Ocasio
E-Mail: dmocasio@srfc.law
If to the Transfer Agent:
Vstock Transfer
18 Lafayette Place
Woodmere, New York 11598
Telephone: (212) 828-8436
Attention: _____________
E-Mail: action@vstocktransfer.com
If to Legal Counsel:
Kelley Drye & Warren LLP
3 World Trade Center
175 Greenwich Street
New York, NY 10007
Telephone: (212) 808-7540
Facsimile: (212) 808-7897
Attention: Michael A. Adelstein, Esq.
E-mail: madelstein@kelleydrye.com
If to a Buyer, to its mailing address and/or email
address set forth on the Schedule of Buyers attached to the Securities Purchase Agreement, with copies to such Buyer’s representatives
as set forth on the Schedule of Buyers, or to such other mailing address and/or email address and/or to the attention of such other Person
as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change,
provided that Kelley Drye & Warren LLP shall only be provided notices sent to the lead investor. Written confirmation of receipt (A) given
by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s
e-mail containing the time, date and recipient’s e-mail or (C) provided by a courier or overnight courier service shall be rebuttable
evidence of personal service, receipt by e-mail or receipt from a nationally recognized overnight delivery service in accordance with
clause (i), (ii) or (iii) above, respectively.
(c) Failure
of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof. The Company and each Investor acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that each party hereto shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions
of this Agreement by any other party hereto and to enforce specifically the terms and provisions hereof (without the necessity of showing
economic loss and without any bond or other security being required), this being in addition to any other remedy to which any party may
be entitled by law or equity.
(d) All
questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws
of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New
York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough
of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue
of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH
OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(e) If
any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction,
the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that
it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining
provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions
of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question
does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the
benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited,
invalid or unenforceable provision(s).
(f) This
Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein
and therein constitute the entire agreement among the parties hereto and thereto solely with respect to the subject matter hereof and
thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein.
This Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced
herein and therein supersede all prior agreements and understandings among the parties hereto solely with respect to the subject matter
hereof and thereof; provided, however, nothing contained in this Agreement or any other Transaction Document shall (or shall be deemed
to) (i) have any effect on any agreements any Investor has entered into with the Company or any of its Subsidiaries prior to the date
hereof with respect to any prior investment made by such Investor in the Company, (ii) waive, alter, modify or amend in any respect any
obligations of the Company or any of its Subsidiaries or any rights of or benefits to any Investor or any other Person in any agreement
entered into prior to the date hereof between or among the Company and/or any of its Subsidiaries and any Investor and all such agreements
shall continue in full force and effect or (iii) limit any obligations of the Company under any of the other Transaction Documents.
(g) Subject
to compliance with Section 9 (if applicable), this Agreement shall inure to the benefit of and be binding upon the permitted successors
and assigns of each of the parties hereto. This Agreement is not for the benefit of, nor may any provision hereof be enforced by, any
Person, other than the parties hereto, their respective permitted successors and assigns and the Persons referred to in Sections 6
and 7 hereof.
(h) The
headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. Unless the
context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural
forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed
broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof”
and words of like import refer to this entire Agreement instead of just the provision in which they are found.
(i) This
Agreement may be executed in two or more identical counterparts, each of which shall be deemed an original, but all of which shall be
considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the
other party. In the event that any signature is delivered by facsimile transmission or by an email which contains a portable document
format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing
(or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.
(j) Each
party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such
other agreements, certificates, instruments and documents as any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
(k) The
language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of
strict construction will be applied against any party. Notwithstanding anything to the contrary set forth in Section 10, terms used in
this Agreement but defined in the other Transaction Documents shall have the meanings ascribed to such terms on the Closing Date in such
other Transaction Documents unless otherwise consented to in writing by each Investor.
(l) All
consents and other determinations required to be made by the Investors pursuant to this Agreement shall be made, unless otherwise specified
in this Agreement, by the Required Holders, determined as if all of the outstanding Notes then held by the Investors have been converted
for Registrable Securities without regard to any limitations on redemption, amortization and/or conversion of the Notes and the outstanding
Warrants then held by Investors have been exercised for Registrable Securities without regard to any limitations on exercise of the Warrants.
(m) This
Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.
(n) The
obligations of each Investor under this Agreement and the other Transaction Documents are several and not joint with the obligations of
any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under
this Agreement or any other Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by
any Investor pursuant hereto or thereto, shall be deemed to constitute the Investors as, and the Company acknowledges that the Investors
do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that
the Investors are in any way acting in concert or as a group or entity with respect to such obligations or the transactions contemplated
by the Transaction Documents or any matters, and the Company acknowledges that the Investors are not acting in concert or as a group,
and the Company shall not assert any such claim, with respect to such obligations or the transactions contemplated by this Agreement or
any of the other the Transaction Documents. Each Investor shall be entitled to independently protect and enforce its rights, including,
without limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary
for any other Investor to be joined as an additional party in any proceeding for such purpose. The use of a single agreement with respect
to the obligations of the Company contained herein was solely in the control of the Company, not the action or decision of any Investor,
and was done solely for the convenience of the Company and not because it was required or requested to do so by any Investor. It is expressly
understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between the Company and
an Investor, solely, and not between the Company and the Investors collectively and not between and among Investors.
[signature page follows]
IN WITNESS WHEREOF, each Buyer and the Company
have caused their respective signature page to this Registration Rights Agreement to be duly executed as of the date first written above.
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COMPANY: |
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SPLASH BEVERAGE GROUP, INC. |
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By: |
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Name: |
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Title: |
IN WITNESS WHEREOF, each Buyer and the Company
have caused their respective signature page to this Registration Rights Agreement to be duly executed as of the date first written above.
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
______________________
______________________
______________________
Attention: _____________
Re: Splash Beverage Group,
Inc.
Ladies and Gentlemen:
[We are][I am] counsel to Splash
Beverage Group, Inc., a Nevada corporation (the “Company”), and have represented the Company in connection with that
certain Securities Purchase Agreement (the “Securities Purchase Agreement”) entered into by and among the Company and
the buyers named therein (collectively, the “Holders”) pursuant to which the Company issued to the Holders senior secured
convertible notes (the “Notes”) convertible into the Company’s shares of common stock, $0.001 par value per share
(the “Common Stock”), certain shares of Common Stock (the “Commitment Shares”) and warrants exercisable
for shares of Common Stock (the “Warrants”). Pursuant to the Securities Purchase Agreement, the Company also has entered
into a Registration Rights Agreement with the Holders (the “Registration Rights Agreement”) pursuant to which the Company
agreed, among other things, to register the Registrable Securities (as defined in the Registration Rights Agreement), including the Commitment
Shares and the shares of Common Stock issuable upon conversion of the Notes and exercise of the Warrants, under the Securities Act of
1933, as amended (the “1933 Act”). In connection with the Company’s obligations under the Registration Rights
Agreement, on ____________ ___, 20__, the Company filed a Registration Statement on Form [S-1][S-3] (File No. 333-_____________)
(the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”) relating
to the Registrable Securities which names each of the Holders as a selling stockholder thereunder.
In connection with the foregoing,
[we][I] advise you that [a member of the SEC’s staff has advised [us][me] by telephone that [the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS]] [an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS]] has been posted
on the web site of the SEC at www.sec.gov] and [we][I] have no knowledge, after a review of information posted on the website of the SEC
at http://www.sec.gov/litigation/stoporders.shtml, that any stop order suspending its effectiveness has been issued or that any proceedings
for that purpose are pending before, or threatened by, the SEC and the Registrable Securities are available for resale under the 1933
Act pursuant to the Registration Statement.
This letter shall serve as our standing
opinion to you that the Commitment Shares and the shares of Common Stock underlying the Notes and Warrants are freely transferable by
the Holders pursuant to the Registration Statement. You need not require further letters from us to effect any future legend-free issuance
or reissuance of such shares of Common Stock to the Holders as contemplated by the Company’s Irrevocable Transfer Agent Instructions
dated _________ __, 20__.
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Very truly yours, |
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[ISSUER’S COUNSEL] |
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By: |
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CC: |
[LEAD INVESTOR] |
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[OTHER BUYERS] |
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EXHIBIT B
SELLING STOCKHOLDERS
The shares of common stock being
offered by the selling stockholders are those previously issued to the selling stockholders and those issuable to the selling stockholders
upon conversion of the notes and exercise of the warrants. For additional information regarding the issuance of the notes and the warrants,
see “Private Placement of Notes, the Commitment Shares and Warrants” above. We are registering the shares of common stock
in order to permit the selling stockholders to offer the shares for resale from time to time. Except for the ownership of the notes, the
Commitment Shares and the warrants issued pursuant to the Securities Purchase Agreement, the selling stockholders have not had any material
relationship with us within the past three years.
The table below lists the selling
stockholders and other information regarding the beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder) of the shares of common stock held by each of the selling stockholders.
The second column lists the number of shares of common stock beneficially owned by the selling stockholders, based on their respective
ownership of shares of common stock, notes and warrants, as of ________, 20__, assuming conversion of the notes and exercise of the warrants
held by each such selling stockholder on that date but taking account of any limitations on conversion and exercise set forth therein.
The third column lists the shares
of common stock being offered by this prospectus by the selling stockholders and does not take in account any limitations on (i) conversion
of the notes set forth therein or (ii) exercise of the warrants set forth therein.
In accordance with the terms of
a registration rights agreement with the holders of the notes, Commitment Shares and the warrants, this prospectus generally covers the
resale of (i) 100% of the Commitment Shares and (ii) 250% of the sum of (A) the maximum number of shares of common stock issued or issuable
pursuant to the Notes, including payment of interest on the notes through [DATE], and (B) the maximum number of shares of common stock
issued or issuable upon exercise of the warrants, in each case, determined as if the outstanding notes (including interest on the notes
through [DATE]) and warrants were converted or exercised (as the case may be) in full (without regard to any limitations on conversion
or exercise contained therein solely for the purpose of such calculation) at an alternate conversion price or exercise price (as the case
may be) calculated as of the trading day immediately preceding the date this registration statement was initially filed with the SEC.
Because the conversion price and alternate conversion price of the notes and the exercise price of the warrants may be adjusted, the number
of shares that will actually be issued may be more or less than the number of shares being offered by this prospectus. The fourth column
assumes the sale of all of the shares offered by the selling stockholders pursuant to this prospectus.
Under the terms of the notes and
the warrants, a selling stockholder may not convert the notes or exercise the warrants to the extent (but only to the extent) such selling
stockholder or any of its affiliates would beneficially own a number of shares of our common stock which would exceed 4.99% of the outstanding
shares of the Company. The number of shares in the second column reflects these limitations. The selling stockholders may sell all, some
or none of their shares in this offering. See “Plan of Distribution.”
Name of Selling Stockholder |
Number of Shares of Common Stock Owned Prior to Offering |
Maximum Number of Shares of Common Stock to be Sold Pursuant to this Prospectus |
Number of Shares of Common Stock of Owned After Offering |
[LEAD INVESTOR] (1) |
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[OTHER BUYERS] |
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PLAN OF DISTRIBUTION
We are registering the shares
of common stock previously issued and the shares of common stock issuable upon conversion of the notes and exercise of the warrants to
permit the resale of these shares of common stock by the holders of the notes, Commitment Shares and warrants from time to time after
the date of this prospectus. We will not receive any of the proceeds from the sale by the selling stockholders of the shares of common
stock, although we will receive the exercise price of any Warrants not exercised by the selling stockholders on a cashless exercise basis.
We will bear all fees and expenses incident to our obligation to register the shares of common stock.
The selling stockholders may sell
all or a portion of the shares of common stock held by them and offered hereby from time to time directly or through one or more underwriters,
broker-dealers or agents. If the shares of common stock are sold through underwriters or broker-dealers, the selling stockholders will
be responsible for underwriting discounts or commissions or agent’s commissions. The shares of common stock may be sold in one or
more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale
or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions, pursuant to one
or more of the following methods:
| · | on any national securities exchange or quotation service on which the securities may be listed or quoted
at the time of sale; |
| · | in the over-the-counter market; |
| · | in transactions otherwise than on these exchanges or systems or in the over-the-counter market; |
| · | through the writing or settlement of options, whether such options are listed on an options exchange or
otherwise; |
| · | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| · | block trades in which the broker-dealer will attempt to sell the shares as agent but may position and
resell a portion of the block as principal to facilitate the transaction; |
| · | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| · | an exchange distribution in accordance with the rules of the applicable exchange; |
| · | privately negotiated transactions; |
| · | short sales made after the date the Registration Statement is declared effective by the SEC; |
| · | broker-dealers may agree with a selling security holder to sell a specified number of such shares at a
stipulated price per share; |
| · | a combination of any such methods of sale; and |
| · | any other method permitted pursuant to applicable law. |
The selling stockholders may also
sell shares of common stock under Rule 144 promulgated under the Securities Act of 1933, as amended, if available, rather than under
this prospectus. In addition, the selling stockholders may transfer the shares of common stock by other means not described in this prospectus.
If the selling stockholders effect such transactions by selling shares of common stock to or through underwriters, broker-dealers or agents,
such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling
stockholders or commissions from purchasers of the shares of common stock for whom they may act as agent or to whom they may sell as principal
(which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary
in the types of transactions involved). In connection with sales of the shares of common stock or otherwise, the selling stockholders
may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares of common stock in the
course of hedging in positions they assume. The selling stockholders may also sell shares of common stock short and deliver shares of
common stock covered by this prospectus to close out short positions and to return borrowed shares in connection with such short sales.
The selling stockholders may also loan or pledge shares of common stock to broker-dealers that in turn may sell such shares.
The selling stockholders may pledge
or grant a security interest in some or all of the notes, warrants or shares of common stock owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time
pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act
amending, if necessary, the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling
stockholders under this prospectus. The selling stockholders also may transfer and donate the shares of common stock in other circumstances
in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of
this prospectus.
To the extent required by the
Securities Act and the rules and regulations thereunder, the selling stockholders and any broker-dealer participating in the distribution
of the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act, and any commission
paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under
the Securities Act. At the time a particular offering of the shares of common stock is made, a prospectus supplement, if required, will
be distributed, which will set forth the aggregate amount of shares of common stock being offered and the terms of the offering, including
the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling
stockholders and any discounts, commissions or concessions allowed or re-allowed or paid to broker-dealers.
Under the securities laws of some
states, the shares of common stock may be sold in such states only through registered or licensed brokers or dealers. In addition, in
some states the shares of common stock may not be sold unless such shares have been registered or qualified for sale in such state or
an exemption from registration or qualification is available and is complied with.
There can be no assurance that
any selling stockholder will sell any or all of the shares of common stock registered pursuant to the registration statement, of which
this prospectus forms a part.
The selling stockholders and any
other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder, including, without limitation, to the extent applicable, Regulation M of the Exchange Act,
which may limit the timing of purchases and sales of any of the shares of common stock by the selling stockholders and any other participating
person. To the extent applicable, Regulation M may also restrict the ability of any person engaged in the distribution of the shares of
common stock to engage in market-making activities with respect to the shares of common stock. All of the foregoing may affect the marketability
of the shares of common stock and the ability of any person or entity to engage in market-making activities with respect to the shares
of common stock.
We will pay all expenses of the
registration of the shares of common stock pursuant to the registration rights agreement, estimated to be $[ ] in total, including, without
limitation, Securities and Exchange Commission filing fees and expenses of compliance with state securities or “blue sky”
laws; provided, however, a selling stockholder will pay all underwriting discounts and selling commissions, if any. We will indemnify
the selling stockholders against liabilities, including some liabilities under the Securities Act in accordance with the registration
rights agreements or the selling stockholders will be entitled to contribution. We may be indemnified by the selling stockholders against
civil liabilities, including liabilities under the Securities Act that may arise from any written information furnished to us by the selling
stockholder specifically for use in this prospectus, in accordance with the related registration rights agreements or we may be entitled
to contribution.
Once sold under the registration
statement, of which this prospectus forms a part, the shares of common stock will be freely tradable in the hands of persons other than
our affiliates.
v3.24.1.u1
Cover
|
May 01, 2024 |
Document Type |
8-K
|
Amendment Flag |
false
|
Document Period End Date |
May 01, 2024
|
Entity File Number |
001-40471
|
Entity Registrant Name |
SPLASH
BEVERAGE GROUP, INC.
|
Entity Central Index Key |
0001553788
|
Entity Tax Identification Number |
34-1720075
|
Entity Incorporation, State or Country Code |
NV
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Entity Address, Address Line One |
1314 East Las Olas Blvd
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Entity Address, Address Line Two |
Suite 221
|
Entity Address, City or Town |
Fort Lauderdale
|
Entity Address, State or Province |
FL
|
Entity Address, Postal Zip Code |
33301
|
City Area Code |
(954)
|
Local Phone Number |
745-5815
|
Written Communications |
false
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Soliciting Material |
false
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Pre-commencement Tender Offer |
false
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Pre-commencement Issuer Tender Offer |
false
|
Entity Emerging Growth Company |
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|
Common Stock, $0.001 par value per share |
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Title of 12(b) Security |
Common Stock, $0.001 par value per share
|
Trading Symbol |
SBEV
|
Security Exchange Name |
NYSEAMER
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Warrants to purchase shares of common stock |
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Warrants to purchase shares of common stock
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- DefinitionThe Tax Identification Number (TIN), also known as an Employer Identification Number (EIN), is a unique 9-digit value assigned by the IRS.
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- DefinitionTitle of a 12(b) registered security.
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- DefinitionTrading symbol of an instrument as listed on an exchange.
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Splash Beverage (AMEX:SBEV)
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