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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
October 26, 2023
Date of Report (Date of earliest event reported)
Phoenix Motor Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware |
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001-41414 |
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85-4319789 |
(State or other jurisdiction of
incorporation) |
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(Commission File Number) |
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(I.R.S. Employer Identification No.) |
1500 Lakeview Loop
Anaheim, CA |
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92807 |
(Address of Principal Executive Offices) |
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(Zip Code) |
Registrant’s telephone number, including
area code: (909) 987-0815
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:
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¨ |
Written communications pursuant to Rule 425 under the Securities Act |
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¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act |
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¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act |
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¨ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Common Stock, par value $0.0004 per share |
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PEV |
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NASDAQ Capital Market |
x |
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). |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. |
Item 1.01. Entry into a Material Definitive Agreement.
On October 26, 2023, Phoenix
Motor Inc., a Delaware corporation (the “Company”), entered into that certain First Amendment (the “Amendment”)
to the Securities Purchase Agreement dated as of June 23, 2023 (the “Original SPA” and together with the Amendment,
the “SPA”), with a certain accredited investor named therein (the “Investor”), In addition to the
Amendment, on October 26, 2023 the Company agreed to issue and sell, in a private placement, subject to the satisfaction of certain closing
conditions, an additional $1.75 million of principal amount (the “Subsequent Tranche”) of the Company’s unsecured
senior convertible promissory note issued on June 23, 2023 (the “Original Note”). On June 23, 2023, the Company had
previously issued $1.6 million of principal amount of pursuant to the Original SPA, which provided that the Company may issue up to an
aggregate of $5.1 million of principal amount under the Original Note. Accordingly, after the Subsequent Tranche, $1.75 million of principal
amount of the Original Note remains available to be funded over additional closings at the discretion of the Investor during the 36 months
following the date of the Original SPA, after the satisfaction or waiver of the applicable closing conditions. Additionally, pursuant
to the Amendment, under the SPA the “Funding Amount” was increased to an aggregate principal amount equal to no greater than
$9,666,500, and the total principal amount was increased to be no greater than $10,564,481, to be reduced by the original issue discount
of 8.5% and amounts previously advanced under the Original Note.
In
connection with the Amendment, the Company issued a warrant (the “Warrant”) to the Investors to purchase up to 1,500,000
shares of the Company’s common stock (the “Common Stock”), with
an exercise price equal to $1.30 per share, subject to full ratchet anti-dilution protection and other adjustments as stated in the Warrant,
which Warrant is exercisable for six years on a cash basis or, if the shares of Common Stock issuable upon exercise of the Warrant
are not registered within 12 months after the closing, on a cashless basis.
The Original Note was
subject to an original issue discount of 8.5%, which resulted in a purchase price of $1,601,250 paid by the Investor for the $1.75 million of principal amount issued
in the Subsequent Tranche.
The Company is required
to use commercially reasonable efforts to efforts to file, within 30 calendar days of the date of the Amendment or as soon as practicable
thereafter, a registration statement (the “Resale Registration Statement”) providing for the resale by the Investors
of the shares of Common Stock issuable upon exercise of the Warrant and conversion of the Notes. The Company is also required to use commercially
reasonable efforts to cause such Resale Registration Statement to become effective within 60 days following its filing with the Securities
and Exchange Commission (“SEC”) and to maintain the effectiveness of the Resale Registration Statement at all times
until each Investor no longer owns any Notes or the Warrant or shares of Common Stock issuable upon conversion or exercise thereof.
The foregoing summaries
of the SPA as amended by the Amendment and the Warrant do not purport to be complete and are subject to, and qualified in their entirety
by, such documents attached as Exhibits 10.1 and 4.1, respectively, to this Current Report on Form 8-K, which are incorporated herein
by reference.
This
Current Report on Form 8-K does not constitute an offer to sell any securities or a solicitation of an offer to buy any securities, nor
shall there be any sale of any securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such state or jurisdiction.
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
under Item 1.01 above with respect to the issuance of the Notes is incorporated into this Item 2.03 by reference.
Item
3.02. Unregistered Sales of Equity Securities.
The information
set forth in Item 1.01 above is incorporated herein by reference into this Item 3.02.
Forward-Looking Statements
This Current Report on
Form 8-K includes contains forward-looking statements, as that term is defined in the Private Litigation Reform Act of 1995, that involve
significant risks and uncertainties. Forward-looking statements can be identified through the use of words such as “may," "might,"
"will," "intend," "should," "could," "can," "would," "continue,"
"expect," "believe," "anticipate," "estimate," "predict," "outlook," "potential,"
"plan," "seek," and similar expressions and variations or the negatives of these terms or other comparable terminology.
These forward-looking statements, which include among other things, statements regarding the parties’ commitments under the Amended
SPA are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions
and other important factors, many of which are outside the Company’s control, that could cause actual results or outcomes to differ
materially from those discussed in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect the Company's current expectations and speak only as of the date of this Report. There can be no assurance that
future developments affecting Phoenix will be those anticipated. Actual results may differ materially from the Company's current expectations
depending upon a number of factors. These factors include, among others, those related to the market performance of the Company’s
Common Stock; the Company’s ability to continue to comply with, the Nasdaq listing requirements; the Company’s ability to
receive shareholder approval of the shares of Common Stock to be issued under the Notes and Warrants for purposes of Nasdaq Listing Rule
5635; our operations and business and financial performance; the Company’s ability to execute on its plans to develop and market
its vehicles and the timing of these development programs; the Company’s estimates of the size of the markets for its vehicles and
cost to bring those vehicles to market; the rate and degree of market acceptance of the Company’s vehicles; our ability to become
profitable; our ability to have access to an adequate supply of parts and materials and other critical components for our vehicles on
the timeline we expect; our ability to raise additional funds, the coronavirus (COVID-19) and the effects of the outbreak and actions
taken in connection therewith, adverse changes in general economic and market conditions; competitive factors including but not limited
to pricing pressures and new product introductions, uncertainty of customer acceptance of new product offerings and market changes, risks
associated with managing the growth of the business; and those other risks and uncertainties that are described in the "Risk Factors"
section of the Company's annual report on Form 10-K filed with the SEC and our other filings with the SEC. These filings identify and
address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in
the forward-looking statements. Except as required by law, the Company does not undertake any responsibility to revise or update any forward-looking
statements.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
* |
Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of such schedules, or any section thereof, to the SEC upon request. |
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.
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PHOENIX MOTOR INC. |
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Dated: October 27, 2023 |
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By: |
/s/ Chris Wang |
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Name: Chris Wang |
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Title: Chief Financial 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.
Phoenix Motor Inc.
Warrant To Purchase shares of
Common Stock
Warrant No.: 2023-1
Date of Issuance: October 26, 2023 (“Issuance
Date”)
Phoenix Motor Inc., a company
incorporated under the laws of the State of Delaware (the “Company”), hereby certifies that, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, JAK Opportunities
ii llc, 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 shares of Common Stock (including any Warrants to Purchase shares of Common Stock issued in exchange, transfer or replacement
hereof, the “Warrant”), at any time or times on or after the Issuance Date (the “Initial Exercisability Date”),
but not after 11:59 p.m., New York time, on the Expiration Date (as defined below), 1,500,000 (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 being issued in connection with an amendment dated as October 25, 2023 (the “Amendment”),
to that certain Securities Purchase Agreement, dated as of June 23, 2023 (the “Securities Purchase Agreement”), between
the Company and the Holder.
1.
EXERCISE OF WARRANT.
(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). 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. 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 $1.30, 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 Schedule 1 to the Amendment (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, the Company shall (X) pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000
of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Exercise Notice), $10
per Trading Day (increasing to $20 per Trading Day on the third Trading Day after the Share Delivery Date) for each Trading Day after
such Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise, 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 shares of 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 the
Warrant Shares are not registered within 12 months after the closing of the Offering, the resale by the Holder of all, or any part, of
the Warrant Shares issuable upon exercise of this Warrant are not registered and available to be issued to the Holder without legend or
other restrictions pursuant to an effective Registration Statement (as defined in the Schedule 1 to the Amendment) (or the prospectus
contained therein is not available for use), 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 shares of Common Stock 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 VWAP of the shares of 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 initial Closing 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 Amendment.
(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 shares or 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, 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. 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.
(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 150% 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 this Warrant (the “Required Reserve
Amount”).
(ii)
Insufficient Authorized Shares. If, notwithstanding Section 1(g)(i) above, and not in limitation thereof, at any time while
any of this Warrant remains 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. 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 shareholders 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 shareholder with a proxy statement and shall use
its best efforts to solicit its shareholders’ approval of such increase in authorized shares of Common Stock and to cause its board
of directors to recommend to the shareholders 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 shares of 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.
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)
Share 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 initial Closing Date, (i) pays a share dividend on one or more classes of its then outstanding shares of Common
Stock or otherwise makes a distribution on any class of share capital that is payable in shares of Common Stock, (ii) subdivides (by any
share split, share 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 share 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 shareholders 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 initial Closing 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)(ii),
if the terms of any Option or Convertible Security (including, without limitation, any Option or Convertible Security that was outstanding
as of the initial Closing 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”
and together with the Primary Security, each a “Unit”), together comprising one integrated transaction, the aggregate
consideration per share of Common Stock with respect to such Primary Security shall be deemed to be the lower of (x) the purchase price
of such Unit, (y) if such Primary Security is an Option and/or Convertible Security, the lowest price per share for which one share of
Common Stock is at any time issuable upon the exercise or conversion of the Primary Security in accordance with Sections 2(b)(i) or 2(b)(ii)
above and (z) the average VWAP of the shares of Common Stock on any Trading Day during the five (5) Trading Day period (the “Adjustment
Period”) immediately following the public announcement of such Dilutive Issuance (for the avoidance of doubt, if such public
announcement is released prior to the opening of the Principal Market on a Trading Day, such Trading Day shall be the first Trading Day
in such five Trading Day period and if this Warrant is exercised, on any given Exercise Date during any such Adjustment Period, solely
with respect to such portion of this Warrant exercised on such applicable Exercise Date, such applicable Adjustment Period shall be deemed
to have ended on, and included, the Trading Day immediately prior to such Exercise Date). If any shares of Common Stock, Options or Convertible
Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be
the net amount of 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 will be the fair value of
such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration
received by the Company for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading
Days immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued to the owners
of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor
will be deemed to be the fair 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, 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)
Holder’s Right of Alternative Exercise Price Following Issuance of Certain Options or Convertible Securities. In addition
to and not in limitation of the other provisions of this Section 2, if the Company in any manner issues or sells or enters into any
agreement to issue or sell, any shares of Common Stock, Options or Convertible Securities (any such securities, “Variable Price
Securities”) after the initial Closing Date that are issuable pursuant to such agreement or convertible into or exchangeable
or exercisable for shares of Common Stock at a price which varies or may vary with the market price of the shares of Common Stock, including
by way of one or more reset(s) to a fixed price, but exclusive of such formulations reflecting customary anti-dilution provisions (such
as share splits, share combinations, share dividends and similar transactions) (each of the formulations for such variable price being
herein referred to as, the “Variable Price”), the Company shall provide written notice thereof via email to the Holder
on the date of such agreement and the issuance of such Convertible Securities or Options. From and after the date the Company enters into
such agreement or issues any such Variable Price Securities, the Holder shall have the right, but not the obligation, in its sole discretion
to substitute the Variable Price for the Exercise Price upon exercise of this Warrant by designating in the Exercise Notice delivered
upon any exercise of this Warrant that solely for purposes of such exercise the Holder is relying on the Variable Price rather than the
Exercise Price then in effect. The Holder’s election to rely on a Variable Price for a particular exercise of this Warrant shall
not obligate the Holder to rely on a Variable Price for any future exercises of this Warrant.
(e)
Share Combination Event Adjustment. If at any time and from time to time on or after the Issuance Date there occurs any
share split, share dividend, share combination recapitalization or other similar transaction involving the shares of Common Stock (each,
a “Share Combination Event”, and such date thereof, the “Share Combination Event Date”) and the
Event Market Price is less than the Exercise Price then in effect (after giving effect to the adjustment in clause 2(a) above), then on
the sixteenth (16th) Trading Day immediately following such Share Combination Event, the Exercise Price then in effect on such sixteenth
(16th) Trading Day (after giving effect to the adjustment in clause 2(a) above) shall be reduced (but in no event increased) to the Event
Market Price. For the avoidance of doubt, if the adjustment in the immediately preceding sentence would otherwise result in an increase
in the Exercise Price hereunder, no adjustment shall be made.
(f)
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 share appreciation rights, phantom share 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(f) 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.
(g)
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 shares of Common
Stock.
(h)
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 Requisite 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.
3.
RIGHTS UPON DISTRIBUTION OF ASSETS. In addition
to any adjustments pursuant to Section 2 above or Section 4 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, shares 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 shares, warrants, securities or other property pro rata to the
record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the
Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations
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 amount of share capital
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 share capital (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction
and the value of such share capital, such adjustments to the amount of share capital 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 shares of 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 shares of 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 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 the Warrant prior to such Fundamental Transaction, such shares, 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 Change of Control, (y) the consummation
of any Change of Control and (z) the Holder first becoming aware of any Change of Control through the date that is ninety (90) days after
the public disclosure of the consummation of such Change of Control by the Company pursuant to a 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 Change of Control.
(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 share capital 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 and 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 SHAREHOLDER. 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 shares 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 shareholder of the Company
or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of shares, reclassification
of shares, 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 shareholder 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 (or made available through the
EDGAR system) with copies of the same notices and other information given to the shareholders of the Company generally, contemporaneously
with the giving thereof to the shareholders.
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 11.2 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 shares, 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 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 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 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.
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 Delaware, without giving effect to any choice of law or conflict
of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of
any jurisdictions other than the State of Delaware. 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
11.2 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 the Southern
District of New York, 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 appoints Vcorp Services, LLC as its agent for service of process in New York. If service of process is effected
pursuant to the above sentence, such service will be deemed sufficient under Delaware law and the Company shall not assert otherwise.
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 such Buyer 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. The choice of
the laws of the State of Delaware as the governing law of this Warrant is a valid choice of law and would be recognized and given effect
to in any action brought before a court of competent jurisdiction in the Cayman Islands or such other jurisdiction applicable to the Company
or any of its Subsidiaries except for those laws (i) which such court considers to be procedural in nature, (ii) which are revenue or
penal laws or (iii) the application of which would be inconsistent with public policy, as such term is interpreted under the laws of the
Cayman Islands or such other jurisdiction applicable to the Company or any of its Subsidiaries. The Company or any of their respective
properties, assets or revenues does not have any right of immunity under Cayman Islands or such other jurisdiction applicable to the Company
or any of its Subsidiaries or Delaware law, from any legal action, suit or proceeding, from the giving of any relief in any such legal
action, suit or proceeding, from set-off or counterclaim, from a jurisdiction applicable to the Company or any of its Subsidiaries or
any Delaware or United States federal court, from service of process, attachment upon or prior to judgment, or attachment in aid of execution
of judgment, or from execution of a judgment, or other legal process or proceeding for the giving of any relief or for the enforcement
of a judgment, in any such court, with respect to its obligations, liabilities or any other matter under or arising out of or in connection
with the Transaction Documents; and, to the extent that the Company, or any of its properties, assets or revenues may have or may hereafter
become entitled to any such right of immunity in any such court in which proceedings may at any time be commenced, the Company hereby
waives such right to the extent permitted by law and hereby consents to such relief and enforcement as provided in this Warrant and the
other Transaction Documents.
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 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 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 email (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, 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) 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 shares of Common Stock occurred under
Section 2(b), (B) the consideration per share at which an issuance or deemed issuance of shares of Common Stock occurred, (C) whether
any issuance or sale or deemed issuance or sale of shares 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, (ii) 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 shares of Common Stock occurred under Section 2(b), (B) the consideration per share at which an issuance or
deemed issuance of shares of Common Stock occurred, (C) whether any issuance or sale or deemed issuance or sale of shares 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,
(iii) 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 the Southern District of New York in lieu of utilizing the procedures set forth in this Section 15
and i(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 11.11 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 (or, if applicable, shares) 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 Share 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 shares
of 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 shares of 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 share dividend, share split, share combination or other similar transaction
during such period.
(h)
“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 shares of Common Stock during the period beginning on the Trading Day immediately preceding the announcement of the
applicable Change of Control (or the consummation of the applicable Change of Control, 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 Change
of Control (if any) plus the value of the non-cash consideration being offered in the applicable Change of Control (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 Change of Control 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 Change of Control, (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
Change of Control and (B) the date of the Holder’s request pursuant to Section 4(c).
(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)
“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 share dividend,
share split, share combination or other similar transaction during such period.
(m) “Common Stock” means (i) the Company’s shares of Common Stock, $0.0004 par value per share, and (ii)
any share capital into which such shares of Common Stock shall have been changed or any share capital resulting from a reclassification
of such shares of Common Stock.
(n)
“Convertible Securities” means any share 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 NYSE American, the Nasdaq Global Select Market, the
Nasdaq Global Market or the Principal Market.
(p)
“Event Market Price” means, with respect to any Share Combination Event Date, the quotient determined by dividing
(x) the sum of the VWAP of the shares of Common Stock for each of the five (5) lowest Trading Days during the twenty (20) consecutive
Trading Day period ending and including the Trading Day immediately preceding the sixteenth (16th) Trading Day after such Share Combination
Event Date, divided by (y) five (5). All such determinations shall be appropriately adjusted for any share dividend, share split, share
combination, recapitalization or other similar transaction during such period.
(q)
“Excluded Securities” means (i) shares of Common Stock or standard options to purchase shares of 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 Share Plan (as defined above) or such agreements with such directors, officers or employees of the Company existing as of the
date of this Agreement, provided that (A) all such issuances (taking into account the shares of Common Stock issuable upon exercise of
such options) after the initial Closing Date pursuant to this clause (i) do not, in the aggregate, exceed more than 5% of the shares of
Common Stock issued and outstanding immediately prior to the initial Closing 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 shares of Common Stock issued
pursuant to an Approved Share Plan or such agreements with such directors, officers or employees of the Company existing as of the date
of this Agreement that are covered by clause (i) above) issued prior to the initial Closing Date, provided that the conversion price of
any such Convertible Securities (other than standard options to purchase shares of Common Stock issued pursuant to an Approved Share Plan
or such agreements with such directors, officers or employees of the Company existing as of the date of this Agreement that are covered
by clause (i) above) is not lowered, none of such Convertible Securities (other than standard options to purchase shares of Common Stock
issued pursuant to an Approved Share Plan or such agreements with such directors, officers or employees of the Company existing as of
the date of this Agreement 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 shares of Common Stock issued
pursuant to an Approved Share Plan or such agreements with such directors, officers or employees of the Company existing as of the date
of this Agreement 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 initial Closing Date (other than antidilution adjustments
pursuant to the terms thereof in effect as of the initial Closing Date), and (iv) securities issued in connection with any bona fide strategic
or commercial alliances, acquisitions, mergers, licensing arrangements, strategic transactions and strategic partnerships (including,
without limitation, joint ventures, marketing or distribution arrangements, collaboration agreements or intellectual property license
agreements) approved by a majority of the disinterested directors of the Company, provided that such securities are issued as “restricted
securities” (as defined in Rule 144) and carry no registration rights that require or permit the filing of any registration statement
in connection therewith during the Restricted Period (as defined in the Securities Purchase Agreement), provided, further, that (w) the
primary purpose of such issuance is not to raise capital as reasonably determined by a majority of the disinterested directors of the
Company, and (x) 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, (y) 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 and (z)
the aggregate number of shares of Common Stock issued (or issuable upon conversion or exercise of Convertible Securities or Options, as
applicable) pursuant to this clause (v), in the aggregate, shall not exceed thirty percent (30%) of the total number of outstanding shares
of Common Stock immediately following the issuance and sale of the Securities pursuant hereto.
(r)
“Expiration Date” means the date that is the sixth (6th) 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.
(s)
“Fundamental Transaction” means (A) that the Company shall, directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the
surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all
of the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation
S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject
to or have its shares of 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 or share 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
shares of 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 shares
of Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding shares of 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.
(t)
“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.
(u)
“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.
(v)
“Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible
Securities.
(w) “Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and
whose shares of 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.
(x)
“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.
(y)
“Principal Market” means the Nasdaq Capital Market.
(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 shares of Common Stock, any day on which the shares of Common Stock is traded on the Principal Market, or, if the Principal Market
is not the principal trading market for the shares of Common Stock, then on the principal securities exchange or securities market on
which the shares of Common Stock is then traded, provided that “Trading Day” shall not include any day on which the shares
of Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the shares of 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 shares of 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 share dividend, share split, share combination, recapitalization or other similar transaction during such period.
[signature page follows]
IN
WITNESS WHEREOF, the Company has caused this Warrant to Purchase shares of Common Stock to be duly executed as of the Issuance
Date set out above.
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PHOENIX
MOTOR INC. |
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By: |
/s/ Xiaofeng Peng |
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Name: XIAOFENG PENG |
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Title: CEO & Chairman |
EXHIBIT A
EXERCISE NOTICE
TO
BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE shares of Common Stock
PHOENIX
MOTOR INC.
The undersigned holder hereby
elects to exercise the Warrant to Purchase shares of Common Stock No. _______ (the “Warrant”) of Phoenix Motor
Inc., a company incorporated under the laws of the State of Delaware (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. |
| ¨ | an “Alternate 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 $________.
In
the event that the Holder has elected an Alternate Cashless Exercise with respect to some or all of the Warrant Shares to be issued pursuant
hereto, the Holder hereby represents and warrants that the applicable Alternate Cashless Exercise Amount is ________ shares of
Common Stock.
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:
Check here if requesting delivery by Deposit/Withdrawal
at Custodian as follows:
DTC Participant: |
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DTC Number: |
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Account Number: |
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Date: _____________ __, ______
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Name of Registered Holder |
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Tax ID:____________________________
Facsimile:__________________________
E-mail Address:_____________________
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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PHOENIX
MOTOR INC. |
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By: |
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Name: |
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Title: |
Exhibit 10.1
FIRST AMENDMENT TO SECURITIES PURCHASE AGREEMENT
This FIRST AMENDMENT TO SECURITIES PURCHASE
AGREEMENT (this “Amendment”), dated as of October 26, 2023, by and between PHOENIX MOTOR INC.,
a Delaware corporation (the “Company”), and JAK Opportunities II LLC, a Delaware limited liability company
(the “Investor”).
WHEREAS:
A. The
Company and the Investor executed and delivered that certain Securities Purchase Amendment, dated as of June 23, 2023 (the “Purchase
Agreement”) pursuant to which the Company issued to the Investor a convertible promissory note (the “Note”)
on June 23, 2023;
B. The
Company wishes to issue a Subsequent Tranche (as defined in the Note) for a purchase price of $1,601,250.00 in the principal amount of
$1,750,00.00; and
C. In
connection with the forgoing, the Company and the Investor wish to amend the Purchase Agreement in certain respects.
NOW
THEREFORE, the Company and the Investor severally (and not jointly) hereby agree as follows:
1. CAPITALIZED
TERMS. Capitalized terms used herein or in Schedule 1 hereto but not otherwise defined shall have the meanings ascribed to them in
the Purchase Agreement or the Note.
2. AMENDMENTS.
a. The
definition of “Funding Amount” in Section 1 of the Purchase Agreement is hereby deleted and replaced with the following:
“Funding Amount” shall mean, in respect of any Investor, the amount identified as such on the signature page hereto
executed by such Investor, and in the aggregate an amount equal to no greater than Nine Million Six Hundred Sixty-Six Thousand Five Hundred
and zero/100 Dollars ($9,666,500.00).
b. Section 2.1
and 2.2 of the Purchase Agreement, respectively, are hereby deleted and replaced with the following:
2.1 Purchase
and Sale of the Notes. Subject to the terms and conditions set forth herein, at the Closing, the Company shall issue and sell to each
Investor, and each Investor shall purchase from the Company, a convertible promissory note, in the form attached hereto as Exhibit A
(each, a “Note” and together, the “Notes”), in the principal amount set forth on the signature page hereto
executed by such Investor, which shall carry an original issue discount of eight and a half percent (8.5%), or in the aggregate, up to
Eight Hundred Ninety Seven Thousand Nine Hundred Eighty One and zero/100 Dollars ($897,981.00) (the “OID”), to cover
the Investors’ accounting fees, due diligence fees, monitoring, and/or other transactional costs incurred in connection with the
purchase and sale of the Notes, which is included in the principal balance of the Notes (each such amount, the “Principal Amount”
of such Note, and all of the Principal Amounts together, the “Aggregate Principal Amount”), with the purchase price
of the Notes be computed by subtracting the OID from the Principal Amount, and shall equal in the aggregate, up to Nine Million Six Hundred
Sixty-Six Thousand Five Hundred zero/100 Dollars and ($9,666,500.00) (the “Purchase Price”). No Investor nor the Company
shall take any contrary position on any tax return, or in any audit, claim, investigation, inquiry or proceeding in respect of taxes,
unless otherwise required pursuant to a final determination within the meaning of Section 1313 of the Internal Revenue Code of 1986,
as amended (the “Code”), or any analogous provision of applicable state, local or non-U.S. law.
2.2 Closing.
The closing of the transactions contemplated by this Agreement (each, a “Closing”) shall occur in tranches (each, a
“Tranche”), with the Closing of the first Tranche consisting of Notes with an aggregate Purchase Price of One Million
Four Hundred Sixty-Four Thousand Dollars and zero/100 Dollars ($1,464,000.00) and an aggregate Principal Amount (including OID) of One
Million Six Hundred Thousand and zero/100 Dollars ($1,600,000.00) (the “Initial Closing”). The Closing of the subsequent
Tranches, consisting of an aggregate Purchase Price of up to Eight Million Two Hundred Two Thousand Five Hundred and zero/100 Dollars
($8,202,500.00) and an aggregate Principal Amount (including OID) of up to Eight Million Nine Hundred Sixty Four Thousand Four Hundred
Eighty and zero/100 Dollars ($8,964,480.00) shall be payable by the Investor to the Company over multiple additional closings at the sole
and absolute discretion, in whole or in part, of the Investor on any date that is prior to the date that is 36 months of date of the initial
Closing.
The Closings with respect to each Tranche
hereto, including payment for and delivery of the Notes, shall take place remotely via the exchange of documents and signatures, no later
than one (1) Business Day following the satisfaction or waiver of the applicable conditions set forth in this Agreement, including
in this Section 2.2 and in Section 6, or at such other time and place as the Company and the Investor agree upon, orally or
in writing (the “Closing,” and the date of the Closing being the “Closing Date”).
3. ISSUANCE
OF WARRANT. In consideration of the foregoing amendments, the Company shall issue to Investor a common stock purchase warrant to purchase
1,500,000 shares of Common Stock in the form attached hereto as Exhibit A (the “Warrant”).
4. REGISTRATION.
As further consideration, the Company shall cause to be registered each of the 4,500,000 shares of Common Stock issuable in respect of
the Warrant and the 16,750,000 shares issuable upon conversion of the tranches outstanding under the Note as of the date hereof in accordance
with the provisions of Schedule 1 hereto (all such shares of Common Stock, the “Investor Shares”).
5. AFFIRMATION. The
Company hereby affirms all of its obligations to the Investor under all of the Purchase Agreement, this Amendment, the Initial Note and
agrees and affirms as follows: (i) that as of the date hereof, the Company has performed, satisfied and complied in all material
respects with all the covenants, agreements and conditions under each of Purchase Agreement, and the Initial Note to be performed, satisfied
or complied with by the Company; (ii) that the Company shall continue to perform each and every covenant, agreement and condition
set forth in each of the Purchase Agreement, this Amendment, and the Initial Note, and continue to be bound by each and all of the terms
and provisions thereof and hereof; (iii) that as of the date hereof, no default or Event of Default has occurred or is continuing
under Purchase Agreement, this Amendment, or the Initial Note, and no event has occurred that, with the passage of time, the giving of
notice, or both, would constitute a default or an Event of Default under the Purchase Agreement, this Amendment, or the Initial Note;
and (iv) that as of the date hereof, no event, fact, or other set of circumstances has occurred which could reasonably be expected
to have, cause, or result in a Material Adverse Effect.
6. RATIFICATION.
The Company hereby acknowledges, represents, warrants and confirms to Investor that: (i) each of the Purchase Agreement, this Amendment,
and the Initial Note are valid and binding obligations of the Company, enforceable against the Company in accordance with their respective
terms; and (ii) no oral representations, statements, or inducements have been made by Investor, or any agent or representative of
Investor, with respect to the Purchase Agreement, this Amendment, or the Initial Note.
7. HOLDER’
CONDUCT. As of the date of this Amendment, the Company hereby acknowledges and admits that: (i) the Investor has acted in good
faith and has fulfilled and fully performed all of its obligations under or in connection with the Purchase Agreement and the Initial
Note or any other related documents; and (ii) that there are no other promises, obligations, understandings or agreements with respect
to the Purchase Agreement, or the Initial Note, or any other document, except as expressly set forth herein, or in the Purchase Agreement,
and the Initial.
8. GOVERNING
LAW; MISCELLANEOUS.
a. Governing
Law; Jurisdiction and Venue. This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware
without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated
by the Purchase Agreement, this Amendment, the Initial Note, or any other agreement, certificate, instrument or document contemplated
hereby or thereby shall be brought and enforced in the New York Supreme Court, County of New York, or in the United States District Court
for the Southern District of New York. The Company and the Investor irrevocably submit to the jurisdiction of such courts, which jurisdiction
shall be exclusive, and hereby waive any objection to such exclusive jurisdiction or that such courts represent an inconvenient forum.
The prevailing party in any such action shall be entitled to recover its reasonable and documented attorneys’ fees and out-of-pocket
expenses relating to such action or proceeding.
b. Recitals.
The recitations set forth in the preamble of this Amendment are true and correct and incorporated herein by this reference.
c. Capitalized
Terms. All capitalized terms used in this Amendment shall have the same meaning ascribed to them in the Purchase Agreement, except
as otherwise specifically set forth herein.
d. Representations
and Warranties. The Company hereby confirms and affirms that all representations and warranties made under the Purchase Agreement
and the Initial Note (specifically including under Section 3 of the Purchase Agreement) are true, correct and complete as of the
date Purchase Agreement and hereby confirm and affirm that all such representations and warranties remain true, correct and complete as
of the date of this Amendment, and by this reference, the Company does hereby re-make each and every one of such representations and warranties
herein as of the date of this Amendment, as if each and every one of such representations and warranties was set forth and re-made in
its entirety in this Amendment by the Company, as same may be qualified by revised disclosure schedules attached to this Amendment, if
any (if no revised disclosures are attached to this Amendment, then no such revised disclosure schedules shall be deemed to exist or to
qualify any of the representations and warranties hereby re-made).
e. Organizational
and Authorization Documents. The Company shall have executed and delivered a certificate of an officer thereof certifying and attaching
(a) resolutions of the Company’s board of directors, approving and authorizing the execution, delivery and performance of this
Amendment and each of the documents and agreements contemplated in connection herewith; and (b) a good standing certificate in the
state of organization of the Company and in each other state requested by Investor; which officer certifies to be true and complete, and
in full force and effect without modification, it being understood that Investor may conclusively rely on each such document and certificate
until formally advised by the Company of any changes therein.
f. Effect
on Purchase Agreement. Except as expressly amended by this Amendment, all of the terms and provisions of the Purchase Agreement shall
remain and continue in full force and effect after the execution of this Amendment, are hereby ratified and confirmed, and incorporated
herein by this reference.
g. Counterparts;
Signatures by Facsimile. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original but
all of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each party and
delivered to the other party. This Amendment, once executed by a party, may be delivered to the other party hereto by facsimile transmission
of a copy of this Amendment bearing the signature of the party so delivering this Amendment.
h. Construction;
Headings. This Amendment shall be deemed to be jointly drafted by the Company and the Investor and shall not be construed against
any person as the drafter hereof. The headings of this Amendment are for convenience of reference only and shall not form part of, or
affect the interpretation of, this Amendment.
i. Severability.
In the event that any provision of this Amendment is invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute
or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability
of any other provision hereof.
j. Entire
Agreement; Amendments. The Purchase Agreement, this Amendment, the Initial Note, the Transaction Documents and the instruments referenced
herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically
set forth herein or therein, neither the Company nor the Investor makes any representation, warranty, covenant or undertaking with respect
to such matters. No provision of this Amendment may be waived or amended other than by an instrument in writing signed by the majority
in interest of the Investor.
k. Notices.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing as provided
in the Purchase Agreement.
l. Successors
and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties and their successors and assigns.
m. Third
Party Beneficiaries. This Amendment 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. Survival.
The representations and warranties of the Company and the agreements and covenants set forth in this Amendment shall survive the closing
hereunder not withstanding any due diligence investigation conducted by or on behalf of the Investor. The Company agrees to indemnify
and hold harmless the Investor and all their officers, directors, employees and agents for loss or damage arising as a result of or related
to any breach or alleged breach by the Company of any of its representations, warranties and covenants set forth in the Purchase Agreement,
this Amendment, and the Initial Note or any of its covenants and obligations under the Purchase Agreement, this Amendment, or the Initial
Note, including advancement of expenses as they are incurred.
o. 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 the other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Amendment and the consummation of the transactions contemplated hereby.
p. No
Strict Construction. The language used in this Amendment 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.
[signature page follows]
IN WITNESS WHEREOF, the undersigned
Investor and the Company have caused this Amendment to be duly executed as of the date first above written.
PHOENIX
MOTOR INC. |
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By: |
/s/ Xiaofeng Peng |
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Name: |
XIAOFENG PENG |
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Title: |
CEO & Chairman |
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JAK OPPORTUNITIES
II LLC |
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By: |
/s Antonio Ruiz-Gimenez |
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Name: |
Antonio Ruiz-Gimenez |
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Title: |
Managing Member |
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EXHIBIT A
FORM OF WARRANT
SCHEDULE 1
Registration Rights
1. Registration.
| (a) | Registration Statement. Promptly, but in any event no later than (30) days from the date of the
Amendment (the “Amendment Date”), the Company shall prepare and file with the SEC a registration statement (a “Registration
Statement”) covering the resale of all of the Investor Shares. The foregoing Registration Statements shall be filed on Form S-1
or any successor forms thereto. The Registration Statements (and each amendment or supplement thereto, and each request for acceleration
of effectiveness thereof) shall be provided to the Investor and its counsel at least five (5) Business Days prior to its filing or
other submission and the Company shall incorporate all reasonable comments provided by the Investor or its counsel. |
| (b) | Expenses. Except as otherwise expressly provided herein, the Company will pay all fees and expenses
incident to the performance of or compliance with this Schedule 1, including all fees and expenses associated with effecting the registration
of the Investor Shares, including all filing and printing fees, the Company’s counsel and accounting fees and expenses, costs associated
with clearing the Investor Shares for sale under applicable state securities laws, listing fees, fees and expenses of one counsel to the
Investor, with such counsel fees not to exceed $10,000 in the aggregate, and the Investor’s reasonable expenses in connection with
the registration, but excluding discounts, commissions, fees of underwriters, selling brokers, dealer managers or similar securities industry
professionals with respect to the Investor Shares being sold. |
| (c) | Effectiveness. The Company shall use commercially reasonable efforts to have the Registration Statement
declared effective as soon as practicable after filing thereof but in no event later than the date that is sixty (60) days, following
the Registration Statement filing date. The Company shall notify the Investor by e-mail as promptly as practicable, and in any event,
within twenty-four (24) hours, after the Registration Statement is declared effective and shall simultaneously provide the Investor with
copies of any related Prospectus to be used in connection with the sale or other disposition of the securities covered thereby. |
| (d) | Piggyback Registration Rights. If the Company at any time determines to file a registration statement
under the 1933 Act to register the offer and sale, by the Company, of Common Stock (other than (x) on Form S-4 or Form S-8
under the 1933 Act or any successor forms thereto, (y) an at-the-market offering, or (z) a registration of securities solely
relating to an offering and sale to employees or directors of the Company pursuant to any employee stock plan or other employee benefit
plan arrangement) at a time where the Investor Shares are not covered by an effective registration statement, the Company shall, as soon
as reasonably practicable, give written notice to the Investor of its intention to so register the offer and sale of Common Stock and,
upon the written request, given within five (5) Business Days after delivery of any such notice by the Company, of the Investor to
include in such registration the Investor Shares (which request shall specify the number of Investor Shares proposed to be included in
such registration), the Company shall cause all such Investor Shares to be included in such registration statement on the same terms and
conditions as the Common Stock otherwise being sold pursuant to such registered offering |
| 2. | Company Obligations. The Company will use its best efforts to effect the registration of the Investor Shares in accordance
with the terms hereof, and pursuant thereto the Company will, as expeditiously as possible: |
| (a) | use its commercially reasonable efforts to cause
the Registration Statement to become effective and to remain continuously effective for a period that will terminate upon the first date
on which all Investor Shares are either covered by the Registration Statement or may be sold without restriction, including volume or
manner-of-sale restrictions, pursuant to Rule 144 or have been sold by the Investor (the “Effectiveness Period”)
and advise the Investor in writing when the Effectiveness Period has expired; |
| (b) | prepare and file with the SEC such amendments and post-effective amendments and supplements to the Registration
Statement as may be necessary to keep the Registration Statement effective for the Effectiveness Period and to comply with the provisions
of the 1933 Act and the 1934 Act with respect to the distribution of all of the Investor Shares covered thereby; |
| (c) | provide copies to and permit counsel designated by the Investor to review all amendments and supplements
to the Registration Statement no fewer than three (3) Business Days prior to its filing with the SEC and not file any document to
which such counsel reasonably objects; |
| (d) | furnish to the Investor and its legal counsel, without charge, (i) promptly after the same is prepared
and publicly distributed, filed with the SEC, or received by the Company (but not later than two (2) Business Days after the filing
date, receipt date or sending date, as the case may be) one copy of the Registration Statement and any amendment thereto, any prospectus
and each amendment or supplement thereto, and each letter written by or on behalf of the Company to the SEC or the staff of the SEC, and
each item of correspondence from the SEC or the staff of the SEC, in each case relating to the Registration Statement (other than any
portion of any thereof which contains information for which the Company has sought confidential treatment), and (ii) such number
of copies of a prospectus, including a preliminary prospectus, and all amendments and supplements thereto and such other documents as
the Investor may reasonably request in order to facilitate the disposition of the Investor Shares that are covered by the related Registration
Statement; |
| (e) | immediately notify the Investor of any request by the SEC for the amending or supplementing of the Registration
Statement or a prospectus or for additional information; |
| (f) | use its commercially reasonable efforts to (i) prevent the issuance of any stop order or other suspension
of effectiveness and, (ii) if such order is issued, obtain the withdrawal of any such order at the earliest possible moment and notify
the Company of the issuance of any such order and the resolution thereof, or its receipt of notice of the initiation or threat of any
proceeding for such purpose; |
| (g) | prior to any public offering of Investor Shares, use its commercially reasonable efforts to register or
qualify or cooperate with the Investor and its counsel in connection with the registration or qualification of such Investor Shares for
offer and sale under the securities or blue sky laws of such jurisdictions requested by the Investor and do any and all other commercially
reasonable acts or things necessary or advisable to enable the distribution in such jurisdictions of the Investor covered by the Registration
Statement and the Company shall promptly notify the Investor of any notification with respect to the suspension of the registration or
qualification of any of such Investor Shares for sale under the securities or blue sky laws of such jurisdictions or its receipt of notice
of the initiation or threat of any proceeding for such purpose; |
| (h) | immediately notify the Investor, at any time prior to the end of the Effectiveness Period, upon discovery
that, or upon the happening of any event as a result of which, the Registration Statement or a prospectus includes an untrue statement
of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading
(in the case of a prospectus, in light of the circumstances in which they were made), and promptly prepare, file with the SEC and furnish
to such holder a supplement to or an amendment of such Registration Statement or a prospectus as may be necessary so that such Registration
Statement or a prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading (in the case of such prospectus, in light of the circumstances in which
they were made); |
| (i) | otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations
of the SEC under the 1933 Act and the 1934 Act; |
| (j) | hold in confidence and not make any disclosure of information concerning the 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 complete the Registration Statement or to avoid or correct a misstatement or omission in the Registration
Statement, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court
or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than
by disclosure in violation of this Agreement or any other agreement, and upon learning that disclosure of such information concerning
the Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice
to the Investor and allow the Investor, at the Investor’s expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, such information; and |
| (k) | take all other reasonable actions necessary to expedite and facilitate disposition by the Investor of
all Investor Shares pursuant to the Registration Statement. |
3. Indemnification.
| (a) | Indemnification by the Company. The Company will indemnify and hold harmless the Investor Parties,
from and against any Losses to which they may become subject under the 1933 Act or otherwise, arising out of, relating to or based upon:
(i) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement, any preliminary
prospectus, final prospectus or other document, including any Blue Sky Application (as defined below), or any amendment or supplement
thereof or any omission or alleged omission of a material fact required to be stated therein or, in the case of the Registration Statement,
necessary to make the statements therein not misleading or, in the case of any preliminary prospectus, final prospectus or other document,
necessary to make the statements therein, in light of the circumstances in which they were made, not misleading; (ii) any Blue Sky
Application or other document executed by the Company specifically for that purpose or based upon written information furnished by the
Company filed in any state or other jurisdiction in order to qualify any or all of the Investor Shares under the securities laws thereof
(any such application, document or information herein called a “Blue Sky Application”); (iii) any violation or alleged
violation by the Company or its agents of the 1933 Act, the 1934 Act or any similar federal or state law or any rule or regulation
promulgated thereunder applicable to the Company or its agents and relating to any action or inaction required of the Company in connection
with the registration or the offer or sale of the Investor Shares pursuant to any Registration Statement; or (iv) any failure to
register or qualify the Investor Shares included in any such Registration Statement in any state where the Company or its agents has affirmatively
undertaken or agreed in writing that the Company will undertake such registration or qualification on the Investor’s behalf and
will reimburse the Investor Parties for any legal or other expenses reasonably incurred by them in connection with investigating, preparing
or defending any such Losses; provided, however, that the Company will not be liable in any such case if and to the extent, but only to
the extent, that any such Losses arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by the Investor or any such controlling Person in writing specifically for use
in such Registration Statement or prospectus. |
| (b) | Conduct of Indemnification Proceedings. Any Person entitled to indemnification hereunder shall
(i) give prompt notice to the indemnifying party of any claim, action, suit or proceeding with respect to which it seeks indemnification
following such Person’s receipt of, or such Person otherwise become aware of, the commencement of such claim, action, suit or proceeding
and (ii) permit such indemnifying party to assume the defense of such claim, action, suit or proceeding with counsel reasonably satisfactory
to the indemnified party; provided, however, that any Person entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such Person
unless (A) the indemnifying party has agreed to pay such fees or expenses, (B) the indemnifying party shall have failed to assume
the defense of such claim and employ counsel reasonably satisfactory to such Person or (C) in the reasonable judgment of any such
Person, based upon written advice of its counsel, a conflict of interest exists between such Person and the indemnifying party with respect
to such claims (in which case, if the Person notifies the indemnifying party in writing that such Person elects to employ separate counsel
at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf
of such Person); and provided, further, that the failure or delay of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations hereunder, except to the extent that such failure or delay to give notice shall materially
adversely affect the indemnifying party in the defense of any such claim or litigation. It is understood that the indemnifying party shall
not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys
at any time for all such indemnified parties. No indemnifying party will, except with the consent of the indemnified party, consent to
entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. |
| (c) | Contribution. If for any reason the indemnification provided for in the preceding paragraph (a) is
unavailable to an indemnified party or insufficient to hold it harmless, other than as expressly specified therein, the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a result of such Losses in such proportion as is appropriate
to reflect the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations.
No Person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the 1933 Act shall be entitled to contribution
from any Person not guilty of such fraudulent misrepresentation. The indemnity and contribution agreements contained in this section are
in addition to any other rights or remedies that any indemnified party may have under applicable law, by separate agreement or otherwise. |
4. Effect
of Failure to File and Maintain Effectiveness of any Registration Statement. In addition to any other remedies provided under the
Transaction Documents, if (i) the Registration Statement covering the resale of all of the Investor Shares required to be covered
thereby and required to be filed by the Company pursuant to this Schedule 1 is not filed with the SEC on or before the Filing Deadline
(a “Filing Failure”), (ii) on any day after the effective date of a Registration Statement sales of all of the
Investor Shares required to be included on such Registration Statement 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 a Trading 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”), other than the
period of time where the Registration Statement is not effective due to a post-effective amendment filing to the Registration Statement
after an Annual Report on Form 10-K is filed, or (iii) if the Company fails to file with the SEC any required reports under
Section 13 or 15(d) of the 1934 Act such that it is not in compliance with Rule 144(c)(1) (or Rule 144(i)(2),
if applicable) (a “Current Public Information Failure”) as a result of which the Investor is unable to sell those Investor
Shares included in such Registration Statement 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), the Company shall pay
to each holder of Investor Shares relating to such Registration Statement an amount in cash equal to one percent (1.0%) of the Outstanding
Principal Amount (I) on the date of such Filing 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) a Maintenance
Failure until such Maintenance Failure is cured; and (III) 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 Investor
Shares shall be entitled pursuant to this Schedule 1 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) Trading
Day after such cure. Notwithstanding the foregoing, (i) no single event or failure with respect to a particular Registration Statement
shall give rise to more than one type of Registration Delay Payment with respect to such Registration Statement, (ii) no Registration
Delay Payments shall be owed to the Investor (with respect to any period during which all of Investor Shares may be sold by the 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), and (iii) with respect to any Investor Shares excluded
from a Registration Statement by election of the Investor.
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