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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
July 24, 2023
TENON MEDICAL, INC.
(Exact name of registrant as specified in its charter)
Delaware |
|
001-41364 |
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45-5574718 |
(State or other jurisdiction |
|
(Commission File
Number) |
|
(IRS Employer |
of incorporation) |
|
|
|
Identification No.) |
104 Cooper Court |
|
|
Los
Gatos, CA |
|
95032 |
(Address of principal executive offices) |
|
(Zip Code) |
(408) 649-5760
(Registrant’s telephone number, including
area code)
N/A
(Former name or former address, if changed since
last report.)
Check the appropriate box below if the Form 8-K
filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
☐ |
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
☐ |
Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
☐ |
Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
|
☐ |
Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
Common Stock, par value $0.001 per share |
|
TNON |
|
The Nasdaq Stock Market LLC |
Warrants, with each having the right to purchase one share of Common Stock |
|
TNONW |
|
The Nasdaq Stock Market LLC |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
Growth Company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 1.01. Entry into a Material Definitive Agreement.
On July
24, 2023, Tenon Medical, Inc. (the “Company”) entered into a purchase agreement (“Purchase Agreement”) with Lincoln
Park Capital Fund, LLC (“Lincoln Park”), under which, subject to specified terms and conditions, the Company may sell
to Lincoln Park up to $10 million of shares of common stock from time to time during the term of the Purchase Agreement.
Additionally, on July 24, 2023, the Company entered
into a registration rights agreement (the “Registration Rights Agreement”) with Lincoln Park, pursuant to which the Company
agreed to file a registration statement with the Securities and Exchange Commission (the “SEC”), covering the resale of shares
of common stock issued to Lincoln Park under the Purchase Agreement.
The Company cannot sell any shares to Lincoln
Park until the date that a registration statement covering the resale of shares of common stock that have been and may in the future be
issued to Lincoln Park under the Purchase Agreement, which the Company agreed to file with the SEC pursuant to the Registration Rights
Agreement, is declared effective by the SEC and a final prospectus in connection therewith is filed and all of the other conditions set
forth in the Purchase Agreement are satisfied (such date, the “Commencement Date”).
Beginning on the Commencement Date and for a period
of 24 months thereafter, under the terms and subject to the conditions of the Purchase Agreement, from time to time, at the Company’s
discretion, the Company has the right, but not the obligation, to sell to Lincoln Park, and Lincoln Park is obligated to purchase, up
to $10 million of shares of common stock, subject to certain limitations set forth in the Purchase Agreement. Specifically, from time
to time from and after the Commencement Date, the Company may, at its discretion, direct Lincoln Park to purchase on any single business
day on which the closing price of its common stock on The Nasdaq Capital Market (“Nasdaq”) is equal to or greater than $0.15
up to 100,000 shares of common stock (a “Regular Purchase”); provided, that the Company may direct Lincoln Park to purchase
in a Regular Purchase (i) up to 125,000 shares of common stock, if the closing sale price of its common stock on Nasdaq on such business
day is at least $1.50 per share and (ii) up to 150,000 shares of common stock, if the closing sale price of its common stock on Nasdaq
on such business day is at least $2.50 per share. In no case, however, will Lincoln Park’s commitment with respect to any single
Regular Purchase exceed $500,000; provided, that the parties may mutually agree at any time to increase the maximum number of shares of
common stock the Company may direct Lincoln Park to purchase in any single Regular Purchase to up to 1,000,000 shares or any number of
shares that shall not exceed 4.99% of the then outstanding shares of common stock. The foregoing share amounts and per share prices will
be adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction
occurring after the date of the Purchase Agreement with respect to our common stock. The purchase price per share for each such Regular
Purchase will be based on prevailing market prices of the Company’s common stock immediately preceding the time of sale, as determined
under the Purchase Agreement.
If the Company directs Lincoln Park to purchase
the maximum number of shares of common stock that the Company may sell in a Regular Purchase, then in addition to such Regular Purchase,
and subject to certain conditions and limitations in the Purchase Agreement, the Company may direct Lincoln Park to purchase additional
shares of common stock in an “accelerated purchase” (each, an “Accelerated Purchase”) and an “additional
accelerated purchase” (each, an “Additional Accelerated Purchase”) (including multiple Additional Accelerated Purchases
on the same trading day) as provided in the Purchase Agreement. The purchase price per share for each Accelerated Purchase and Additional
Accelerated Purchase will be based on market prices of the common stock on the applicable purchase date for such Accelerated Purchases
and such Additional Accelerated Purchases. Lincoln Park has no right to require the Company to sell any common stock to Lincoln Park,
but Lincoln Park is obligated to make purchases as the Company directs, subject to conditions and limitations set forth in the Purchase
Agreement.
The Purchase Agreement also prohibits the Company from directing Lincoln
Park to purchase any shares of common stock if those shares, when aggregated with all other shares of common stock then beneficially owned
by Lincoln Park and its affiliates, would result in Lincoln Park and its affiliates having beneficial ownership, at any single point in
time, of more than 4.99% of the then total outstanding shares of common stock.
Under applicable
rules of Nasdaq, the Company may not issue or sell to Lincoln Park under the Purchase Agreement more than 19.99% of the shares of the
common stock outstanding immediately prior to the execution of the Purchase Agreement unless (i) stockholder approval is obtained
or (ii) the issuances and sales of common stock pursuant to the Purchase Agreement are not deemed to be “below market”
in accordance with the applicable rules of Nasdaq.
Lincoln Park may not assign or transfer its rights and obligations under the Purchase Agreement. The
Company may elect to terminate the Purchase Agreement at any time, without any cost or penalty. The Purchase Agreement does not include
any of the following: (i) limitations on the Company’s use of amounts it receives as the purchase price for shares of common stock
sold to Lincoln Park; (ii) financial or business covenants; (iii) restrictions on future financings (other than restrictions on its ability
to enter into other equity line of credit transactions or transactions that are similar thereto); (iv) rights of first refusal; or (v)
participation rights or penalties.
The Company’s net proceeds under the Purchase
Agreement will depend on the frequency of sales and the number of shares sold to Lincoln Park and the prices at which the Company sells
shares to Lincoln Park. The Company expects that any net proceeds it receives from such sales to Lincoln Park will be used for general
corporate purposes, including working capital. As consideration for Lincoln Park’s commitment to purchase up to $10 million of shares
of common stock under the Purchase Agreement, the Company issued 989,087 shares of common stock to Lincoln Park (the “Commitment
Shares”).
The foregoing summaries of the Purchase Agreement
and Registration Rights Agreement do not purport to be complete and are subject to, and qualified in their entirety by, such documents
attached as Exhibits 10.1 and 10.2, respectively, to this Current Report on Form 8-K (this “Report”), which are incorporated
herein by reference.
Item 3.02. Unregistered Sale of Equity Securities.
The information contained above in Item 1.01 is
incorporated by reference into this Item 3.02. The offering and sale of the issuance of the Commitment Shares to Lincoln Park under the
Purchase Agreement is exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities
Act”), and Rule 506(b) of Regulation D thereunder. Lincoln Park represented in the Purchase Agreement that it is an accredited investor,
as such term is defined in Rule 501(a)(3) of Regulation D under the Securities Act, and that it is acquiring the Commitment Shares for
its own account and not with a view to any resale, distribution or other distribution of such securities in violation of the federal securities
laws or applicable state securities laws.
Item 9.01. Financial
Statement and Exhibits.
(d) Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: July 28, 2023 |
TENON MEDICAL, INC. |
|
|
|
|
By: |
/s/ Steven M. Foster |
|
Name: |
Steven M. Foster |
|
Title: |
Chief Executive Officer and President |
3
Exhibit 10.1
Execution Version
PURCHASE AGREEMENT
PURCHASE AGREEMENT
(the “Agreement”), dated as of July 24, 2023, by and between TENON MEDICAL, INC., a Delaware corporation (the
“Company”), and LINCOLN PARK CAPITAL FUND, LLC, an Illinois limited liability company (the “Investor”).
WHEREAS:
Subject to the terms and conditions
set forth in this Agreement, the Company wishes to sell to the Investor, and the Investor wishes to buy from the Company, up to Ten Million
Dollars ($10,000,000) of the Company’s common stock, par value $0.001 per share (the “Common Stock”). The shares of Common
Stock to be purchased hereunder are referred to herein as the “Purchase Shares.”
NOW THEREFORE, in consideration
of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Company and the Investor hereby agree as follows:
1. CERTAIN
DEFINITIONS.
For purposes of this Agreement,
the following terms shall have the following meanings:
(a) “Accelerated
Purchase Date” means, with respect to any Accelerated Purchase made pursuant to Section 2(b) hereof, the Business Day
immediately following the applicable Purchase Date with respect to the corresponding Regular Purchase referred to in clause (i) of the
second sentence of Section 2(b) hereof.
(b) “Accelerated
Purchase Minimum Price Threshold” means, with respect to any Accelerated Purchase made pursuant to Section 2(b) hereof,
the greater of (i) seventy-five percent (75%) of the Closing Sale Price of the Common Stock on the applicable Purchase Date with respect
to the corresponding Regular Purchase referred to in clause (i) of the second sentence of Section 2(b) hereof and (ii) the minimum
per share price threshold set forth in the applicable Accelerated Purchase Notice.
(c) “Accelerated
Purchase Notice” means, with respect to an Accelerated Purchase made pursuant to Section 2(b) hereof, an irrevocable
written notice from the Company to the Investor directing the Investor to purchase the number of Purchase Shares specified by the Company
therein as the Accelerated Purchase Share Amount to be purchased by the Investor (such specified Accelerated Purchase Share Amount subject
to adjustment in accordance with Section 2(b) hereof as necessary to give effect to the Purchase Share amount limitations applicable
to such Accelerated Purchase Share Amount as set forth in this Agreement) at the applicable Accelerated Purchase Price on the applicable
Accelerated Purchase Date for such Accelerated Purchase.
(d) “Accelerated
Purchase Price” means, with respect to an Accelerated Purchase made pursuant to Section 2(b) hereof, ninety-five percent
(95%) of the lower of (i) the VWAP for the period beginning at 9:30:01 a.m., Eastern time, on the applicable Accelerated Purchase Date,
or such other time publicly announced by the Principal Market as the official open (or commencement) of trading on the Principal Market
on such applicable Accelerated Purchase Date (the “Accelerated Purchase Commencement Time”), and ending at the earliest
of (A) 4:00:00 p.m., Eastern time, on such applicable Accelerated Purchase Date, or such other time publicly announced by the Principal
Market as the official close of trading on the Principal Market on such applicable Accelerated Purchase Date, (B) such time, from and
after the Accelerated Purchase Commencement Time for such Accelerated Purchase, that the total number (or volume) of shares of Common
Stock traded on the Principal Market has exceeded the applicable Accelerated Purchase Share Volume Maximum, and (C) such time, from and
after the Accelerated Purchase Commencement Time for such Accelerated Purchase, that the Sale Price has fallen below the applicable Accelerated
Purchase Minimum Price Threshold (such earliest of (i)(A), (i)(B) and (i)(C) above, the “Accelerated Purchase Termination Time”),
and (ii) the Closing Sale Price of the Common Stock on such applicable Accelerated Purchase Date (to be appropriately adjusted for any
reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction).
(e) “Accelerated
Purchase Share Amount” means, with respect to an Accelerated Purchase made pursuant to Section 2(b) hereof, the number
of Purchase Shares directed by the Company to be purchased by the Investor in an Accelerated Purchase Notice, which number of Purchase
Shares shall not exceed the lesser of (i) three hundred percent (300%) of the number of Purchase Shares directed by the Company to be
purchased by the Investor pursuant to the corresponding Regular Purchase Notice for the corresponding Regular Purchase referred to in
clause (i) of the second sentence of Section 2(b) hereof (subject to the Purchase Share limitations contained in Section 2(a)
hereof) and (ii) an amount equal to (A) the Accelerated Purchase Share Percentage multiplied by (B) the total number (or volume) of shares
of Common Stock traded on the Principal Market during the period on the applicable Accelerated Purchase Date beginning at the Accelerated
Purchase Commencement Time for such Accelerated Purchase and ending at the Accelerated Purchase Termination Time for such Accelerated
Purchase; provided, however, that the parties may mutually agree at any time to increase the maximum number of Purchase
Shares the Company may direct the Investor to purchase in any Accelerated Purchase Notice for an Accelerated Purchase at the applicable
Accelerated Purchase Price to up to 1,000,000 Purchase Shares or any number of Purchase Shares that shall not exceed 4.99% of the then
outstanding shares of Common Stock.
(f) “Accelerated
Purchase Share Percentage” means, with respect to an Accelerated Purchase made pursuant to Section 2(b) hereof, twenty-five
percent (25%).
(g) “Accelerated
Purchase Share Volume Maximum” means, with respect to an Accelerated Purchase made pursuant to Section 2(b) hereof, a
number of shares of Common Stock equal to (i) the number of Purchase Shares specified by the Company in the applicable Accelerated Purchase
Notice as the Accelerated Purchase Share Amount to be purchased by the Investor in such Accelerated Purchase, divided by (ii) the Accelerated
Purchase Share Percentage (to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse
stock split or other similar transaction).
(h) “Additional
Accelerated Purchase Date” means, with respect to an Additional Accelerated Purchase made pursuant to Section 2(c)
hereof, the Business Day (i) that is the Accelerated Purchase Date with respect to the corresponding Accelerated Purchase referred
to in clause (i) of the proviso in the second sentence of Section 2(c) hereof and (ii) on which the Investor receives, prior
to 1:00 p.m., Eastern time, on such Business Day, a valid Additional Accelerated Purchase Notice for such Additional Accelerated
Purchase in accordance with this Agreement.
(i) “Additional
Accelerated Purchase Minimum Price Threshold” means, with respect to an Additional Accelerated Purchase made pursuant to Section
2(c) hereof, the greater of (i) seventy-five percent (75%) of the Closing Sale Price of the Common Stock on the Business Day immediately
preceding the applicable Additional Accelerated Purchase Date with respect to such Additional Accelerated Purchase and (ii) the minimum
per share price threshold set forth in the applicable Additional Accelerated Purchase Notice.
(j) “Additional
Accelerated Purchase Notice” means, with respect to an Additional Accelerated Purchase made pursuant to Section 2(c)
hereof, an irrevocable written notice from the Company to the Investor directing the Investor to purchase the number of Purchase Shares
specified by the Company therein as the Additional Accelerated Purchase Share Amount to be purchased by the Investor (such specified Additional
Accelerated Purchase Share Amount subject to adjustment in accordance with Section 2(c) hereof as necessary to give effect to the
Purchase Share amount limitations applicable to such Additional Accelerated Purchase Share Amount as set forth in this Agreement) at the
applicable Additional Accelerated Purchase Price on the applicable Additional Accelerated Purchase Date for such Additional Accelerated
Purchase.
(k) “Additional
Accelerated Purchase Price” means, with respect to an Additional Accelerated Purchase made pursuant to Section 2(c) hereof,
ninety-five percent (95%) of the lower of (i) the VWAP for the period on the applicable Additional Accelerated Purchase Date, beginning
at the latest of (A) the applicable Accelerated Purchase Termination Time with respect to the corresponding Accelerated Purchase referred
to in clause (i) of the proviso in the second sentence of Section 2(c) hereof on such Additional Accelerated Purchase Date, (B)
the applicable Additional Accelerated Purchase Termination Time with respect to the most recently completed prior Additional Accelerated
Purchase on such Additional Accelerated Purchase Date, as applicable, and (C) the time at which all Purchase Shares subject to all prior
Accelerated Purchases and Additional Accelerated Purchases (as applicable), including, without limitation, those that have been effected
on the same Business Day as the applicable Additional Accelerated Purchase Date with respect to which the applicable Additional Accelerated
Purchase relates, have theretofore been received by the Investor as DWAC Shares in accordance with this Agreement (such latest of (i)(A),
(i)(B) and (i)(C) above, the “Additional Accelerated Purchase Commencement Time”), and ending at the earliest of (X)
4:00 p.m., Eastern time, on such Additional Accelerated Purchase Date, or such other time publicly announced by the Principal Market as
the official close of trading on the Principal Market on such Additional Accelerated Purchase Date, (Y) such time, from and after the
Additional Accelerated Purchase Commencement Time for such Additional Accelerated Purchase, that total number (or volume) of shares of
Common Stock traded on the Principal Market has exceeded the applicable Additional Accelerated Purchase Share Volume Maximum, and (Z)
such time, from and after the Additional Accelerated Purchase Commencement Time for such Additional Accelerated Purchase, that the Sale
Price has fallen below the applicable Additional Accelerated Purchase Minimum Price Threshold (such earliest of (i)(X), (i)(Y) and (i)(Z)
above, the “Additional Accelerated Purchase Termination Time”), and (ii) the Closing Sale Price of the Common Stock
on such Additional Accelerated Purchase Date (to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend,
stock split, reverse stock split or other similar transaction).
(l) “Additional
Accelerated Purchase Share Amount” means, with respect to an Additional Accelerated Purchase made pursuant to Section
2(c) hereof, the number of Purchase Shares directed by the Company to be purchased by the Investor on an Additional Accelerated
Purchase Notice, which number of Purchase Shares shall not exceed the lesser of (i) three hundred percent (300%) of the number of
Purchase Shares directed by the Company to be purchased by the Investor pursuant to the corresponding Regular Purchase Notice for
the corresponding Regular Purchase referred to in clause (i) of the proviso in the second sentence of Section 2(c) hereof
(subject to the Purchase Share limitations contained in Section 2(a) hereof) and (ii) an amount equal to (A) the Additional
Accelerated Purchase Share Percentage multiplied by (B) the total number (or volume) of shares of Common Stock traded on the
Principal Market during the period on the applicable Additional Accelerated Purchase Date beginning at the Additional Accelerated
Purchase Commencement Time for such Additional Accelerated Purchase and ending at the Additional Accelerated Purchase Termination
Time for such Additional Accelerated Purchase; provided, however, that the parties may mutually agree at any time to
increase the maximum number of Purchase Shares the Company may direct the Investor to purchase in any Additional Accelerated
Purchase Notice for an Additional Accelerated Purchase at the applicable Additional Accelerated Purchase Price to up to 1,000,000
Purchase Shares or any number of Purchase Shares that shall not exceed 4.99% of the then outstanding shares of Common Stock.
(m) “Additional
Accelerated Purchase Share Percentage” means, with respect to an Additional Accelerated Purchase made pursuant to Section
2(c) hereof, twenty-five percent (25%).
(n) “Additional
Accelerated Purchase Share Volume Maximum” means, with respect to an Additional Accelerated Purchase made pursuant to Section
2(c) hereof, a number of shares of Common Stock equal to (i) the number of Purchase Shares specified by the Company in the applicable
Additional Accelerated Purchase Notice as the Additional Accelerated Purchase Share Amount to be purchased by the Investor in such Additional
Accelerated Purchase, divided by (ii) the Additional Accelerated Purchase Share Percentage (to be appropriately adjusted for any reorganization,
recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction).
(o) “Alternate
Adjusted Regular Purchase Share Limit” means, with respect to a Regular Purchase made pursuant to Section 2(a) hereof,
the maximum number of Purchase Shares which, taking into account the applicable per share Purchase Price therefor calculated in accordance
with this Agreement, would enable the Company to deliver to the Investor, on the applicable Purchase Date for such Regular Purchase, a
Regular Purchase Notice for a Purchase Amount equal to, or as closely approximating without exceeding, One Hundred Thousand Dollars ($100,000).
(p) “Available
Amount” means, initially, Ten Million Dollars ($10,000,000) in the aggregate, which amount shall be reduced by the Purchase
Amount each time the Investor purchases Purchase Shares pursuant to Section 2 hereof.
(q) “Average
Price” means a price per Purchase Share (rounded to the nearest tenth of a cent) equal to the quotient obtained by dividing
(i) the aggregate gross purchase price paid by the Investor for all Purchase Shares purchased pursuant to this Agreement, by (ii) the
aggregate number of Purchase Shares issued pursuant to this Agreement.
(r) “Bankruptcy
Law” means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors.
(s) “Base
Price” means a price per Purchase Share equal to the sum of (i) the Signing Market Price and (ii) $0.014 (subject to adjustment
for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction that occurs
on or after the date of this Agreement).
(t) “Business
Day” means any day on which the Principal Market is open for trading, including any day on which the Principal Market is open
for trading for a period of time less than the customary time.
(u) “Closing
Sale Price” means, for any security as of any date, the last closing sale price for such security on the Principal Market as
reported by the Principal Market.
(v) “Confidential
Information” means any information disclosed by either party to the other party, either directly or indirectly, in writing,
orally or by inspection of tangible objects (including, without limitation, documents, prototypes, samples, plant and equipment), which
is designated as “Confidential,” “Proprietary” or some similar designation. Information communicated orally shall
be considered Confidential Information if such information is confirmed in writing as being Confidential Information within ten (10) Business
Days after the initial disclosure. Confidential Information may also include information disclosed to a disclosing party by third parties.
Confidential Information shall not, however, include any information which (i) was publicly known and made generally available in the
public domain prior to the time of disclosure by the disclosing party; (ii) becomes publicly known and made generally available after
disclosure by the disclosing party to the receiving party through no action or inaction of the receiving party; (iii) is already in the
possession of the receiving party without confidential restriction at the time of disclosure by the disclosing party as shown by the receiving
party’s files and records immediately prior to the time of disclosure; (iv) is obtained by the receiving party from a third party
without a breach of such third party’s obligations of confidentiality; (v) is independently developed by the receiving party without
use of or reference to the disclosing party’s Confidential Information, as shown by documents and other competent evidence in the
receiving party’s possession; or (vi) is required by law to be disclosed by the receiving party, provided that the receiving party
gives the disclosing party prompt written notice of such requirement prior to such disclosure and assistance in obtaining an order protecting
the information from public disclosure.
(w) “Custodian”
means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.
(x) “DTC”
means The Depository Trust Company, or any successor performing substantially the same function for the Company.
(y) “DWAC
Shares” means shares of Common Stock that are (i) issued in electronic form, (ii) freely tradable and transferable and without
restriction on resale and (iii) timely credited by the Company to the Investor’s or its designee’s specified Deposit/Withdrawal
at Custodian (DWAC) account with DTC under its Fast Automated Securities Transfer (FAST) Program, or any similar program hereafter adopted
by DTC performing substantially the same function.
(z) “Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
(aa) “Floor Price”
means, with respect to a Regular Purchase made pursuant to Section 2(a) hereof, $0.15, which shall be appropriately adjusted for
any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction and, effective upon the consummation
of any such reorganization, recapitalization, non-cash dividend, stock split or other similar transaction, the Floor Price shall mean
the lower of (i) the adjusted price and (ii) $0.15.
(bb) “Fully Adjusted
Regular Purchase Share Limit” means, with respect to any reorganization, recapitalization, non-cash dividend, stock split or
other similar transaction from and after the date of this Agreement, the Regular Purchase Share Limit (as defined in Section 2(a) hereof)
in effect on the applicable date of determination, after giving effect to the full proportionate adjustment thereto made pursuant to Section
2(a) hereof for or in respect of such reorganization, recapitalization, non-cash dividend, stock split or other similar transaction.
(cc) “Material
Adverse Effect” means any material adverse effect on (i) the enforceability of any Transaction Document, (ii) the
results of operations, assets, business or financial condition of the Company and its Subsidiaries, taken as a whole, other than any material
adverse effect that resulted exclusively from (A) any change in the United States or foreign economies or securities or financial
markets in general that does not have a disproportionate effect on the Company and its Subsidiaries, taken as a whole, (B) any change
that generally affects the industry in which the Company and its Subsidiaries operate that does not have a disproportionate effect on
the Company and its Subsidiaries, taken as a whole, (C) any change arising in connection with earthquakes, hostilities, acts of war,
sabotage or terrorism or military actions or any escalation or material worsening of any such hostilities, acts of war, sabotage or terrorism
or military actions existing as of the date hereof, (D) any action taken by the Investor, its affiliates or its or their successors
and assigns with respect to the transactions contemplated by this Agreement, (E) the effect of any change in applicable laws or accounting
rules that does not have a disproportionate effect on the Company and its Subsidiaries, taken as a whole, or (F) any change resulting
from compliance with terms of this Agreement or the consummation of the transactions contemplated by this Agreement, or (iii) the
Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document to be performed
as of the date of determination.
(dd) “Maturity
Date” means the first day of the month immediately following the twenty-four (24) month anniversary of the Commencement Date.
(ee) “PEA Period”
means the period commencing at 9:30 a.m., Eastern time, on the fifth (5th) Business Day immediately prior to the filing of
any post-effective amendment to the Registration Statement (as defined herein) or New Registration Statement (as such term is defined
in the Registration Rights Agreement), and ending at 9:30 a.m., Eastern time, on the Business Day immediately following, the effective
date of any post-effective amendment to the Registration Statement (as defined herein) or New Registration Statement (as such term is
defined in the Registration Rights Agreement).
(ff) “Person”
means an individual or entity including but not limited to any limited liability company, a partnership, a joint venture, a corporation,
a trust, an unincorporated organization and a government or any department or agency thereof.
(gg) “Principal
Market” means The Nasdaq Capital Market (or any nationally recognized successor thereto); provided, however, that in the event
the Company’s Common Stock is ever listed or traded on The Nasdaq Global Market, The Nasdaq Global Select Market, the New York Stock
Exchange, the NYSE American, the NYSE Arca, or the OTCQB or the OTCQX operated by OTC Markets Group, Inc. (or any nationally recognized
successor to any of the foregoing), then the “Principal Market” shall mean such other market or exchange on which the
Company’s Common Stock is then listed or traded.
(hh) “Purchase
Amount” means, with respect to any Regular Purchase, any Accelerated Purchase or any Additional Accelerated Purchase made hereunder,
as applicable, the portion of the Available Amount to be purchased by the Investor pursuant to Section 2 hereof.
(ii) “Purchase
Date” means, with respect to a Regular Purchase made pursuant to Section 2(a) hereof, the Business Day on which the Investor
receives, after 4:00 p.m., Eastern time, but prior to 5:00 p.m., Eastern time, on such Business Day, a valid Regular Purchase Notice for
such Regular Purchase in accordance with this Agreement.
(jj) “Purchase
Price” means, with respect to any Regular Purchase made pursuant to Section 2(a) hereof, the lower of: (i) the lowest
Sale Price on the applicable Purchase Date for such Regular Purchase and (ii) the arithmetic average of the three (3) lowest Closing Sale
Prices for the Common Stock during the ten (10) consecutive Business Days ending on the Business Day immediately preceding such Purchase
Date for such Regular Purchase (in each case, to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend,
stock split or other similar transaction that occurs on or after the date of this Agreement).
(kk) “Regular
Purchase Notice” means, with respect to any Regular Purchase pursuant to Section 2(a) hereof, an irrevocable written
notice from the Company to the Investor directing the Investor to buy such applicable amount of Purchase Shares at the applicable Purchase
Price as specified by the Company therein on the applicable Purchase Date for such Regular Purchase.
(ll) “Sale Price”
means any trade price for the shares of Common Stock on the Principal Market as reported by the Principal Market.
(mm) “SEC”
means the U.S. Securities and Exchange Commission.
(nn) “Securities”
means, collectively, the Purchase Shares and the Commitment Shares.
(oo) “Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
(pp) “Signing
Market Price” means $0.2911, representing the official closing price of the Common Stock on The Nasdaq Capital Market (as reflected
on Nasdaq.com) on the date of this Agreement.
(qq) “Subsidiary”
means any Person the Company wholly-owns or controls, or in which the Company, directly or indirectly, owns a majority of the voting stock
or similar voting interest, in each case that would be disclosable pursuant to Item 601(b)(21) of Regulation S-K promulgated under the
Securities Act.
(rr) “Transaction
Documents” means, collectively, this Agreement and the schedules and exhibits hereto, the Registration Rights Agreement and
the schedules and exhibits thereto, and each of the other agreements, documents, certificates and instruments entered into or furnished
by the parties hereto in connection with the transactions contemplated hereby and thereby.
(ss) “Transfer Agent”
means Vstock Transfer, LLC, or such other Person who is then serving as the transfer agent for the Company in respect of the Common Stock.
(tt) “VWAP”
means in respect of an Accelerated Purchase Date and an Additional Accelerated Purchase Date, as applicable, the volume weighted average
price of the Common Stock on the Principal Market, as reported on the Principal Market or by another reputable source such as Bloomberg,
L.P.
| 2. | PURCHASE OF COMMON STOCK. |
Subject to the terms and conditions
set forth in this Agreement, the Company has the right to sell to the Investor, and the Investor has the obligation to purchase from the
Company, Purchase Shares as follows:
(a) Commencement
of Regular Sales of Common Stock. Upon the satisfaction of all of the conditions set forth in Sections 7 and 8 hereof
(the “Commencement” and the date of satisfaction of such conditions the “Commencement Date”) and
thereafter, the Company shall have the right, but not the obligation, to direct the Investor, by its delivery to the Investor of a Regular
Purchase Notice from time to time, to purchase up to One Hundred Thousand (100,000) Purchase Shares, subject to adjustment as set forth
below in this Section 2(a) (such maximum number of Purchase Shares, as may be adjusted from time to time, the “Regular
Purchase Share Limit”), at the Purchase Price on the Purchase Date (each such purchase a “Regular Purchase”);
provided, however, that (i) the Regular Purchase Share Limit shall be increased to One Hundred Twenty-Five Thousand (125,000)
Purchase Shares, if the Closing Sale Price of the Common Stock on the applicable Purchase Date is not below $1.50, and (ii) the Regular
Purchase Share Limit shall be increased to One Hundred Fifty Thousand (150,000) Purchase Shares, if the Closing Sale Price of the Common
Stock on the applicable Purchase Date is not below $2.50 (all of which share and dollar amounts shall be appropriately proportionately
adjusted for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction; provided that if,
after giving effect to the full proportionate adjustment to the Regular Purchase Share Limit therefor, the Fully Adjusted Regular Purchase
Share Limit then in effect would preclude the Company from delivering to the Investor a Regular Purchase Notice hereunder for a Purchase
Amount (calculated by multiplying (X) the number of Purchase Shares equal to the Fully Adjusted Regular Purchase Share Limit, by (Y) the
Purchase Price per Purchase Share covered by such Regular Purchase Notice on the applicable Purchase Date therefor) equal to or greater
than One Hundred Thousand Dollars ($100,000), the Regular Purchase Share Limit for such Regular Purchase Notice shall not be fully adjusted
to equal the applicable Fully Adjusted Regular Purchase Share Limit, but rather the Regular Purchase Share Limit for such Regular Purchase
Notice shall be adjusted to equal the applicable Alternate Adjusted Regular Purchase Share Limit as of the applicable Purchase Date for
such Regular Purchase Notice); provided, further, however, that the Investor’s committed obligation under any
single Regular Purchase, other than any Regular Purchase with respect to which an Alternate Adjusted Regular Purchase Share Limit shall
apply, shall not exceed Five Hundred Thousand Dollars ($500,000); and provided, further, however, that the parties
may mutually agree at any time to increase the maximum number of Purchase Shares the Company may direct the Investor to purchase in any
Regular Purchase Notice for a Regular Purchase at the applicable Regular Purchase Price to up to 1,000,000 Purchase Shares or any number
of Purchase Shares that shall not exceed 4.99% of the then outstanding shares of Common Stock. If the Company delivers any Regular Purchase
Notice for a Purchase Amount in excess of the limitations contained in the immediately preceding sentence, such Regular Purchase Notice
shall be void ab initio to the extent of the amount by which the number of Purchase Shares set forth in such Regular Purchase Notice
exceeds the number of Purchase Shares which the Company is permitted to include in such Purchase Notice in accordance herewith, and the
Investor shall have no obligation to purchase such excess Purchase Shares in respect of such Regular Purchase Notice; provided,
however, that the Investor shall remain obligated to purchase the number of Purchase Shares which the Company is permitted to include
in such Regular Purchase Notice. The Company may deliver a Regular Purchase Notice to the Investor as often as every Business Day, so
long as (i) the Closing Sale Price of the Common Stock on such Business Day is not less than the Floor Price and (ii) all Purchase Shares
subject to all prior Regular Purchases have theretofore been received by the Investor as DWAC Shares in accordance with this Agreement.
Notwithstanding the foregoing, the Company shall not deliver any Regular Purchase Notices to the Investor during the PEA Period.
(b) Accelerated
Purchases. Subject to the terms and conditions of this Agreement, from and after the Commencement Date, in addition to purchases of
Purchase Shares as described in Section 2(a) above, the Company shall also have the right, but not the obligation, to direct the
Investor, by its delivery to the Investor of an Accelerated Purchase Notice from time to time in accordance with this Agreement, to purchase
the applicable Accelerated Purchase Share Amount at the Accelerated Purchase Price on the Accelerated Purchase Date therefor in accordance
with this Agreement (each such purchase, an “Accelerated Purchase”). The Company may deliver an Accelerated Purchase
Notice to the Investor only (i) on a Purchase Date on which the Company also properly submitted a Regular Purchase Notice providing for
a Regular Purchase of a number of Purchase Shares not less than the Regular Purchase Share Limit then in effect on such Purchase Date
in accordance with this Agreement (including, without limitation, giving effect to any automatic increase to the Regular Purchase Share
Limit as a result of the Closing Sale Price of the Common Stock exceeding certain thresholds set forth in Section 2(a) above on
such Purchase Date and any other adjustments to the Regular Purchase Share Limit, in each case pursuant to Section 2(a) above)
and (ii) if all Purchase Shares subject to all Regular Purchases, Accelerated Purchases and Additional Accelerated Purchases prior to
the Regular Purchase Date referred to in clause (i) hereof (as applicable) have theretofore been received by the Investor as DWAC Shares
in accordance with this Agreement. If the Company delivers any Accelerated Purchase Notice directing the Investor to purchase an amount
of Purchase Shares that exceeds the Accelerated Purchase Share Amount that the Company is then permitted to include in such Accelerated
Purchase Notice, such Accelerated Purchase Notice shall be void ab initio to the extent of the amount by which the number of Purchase
Shares set forth in such Accelerated Purchase Notice exceeds the Accelerated Purchase Share Amount that the Company is then permitted
to include in such Accelerated Purchase Notice (which shall be confirmed in an Accelerated Purchase Confirmation), and the Investor shall
have no obligation to purchase such excess Purchase Shares in respect of such Accelerated Purchase Notice; provided, however,
that the Investor shall remain obligated to purchase the Accelerated Purchase Share Amount which the Company is permitted to include in
such Accelerated Purchase Notice. Within one (1) Business Day after completion of each Accelerated Purchase Date for an Accelerated Purchase,
the Investor will provide to the Company a written confirmation of such Accelerated Purchase setting forth the applicable Accelerated
Purchase Share Amount and Accelerated Purchase Price for such Accelerated Purchase (each, an “Accelerated Purchase Confirmation”).
Notwithstanding the foregoing, the Company shall not deliver any Accelerated Purchase Notices to the Investor during the PEA Period.
(c) Additional
Accelerated Purchases. Subject to the terms and conditions of this Agreement, from and after the Commencement Date, in addition to
purchases of Purchase Shares as described in Section 2(a) and Section 2(b) above, the Company shall also have the right,
but not the obligation, to direct the Investor, by its timely delivery to the Investor of an Additional Accelerated Purchase Notice on
an Additional Accelerated Purchase Date in accordance with this Agreement, to purchase the applicable Additional Accelerated Purchase
Share Amount at the applicable Additional Accelerated Purchase Price therefor in accordance with this Agreement (each such purchase, an
“Additional Accelerated Purchase”). The Company may deliver multiple Additional Accelerated Purchase Notices to the
Investor on an Additional Accelerated Purchase Date; provided, however, that the Company may deliver an Additional Accelerated
Purchase Notice to the Investor only (i) on a Business Day that is also the Accelerated Purchase Date for an Accelerated Purchase with
respect to which the Company properly submitted to the Investor an Accelerated Purchase Notice in accordance with this Agreement on the
applicable Purchase Date for a Regular Purchase of a number of Purchase Shares not less than the Regular Purchase Share Limit then in
effect in accordance with this Agreement (including, without limitation, giving effect to any automatic increase to the Regular Purchase
Share Limit as a result of the Closing Sale Price of the Common Stock exceeding certain thresholds set forth in Section 2(a) above
on such Purchase Date and any other adjustments to the Regular Purchase Share Limit, in each case pursuant to Section 2(a) above),
and (ii) if all Purchase Shares subject to all prior Regular Purchases, Accelerated Purchases and Additional Accelerated Purchases, including,
without limitation, those that have been effected on the same Business Day as the applicable Additional Accelerated Purchase Date with
respect to which the applicable Additional Accelerated Purchase relates, in each case have theretofore been received by the Investor as
DWAC Shares in accordance with this Agreement. If the Company delivers any Additional Accelerated Purchase Notice directing the Investor
to purchase an amount of Purchase Shares that exceeds the Additional Accelerated Purchase Share Amount that the Company is then permitted
to include in such Additional Accelerated Purchase Notice, such Additional Accelerated Purchase Notice shall be void ab initio
to the extent of the amount by which the number of Purchase Shares set forth in such Additional Accelerated Purchase Notice exceeds the
Additional Accelerated Purchase Share Amount that the Company is then permitted to include in such Additional Accelerated Purchase Notice
(which shall be confirmed in an Additional Accelerated Purchase Confirmation), and the Investor shall have no obligation to purchase such
excess Purchase Shares in respect of such Additional Accelerated Purchase Notice; provided, however, that the Investor shall
remain obligated to purchase the Additional Accelerated Purchase Share Amount which the Company is permitted to include in such Additional
Accelerated Purchase Notice. Within one (1) Business Day after completion of each Additional Accelerated Purchase Date, the Investor will
provide to the Company a written confirmation of each Additional Accelerated Purchase on such Additional Accelerated Purchase Date setting
forth the applicable Additional Accelerated Purchase Share Amount and Additional Accelerated Purchase Price for each such Additional Accelerated
Purchase on such Additional Accelerated Purchase Date (each, an “Additional Accelerated Purchase Confirmation”). Notwithstanding
the foregoing, the Company shall not deliver any Additional Accelerated Purchase Notices to the Investor during the PEA Period.
(d)
Payment for Purchase Shares. For each Regular Purchase, the Investor shall pay to the Company an amount equal to the Purchase Amount
with respect to such Regular Purchase as full payment for such Purchase Shares via wire transfer of immediately available funds on the
same Business Day that the Investor receives such Purchase Shares, if such Purchase Shares are received by the Investor before 1:00 p.m.,
Eastern time, or, if such Purchase Shares are received by the Investor after 1:00 p.m., Eastern time, the next Business Day. For each
Accelerated Purchase and each Additional Accelerated Purchase, the Investor shall pay to the Company an amount equal to the Purchase Amount
with respect to such Accelerated Purchase and Additional Accelerated Purchase, respectively, as full payment for such Purchase Shares
via wire transfer of immediately available funds on the second (2nd) Business Day following the date that the Investor receives
such Purchase Shares. If the Company or the Transfer Agent shall fail for any reason or for no reason to electronically transfer any Purchase
Shares as DWAC Shares in respect of a Regular Purchase, an Accelerated Purchase, or an Additional Accelerated Purchase (as applicable)
within two (2) Business Days following the receipt by the Company of the Purchase Price, Accelerated Purchase Price, and Additional Accelerated
Purchase Price, respectively, therefor in compliance with this Section 2(d), and if on or after such Business Day the Investor
purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Investor of
such Purchase Shares that the Investor anticipated receiving from the Company in respect of such Regular Purchase, Accelerated Purchase,
or Additional Accelerated Purchase (as applicable), then the Company shall, within two (2) Business Days after the Investor’s request,
either (i) pay cash to the Investor in an amount equal to the Investor’s total purchase price (including brokerage commissions,
if any) for the shares of Common Stock so purchased (the “Cover Price”), at which point the Company’s obligation
to deliver such Purchase Shares as DWAC Shares shall terminate, or (ii) promptly honor its obligation to deliver to the Investor such
Purchase Shares as DWAC Shares and pay cash to the Investor in an amount equal to the excess (if any) of the Cover Price over the total
Purchase Amount paid by the Investor pursuant to this Agreement for all of the Purchase Shares to be purchased by the Investor in connection
with such Regular Purchase, Accelerated Purchase, and Additional Accelerated Purchase (as applicable). The Company shall not issue any
fraction of a share of Common Stock upon any Regular Purchase, Accelerated Purchase, or Additional Accelerated Purchase. If the issuance
would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock
up or down to the nearest whole share. All payments made under this Agreement shall be made in lawful currency of the United States of
America by wire transfer of immediately available funds to such account as the Company (or the Investor, as applicable) may from time
to time designate by written notice in accordance with the provisions of this Agreement. Whenever any amount expressed to be due by the
terms of this Agreement is due on any day that is not a Business Day, the same shall instead be due on the next succeeding day that is
a Business Day.
(e) Compliance
with Rules of Principal Market.
(i) Exchange
Cap. Subject to Section 2(e)(ii) below, the Company shall not issue or sell any shares of Common Stock pursuant to this Agreement,
and the Investor shall not purchase or acquire any shares of Common Stock pursuant to this Agreement, to the extent that after giving
effect thereto, the aggregate number of shares of Common Stock that would be issued pursuant to this Agreement and the transactions contemplated
hereby would exceed 4,322,591 (such number of shares equal to 19.99% of the shares of Common Stock issued and outstanding immediately
prior to the execution of this Agreement), which number of shares shall be (i) reduced, on a share-for-share basis, by the number of shares
of Common Stock issued or issuable pursuant to any transaction or series of transactions that may be aggregated with the transactions
contemplated by this Agreement under applicable rules of The Nasdaq Stock Market LLC and (ii) appropriately adjusted for any reorganization,
recapitalization, non-cash dividend, stock split, or other similar transaction that occurs after the date of this Agreement (such maximum
number of shares, the “Exchange Cap”), unless and until the Company elects to solicit stockholder approval of the issuance
of Common Stock as contemplated by this Agreement, and the stockholders of the Company have in fact approved the issuance of Common Stock
as contemplated by this Agreement in accordance with the applicable rules of The Nasdaq Stock Market LLC. For the avoidance of doubt,
the Company may, but shall be under no obligation to, request its stockholders to approve the issuance of Common Stock as contemplated
by this Agreement; provided, that if stockholder approval is not obtained in accordance with this Section 2(e)(i), the Exchange
Cap shall be applicable for all purposes of this Agreement and the transactions contemplated hereby at all times during the term of this
Agreement (except as set forth in Section 2(e)(ii) below).
(ii) At-Market
Transaction. Notwithstanding Section 2(e)(i) above, the Exchange Cap shall not be applicable for any purposes of this Agreement
and the transactions contemplated hereby, solely to the extent that (and only for so long as) the Average Price shall equal or exceed
the Base Price (it being hereby acknowledged and agreed that the Exchange Cap shall be applicable for all purposes of this Agreement and
the transactions contemplated hereby at all other times during the term of this Agreement, unless the stockholder approval referred to
in Section 2(e)(i) is obtained). The parties acknowledge and agree that the Signing Market Price used to determine the Base Price
hereunder represents the lower of (i) the official closing price of the Common Stock on The Nasdaq Capital Market (as reflected on Nasdaq.com)
on the date of this Agreement and (ii) the average official closing price of the Common Stock on The Nasdaq Capital Market (as reflected
on Nasdaq.com) for the five (5) consecutive trading days ending on the date of this Agreement.
(iii) General.
The Company shall not issue any shares of Common Stock pursuant to this Agreement if such issuance would reasonably be expected to result
in (A) a violation of the Securities Act or (B) a breach of the rules and regulations of the Principal Market. The provisions of this
Section 2(e) shall be implemented in a manner otherwise than in strict conformity with the terms hereof only if necessary to ensure
compliance with the Securities Act and the rules and regulations of the Principal Market.
(f) Beneficial
Ownership Limitation. Notwithstanding anything to the contrary contained in this Agreement, the Company shall not issue or sell,
and the Investor shall not purchase or acquire, any shares of Common Stock under this Agreement which, when aggregated with
all other shares of Common Stock then beneficially owned by the Investor and its affiliates (as calculated pursuant to Section 13(d) of
the Exchange Act and Rule 13d-3 promulgated thereunder), would result in the beneficial ownership by the Investor of more than 4.99%
of the then issued and outstanding shares of Common Stock (the “Beneficial Ownership Limitation”). Upon the written
or oral request of the Investor, the Company shall promptly (but not later than twenty-four (24) hours) confirm orally or in writing to
the Investor the number of shares of Common Stock then outstanding. The Investor and the Company shall each cooperate in good faith in
the determinations required hereby and the application hereof. The Investor’s written certification to the Company of the applicability
of the Beneficial Ownership Limitation, and the resulting effect thereof hereunder at any time, shall be conclusive with respect to the
applicability thereof and such result absent manifest error.
| 3. | INVESTOR’S REPRESENTATIONS AND WARRANTIES. |
The Investor represents and
warrants to the Company that as of the date hereof and as of the Commencement Date:
(a) Organization.
The Investor is an entity duly organized, validly existing, and in good standing under the laws of its jurisdiction of organization, with
the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry
out its obligations hereunder.
(b) Investment
Purpose. The Investor is acquiring the Securities as principal for its own account and not with a view to or for distributing or reselling
such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention
of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or
indirect arrangement or understandings with any other Persons to distribute or regarding the distribution of such Securities in violation
of the Securities Act or any applicable state securities law (this representation and warranty not limiting the Investor’s right
to sell the Securities at any time pursuant to the Registration Statement described herein or otherwise in compliance with applicable
federal and state securities laws). The Investor is acquiring the Securities hereunder in the ordinary course of its business.
(c) Accredited
Investor Status. The Investor is an “accredited investor” as that term is defined in Rule 501(a)(3) of Regulation D promulgated
under the Securities Act.
(d) Reliance
on Exemptions. The Investor understands that the Securities are being offered and sold to it in reliance on specific exemptions from
the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth
and accuracy of, and the Investor’s compliance with, the representations, warranties, agreements, acknowledgments, and understandings
of the Investor set forth herein in order to determine the availability of such exemptions and the eligibility of the Investor to acquire
the Securities.
(e) Information.
The Investor understands that its investment in the Securities involves a high degree of risk. The Investor (i) is able to bear the economic
risk of an investment in the Securities including a total loss thereof, (ii) has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the proposed investment in the Securities, and (iii) has had an opportunity
to ask questions of and receive answers from the officers of the Company concerning the financial condition and business of the Company
and others matters related to an investment in the Securities. Neither such inquiries nor any other due diligence investigations conducted
by the Investor or its representatives shall modify, amend, or affect the Investor’s right to rely on the Company’s representations
and warranties contained in Section 4 below. The Investor has sought such accounting, legal, and tax advice from its own independent
advisors as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.
(f) No
Governmental Review. The Investor understands that no U.S. federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of an investment in the Securities
nor have such authorities passed upon or endorsed the merits of the offering of the Securities.
(g) Transfer
or Sale. The Investor understands that (i) the Securities may not be offered for sale, sold, assigned, or transferred unless (A) registered
pursuant to the Securities Act or (B) an exemption exists permitting such Securities to be sold, assigned, or transferred without such
registration; (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and
further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person through whom
the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some
other exemption under the Securities Act or the rules and regulations of the SEC thereunder.
(h) Validity;
Enforcement. This Agreement has been duly and validly authorized, executed, and delivered on behalf of the Investor and is a valid
and binding agreement of the Investor enforceable against the Investor in accordance with its terms, subject as to enforceability to general
principles of equity and to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, and other similar laws relating
to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
(i)
Residency. The Investor is a resident of the State of Illinois.
(j) No
Short Selling. The Investor represents and warrants to the Company that at no time prior to the date of this Agreement has any of
the Investor, its agents, representatives, or affiliates engaged in or effected, in any manner whatsoever, directly or indirectly, any
(i) “short sale” (as such term is defined in Rule 200 of Regulation SHO of the Exchange Act) of the Common Stock or (ii) hedging
transaction, which establishes a net short position with respect to the Common Stock.
| 4. | REPRESENTATIONS AND WARRANTIES OF THE COMPANY. |
The Company represents and
warrants to the Investor that, except as set forth in the disclosure schedules attached hereto, which exceptions shall be deemed to be
a part of the representations and warranties made hereunder, as of the date hereof and as of the Commencement Date:
(a) Organization
and Qualification. The Company and each of its Subsidiaries is an entity duly incorporated or otherwise organized, validly existing,
and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite corporate power and authority
to own and use its properties and assets and to carry on its business as currently conducted. Each of the Company and its Subsidiaries
is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the
nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified
or in good standing, as the case may be, could not have or reasonably be expected to result in a Material Adverse Effect and no proceeding
has been instituted in any such jurisdiction revoking, limiting, or curtailing or seeking to revoke, limit, or curtail such power and
authority or qualification. The Company has no Subsidiaries required to be disclosed pursuant to Item 601(b)(21)(ii) of Regulation S-K,
except as set forth in Exhibit 21.1 to the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2022 filed
with the SEC on March 10, 2023 (the “2022 Form 10-K”).
(b) Authorization;
Enforcement; Validity. (i) The Company has the requisite corporate power and authority to enter into and perform its obligations under
this Agreement, the Registration Rights Agreement, and each of the other Transaction Documents, and to issue the Securities in accordance
with the terms hereof and thereof, (ii) the execution and delivery of the Transaction Documents by the Company and the consummation by
it of the transactions contemplated hereby and thereby, including without limitation, the issuance of the Commitment Shares (as defined
below in Section 5(e)) and the reservation for issuance and the issuance of the Purchase Shares issuable under this Agreement,
have been duly authorized by the Company’s Board of Directors and no further consent or authorization is required by the Company,
its Board of Directors, or its stockholders (except as provided in this Agreement), (iii) each of this Agreement and the Registration
Rights Agreement has been, and each other Transaction Document shall be on the Commencement Date, duly executed and delivered by the Company,
and (iv) each of this Agreement and the Registration Rights Agreement constitutes, and each other Transaction Document upon its execution
on behalf of the Company, shall constitute, the valid and binding obligations of the Company enforceable against the Company in accordance
with their terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation, or similar laws relating to, or affecting generally, the enforcement of creditors’ rights and remedies.
The Board of Directors of the Company has approved the resolutions (the “Signing Resolutions”) substantially in the
form as set forth as Exhibit C attached hereto to authorize this Agreement, the Registration Rights Agreement, and the transactions
contemplated hereby. The Signing Resolutions are valid, in full force and effect and have not been modified or supplemented in any respect.
The Company has delivered to the Investor a true and correct copy of minutes of a meeting of the Board of Directors of the Company at
which the Signing Resolutions were duly adopted by the Board of Directors of the Company or a unanimous written consent adopting the Signing
Resolutions executed by all of the members of the Board of Directors of the Company. Except as set forth in this Agreement, no other approvals
or consents of the Company’s Board of Directors, any authorized committee thereof, or stockholders (except as provided in this Agreement)
is necessary under applicable laws and the Company’s Certificate of Incorporation or Bylaws to authorize the execution and delivery
of the Transaction Documents or any of the transactions contemplated thereby, including, but not limited to, the issuance of the Commitment
Shares and the issuance of the Purchase Shares.
(c) Capitalization.
As of the date hereof, the authorized capital stock of the Company is set forth in the Company’s Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 2023. Except as disclosed in the SEC Documents (as defined below), (i) no shares of the Company’s
capital stock are subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company,
(ii) there are no outstanding debt securities, (iii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls,
or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company
or any of its Subsidiaries, or contracts, commitments, understandings, or arrangements by which the Company or any of its Subsidiaries
is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries or options, warrants, scrip,
rights to subscribe to, calls, or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares
of capital stock of the Company or any of its Subsidiaries, (iv) there are no agreements or arrangements under which the Company or any
of its Subsidiaries is obligated to register the sale of any of their securities under the Securities Act (except the Registration Rights
Agreement), (v) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption
or similar provisions, and there are no contracts, commitments, understandings, or arrangements by which the Company or any of its Subsidiaries
is or may become bound to redeem a security of the Company or any of its Subsidiaries, (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of the Securities as described in this Agreement, and (vii)
the Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement.
The Company has furnished to the Investor true and correct copies of the Company’s Amended and Restated Certificate of Incorporation
as in effect on the date hereof (the “Certificate of Incorporation”), and the Company’s Bylaws as in effect on
the date hereof (the “Bylaws”), and summaries of the material terms of all securities convertible into or exercisable
for Common Stock, if any, and copies of any documents containing the material rights of the holders thereof in respect thereto that are
not disclosed in the SEC Documents.
(d) Issuance
of Securities. Upon issuance and payment therefor in accordance with the terms and conditions of this Agreement, the Purchase Shares
shall be validly issued, fully paid, and nonassessable and free from all taxes, liens, charges, restrictions, rights of first refusal,
and preemptive rights with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common
Stock. Upon issuance in accordance with the terms and conditions of this Agreement, the Commitment Shares (as defined in Section 5(e))
shall be validly issued, fully paid, and nonassessable and free from all taxes, liens, charges, restrictions, rights of first refusal,
and preemptive rights with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common
Stock. 5,000,000 shares of Common Stock have been duly authorized and reserved for issuance upon purchase under this Agreement as Purchase
Shares.
(e) No
Conflicts. The execution, delivery, and performance of the Transaction Documents by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Commitment Shares and the reservation
for issuance and issuance of the Purchase Shares) will not (i) result in a violation of the Certificate of Incorporation, any certificate
of designations, preferences and rights of any outstanding series of preferred stock of the Company or the Bylaws or (ii) conflict with,
or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights
of termination, amendment, acceleration, or cancellation of, any agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party, or result in a violation of any law, rule, regulation, order, judgment, or decree (including federal and state
securities laws and regulations, the rules of the Principal Market applicable to the Company or any of its Subsidiaries) or by which any
property or asset of the Company or any of its Subsidiaries is bound or affected, except in the case of conflicts, defaults, terminations,
amendments, accelerations, cancellations, and violations under clause (ii), which could not reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor its Subsidiaries is in violation of any term of or in default under its certificate or articles
of incorporation, any certificate of designation, preferences, and rights of any outstanding series of preferred stock of the Company
or bylaws or other organizational documents. Neither the Company nor any Subsidiary: (i) is in default
under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result
in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default
under or that it is in violation of, any indenture, loan, or credit agreement or any other agreement or instrument to which it is a party
or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any
judgment, decree, or order of any court, arbitrator, or other governmental authority, or (iii) is in violation of any statute, rule, ordinance,
or regulation of any governmental authority, including without limitation all foreign, federal, state, and local laws relating to taxes,
environmental protection, occupational health and safety, product quality and safety, and employment and labor matters, except in each
case as could not have or reasonably be expected to result in a Material Adverse Effect. Except as specifically contemplated by
this Agreement and as required under the Securities Act or applicable state securities laws and the rules of the Principal Market, the
Company is not required to obtain any consent, authorization, or order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self-regulatory agency in order for it to execute, deliver, or perform any of its obligations under or contemplated
by the Transaction Documents in accordance with the terms hereof or thereof. Except as set forth elsewhere in this Agreement, all consents,
authorizations, orders, filings, and registrations which the Company is required to obtain pursuant to the preceding sentence shall be
obtained or effected on or prior to the Commencement Date. Except as disclosed in the SEC Documents, since one (1) year prior to the date
hereof, the Company has not received nor delivered any notices or correspondence from or to the Principal Market, other than notices with
respect to listing of additional shares of Common Stock and other routine correspondence. Except as disclosed in the SEC Documents, the
Principal Market has not commenced any delisting proceedings against the Company.
(f) SEC
Documents; Financial Statements. The Company has filed all reports, schedules, forms, statements, and other documents required to
be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the twelve
(12) months preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material)
(the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred
to herein as the “SEC Documents”) on a timely basis or has received a valid extension of such time of filing and has
filed any such SEC Documents prior to the expiration of any such extension. As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the Securities Act and the Exchange Act, as applicable. None of the SEC Documents, when
filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The
consolidated financial statements of the Company included or incorporated by reference in the SEC Documents, together with the related
notes and schedules, present fairly, in all material respects, the consolidated financial position of the Company as of the dates indicated
and the consolidated results of operations, cash flows, and changes in stockholders’ equity of the Company for the periods specified
and have been prepared in compliance in all material respects with the requirements of the Securities Act and Exchange Act, as applicable,
as in effect as of the time of filing and in conformity with generally accepted accounting principles in the United States as in effect
as of the time of filing (“GAAP”) applied on a consistent basis (except (i) for such adjustments to accounting
standards and practices as are noted therein and (ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) during the periods involved; the other financial and statistical data with respect
to the Company contained or incorporated by reference in the SEC Documents, are accurately and fairly presented in all material respects
and prepared on a basis materially consistent with the financial statements and books and records of the Company; there are no financial
statements (historical or pro forma) that are required to be included or incorporated by reference in the SEC Documents that are not included
or incorporated by reference as required; the Company does not have any material liabilities or obligations, direct or contingent (including
any off balance sheet obligations), not described in the SEC Documents (including the exhibits thereto and documents incorporated by reference
thereto), which are required to be described in the SEC Documents (including the exhibits thereto and documents incorporated by reference
thereto); and all disclosures contained or incorporated by reference in the SEC Documents, if any, regarding “non-GAAP financial
measures” (as such term is defined by the rules and regulations of the SEC) comply in all material respects with Regulation G of
the Exchange Act and Item 10 of Regulation S-K under the Securities Act, to the extent applicable. The
Company does not have pending before the SEC any request for confidential treatment of information.
(g) Absence
of Certain Changes; No Undisclosed Events, Liabilities or Developments; Solvency. Except as disclosed in the SEC Documents, since
December 31, 2022, (i) there has been no event, occurrence, or development that has had or that
could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or
otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice
and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings
made with the SEC, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend
or distribution of cash or other property to its stockholders or purchased, redeemed, or made any agreements to purchase or redeem any
shares of its capital stock, and (v) the Company has not issued any equity securities to any officer, director, or affiliate, except pursuant
to existing Company stock option plans and as may be issued and sold pursuant to this Agreement. Except for the issuance of the
Securities contemplated by this Agreement, no event, liability, fact, circumstance, occurrence, or development has occurred or exists
or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries or their respective businesses, prospects,
properties, operations, assets, or financial condition that would be required to be disclosed by the Company under applicable securities
laws at the time this representation is made or deemed made that has not been publicly disclosed at least one (1) Business Day prior to
the date that this representation is made. The Company has not taken any steps, and does not currently expect to take any steps,
to seek protection pursuant to any Bankruptcy Law nor does the Company or any of its Subsidiaries have any knowledge or reason to believe
that its creditors intend to initiate involuntary bankruptcy or insolvency proceedings. The Company is financially solvent and is generally
able to pay its debts as they become due.
(h) Absence
of Litigation. Except as disclosed in the SEC Documents, there is no action, suit, inquiry,
notice of violation, proceeding, or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company,
any Subsidiary, or any of their respective properties before or by any court, arbitrator, governmental, or administrative agency or regulatory
authority (federal, state, county, local, or foreign) (collectively, an “Action”), which (i) adversely affects or challenges
the legality, validity, or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable
decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any
director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or
state securities laws or a claim of breach of fiduciary duty, which would, if there were an unfavorable decision, have or reasonably be
expected to result in a Material Adverse Effect. There has not been, and to the knowledge of the Company, there is not pending or
contemplated, any investigation by the SEC involving the Company or any current or former director or officer of the Company. The
SEC has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.
(i) Acknowledgment
Regarding Investor’s Status. The Company acknowledges and agrees that the Investor is acting solely in the capacity of arm’s
length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby. The Company further acknowledges
that the Investor is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated hereby and thereby and any advice given by the Investor or any of its representatives or agents
in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to the Investor’s
purchase of the Securities. The Company further represents to the Investor that the Company’s decision to enter into the Transaction
Documents has been based solely on the independent evaluation by the Company and its representatives and advisors.
(j) No
General Solicitation; No Integrated Offering. Neither the Company, nor any of its affiliates, nor any Person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities
Act) in connection with the offer or sale of the Securities. Neither the Company, nor or any of its affiliates, nor any Person acting
on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under
circumstances that would require registration of the offer and sale of any of the Securities under the Securities Act, whether through
integration with prior offerings or otherwise, or cause this offering of the Securities to be integrated with prior offerings by the Company
in a manner that would require stockholder approval pursuant to the rules of the Principal Market on which any of the securities of the
Company are listed or designated. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the
Principal Market.
(k) Intellectual
Property Rights. The Company and the Subsidiaries have, or have rights to use, all patents,
patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses,
and other intellectual property rights and similar rights necessary or required for use in connection with their respective businesses
as described in the SEC Documents and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual
Property Rights”). None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that
any of, the Intellectual Property Rights has expired, terminated, or been abandoned, or is expected to expire or terminate or be abandoned,
within two (2) years from the date of this Agreement. Neither the Company nor any Subsidiary has received, since the date of the
latest audited financial statements included within the SEC Documents, a written notice of a claim or otherwise has any knowledge that
the Intellectual Property Rights violate or infringe upon the rights of any Person, except as could not have or reasonably be expected
to not have a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and
there is no existing infringement by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries
have taken reasonable security measures to protect the secrecy, confidentiality, and value of all of their intellectual properties, except
where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(l) Environmental
Laws. The Company and its Subsidiaries (i) are in compliance with all federal, state, local,
and foreign laws relating to pollution or protection of human health or the environment (including ambient air, surface water, groundwater,
land surface, or subsurface strata), including laws relating to emissions, discharges, releases, or threatened releases of chemicals,
pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the
environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling
of Hazardous Materials, as well as all authorizations, codes, decrees, demands, or demand letters, injunctions, judgments, licenses, notices,
or notice letters, orders, permits, plans, or regulations, issued, entered, promulgated, or approved thereunder (“Environmental
Laws”); (ii) have received all permits licenses or other approvals required of them under applicable Environmental Laws to conduct
their respective businesses; and (iii) are in compliance with all terms and conditions of any such permit, license, or approval where
in each clause (i), (ii), and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate,
a Material Adverse Effect.
(m) Title.
Except as set forth in the SEC Documents, the Company and its Subsidiaries have good and marketable title in fee simple to all real property
owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and
its Subsidiaries, in each case free and clear of all liens, encumbrances and defects (“Liens”) and, except for Liens
as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such
property by the Company and its Subsidiaries and Liens for the payment of federal, state, or other taxes, the payment of which is neither
delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and its Subsidiaries are held by
them under valid, subsisting, and enforceable leases with which the Company and its Subsidiaries are in compliance with such exceptions
as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its
Subsidiaries.
(n) Insurance.
The Company and its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which the Company and its Subsidiaries are engaged, including, but not limited
to, directors and officers insurance coverage. Neither the Company nor any Subsidiary has any reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business without a significant increase in cost.
(o) Regulatory
Permits. The Company and its Subsidiaries possess all certificates, authorizations, and permits issued by the appropriate federal,
state, local, or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Documents, except
where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (each, a “Material
Permit”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification
of any Material Permit. The disclosures in the SEC Documents concerning the effects of federal, state, local, and all foreign regulation
on the Company’s business as currently contemplated are correct in all material respects.
(p) Tax
Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material
Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state, and local income and all
foreign income and franchise tax returns, reports, and declarations required by any jurisdiction to which it is subject, (ii) has paid
all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports,
and declarations, and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods
subsequent to the periods to which such returns, reports, or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no basis for any such
claim. The provisions for taxes payable, if any, shown on the financial statements filed with or as part of the SEC Documents are sufficient
for all accrued and unpaid taxes, whether or not disputed, and for all periods to and including the dates of such consolidated financial
statements. The term “taxes” means all federal, state, local, foreign, and other net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, windfall profits, customs, duties, or other taxes, fees, assessments, or charges of any
kind whatsoever, together with any interest and any penalties, additions to tax, or additional amounts with respect thereto. The term
“returns” means all returns, declarations, reports, statements, and other documents required to be filed in respect
to taxes.
(q) Transactions
With Affiliates and Employees. Except as disclosed in the SEC Documents, none of the officers
or directors of the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary
is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers, and directors),
including any contract, agreement, or other arrangement providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments to or
from any officer, director, or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee, stockholder, member, or partner, in each case in excess of One
Hundred Twenty Thousand Dollars ($120,000) other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement
for expenses incurred on behalf of the Company, and (iii) other employee benefits, including stock option agreements under any stock option
plan of the Company.
(r) Application
of Takeover Protections. The Company and its Board of Directors have taken or will take prior to the Commencement Date all necessary
action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution
under a rights agreement), or other similar anti-takeover provision under the Certificate of Incorporation or the laws of the state of
its incorporation which is or could become applicable to the Investor as a result of the transactions contemplated by this Agreement,
including, without limitation, the Company’s issuance of the Securities and the Investor’s ownership of the Securities.
(s) Disclosure.
Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents that will be timely
publicly disclosed by the Company, the Company confirms that neither it nor any other Person authorized to act on its behalf has provided
the Investor or its agents or counsel with any information that it believes constitutes or might constitute material, non-public information
which is not otherwise disclosed in the Registration Statement or the SEC Documents. The Company understands and confirms that the Investor
will rely on the foregoing representation in effecting purchases and sales of securities of the Company. All of the disclosure
furnished by or on behalf of the Company by a Person authorized by the Company to the Investor regarding the Company, its business, and
the transactions contemplated hereby is true and correct and does not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not
misleading. The press releases disseminated by the Company during the twelve (12) months preceding the date of this Agreement taken as
a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading. The
Company acknowledges and agrees that the Investor neither makes nor has made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 3 hereof.
(t) Foreign
Corrupt Practices. Neither the Company nor any Subsidiary has, and to the Company’s Knowledge, no agent or other person acting
on behalf of the Company and each Subsidiary has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment,
or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government
officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully
any contribution made by the Company and each Subsidiary (or made by any person acting on behalf of the Company and each Subsidiary of
which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt
Practices Act of 1977, as amended (the “FCPA”). The Company has taken reasonable steps to ensure that its accounting
controls and procedures are sufficient to cause the Company to comply in all material respects with the FCPA.
(u) DTC
Eligibility. The Company, through the Transfer Agent, currently participates in the DTC Fast Automated Securities Transfer (FAST)
Program and the Common Stock can be transferred electronically to third parties via the DTC Fast Automated Securities Transfer (FAST)
Program.
(v) Sarbanes-Oxley
Act; Internal Controls. The Company and the Subsidiaries are in compliance in all material respects
with all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and all applicable rules
and regulations promulgated by the SEC thereunder that are effective as of the Closing Date. Except as disclosed in the SEC
Documents, the Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance
that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access
to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
The Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information required to be disclosed
by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the
time periods specified in the SEC’s rules and forms. The Company’s certifying officers have evaluated the effectiveness
of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of the period covered by the most recently
filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its
most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure
controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes
in the internal control over financial reporting (as such term is defined in the Exchange Act) of the Company and its Subsidiaries that
have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting of the Company
and its Subsidiaries.
(w) Certain
Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor, or
consultant, finder, placement agent, investment banker, bank, or other Person with respect to the transactions contemplated by the Transaction
Documents. The Investor shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section 4(w) that may be due in connection with the transactions contemplated by
the Transaction Documents.
(x) Investment
Company. Neither the Company or its Subsidiaries is or, after giving effect to the offering
and sale of the Securities to the Investor pursuant to this Agreement, will be, an “investment company” or an entity “controlled”
by an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended.
(y) Listing
and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock
pursuant to the Exchange Act nor has the Company received any notification that the SEC is currently contemplating terminating such registration.
The issued and outstanding shares of Common Stock are listed and posted for trading on the Principal Market, and the Company is in compliance
in all respects with the current listing requirements of the Principal Market; and the Securities will be listed and posted for trading
on the Principal Market at or prior to Commencement, with respect to the Commitment Shares, and prior to the time of sale to the Investor
pursuant to this Agreement, with respect to the Purchase Shares. Except as disclosed in the SEC Documents, the Company has not, in the
twelve (12) months preceding the date hereof, received any notice from any Person to the effect that the Company is not in compliance
with the listing or maintenance requirements of the Principal Market. Except as disclosed in the SEC Documents, the Company is, and has
no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.
(z) Accountants.
As of the Closing Date, the Company’s accounting firm is Armanino, LLP (the “Auditor”).
The Auditor has expressed its opinion with respect to the Company’s consolidated financial statements included in the 2022 Form
10-K filed by the Company with the SEC. To the knowledge and belief of the Company, such accounting firm is a registered public accounting
firm as required by the Exchange Act. The Auditor has not, during the periods covered by the financial statements included in the
2022 Form 10-K, provided to the Company any non-audit services, as such term is used in Section 10A(g) of the Exchange Act.
(aa) No Market Manipulation.
The Company has not, and to its knowledge no Person acting on its behalf has, (i) taken, directly or indirectly, any action designed
to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale
of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Securities,
or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company.
(bb) Shell Company Status.
The Company is not currently, and to its knowledge has never been, an issuer identified in Rule 144(i)(1) under the Securities Act.
(cc) Office
of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director, officer, agent,
employee, or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department.
(dd) U.S.
Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within the
meaning of Section 897 of the Internal Revenue Code of 1986, as amended.
(ee) Bank
Holding Company Act. Neither the Company nor any of its Subsidiaries or affiliates is subject to the Bank Holding Company Act of 1956,
as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal
Reserve”). Neither the Company nor any of its Subsidiaries or affiliates owns or controls, directly or indirectly, five
percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity
of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its
Subsidiaries or affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to
the BHCA and to regulation by the Federal Reserve.
(ff) Money
Laundering. The operations of the Company and its Subsidiaries are and have been
conducted at all times in compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions
Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively,
the “Money Laundering Laws”), and no Action or Proceeding by or before any court or governmental agency, authority,
or body or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge
of the Company or any Subsidiary, threatened. The term “Proceeding” means an action, claim, suit, investigation,
or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced
or threatened.
(gg) Labor Relations.
No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of
the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s
or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such
Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its
Subsidiaries believe that their relationships with their employees are good. To the knowledge of the Company, no executive officer
of the Company or any Subsidiary is, or is now expected to be, in violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement, or non-competition agreement, or any other contract or agreement or any restrictive covenant
in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries
to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S.
federal, state, local, and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment,
and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(hh)
Cybersecurity. (i)(x) To the Company’s knowledge, there has been no security breach or other compromise of or relating
to any of the Company’s or any Subsidiary’s information technology and computer systems, networks, hardware, software, data
(including the data of its respective customers, employees, suppliers, vendors, and any third party data maintained by or on behalf of
it), equipment or technology (collectively, “IT Systems and Data”) and (y) the Company and the Subsidiaries have not
been notified of, and has no knowledge of any event or condition that would reasonably be expected to result in, any security breach or
other compromise to its IT Systems and Data; (ii) the Company and the Subsidiaries are presently in compliance with all applicable laws
or statutes and all judgments, orders, rules, and regulations of any court or arbitrator or governmental or regulatory authority, internal
policies, and contractual obligations relating to the privacy and security of IT Systems and Data and to the protection of such IT Systems
and Data from unauthorized use, access, misappropriation, or modification, except as would not, individually or in the aggregate, have
a Material Adverse Effect; (iii) the Company and the Subsidiaries have implemented and maintained commercially reasonable safeguards to
maintain and protect its material confidential information and the integrity, continuous operation, redundancy, and security of all IT
Systems and Data; and (iv) the Company and the Subsidiaries have implemented backup and disaster recovery technology consistent with customary
industry standards and practices.
(ii) Stock
Option Plans. Each stock option granted by the Company under the Company’s stock option plan was granted (i) in accordance with
the terms of the Company’s stock option plan and (ii) with an exercise price at least equal to the fair market value of the Common
Stock on the date such stock option would be considered granted under GAAP and applicable law. No stock option granted under the Company’s
stock option plan has been backdated. The Company has not knowingly granted, and there is no and has been no Company policy or practice
to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public
announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.
(jj) Enforceability
of Material Agreements. Except as set forth in the SEC Documents, the descriptions in the SEC Documents of the material agreements
between the Company or any of its Subsidiaries, on the one hand, and any one or more third parties, on the other hand, therein described
present fairly in all material respects the information required to be shown, and there are no such material agreements of a character
required to be described in the SEC Documents or to be filed as exhibits thereto which are not described or filed as required; all
material agreements between the Company or any of its Subsidiaries, on the one hand, and any one or more third parties, on the other hand,
expressly referenced in the SEC Documents are legal, valid, and binding obligations of the Company or one or more of its Subsidiaries,
enforceable in accordance with their respective terms, except to the extent enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting creditors’ rights generally and by general equitable principles, and except where
the failure of any such material agreement to be enforceable in accordance with its terms would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(kk) FDA. As to
each product subject to the jurisdiction of the U.S. Food and Drug Administration (“FDA”) under the Federal Food, Drug
and Cosmetic Act, as amended, and the regulations thereunder (“FDCA”) that is manufactured, packaged, labeled, tested,
distributed, sold, and/or marketed by the Company or any of its Subsidiaries (each such product, a “Product”), such
Product is being manufactured, packaged, labeled, tested, distributed, sold, and/or marketed by the Company in compliance with all applicable
requirements under the FDCA and similar laws, rules, and regulations relating to registration, investigational use, premarket clearance,
licensure, or application approval, good manufacturing practices, good laboratory practices, good clinical practices, product listing,
quotas, labeling, advertising, record keeping, and filing of reports, except where the failure to be in compliance would not have a Material
Adverse Effect. There is no pending, completed or, to the Company’s knowledge, threatened, action (including any lawsuit, arbitration,
or legal or administrative or regulatory proceeding, charge, complaint, or investigation) against the Company or any of its Subsidiaries,
and none of the Company or any of its Subsidiaries has received any notice, warning letter, or other communication from the FDA or any
other governmental entity, which (i) contests the premarket clearance, licensure, registration, or approval of, the uses of, the distribution
of, the manufacturing or packaging of, the testing of, the sale of, or the labeling and promotion of any Product, (ii) withdraws its approval
of, requests the recall, suspension, or seizure of, or withdraws or orders the withdrawal of advertising or sales promotional materials
relating to, any Product, (iii) imposes a clinical hold on any clinical investigation by the Company or any of its Subsidiaries, (iv)
enjoins production at any facility of the Company or any of its Subsidiaries, (v) enters or proposes to enter into a consent decree of
permanent injunction with the Company or any of its Subsidiaries, or (vi) otherwise alleges any violation of any laws, rules, or regulations
by the Company or any of its Subsidiaries, and which, either individually or in the aggregate, would have a Material Adverse Effect. The
properties, business, and operations of the Company have been and are being conducted in all material respects in accordance with all
applicable laws, rules, and regulations of the FDA. The Company has not been informed by the FDA that the FDA will prohibit the
marketing, sale, license, or use in the United States of any product proposed to be developed, produced, or marketed by the Company nor
has the FDA expressed any concern as to approving or clearing for marketing any product being developed or proposed to be developed by
the Company.
(ll) Smaller Reporting
Company Status. As of the Closing Date, the Company was, and as of the Commencement Date, the Company believes in good faith that
it will be, a “smaller reporting company” as defined in Rule 12b-2 of the Exchange Act.
(mm) Emerging
Growth Company Status. As of the Closing Date the Company was, and as of the Commencement Date the Company will be, an “emerging
growth company” as defined in Section 2(a)(19) of the Securities Act, as modified by the Jumpstart Our Business Startups Act
of 2012.
(nn) No Disqualification
Events. None of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the
Company participating in the offering contemplated hereby, any beneficial owner of twenty percent (20%) or more of the Company’s
outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under
the Securities Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person”)
is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a
“Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3) under the Securities
Act. The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event.
(a) Filing
of Current Report and Registration Statement. The Company agrees that it shall, within the time required under the Exchange Act, file
with the SEC a report on Form 8-K relating to the transactions contemplated by, and describing the material terms and conditions of, the
Transaction Documents (the “Current Report”). The Company shall also file with the SEC, within twenty (20) Business
Days from the date hereof, a new registration statement (the “Registration Statement”) covering only the resale of
the Purchase Shares and all of the Commitment Shares, in accordance with the terms of the Registration Rights Agreement between the Company
and the Investor, dated as of the date hereof (the “Registration Rights Agreement”). The Company shall permit the Investor
to review and comment upon (1) the final pre-filing draft version of the Current Report at least two (2) Business Days prior to its
filing with the SEC, and the Company shall give due consideration to all such comments. The Investor shall use its reasonable best efforts
to comment upon the Current Report within one (1) Business Day from the date the Investor receives the final versions thereof from
the Company. The Investor shall cooperate with the Company as reasonably requested by the Company in connection with the preparation and
filing of the Current Report with the SEC.
(b) Blue
Sky. The Company shall take all such action, if any, as is reasonably necessary in order to obtain an exemption for or to register
or qualify (i) the issuance of the Commitment Shares and the sale of the Purchase Shares to the Investor under this Agreement and (ii)
any subsequent resale of all Commitment Shares and all Purchase Shares by the Investor, in each case, under applicable securities or “Blue
Sky” laws of the states of the United States in such states as is reasonably requested by the Investor from time to time, and shall
provide evidence of any such action so taken to the Investor.
(c) Listing/DTC.
The Company shall promptly secure the listing of all of the Purchase Shares and Commitment Shares to be issued to the Investor hereunder
on the Principal Market (subject to official notice of issuance) and upon each other national securities exchange or automated quotation
system, if any, upon which the Common Stock is then listed, and shall use commercially reasonable efforts to maintain, so long as any
shares of Common Stock shall be so listed, such listing of all such Securities from time to time issuable hereunder. The Company shall
use commercially reasonable efforts to maintain the listing of the Common Stock on the Principal Market and shall comply in all respects
with the Company’s reporting, filing and other obligations under the bylaws or rules and regulations of the Principal Market. Neither
the Company nor any of its Subsidiaries shall take any action that would reasonably be expected to result in the delisting or suspension
of the Common Stock on the Principal Market. The Company shall promptly, and in no event later than the following Business Day, provide
to the Investor copies of any notices it receives from any Person regarding the continued eligibility of the Common Stock for listing
on the Principal Market; provided, however, that the Company shall not be required to provide the Investor copies of any
such notice that the Company reasonably believes constitutes material non-public information and the Company would not be required to
publicly disclose such notice in any report or statement filed with the SEC and under the Exchange Act or the Securities Act. The Company
shall pay all fees and expenses in connection with satisfying its obligations under this Section 5(c). The Company shall take all
action necessary to ensure that its Common Stock can be transferred electronically as DWAC Shares.
(d) Prohibition
of Short Sales and Hedging Transactions. The Investor agrees that beginning on the date of this Agreement and ending on the date of
termination of this Agreement as provided in Section 11, the Investor and its agents, representatives, and affiliates shall not
in any manner whatsoever enter into or effect, directly or indirectly, any (i) “short sale” (as such term is defined in Rule
200 of Regulation SHO of the Exchange Act) of the Common Stock or (ii) hedging transaction, which establishes a net short position with
respect to the Common Stock.
(e) Issuance
of Commitment Shares. In consideration for the Investor’s execution and delivery of this Agreement, the Company shall cause
to be issued to the Investor a total of 989,087 shares of Common Stock (the “Commitment Shares”) immediately upon the
execution of this Agreement and shall deliver to the Transfer Agent the Irrevocable Transfer Agent Instructions with respect to the issuance
of such Commitment Shares. For the avoidance of doubt, all of the Commitment Shares shall be fully earned as of the date of this Agreement,
whether or not the Commencement shall occur or any Purchase Shares are purchased by the Investor under this Agreement and irrespective
of any subsequent termination of this Agreement.
(f) Due
Diligence; Non-Public Information. The Investor shall have the right, from time to time as the Investor may reasonably deem appropriate
and upon reasonable advance notice to the Company, to perform reasonable due diligence on the Company during normal business hours. The
Company and its officers and employees shall provide information and reasonably cooperate with the Investor in connection with any reasonable
request by the Investor related to the Investor’s due diligence of the Company. Each party hereto agrees not to disclose any Confidential
Information of the other party to any third party and shall not use the Confidential Information for any purpose other than in connection
with, or in furtherance of, the transactions contemplated hereby. Each party hereto acknowledges that the Confidential Information shall
remain the property of the disclosing party and agrees that it shall take all reasonable measures to protect the secrecy of any Confidential
Information disclosed by the other party. The Company confirms that neither it nor any other Person acting on its behalf shall provide
the Investor or its agents or counsel with any information that constitutes or might constitute material, non-public information, unless
a simultaneous public announcement thereof is made by the Company in the manner contemplated by Regulation FD. In the event of a breach
of the foregoing covenant by the Company or any Person acting on its behalf (as determined in the reasonable good faith judgment of the
Investor), in addition to any other remedy provided herein or in the other Transaction Documents, if the Investor is holding any Securities
at the time of the disclosure of material, non-public information, the Investor shall have the right to make a public disclosure, in the
form of a press release, public advertisement, or otherwise, of such material, non-public information without the prior approval by the
Company; provided the Investor shall have first provided notice to the Company that it believes it has received information that
constitutes material, non-public information, the Company shall have at least twenty-four (24) hours to publicly disclose such material,
non-public information prior to any such disclosure by the Investor, the Company shall have failed to demonstrate to the Investor in writing
within such time period that such information does not constitute material, non-public information, and the Company shall have failed
to publicly disclose such material, non-public information within such time period. The Investor shall not have any liability to the Company,
any of its Subsidiaries, or any of their respective directors, officers, employees, stockholders, or agents, for any such disclosure.
The Company understands and confirms that the Investor shall be relying on the foregoing covenants in effecting transactions in securities
of the Company.
(g) Purchase
Records. The Investor and the Company shall each maintain records showing the remaining Available Amount at any given time and the
dates and Purchase Amounts for each Regular Purchase, Accelerated Purchase, and Additional Accelerated Purchase or shall use such other
method, reasonably satisfactory to the Investor and the Company.
(h) Taxes.
The Company shall pay any and all transfer, stamp, or similar taxes that may be payable with respect to the issuance and delivery of any
shares of Common Stock to the Investor made under this Agreement.
(i) Use
of Proceeds. The Company will use the net proceeds from the offering as described in the Registration Statement or the SEC Documents.
(j) Other
Transactions. The Company shall not enter into, announce, or recommend to its stockholders any agreement, plan, arrangement, or transaction
in or of which the terms thereof would restrict, materially delay, conflict with, or impair the ability or right of the Company to perform
its obligations under the Transaction Documents, including, without limitation, the obligation of the Company to deliver the Purchase
Shares and the Commitment Shares to the Investor in accordance with the terms of the Transaction Documents.
(k) Integration.
From and after the date of this Agreement, neither the Company, nor or any of its affiliates will, and the Company shall use its reasonable
best efforts to ensure that no Person acting on their behalf will, directly or indirectly, make any offers or sales of any security or
solicit any offers to buy any security, under circumstances that would (i) require registration of the offer and sale by the Company to
the Investor of any of the Securities under the Securities Act, or (ii) cause this offering of the Securities by the Company to the Investor
to be integrated with other offerings by the Company in a manner that would require stockholder approval pursuant to the rules of the
Principal Market on which any of the securities of the Company are listed or designated, unless in the case of this clause (ii), stockholder
approval is obtained before the closing of such subsequent transaction in accordance with the rules of such Principal Market.
(l) Limitation
on Similar Transactions. From and after the date of this Agreement until the earlier of (i) the one hundred and eightieth (180th)
calendar day after the effective date of any termination of this Agreement under subsection (a), (b), (c) or (d) of Section 11 hereof
and (ii) the later of (A) the 24-month anniversary of the date of this Agreement and (B) the 24-month anniversary of the Commencement
Date (if the Commencement has occurred), irrespective of any earlier termination of this Agreement, the Company and its Subsidiaries shall
be prohibited from effecting or entering into an agreement to effect any issuance by the Company or any of its Subsidiaries of Common
Stock or Common Stock Equivalents (or any combination of units thereof) in any “equity line of credit”, “at-the-market
offering” or other similar offering in which the Company may offer, issue or sell Common Stock or Common Stock Equivalents (or any
combination of units thereof) at a future determined price, other than in connection with an Exempt Issuance. The Investor shall be entitled
to seek injunctive relief against the Company and its Subsidiaries to preclude any such issuance, which remedy shall be in addition to
any right to collect damages, without the necessity of showing economic loss and without any bond or other security being required. “Common
Stock Equivalents” means any securities of the Company or its Subsidiaries which entitle the holder thereof to acquire at any
time shares of Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that
is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, shares of Common
Stock. “Exempt Issuance” means the issuance of (a) any Securities issued or issuable to the Investor pursuant to this
Agreement, and any securities, including, without limitation, Common Stock or Common Stock Equivalents (or any combination of units thereof),
issued or issuable to the Investor or any affiliate of the Investor pursuant to any other existing agreement or arrangement between the
Company or any of its Subsidiaries, on the one hand, and the Investor or any of its affiliates, on the other hand, if any, (b) any securities
issued or issuable upon the exercise or exchange of or conversion of any shares of Common Stock or Common Stock Equivalents owned or held,
directly or indirectly, by the Investor or any of its affiliates or designees at any time, (c) any securities, including, without limitation,
Common Stock or Common Stock Equivalents (or any combination of units thereof), issuable to the Investor or any of its affiliates or designees
pursuant to any other future agreement or arrangement between the Investor or any of its affiliates or designees, on the one hand, and
the Company or any of its Subsidiaries, on the other hand, entered into after the date of this Agreement, if any, or (d) shares of Common
Stock issued pursuant to an “at-the-market offering” under Rule 415(a)(4) under the Securities Act by the Company exclusively
through one or more registered broker-dealer(s) acting as agent(s) of the Company pursuant to a written agreement between the Company
and such registered broker-dealer(s) only.
| 6. | TRANSFER AGENT INSTRUCTIONS. |
(a) On
the date of this Agreement, the Company shall issue irrevocable instructions to the Transfer Agent substantially in the form attached
hereto as Exhibit D to issue the Commitment Shares in accordance with the terms of this Agreement (the “Irrevocable Transfer
Agent Instructions”). The certificate(s) or book-entry statement(s) representing the Commitment Shares, except as set forth
below, shall bear the following restrictive legend (the “Restrictive Legend”):
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, UNLESS SOLD PURSUANT TO: (1) RULE 144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (2) AN OPINION OF HOLDER’S COUNSEL,
IN A CUSTOMARY FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS.”
(b) On
the earlier of (i) the Commencement Date and (ii) such time that the Investor shall request, provided all conditions of Rule 144 under
the Securities Act are met, the Company shall, no later than one (1) Business Day following the delivery by the Investor to the Company
or the Transfer Agent of one or more legended certificates or book-entry statements representing the Commitment Shares (which certificates
or book-entry statements the Investor shall promptly deliver on or prior to the first to occur of the events described in clauses (i)
and (ii) of this sentence), as directed by the Investor, issue and deliver (or cause to be issued and delivered) to the Investor, as requested
by the Investor, either: (A) a certificate or book-entry statement representing such Commitment Shares that is free from all restrictive
and other legends; or (B) a number of shares of Common Stock equal to the number of Commitment Shares represented by the certificate(s)
or book-entry statement(s) so delivered by the Investor as DWAC Shares. The Company shall take all actions to carry out the intent and
accomplish the purposes of the immediately preceding sentence, including, without limitation, delivering all such legal opinions, consents,
certificates, resolutions, and instructions to the Transfer Agent, and any successor transfer agent of the Company, as may be requested
from time to time by the Investor or necessary or desirable to carry out the intent and accomplish the purposes of the immediately preceding
sentence. On the Commencement Date, the Company shall issue to the Transfer Agent, and any subsequent transfer agent, (x) irrevocable
instructions in the form substantially similar to those used by the Investor in substantially similar transactions (the “Commencement
Irrevocable Transfer Agent Instructions”) and (y) the notice of effectiveness of the Registration Statement in the form attached
as an exhibit to the Registration Rights Agreement (the “Notice of Effectiveness of Registration Statement”), in each
case to issue the Commitment Shares and the Purchase Shares in accordance with the terms of this Agreement and the Registration Rights
Agreement. All Purchase Shares and Commitment Shares to be issued from and after Commencement to or for the benefit of the Investor pursuant
to this Agreement shall be issued only as DWAC Shares. The Company represents and warrants to the Investor that, while this Agreement
is effective, no instruction other than the Commencement Irrevocable Transfer Agent Instructions and the Notice of Effectiveness of Registration
Statement referred to in this Section 6(b) will be given by the Company to the Transfer Agent with respect to the Purchase Shares
or the Commitment Shares from and after Commencement, and the Purchase Shares and the Commitment Shares covered by the Registration Statement
shall otherwise be freely transferable on the books and records of the Company. If the Investor effects a sale, assignment, or transfer
of the Purchase Shares, the Company shall permit the transfer and shall promptly instruct the Transfer Agent (and any subsequent transfer
agent) to issue DWAC Shares in such name and in such denominations as specified by the Investor to effect such sale, transfer or assignment.
The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Investor. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations under this Section 6 will be inadequate and agrees,
in the event of a breach or threatened breach by the Company of the provisions of this Section 6, that the Investor shall be entitled,
in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without any bond or other security being required. The Company agrees that
if the Company fails to fully comply with the provisions of this Section 6(b) within five (5) Business Days of the Investor providing
the deliveries referred to above, the Company shall, at the Investor’s written instruction, purchase such shares of Common Stock
containing the Restrictive Legend from the Investor at the greater of the (i) purchase price paid for such shares of Common Stock (as
applicable) and (ii) the Closing Sale Price of the Common Stock on the date of the Investor’s written instruction.
| 7. | CONDITIONS TO THE COMPANY’S RIGHT TO COMMENCE SALES OF SHARES
OF COMMON STOCK. |
The right of the Company hereunder
to commence sales of the Purchase Shares on the Commencement Date is subject to the satisfaction of each of the following conditions:
(a) The Investor
shall have executed each of the Transaction Documents and delivered the same to the Company;
(b) The Registration
Statement covering the resale of the Purchase Shares and all of the Commitment Shares shall have been declared effective under the Securities
Act by the SEC, and no stop order with respect to the Registration Statement shall be pending or threatened by the SEC; and
(c) The representations
and warranties of the Investor shall be true and correct in all material respects as of the date hereof and as of the Commencement Date
as though made at that time.
| 8. | CONDITIONS TO THE INVESTOR’S OBLIGATION TO PURCHASE SHARES OF COMMON STOCK. |
The obligation of the Investor
to buy Purchase Shares under this Agreement is subject to the satisfaction of each of the following conditions on or prior to the Commencement
Date and, once such conditions have been initially satisfied, there shall not be any ongoing obligation to satisfy such conditions after
the Commencement has occurred:
(a) The
Company shall have executed each of the Transaction Documents and delivered the same to the Investor;
(b) The
Company shall have issued or caused to be issued to the Investor (i) one or more certificates or book-entry statements representing the
Commitment Shares free from all restrictive and other legends or (ii) a number of shares of Common Stock equal to the number of Commitment
Shares as DWAC Shares, in each case in accordance with Section 6(b);
(c) The
Common Stock shall be listed or quoted on the Principal Market, subject only to customary listing conditions, trading in the Common Stock
shall not have been within the last three hundred sixty-five (365) days suspended by the SEC, the Principal Market, and all Securities
to be issued by the Company to the Investor pursuant to this Agreement shall have been approved for listing or quotation on the Principal
Market in accordance with the applicable rules and regulations of the Principal Market, subject only to official notice of issuance and
any standard listing conditions for transactions of this nature;
(d) The
Investor shall have received the opinions and negative assurances of the Company’s legal counsel, dated as of the Commencement Date,
substantially in the forms heretofore agreed by the parties hereto;
(e) The
representations and warranties of the Company shall be true and correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in Section 4 above, in which case, the portion of such representations
and warranties so qualified shall be true and correct without further qualification) as of the date hereof and as of the Commencement
Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and
correct as of such date) and the Company shall have performed, satisfied, and complied with the covenants, agreements, and conditions
required by the Transaction Documents to be performed, satisfied, or complied with by the Company at or prior to the Commencement Date.
The Investor shall have received a certificate, executed by the Chief Executive Officer, President, or Chief Financial Officer of the
Company, dated as of the Commencement Date, to the foregoing effect in the form attached hereto as Exhibit A;
(f) The
Board of Directors of the Company shall have adopted resolutions in substantially the form attached hereto as Exhibit B which shall
be in full force and effect without any amendment or supplement thereto as of the Commencement Date;
(g) As
of the Commencement Date, the Company shall have reserved out of its authorized and unissued Common Stock, solely for the purpose of effecting
purchases of Purchase Shares hereunder, 5,000,000 shares of Common Stock;
(h) The
Commencement Irrevocable Transfer Agent Instructions and the Notice of Effectiveness of Registration Statement each shall have been delivered
to and acknowledged in writing by the Company and the Company’s Transfer Agent (or any successor transfer agent);
(i) The
Company shall have delivered to the Investor a certificate evidencing the incorporation and good standing of the Company in the State
of Delaware issued by the Secretary of State of the State of Delaware as of a date within ten (10) Business Days of the Commencement Date;
(j) The
Company shall have delivered to the Investor a certified copy of the Certificate of Incorporation as certified by the Secretary of State
of the State of Delaware within ten (10) Business Days of the Commencement Date;
(k) The
Company shall have delivered to the Investor a secretary’s certificate executed by the Secretary of the Company, dated as of the
Commencement Date, in the form attached hereto as Exhibit C;
(l) The
Registration Statement covering the resale of the Purchase Shares and all of the Commitment Shares shall have been declared effective
under the Securities Act by the SEC, and no stop order with respect to the Registration Statement shall be pending or threatened by the
SEC. The Company shall have prepared and filed with the SEC, not later than one (1) Business Day after the effective date of the Registration
Statement, a final and complete prospectus (the preliminary form of which shall be included in the Registration Statement) and shall have
delivered to the Investor a true and complete copy thereof. Such prospectus shall be current and available for the resale by the Investor
of all of the Securities covered thereby. The Current Report shall have been filed with the SEC as required pursuant to Section 5(a).
All reports, schedules, registrations, forms, statements, information and other documents required to have been filed by the Company with
the SEC at or prior to the Commencement Date pursuant to the reporting requirements of the Exchange Act shall have been filed with the
SEC within the applicable time periods prescribed for such filings under the Exchange Act;
(m) No
Suspension Event has occurred and is continuing, or any event which, after notice and/or lapse of time, would become a Suspension Event
has occurred and is continuing;
(n) All
federal, state, and local governmental laws, rules, and regulations applicable to the transactions contemplated by the Transaction Documents
and necessary for the execution, delivery, and performance of the Transaction Documents and the consummation of the transactions contemplated
thereby in accordance with the terms thereof shall have been complied with, and all consents, authorizations and orders of, and all filings
and registrations with, all federal, state, and local courts or governmental agencies and all federal, state, and local regulatory or
self-regulatory agencies necessary for the execution, delivery, and performance of the Transaction Documents and the consummation of the
transactions contemplated thereby in accordance with the terms thereof shall have been obtained or made, including, without limitation,
in each case those required under the Securities Act, the Exchange Act, applicable state securities, or “Blue Sky” laws or
applicable rules and regulations of the Principal Market, or otherwise required by the SEC, the Principal Market, or any state securities
regulators;
(o) No
statute, regulation, order, decree, writ, ruling, or injunction shall have been enacted, entered, promulgated, threatened, or endorsed
by any federal, state, or local court or governmental authority of competent jurisdiction which prohibits the consummation of or which
would materially modify or delay any of the transactions contemplated by the Transaction Documents; and
(p) No
action, suit, or proceeding before any federal, state, local, or foreign arbitrator or any court or governmental authority of competent
jurisdiction shall have been commenced or threatened, and no inquiry or investigation by any federal, state, local or foreign governmental
authority of competent jurisdiction shall have been commenced or threatened, against the Company, or any of the officers, directors, or
affiliates of the Company, seeking to restrain, prevent, or change the transactions contemplated by the Transaction Documents, or seeking
material damages in connection with such transactions.
In consideration of the Investor’s
execution and delivery of the Transaction Documents and acquiring the Securities hereunder and in addition to all of the Company’s
other obligations under the Transaction Documents, the Company shall defend, protect, indemnify, and hold harmless the Investor and all
of its affiliates, stockholders, members, officers, directors, employees, and direct or indirect investors and any of the foregoing Person’s
agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this
Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes of action, suits, claims,
losses, costs, penalties, fees, liabilities, and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee
is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements
(the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the Company in the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained
in the Transaction Documents or any other certificate, instrument, or document contemplated hereby or thereby, or (c) any cause of action,
suit, or claim brought or made against such Indemnitee and arising out of or resulting from the execution, delivery, performance, or enforcement
of the Transaction Documents or any other certificate, instrument, or document contemplated hereby or thereby, other than, in the case
of clause (c), with respect to Indemnified Liabilities which directly and primarily result from the fraud, gross negligence, or willful
misconduct of an Indemnitee. The indemnity in this Section 9 shall not apply to amounts paid in settlement of any claim if such
settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld, conditioned,
or delayed. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.
Payment under this indemnification shall be made within thirty (30) days from the date Investor makes written request for it. A certificate
containing reasonable detail as to the amount of such indemnification submitted to the Company by Investor shall be conclusive evidence,
absent manifest error, of the amount due from the Company to Investor. If any action shall be brought against any Indemnitee in respect
of which indemnity may be sought pursuant to this Agreement, such Indemnitee shall promptly notify the Company in writing, and the Company
shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Indemnitee. Any Indemnitee
shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Indemnitee, except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to
employ counsel, or (iii) in such action there is, in the reasonable opinion of such separate counsel, a material conflict on any
material issue between the position of the Company and the position of such Indemnitee, in which case the Company shall be responsible
for the reasonable fees and expenses of no more than one such separate counsel.
A “Suspension Event”
shall be deemed to have occurred at any time as any of the following events occurs:
(a) the
effectiveness of a registration statement registering the resale of the Securities lapses for any reason (including, without limitation,
the issuance of a stop order or similar order) or such registration statement (or the prospectus forming a part thereof) is unavailable
to the Investor for resale of any or all of the Securities to be issued to the Investor under the Transaction Documents, and such lapse
or unavailability continues for a period of ten (10) consecutive Business Days or for more than an aggregate of thirty (30) Business Days
in any three hundred sixty-five (365)-day period, but excluding a lapse or unavailability where (i) the Company terminates a registration
statement after the Investor has confirmed in writing that all of the Securities covered thereby have been resold or (ii) the Company
supersedes one registration statement with another registration statement, including (without limitation) by terminating a prior registration
statement when it is effectively replaced with a new registration statement covering Securities (provided in the case of this clause (ii)
that all of the Securities covered by the superseded (or terminated) registration statement that have not theretofore been resold are
included in the superseding (or new) registration statement);
(b) the
suspension of the Common Stock from trading on the Principal Market for a period of one (1) Business Day, provided that the Company may
not direct the Investor to purchase any shares of Common Stock during any such suspension;
(c) the
delisting of the Common Stock from The Nasdaq Capital Market (or any nationally recognized successor thereto), provided, however, that
the Common Stock is not immediately thereafter trading on The Nasdaq Global Market, The Nasdaq Global Select Market, the New York Stock
Exchange, the NYSE American, the NYSE Arca, or the OTCQX or OTCQB operated by the OTC Markets Group Inc. (or any nationally recognized
successors thereto);
(d) the
failure for any reason by the Transfer Agent to issue Purchase Shares to the Investor within two (2) Business Days after the Purchase
Date, Accelerated Purchase Date, or Additional Accelerated Purchase Date, as applicable, on which the Investor is entitled to receive
such Purchase Shares;
(e) the
Company breaches any representation, warranty, covenant, or other term or condition under any Transaction Document if such breach would
reasonably be expected to have a Material Adverse Effect and except, in the case of a breach of a covenant which is reasonably curable,
only if such breach continues for a period of at least five (5) Business Days;
(f) if
any Person commences a proceeding against the Company pursuant to or within the meaning of any Bankruptcy Law;
(g) if
the Company, pursuant to or within the meaning of any Bankruptcy Law, (i) commences a voluntary case, (ii) consents to the entry of an
order for relief against it in an involuntary case, (iii) consents to the appointment of a Custodian of it or for all or substantially
all of its property, or (iv) makes a general assignment for the benefit of its creditors or is generally unable to pay its debts as the
same become due;
(h) a
court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against the Company in an involuntary
case, (ii) appoints a Custodian of the Company or for all or substantially all of its property, or (iii) orders the liquidation of the
Company or any Subsidiary;
(i) if
at any time the Company is not eligible to transfer its Common Stock electronically as DWAC Shares; or
(j) if
at any time after the Commencement Date, the Exchange Cap is reached (to the extent such Exchange Cap is applicable pursuant to Section
2(e) hereof), and the stockholder approval referred to in Section 2(e)(i) has not been obtained in accordance with the applicable
rules of The Nasdaq Stock Market LLC.
In addition to any other rights and remedies under
applicable law and this Agreement, so long as a Suspension Event has occurred and is continuing, or if any event which, after notice and/or
lapse of time, would reasonably be expected to become a Suspension Event has occurred and is continuing, the Company shall not deliver
to the Investor any Regular Purchase Notice, Accelerated Purchase Notice, or Additional Accelerated Purchase Notice.
This Agreement may be terminated
only as follows:
(a) If
pursuant to or within the meaning of any Bankruptcy Law, the Company commences a voluntary case or any Person commences a proceeding against
the Company which is not discharged within ninety (90) days, a Custodian is appointed for the Company or for all or substantially all
of its property, or the Company makes a general assignment for the benefit of its creditors (any of which would be a Suspension Event
as described in Sections 10(f), 10(g), and 10(h) hereof), this Agreement shall automatically terminate without any
liability or payment to the Company (except as set forth below) without further action or notice by any Person.
(b) In
the event that (i) the Company fails to file the Registration Statement with the SEC within the period specified in Section 5(a)
hereof in accordance with the terms of the Registration Rights Agreement or (ii) the Commencement shall not have occurred on or before
October 31, 2023, due to the failure to satisfy the conditions set forth in Sections 7 and 8 above with respect to the Commencement,
then, in the case of clause (i) above, this Agreement may be terminated by the Investor at any time prior to the filing of the Registration
Statement and, in the case of clause (ii) above, this Agreement may be terminated by either party at the close of business on October
31, 2023 or thereafter, in each case without liability of such party to the other party (except as set forth below); provided, however,
that the right to terminate this Agreement under this Section 11(b) shall not be available to any party if such party is then in
breach of any covenant or agreement contained in this Agreement or any representation or warranty of such party contained in this Agreement
fails to be true and correct such that the conditions set forth in Section 7(c) or Section 8(e), as applicable, could not
then be satisfied.
(c)
At any time after the Commencement Date, the Company shall have the option to terminate this Agreement for any reason or for no reason
by delivering notice (a “Company Termination Notice”) to the Investor electing to terminate this Agreement without
any liability whatsoever of any party to any other party under this Agreement (except as set forth below). The Company Termination Notice
shall not be effective until one (1) Business Day after it has been received by the Investor.
(d) This
Agreement shall automatically terminate on the date that the Company sells and the Investor purchases the full Available Amount as provided
herein, without any action or notice on the part of any party and without any liability whatsoever of any party to any other party under
this Agreement (except as set forth below).
(e) If,
for any reason or for no reason, the full Available Amount has not been purchased in accordance with Section 2 of this Agreement
by the Maturity Date, this Agreement shall automatically terminate on the Maturity Date, without any action or notice on the part of any
party and without any liability whatsoever of any party to any other party under this Agreement (except as set forth below).
Except as set forth in Sections 11(a) (in
respect of a Suspension Event under Sections 10(f), 10(g), and 10(h)), 11(d), and 11(e), any termination of
this Agreement pursuant to this Section 11 shall be effected by written notice from the Company to the Investor, or the Investor
to the Company, as the case may be, setting forth the basis for the termination hereof. The representations and warranties and covenants
of the Company and the Investor contained in Sections 3, 4, 5, and 6 hereof, the indemnification provisions
set forth in Section 9 hereof and the agreements and covenants set forth in Sections 10, 11, and 12 shall
survive the execution and delivery of this Agreement and any termination of this Agreement. No termination of this Agreement shall (i)
affect the Company’s or the Investor’s rights or obligations under (A) this Agreement with respect to pending Regular Purchases,
Accelerated Purchases, or Additional Accelerated Purchases and the Company and the Investor shall complete their respective obligations
with respect to any pending Regular Purchases, Accelerated Purchases, and Additional Accelerated Purchases under this Agreement and (B)
the Registration Rights Agreement, which shall survive any such termination, or (ii) be deemed to release the Company or the Investor
from any liability for intentional misrepresentation or willful breach of any of the Transaction Documents.
(a) Governing
Law; Jurisdiction; Jury Trial. The corporate laws of the State of Delaware shall govern all issues concerning the relative rights
of the Company and its stockholders. All other questions concerning the construction, validity, enforcement, and interpretation of this
Agreement, the Registration Rights Agreement, and the other Transaction Documents shall be governed by the internal laws of the State
of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any
other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Illinois. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of Illinois, County of Cook, for
the adjudication of any dispute hereunder or under the other Transaction Documents or in connection herewith or therewith, or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action, or proceeding,
any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action, or proceeding is brought in
an inconvenient forum or that the venue of such suit, action, or proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action, or proceeding by mailing a copy thereof to such party
at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted
by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF
ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(b) Counterparts.
This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature
or signature delivered by e-mail in a “.pdf” format data file, including any electronic signature complying with the U.S.
federal ESIGN Act of 2000, e.g., www.docusign.com, www.echosign.adobe.com, etc., shall be considered due execution and shall be binding
upon the signatory thereto with the same force and effect as if the signature were an original signature.
(c) Headings.
The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.
(d) Severability.
If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any
provision of this Agreement in any other jurisdiction.
(e) Entire
Agreement. The Transaction Documents supersede all other prior oral or written agreements between the Investor, the Company, their
affiliates, and Persons acting on their behalf with respect to the subject matter thereof, and this Agreement, the other 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. The Company acknowledges and agrees that it has not relied on, in any manner whatsoever,
any representations or statements, written or oral, other than as expressly set forth in the Transaction Documents.
(f) Notices.
Any notices, consents or other communications required or permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt when delivered personally; (ii) upon receipt when sent by facsimile or email (provided
confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Business
Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the
same. The addresses for such communications shall be:
If to the Company:
|
Tenon Medical, Inc. |
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104 Cooper Court |
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Los Gatos, CA 95032 |
|
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Telephone: |
(408) 649-5760 |
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E-mail: |
sfoster@tenonmed.com |
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Attention: |
Steven M. Foster |
|
|
President and Chief Executive Officer |
With a copy to (which shall not constitute
notice or service of process):
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Carmel, Milazzo & Feil LLP |
|
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55 West 39th Street, 18th Floor |
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New York, NY 10018 |
|
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Telephone: |
(212) 658-0458 |
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Facsimile: |
(646) 838-1314 |
|
Attention: |
Ross D. Carmel, Esq. |
If to the Investor:
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Lincoln Park Capital Fund, LLC |
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440 North Wells, Suite 410 |
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Chicago, IL 60654 |
|
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Telephone: |
312-822-9300 |
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Facsimile: |
312-822-9301 |
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E-mail: |
jscheinfeld@lpcfunds.com/jcope@lpcfunds.com |
|
Attention: |
Josh Scheinfeld/Jonathan Cope |
With a copy to (which shall
not constitute notice or service of process):
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Reed Smith LLP |
|
|
599 Lexington Avenue |
|
|
New York, NY 10022 |
|
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Telephone: |
(212) 549-0285 |
|
Facsimile: |
(212) 521-5450 |
|
E-mail: |
amarsico@reedsmith.com |
|
Attention: |
Anthony J. Marsico, Esq. |
If to the Transfer Agent:
|
Vstock Transfer, LLC |
|
18 Lafayette Place |
|
|
Woodmere, NY 11598 |
|
|
Telephone: |
(212) 828-8436 |
|
Facsimile: |
(646) 536-3179 |
|
E-mail: |
shay@vstocktransfer.com |
|
Attention: |
Shay Galam |
or at such other address and/or facsimile number
and/or email address and/or to the attention of such other Person as the recipient party has specified by written notice given to each
other party three (3) Business Days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient
of such notice, consent, or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine
or email account containing the time, date, and recipient facsimile number or email address, as applicable, and an image of the first
page of such transmission, or (C) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal
service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii),
or (iii) above, respectively.
(g) Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns.
The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investor,
including by merger or consolidation. The Investor may not assign its rights or obligations under this Agreement.
(h) No
Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors
and assigns and, except as set forth in Section 9, is not for the benefit of, nor may any provision hereof be enforced by, any
other Person.
(i) Publicity.
The Company shall afford the Investor and its counsel with the opportunity to review and comment upon, shall consult with the Investor
and its counsel on the form and substance of, and shall give due consideration to all such comments from the Investor or its counsel on,
any press release, SEC filing, or any other public disclosure by or on behalf of the Company relating to the Investor, its purchases hereunder,
or any aspect of the Securities, the Transaction Documents, or the transactions contemplated thereby, not less than twenty-four (24) hours
prior to the issuance, filing, or public disclosure thereof. The Investor must be provided with a final version of any portion of such
press release, SEC filing, or other public disclosure relating to the Investor, its purchases hereunder, or any aspect of the Securities,
the Transaction Documents, or the transactions contemplated thereby at least twenty-four (24) hours prior to any release, issuance, filing,
or use by the Company thereof. The Company agrees and acknowledges that its failure to fully comply with this Section 12(i) shall
constitute a Material Adverse Effect.
(j) Further
Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments, and documents, as the other party may reasonably request in order to
consummate and make effective, as soon as reasonably possible, the Commencement, and to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
(k) No
Financial Advisor, Placement Agent, Broker or Finder. The Company represents and warrants to the Investor that it has not engaged
any financial advisor, placement agent, broker, or finder in connection with the transactions contemplated hereby. The Investor represents
and warrants to the Company that it has not engaged any financial advisor, placement agent, broker, or finder in connection with the transactions
contemplated hereby. The Company shall be responsible for the payment of any fees or commissions, if any, of any financial advisor, placement
agent, broker, or finder relating to or arising out of the transactions contemplated hereby. The Company shall pay, and hold the Investor
harmless against, any liability, loss, or expense (including, without limitation, reasonable attorneys’ fees and out of pocket expenses)
arising in connection with any such claim.
(l) No
Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their
mutual intent, and no rules of strict construction will be applied against any party. In addition, each and every reference to share prices
and shares of Common Stock in this Agreement shall be subject to adjustment as provided in this Agreement for reverse and forward stock
splits, stock dividends, stock combinations, and other similar transactions of the Common Stock that occur after the date of this Agreement.
(m) Remedies,
Other Obligations, Breaches and Injunctive Relief. The Investor’s remedies provided in this Agreement, including, without limitation,
the Investor’s remedies provided in Section 9, shall be cumulative and in addition to all other remedies available to the
Investor under this Agreement, at law or in equity (including a decree of specific performance and/or other injunctive relief), no remedy
of the Investor contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein
shall limit the Investor’s right to pursue actual damages for any failure by the Company to comply with the terms of this Agreement.
The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Investor 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 Investor shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity
of showing economic loss and without any bond or other security being required.
(n) Enforcement
Costs. If: (i) this Agreement is placed by the Investor in the hands of an attorney for enforcement or is enforced by the Investor
through any legal proceeding; (ii) an attorney is retained to represent the Investor in any bankruptcy, reorganization, receivership,
or other proceedings affecting creditors’ rights and involving a claim under this Agreement; or (iii) an attorney is retained to
represent the Investor in any other proceedings whatsoever in connection with this Agreement, then the Company shall pay to the Investor,
as incurred by the Investor, all reasonable costs and expenses including reasonable attorneys’ fees incurred in connection therewith,
in addition to all other amounts due hereunder.
(o) Amendment
and Waiver; Failure or Indulgence Not Waiver. No provision of this Agreement may be amended or waived by the parties from and after
the date that is one (1) Business Day immediately preceding the initial filing of the Registration Statement with the SEC. Subject to
the immediately preceding sentence, (i) no provision of this Agreement may be amended other than by a written instrument signed by both
parties hereto and (ii) no provision of this Agreement may be waived other than in a written instrument signed by the party against whom
enforcement of such waiver is sought. No failure or delay in the exercise of any power, right, or privilege hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such power, right, or privilege preclude other or further exercise thereof
or of any other right, power, or privilege.
** Signature Page Follows **
IN WITNESS WHEREOF, the Investor
and the Company have caused this Agreement to be duly executed as of the date first written above.
|
THE COMPANY: |
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|
|
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TENON MEDICAL, INC. |
|
|
|
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By: |
/s/
Steven M. Foster |
|
Name: |
Steven M. Foster |
|
Title: |
President and Chief Executive Officer |
|
|
|
|
INVESTOR: |
|
|
|
|
LINCOLN PARK CAPITAL FUND, LLC |
|
BY: |
LINCOLN PARK CAPITAL, LLC |
|
BY: |
ROCKLEDGE CAPITAL CORPORATION |
|
|
|
|
By: |
/s/
Joshua Scheinfeld |
|
Name: |
Joshua Scheinfeld |
|
Title: |
President |
EXHIBITS
Exhibit A |
Form of Officer’s Certificate |
Exhibit B |
Form of Resolutions of Board of Directors of the Company |
Exhibit C |
Form of Secretary’s Certificate |
Exhibit D |
Form of Letter to Transfer Agent |
EXHIBIT A
FORM OF OFFICER’S CERTIFICATE
This Officer’s Certificate
(“Certificate”) is being delivered pursuant to Section 8(e) of that certain Purchase Agreement dated as of July
24, 2023 (the “Purchase Agreement”), by and between TENON MEDICAL, INC., a Delaware corporation (the “Company”),
and LINCOLN PARK CAPITAL FUND, LLC (the “Investor”). Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Purchase Agreement.
The undersigned, ___________,
______________ of the Company, hereby certifies, on behalf of the Company and not in his individual capacity, as follows:
1. I
am the _____________ of the Company and make the statements contained in this Certificate;
2. The
representations and warranties of the Company are true and correct in all material respects (except to the extent that any of such representations
and warranties is already qualified as to materiality in Section 4 of the Purchase Agreement, in which case, such representations and
warranties are true and correct without further qualification) as of the date when made and as of the Commencement Date as though made
at that time (except for representations and warranties that speak as of a specific date, in which case such representations and warranties
are true and correct as of such date);
3. The
Company has performed, satisfied and complied in all material respects with covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by the Company at or prior to the Commencement Date.
4. The Company
has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any Bankruptcy Law nor does
the Company or any of its Subsidiaries have any knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy or insolvency proceedings. The Company is financially solvent and is generally able to pay its debts as they become
due.
IN WITNESS WHEREOF, I have
hereunder signed my name on this ___ day of ___________.
The undersigned as Secretary
of TENON MEDICAL, INC., a Delaware corporation, hereby certifies that ___________ is the duly elected, appointed, qualified and
acting ________ of TENON MEDICAL, INC. and that the signature appearing above is his genuine signature.
EXHIBIT B
FORM OF COMPANY RESOLUTIONS
FOR SIGNING PURCHASE AGREEMENT
UNANIMOUS WRITTEN CONSENT OF
TENON MEDICAL, INC.
In accordance with the corporate
laws of the state of Delaware, the undersigned, being all of the directors of Tenon Medical, Inc., a Delaware corporation (the “Corporation”),
do hereby consent to and adopt the following resolutions as the action of the Board of Directors of the Corporation (the “Board”)
for and on behalf of the Corporation and hereby direct that this Unanimous Written Consent (this “Consent”) be filed
with the minutes of the proceedings of the Board:
WHEREAS, there has been presented
to the Board a draft of the Purchase Agreement (the “Purchase Agreement”), by and between the Corporation and Lincoln
Park Capital Fund, LLC, an Illinois limited liability company (“Lincoln Park”), providing for the purchase by Lincoln
Park of up to Ten Million Dollars ($10,000,000) of the Corporation’s common stock, par value $0.001 per share (the “Common
Stock”), from time to time at the direction of the Corporation; and
WHEREAS, after careful consideration
of the Purchase Agreement, the documents incident thereto and other factors deemed relevant by the Board, the Board has determined that
it is advisable and in the best interests of the Corporation to engage in the transactions contemplated by the Purchase Agreement, including,
but not limited to, the issuance of 989,087 shares of Common Stock to Lincoln Park as a commitment fee (the “Commitment Shares”)
and the sale of shares of Common Stock to Lincoln Park up to the available amount under the Purchase Agreement (the “Purchase
Shares”).
Transaction Documents
NOW, THEREFORE, BE IT RESOLVED,
that the transactions described in the Purchase Agreement are hereby approved and ________________________________________ (the “Authorized
Officers”) are severally authorized to execute and deliver the Purchase Agreement, and any other agreements or documents contemplated
thereby including, without limitation, a registration rights agreement (the “Registration Rights Agreement”) providing
for the registration of the shares of the Common Stock issuable in respect of the Purchase Agreement on behalf of the Corporation, with
such amendments, changes, additions, and deletions as the Authorized Officers may deem to be appropriate and approve on behalf of, the
Corporation, such approval to be conclusively evidenced by the signature of an Authorized Officer thereon; and
FURTHER RESOLVED, that the
terms and provisions of the Registration Rights Agreement by and among the Corporation and Lincoln Park are hereby approved and the Authorized
Officers are authorized to execute and deliver the Registration Rights Agreement (pursuant to the terms of the Purchase Agreement), with
such amendments, changes, additions, and deletions as the Authorized Officer may deem appropriate and approve on behalf of, the Corporation,
such approval to be conclusively evidenced by the signature of an Authorized Officer thereon; and
FURTHER RESOLVED, that the
terms and provisions of the forms of Irrevocable Transfer Agent Instructions and Notice of Effectiveness of Registration Statement (collectively,
the “Instructions”) are hereby approved and the Authorized Officers are authorized to execute and deliver the Instructions
on behalf of the Corporation in accordance with the Purchase Agreement, with such amendments, changes, additions, and deletions as the
Authorized Officers may deem appropriate and approve on behalf of, the Corporation, such approval to be conclusively evidenced by the
signature of an Authorized Officer thereon; and
Execution of Purchase
Agreement
FURTHER RESOLVED, that the
Corporation be and it hereby is authorized to execute the Purchase Agreement providing for the purchase by Lincoln Park of up to Ten Million
Dollars ($10,000,000) of the Common Stock, from time to time at the direction of the Corporation; and
Issuance of Common Stock
FURTHER RESOLVED, that the
Corporation is hereby authorized to issue to Lincoln Park Capital Fund, LLC, 989,087 shares of Common Stock as Commitment Shares and that
upon issuance of the Commitment Shares pursuant to the Purchase Agreement the Commitment Shares shall be duly authorized, validly issued,
fully paid, and nonassessable with no personal liability attaching to the ownership thereof; and
FURTHER RESOLVED, that the
Corporation is hereby authorized to issue shares of Common Stock upon the purchase of Purchase Shares up to the Available Amount under
the Purchase Agreement in accordance with the terms of the Purchase Agreement and that, upon issuance of the Purchase Shares pursuant
to the Purchase Agreement, the Purchase Shares will be duly authorized, validly issued, fully paid, and nonassessable with no personal
liability attaching to the ownership thereof; and
FURTHER
RESOLVED, that the Corporation shall initially reserve 5,000,000 shares of Common Stock for issuance
as Purchase Shares under the Purchase Agreement.
Approval of Actions
FURTHER RESOLVED, that, without
limiting the foregoing, the Authorized Officers are, and each of them hereby is, authorized and directed to proceed on behalf of the Corporation
and to take all such steps as deemed necessary or appropriate, with the advice and assistance of counsel, to cause the Corporation to
consummate the agreements referred to herein and to perform its obligations under such agreements; and
FURTHER RESOLVED, that the
Authorized Officers be, and each of them hereby is, authorized, empowered, and directed on behalf of and in the name of the Corporation,
to take or cause to be taken all such further actions and to execute and deliver or cause to be executed and delivered all such further
agreements, amendments, documents, certificates, reports, schedules, applications, notices, letters, and undertakings and to incur and
pay all such fees and expenses as in their judgment shall be necessary, proper, or desirable to carry into effect the purpose and intent
of any and all of the foregoing resolutions, and that all actions heretofore taken by any officer or director of the Corporation in connection
with the transactions contemplated by the agreements described herein are hereby approved, ratified, and confirmed in all respects.
IN WITNESS WHEREOF, the Board has executed and
delivered this Consent effective as of __________, 2023.
_______________________________
_______________________________
_______________________________
being all of the directors of Tenon Medical, Inc.
EXHIBIT C
FORM OF SECRETARY’S CERTIFICATE
This Secretary’s Certificate
(“Certificate”) is being delivered pursuant to Section 8(k) of that certain Purchase Agreement dated as of July 24,
2023 (“Purchase Agreement”), by and between TENON MEDICAL, INC., a Delaware corporation (the “Company”),
and LINCOLN PARK CAPITAL FUND, LLC (the “Investor”), pursuant to which the Company may sell to the Investor up to Ten
Million Dollars ($10,000,000) of the Company’s common stock, par value $0.001 per share (the “Common Stock”). Capitalized
terms used herein and not otherwise defined shall have the meanings ascribed to them in the Purchase Agreement.
The undersigned, ____________, Assistant Secretary
of the Company, hereby certifies, on behalf of the Company and not in his individual capacity, as follows:
1. I
am the Secretary of the Company and make the statements contained in this Secretary’s Certificate.
2. Attached
hereto as Exhibit A and Exhibit B are true, correct and complete copies of the Company’s Bylaws (“Bylaws”)
and Amended and Restated Certificate of Incorporation (“Charter”), in each case, as amended through the date hereof, and no
action has been taken by the Company, its directors, officers or stockholders, in contemplation of the filing of any further amendment
relating to or affecting the Bylaws or Charter.
3. Attached
hereto as Exhibit C are true, correct and complete copies of the resolutions duly adopted by the Board of Directors of the Company
on _____________, at which a quorum was present and acting throughout. Such resolutions have not been amended, modified or rescinded and
remain in full force and effect and such resolutions are the only resolutions adopted by the Company’s Board of Directors, or any
committee thereof, or the stockholders of the Company relating to or affecting (i) the entering into and performance of the Purchase Agreement,
the Registration Rights Agreement and the other Transaction Documents, or the issuance, offering and sale of the Purchase Shares and the
Commitment Shares, and (ii) and the performance of the Company of its obligations under each of the Transaction Documents as contemplated
therein.
4. As
of the date hereof, the authorized, issued and reserved capital stock of the Company is as set forth on Exhibit D hereto.
IN WITNESS WHEREOF,
I have hereunder signed my name on this ___ day of ____________, 202__.
|
|
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[NAME] |
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Assistant Secretary |
The undersigned as ______________ of TENON
MEDICAL, INC., a Delaware corporation, hereby certifies that __________________ is the duly elected, appointed, qualified and acting
Secretary of TENON MEDICAL, INC., and that the signature appearing above is his genuine signature.
EXHIBIT D
FORM OF LETTER TO THE TRANSFER AGENT FOR THE
ISSUANCE OF THE COMMITMENT SHARES AT SIGNING OF THE PURCHASE AGREEMENT
[COMPANY LETTERHEAD]
[DATE]
Vstock Transfer, LLC
18 Lafayette Place
Woodmere, NY 11598
Attention:________________
Re: Issuance of Common Stock to Lincoln Park Capital Fund, LLC
Dear ___________,
On behalf of Tenon Medical, Inc., a Delaware corporation,
you are hereby instructed to issue as soon as possible a book-entry statement representing an aggregate of 989,087 shares
of our common stock, par value $0.001 per share, in the name of Lincoln Park Capital Fund, LLC. The book-entry statement
should be dated July 24, 2023. The book-entry statement should bear the following restrictive legend:
“THE SECURITIES REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, UNLESS SOLD PURSUANT TO:
(1) RULE 144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (2) AN OPINION OF HOLDER’S COUNSEL, IN A CUSTOMARY FORM, THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS.”
The book-entry statement should be sent as soon as possible via
overnight mail to the following address:
Lincoln Park Capital Fund, LLC
440 North Wells, Suite 410
Chicago, IL 60654
Attention: Josh Scheinfeld/Jonathan Cope
Thank you very much for your help. Please call me at ______________
if you have any questions or need anything further.
TENON MEDICAL, INC.
FORM OF COMPANY LEGAL COUNSEL OPINIONS
Capitalized terms used herein
but not defined herein, have the meaning set forth in that certain Purchase Agreement dated as of July 24, 2023 (the “Purchase
Agreement”), by and between Tenon Medical, Inc., a Delaware corporation (the “Company”), and Lincoln Park
Capital Fund, LLC, an Illinois limited liability company (“Lincoln Park”). The law covered by the opinions expressed
herein is limited to the laws of the State of Delaware. Based on the foregoing, and subject to the assumptions and qualifications set
forth herein, we are of the opinion that:
1. The
Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. The Company
is qualified to do business as a foreign corporation and is in good standing in the State of California.
2. The
Company has the corporate power to execute and deliver, and perform its obligations under the Purchase Agreement and the Registration
Rights Agreement. The Company has the corporate power to conduct its business and to own and use the properties owned and used by, it
in all material respects, as described in the Registration Statement and the Prospectus.
3. The
execution, delivery, and performance by the Company of the Purchase Agreement and the Registration Rights Agreement, the consummation
by the Company of the transactions contemplated thereby, including the offering, sale, and issuance of the Securities in accordance with
the terms and conditions of the Purchase Agreement, and fulfillment and compliance by the Company with each of its obligations thereunder
in accordance with the terms thereof, have been duly authorized and approved by the Company’s Board of Directors and no further
consent, approval, or authorization of the Company, its Board of Directors, or its stockholders is required.
4. Each of the Purchase Agreement
and the Registration Rights Agreement has been duly executed and delivered by the Company and constitutes the valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, or similar laws relating to, or affecting
creditor’s rights and remedies.
5. The
execution, delivery, and performance by the Company of each of the Purchase Agreement and the Registration Rights Agreement, the consummation
by the Company of the transactions contemplated thereby, including the offering, sale, and issuance of the Securities in accordance with
the terms and conditions of the Purchase Agreement, and fulfillment and compliance by the Company with each of its obligations thereunder
in accordance with the terms thereof, do not and will not: (i) conflict with or violate any provision of the Certificate of Incorporation
or the Bylaws, (ii) conflict with, constitute a breach of or default or an event which, with the giving of notice or lapse of time or
both, constitutes or could constitute a breach or a default under any material agreement, instrument, or document filed or incorporated
by reference as an exhibit to the Registration Statement, or as an exhibit to any of the SEC Documents that are incorporated by reference
in the Registration Statement and Prospectus (the “Material Agreements”), (iii) violate any statute, law, rule,
or regulation applicable to the Company or the transactions contemplated by the Purchase Agreement and the Registration Rights Agreement,
or (iv) violate any order, writ, injunction, or decree applicable to the Company.
6. The
Commitment Shares have been duly authorized by all necessary corporate action on the part of the Company and, when issued and delivered
by the Company pursuant to the Purchase Agreement, will be validly issued, fully paid, and non-assessable and free of any preemptive or
other similar rights arising under the Certificate of Incorporation, the Bylaws, the Delaware General Corporation Law, as amended (the
“DGCL”), or any of the Material Agreements. The Purchase Shares have been duly authorized by all necessary corporate
action on the part of the Company and, when issued, sold, and delivered by the Company pursuant to the Purchase Agreement against payment
therefor, will be validly issued, fully paid, and non-assessable and free of any preemptive or other similar rights arising under the
Certificate of Incorporation, the Bylaws, the DGCL or any of the Material Agreements.
7. As
of the date hereof, the authorized capital stock of the Company consists of [●] shares of common stock, par value $0.001 per share.
8. Assuming
the accuracy of your representations and warranties contained in the Purchase Agreement, the offering, sale, and issuance of the Securities
by the Company to you pursuant to the Purchase Agreement is exempt from registration under the Securities Act.
9. No
consent, approval, authorization, or other order of, or registration or filing under the DGCL, or with any California state or U.S. federal
court or other governmental or regulatory authority or agency, which is in such counsel’s experience customarily applicable to transactions
of the type contemplated by the Purchase Agreement and the Registration Rights Agreement is required for the Company’s execution,
delivery, and performance of the Purchase Agreement and the Registration Rights Agreement, or the consummation of the transactions contemplated
by the Purchase Agreement and the Registration Rights Agreement, other than such as previously have been obtained or made under the Securities
Act or the Exchange Act, and such approvals as have been obtained in connection with the listing of the Securities on the Principal Market,
or as may be required under applicable state securities or Blue Sky laws (as to which we expresses no opinion).
10. The Common Stock is registered
pursuant to Section 12(b) of the Exchange Act. To our knowledge, since one (1) year preceding the date of the Purchase Agreement and the
Registration Rights Agreement, the Company has been in compliance with the reporting requirements of the Exchange Act applicable to it.
11. The Company is not, and
after giving effect to the issuance and sale of the Securities under the Purchase Agreement and the application of the proceeds therefrom
as described in the Registration Statement and the Prospectus, will not be, an “investment company,” as that term is defined
in the Investment Company Act of 1940, as amended.
12. Except as disclosed in the
Registration Statement and the Prospectus, no person has the right, as a result of the filing or effectiveness of the Registration Statement,
pursuant to the terms of any of the Material Agreements, to have any securities issued by the Company and owned by such person registered
pursuant to the Securities Act and included in the Registration Statement or sold in the offering contemplated by the Purchase Agreement,
the Registration Rights Agreement, the Registration Statement, and the Prospectus, except for such rights as have been complied with or
waived.
13. The statements in the Registration
Statement and Prospectus under the caption “Description of Capital Stock,” insofar as such statements contain descriptions
of laws, rules, or regulations, and insofar as they describe the terms of agreements or the Certificate of Incorporation or Bylaws, are
correct in all material respects.
14. The Registration Statement
was declared effective under the Securities Act on [●], 2023, at [4:00 p.m., Eastern Time], based solely upon a review of the Notice
of Effectiveness of Registration Statement posted by the SEC on EDGAR. Based solely upon a review of the “Stop Orders” listed
on the SEC’s website at http://www.sec.gov/litigation/stoporders.shtml, no order suspending the effectiveness of the Registration
Statement has been issued, and no proceeding for that purpose or pursuant to Section 8A of the Securities Act against the Company or in
connection with the offering is pending or, to our knowledge, threatened by the SEC.
15. The Prospectus has been
filed with the SEC pursuant to Rule 424(b) under the Securities Act in the manner and within the time period required by such Rule 424(b).
16. The Registration Statement,
as of its effective date, and the Prospectus, as of its date and the date hereof, appear on their face to be appropriately responsive
in all material respects with the requirements of the Securities Act and the applicable rules and regulations thereunder and Form S-1
(except that, in each case, we express no opinion with respect to Regulation S-T or the financial statements, schedules, or other financial
data included therein, derived therefrom or omitted therefrom). Each of the reports, statements, schedules, and other documents filed
by the company with the SEC under the Exchange Act and incorporated by reference in the Registration Statement and the Prospectus (the
“Incorporated Documents”), when such Incorporated Document was filed with the SEC, complied as to the form in all material
respects with the requirements of the Exchange Act and the applicable rules and regulations thereunder.
17. We are not representing
the Company in any pending litigation in which it is a named defendant that challenges the validity or enforceability of, or seeks to
enjoin the performance of, the Purchase Agreement, the Registration Rights Agreement, or any of the other Transaction Documents.
[THE FOLLOWING MAY BE MADE IN
A SEPARATE NEGATIVE ASSURANCES LETTER]
Subject to the foregoing,
we confirm to you that, on the basis of the information we gained in the course of performing the services referred to above, nothing
has come to our attention that has caused us to believe that (1) the Registration Statement, as of its effective date, contained an untrue
statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein
not misleading, or (2) the Prospectus, as of its date or as of the date hereof, included or includes an untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under
which they were made, not misleading; it being understood that, in connection with clauses (1) and (2) above, we make no statement as
to any financial statements (including notes thereto) or financial schedules or other financial, accounting, or statistical data included,
or incorporated by reference, in, or omitted from, the Registration Statement or the Prospectus.
Exhibit 10.2
Execution Version
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT
(this “Agreement”), dated as of July 24, 2023, by and between TENON MEDICAL, INC., a Delaware corporation (the
“Company”), and LINCOLN PARK CAPITAL FUND, LLC, an Illinois limited liability company (together with it permitted
assigns, the “Buyer”). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings
set forth in the Purchase Agreement by and between the parties hereto, dated as of the date hereof (as amended, restated, supplemented
or otherwise modified from time to time, the “Purchase Agreement”).
WHEREAS:
A. Upon
the terms and subject to the conditions of the Purchase Agreement, (i) the Company has agreed to issue to the Investor, and the Investor
has agreed to purchase, up to Ten Million Dollars ($10,000,000) of the Company’s common stock, par value $0.001 per share (the “Common
Stock”), pursuant to the Purchase Agreement (such shares, the “Purchase Shares”), and (ii) the Company has
agreed to issue to the Investor such number of shares of Common Stock as consideration for its commitment to purchase shares of Common
Stock under the Purchase Agreement at such times and otherwise in accordance with the terms set forth in Section 5(e) of the Purchase
Agreement (collectively, the “Commitment Shares”); and
B. To
induce the Investor to enter into the Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities
Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the “Securities
Act”), and applicable state securities laws.
NOW, THEREFORE, in
consideration of the promises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and the Buyer hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the
following terms shall have the following meanings:
a. “Investor”
means the Buyer, any transferee or assignee thereof to whom a Buyer assigns its rights under this Agreement in accordance with Section
9 and who agrees to become bound by the provisions of this Agreement, and any transferee or assignee thereof to whom a transferee or assignee
assigns its rights under this Agreement in accordance with Section 9 and who agrees to become bound by the provisions of this Agreement.
b. “Person”
means any individual or entity including but not limited to any corporation, a limited liability company, an association, a partnership,
an organization, a business, an individual, a governmental or political subdivision thereof or a governmental agency.
c. “Register,”
“registered,” and “registration” refer to a registration effected by preparing and filing one or more
registration statements of the Company in compliance with the Securities Act and pursuant to Rule 415 under the Securities Act or any
successor rule providing for offering securities on a continuous basis (“Rule 415”), and the declaration or ordering
of effectiveness of such registration statement(s) by the United States Securities and Exchange Commission (the “SEC”).
d. “Registrable
Securities” means all of the Commitment Shares and all of the Purchase Shares, that may, from time to time, be issued or become
issuable to the Investor under the Purchase Agreement (without regard to any limitation or restriction on purchases), and any and all
shares of capital stock issued or issuable with respect to the Purchase Shares, the Commitment Shares or the Purchase Agreement as a result
of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise, without regard to any limitation on purchases
under the Purchase Agreement
e. “Registration
Statement” means one or more registration statements of the Company covering only the sale of the Registrable Securities.
2. REGISTRATION.
a. Mandatory
Registration. The Company shall, within twenty (20) Business Days after the date hereof, file with the SEC an initial Registration
Statement covering the maximum number of Registrable Securities, which shall include all of the Commitment Shares and such number of additional
Registrable Securities as shall be permitted to be included thereon in accordance with applicable SEC rules, regulations and interpretations
so as to permit the resale of such Registrable Securities by the Investor under Rule 415 under the Securities Act at then prevailing market
prices (and not fixed prices), as mutually determined by both the Company and the Investor in consultation with their respective legal
counsel. The initial Registration Statement shall register only the Registrable Securities. The Investor and its counsel shall have a
reasonable opportunity to review and comment upon such Registration Statement and any amendment or supplement to such Registration Statement
and any related prospectus prior to its filing with the SEC, and the Company shall give due consideration to all such comments. The Investor
shall furnish all information reasonably requested by the Company for inclusion therein. The Company shall use its best efforts to have
the Registration Statement and any amendment declared effective by the SEC at the earliest possible date. The Company shall use reasonable
best efforts to keep the Registration Statement effective pursuant to Rule 415 promulgated under the Securities Act and available for
the resale by the Investor of all of the Registrable Securities covered thereby at all times until the date on which the Investor shall
have resold all the Registrable Securities covered thereby and no Available Amount remains under the Purchase Agreement (the “Registration
Period”). The Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall
not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make
the statements therein, in light of the circumstances in which they were made, not misleading.
b. Rule
424 Prospectus. The Company shall, as required by applicable securities regulations, from time to time file with the SEC, pursuant
to Rule 424 promulgated under the Securities Act, the prospectus and prospectus supplements, if any, to be used in connection with sales
of the Registrable Securities under the Registration Statement. The Investor and its counsel shall have a reasonable opportunity to review
and comment upon such prospectus prior to its filing with the SEC, and the Company shall give due consideration to all such comments.
The Investor shall use its reasonable best efforts to comment upon such prospectus within one (1) Business Day from the date the Investor
receives the final pre-filing version of such prospectus.
c. Sufficient
Number of Shares Registered. In the event the number of shares available under the Registration Statement is insufficient to cover
all of the Registrable Securities, the Company shall amend the Registration Statement or file a new Registration Statement (a “New
Registration Statement”), so as to cover all of such Registrable Securities (subject to the limitations set forth in Section
2(a)) as soon as practicable, but in any event not later than ten (10) Business Days after the necessity therefor arises, subject to any
limits that may be imposed by the SEC pursuant to Rule 415 under the Securities Act. The Company shall use its reasonable best efforts
to cause such amendment and/or New Registration Statement to become effective as soon as practicable following the filing thereof.
d. Offering. If the staff
of the SEC (the “Staff”) or the SEC seeks to characterize any offering pursuant to a Registration Statement filed pursuant
to this Agreement as constituting an offering of securities that does not permit such Registration Statement to become effective and be
used for resales by the Investor under Rule 415 at then-prevailing market prices (and not fixed prices), or if after the filing of the
initial Registration Statement with the SEC pursuant to Section 2(a), the Company is otherwise required by the Staff or the SEC to reduce
the number of Registrable Securities included in such initial Registration Statement, then the Company shall reduce the number of Registrable
Securities to be included in such initial Registration Statement (after consulting with the Investor and its legal counsel as to the specific
Registrable Securities to be removed therefrom) until such time as the Staff and the SEC shall so permit such Registration Statement to
become effective and be used as aforesaid. In the event of any reduction in Registrable Securities pursuant to this paragraph, the Company
shall file one or more New Registration Statements in accordance with Section 2(c) until such time as all Registrable Securities have
been included in Registration Statements that have been declared effective and the prospectus contained therein is available for use by
the Investor. Notwithstanding any provision herein or in the Purchase Agreement to the contrary, the Company’s obligations to register
Registrable Securities (and any related conditions to the Investor’s obligations) shall be qualified as necessary to comport with
any requirement of the SEC or the Staff as addressed in this Section 2(d).
3. RELATED
OBLIGATIONS.
With respect to the Registration
Statement and whenever any Registrable Securities are to be registered pursuant to Section 2 including on any New Registration Statement,
the Company shall use its reasonable best efforts to effect the registration of the Registrable Securities in accordance with the intended
method of disposition thereof and, pursuant thereto, the Company shall have the following obligations:
a. The
Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to any registration
statement and the prospectus used in connection with such registration statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the Securities Act, as may be necessary to keep the Registration Statement or any New Registration Statement effective
at all times during the Registration Period, and, during such period, comply with the provisions of the Securities Act with respect to
the disposition of all Registrable Securities of the Company covered by the Registration Statement or any New Registration Statement until
such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by
the seller or sellers thereof as set forth in such Registration Statement.
b. The
Company shall permit the Investor to review and comment upon the Registration Statement or any New Registration Statement and all amendments
and supplements thereto at least two (2) Business Days prior to their filing with the SEC, and not file any such document in a form to
which Investor reasonably objects. The Investor shall use its reasonable best efforts to comment upon the Registration Statement or any
New Registration Statement and any amendments or supplements thereto within two (2) Business Days from the date the Investor receives
the final version thereof. The Company shall furnish to the Investor, without charge any correspondence from the SEC or the staff of the
SEC to the Company or its representatives relating to the Registration Statement or any New Registration Statement.
c. Upon
request of the Investor, the Company shall furnish to the Investor, (i) promptly after the same is prepared and filed with the SEC, at
least one (1) copy of such registration statement and any amendment(s) thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits, (ii) upon the effectiveness of any registration statement, a copy of the prospectus
included in such registration statement and all amendments and supplements thereto (or such other number of copies as the Investor may
reasonably request) and (iii) such other documents, including copies of any preliminary or final prospectus, as the Investor may reasonably
request from time to time in order to facilitate the disposition of the Registrable Securities owned by the Investor. For the avoidance
of doubt, any filing available to the Investor via the SEC’s live EDGAR system shall be deemed “furnished to the Investor”
hereunder.
d. The
Company shall use reasonable best efforts to (i) register and qualify the Registrable Securities covered by a registration statement under
such other securities or “blue sky” laws of such jurisdictions in the United States as the Investor reasonably requests, (ii)
prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions
as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided,
however, that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), (y) subject itself to general taxation in
any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify
the Investor who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction
in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.
e. As
promptly as practicable after becoming aware of such event or facts, the Company shall notify the Investor in writing of the happening
of any event or existence of such facts as a result of which the prospectus included in any registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading, and promptly prepare a supplement or amendment
to such registration statement to correct such untrue statement or omission, and deliver a copy of such supplement or amendment to the
Investor (or such other number of copies as the Investor may reasonably request). The Company shall also promptly notify the Investor
in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a registration statement
or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to the Investor by email or
facsimile on the same day of such effectiveness and by overnight mail), (ii) of any request by the SEC for amendments or supplements to
any registration statement or related prospectus or related information, and (iii) of the Company’s reasonable determination that a post-effective
amendment to a registration statement would be appropriate.
f. The
Company shall use its reasonable best efforts to prevent the issuance of any stop order or other suspension of effectiveness of any registration
statement, or the suspension of the qualification of any Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify the Investor
of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.
g. The
Company shall (i) cause all the Registrable Securities to be listed on each securities exchange on which securities of the same class
or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules
of such exchange, or (ii) secure designation and quotation of all the Registrable Securities on the Principal Market. The Company shall
pay all fees and expenses in connection with satisfying its obligation under this Section.
h. The
Company shall cooperate with the Investor to facilitate the timely preparation and delivery of certificates (not bearing any restrictive
legend) representing the Registrable Securities to be offered pursuant to any registration statement and enable such certificates to be
in such denominations or amounts as the Investor may reasonably request and registered in such names as the Investor may request.
i. The
Company shall at all times provide a transfer agent and registrar with respect to its Common Stock.
j. If
reasonably requested by the Investor, the Company shall (i) immediately incorporate in a prospectus supplement or post-effective amendment
such information as the Investor believes should be included therein relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the number of Registrable Securities being sold, the purchase price being paid
therefor and any other terms of the offering of the Registrable Securities; (ii) make all required filings of such prospectus supplement
or post-effective amendment as soon as practicable upon notification of the matters to be incorporated in such prospectus supplement or
post-effective amendment; and (iii) supplement or make amendments to any Registration Statement or New Registration Statement.
k. The
Company shall use its reasonable best efforts to cause the Registrable Securities covered by any registration statement to be registered
with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable
Securities.
l. Within
one (1) Business Day after any registration statement which includes the Registrable Securities is declared effective by the SEC, the
Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities
(with copies to the Investor) confirmation that such registration statement has been declared effective by the SEC in the form attached
hereto as Exhibit A. Thereafter, if requested by the Buyer at any time, the Company shall require its counsel to deliver to the
Buyer a written confirmation whether or not the effectiveness of such registration statement has lapsed at any time for any reason (including,
without limitation, the issuance of a stop order) and whether or not the registration statement is current and available to the Buyer
for sale of all of the Registrable Securities.
m. The
Company shall take all other reasonable actions necessary to expedite and facilitate disposition by the Investor of Registrable Securities
pursuant to any registration statement.
4. OBLIGATIONS
OF THE INVESTOR.
a. The
Company shall notify the Investor in writing of the information the Company reasonably requires from the Investor in connection with any
registration statement hereunder. The Investor shall promptly furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required
to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the
Company may reasonably request.
b. The
Investor agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of
any registration statement hereunder.
c. The
Investor agrees that, upon receipt of any notice from the Company of the happening of any event or existence of facts of the kind described
in Section 3(f) or the first sentence of Section 3(e), the Investor will immediately discontinue disposition of Registrable Securities
pursuant to any registration statement(s) covering such Registrable Securities until the Investor’s receipt of the copies of the supplemented
or amended prospectus contemplated by Section 3(f) or the first sentence of Section 3(e). Notwithstanding anything to the contrary, the
Company shall cause its transfer agent to promptly deliver shares of Common Stock without any restrictive legend in accordance with the
terms of the Purchase Agreement in connection with any sale of Registrable Securities with respect to which an Investor has entered into
a contract for sale prior to the Investor’s receipt of a notice from the Company of the happening of any event of the kind described in
Section 3(f) or the first sentence of Section 3(e) and for which the Investor has not yet settled.
5. EXPENSES
OF REGISTRATION.
All reasonable expenses, other
than sales or brokerage commissions, incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3,
including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, and fees and disbursements
of counsel for the Company, shall be paid by the Company.
6. INDEMNIFICATION.
a. To
the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend the Investor, each Person,
if any, who controls the Investor, the members, the directors, officers, partners, employees, agents, representatives of the Investor
and each Person, if any, who controls the Investor within the meaning of the Securities Act or the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) (each, an “Indemnified Person”), against any losses, claims, damages, liabilities,
judgments, fines, penalties, charges, costs, attorneys’ fees, amounts paid in settlement or expenses, joint or several, (collectively,
“Claims”) incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation
or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC,
whether pending or threatened, whether or not an indemnified party is or may be a party thereto (“Indemnified Damages”),
to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in the Registration Statement,
any New Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the
offering under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered (“Blue
Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in the final
prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission
or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under
which the statements therein were made, not misleading, (iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating
to the offer or sale of the Registrable Securities pursuant to the Registration Statement or any New Registration Statement or (iv) any
material violation by the Company of this Agreement (the matters in the foregoing clauses (i) through (iv) being, collectively, “Violations”).
The Company shall reimburse each Indemnified Person promptly as such expenses are incurred and are due and payable, for any reasonable
legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim
by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with information about
the Investor furnished in writing to the Company by such Indemnified Person expressly for use in connection with the preparation of the
Registration Statement, any New Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely
made available by the Company pursuant to Section 3(c) or Section 3(e); (ii) with respect to any superseded prospectus, shall not inure
to the benefit of any such person from whom the person asserting any such Claim purchased the Registrable Securities that are the subject
thereof (or to the benefit of any person controlling such person) if the untrue statement or omission of material fact contained in the
superseded prospectus was corrected in the revised prospectus, as then amended or supplemented, if such revised prospectus was timely
made available by the Company pursuant to Section 3(c) or Section 3(e), and the Indemnified Person was promptly advised in writing not
to use the incorrect prospectus prior to the use giving rise to a violation and such Indemnified Person, notwithstanding such advice,
used it; (iii) shall not be available to the extent such Claim is based on a failure of the Investor to deliver or to cause to be delivered
the prospectus made available by the Company, if such prospectus was timely made available by the Company pursuant to Section 3(c) or
Section 3(e); and (iv) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the
Investor pursuant to Section 9.
b. In
connection with the Registration Statement or any New Registration Statement, the Investor agrees to indemnify, hold harmless and defend,
to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors, each of its officers who
signs the Registration Statement or any New Registration Statement, each Person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act (collectively and together with an Indemnified Person, an “Indemnified Party”),
against any Claim or Indemnified Damages to which any of them may become subject, under the Securities Act, the Exchange Act or otherwise,
insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the extent, and only to the
extent, that such Violation occurs in reliance upon and in conformity with written information about the Investor set forth on Exhibit
B attached hereto and furnished to the Company by the Investor expressly for use in connection with such registration statement; and,
subject to Section 6(d), the Investor will reimburse any legal or other expenses reasonably incurred by them in connection with investigating
or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 6(b) and the agreement with respect
to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of the Investor, which consent shall not be unreasonably withheld; provided, further, however, that the Investor
shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to
the Investor as a result of the sale of Registrable Securities pursuant to such registration statement. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of
the Registrable Securities by the Investor pursuant to Section 9.
c. Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party
so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually
satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that
an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses to be paid by the
indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of
the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests
between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding. The Indemnified
Party or Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such
action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified
Party or Indemnified Person which relates to such action or claim. The indemnifying party shall keep the Indemnified Party or Indemnified
Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying
party shall be liable for any settlement of any action, claim or proceeding effected without its written consent, provided, however, that
the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the consent
of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which
does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person
of a release from all liability in respect to such claim or litigation. Following indemnification as provided for hereunder, the indemnifying
party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within
a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified
Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend
such action.
d. The
indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.
e. The
indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.
7. CONTRIBUTION.
To the extent any indemnification
by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation; and
(ii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.
8. REPORTS
AND DISCLOSURE UNDER THE SECURITIES ACT.
With a view to making available
to the Investor the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the SEC that
may at any time permit the Investor to sell securities of the Company to the public without registration (“Rule 144”),
the Company agrees, at the Company’s sole expense, to:
a. make
and keep public information available, as those terms are understood and defined in Rule 144;
b. file
with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act
so long as the Company remains subject to such requirements and the filing of such reports and other documents is required for the applicable
provisions of Rule 144;
c. furnish
to the Investor so long as the Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting and or disclosure provisions of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the
most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the Investor to sell such securities pursuant to Rule 144 without registration; and
d. take
such additional action as is requested by the Investor to enable the Investor to sell the Registrable Securities pursuant to Rule 144,
including, without limitation, delivering all such legal opinions, consents, certificates, resolutions and instructions to the Company’s
Transfer Agent as may be requested from time to time by the Investor and otherwise fully cooperate with Investor and Investor’s
broker to effect such sale of securities pursuant to Rule 144.
The Company agrees that damages
may be an inadequate remedy for any breach of the terms and provisions of this Section 8 and that Investor shall, whether or not it is
pursuing any remedies at law, be entitled to equitable relief in the form of a preliminary or permanent injunctions, without having to
post any bond or other security, upon any breach or threatened breach of any such terms or provisions.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The Company shall not assign
this Agreement or any rights or obligations hereunder without the prior written consent of the Investor. The Investor may not assign its
rights under this Agreement without the prior written consent of the Company, other than to an affiliate of the Investor controlled by
Jonathan Cope or Joshua Scheinfeld, in which case the assignee must agree in writing to be bound by the terms and conditions of this Agreement.
10. AMENDMENT
OF REGISTRATION RIGHTS.
No provision of this Agreement
may be amended or waived by the parties from and after the date that is one (1) Business Day immediately preceding the initial filing
of the Registration Statement with the SEC. Subject to the immediately preceding sentence, no provision of this Agreement may be (i) amended
other than by a written instrument signed by both parties hereto or (ii) waived other than in a written instrument signed by the party
against whom enforcement of such waiver is sought. Failure of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.
11. MISCELLANEOUS.
a. A
Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities.
If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities,
the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities.
b. Any
notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile or email
(provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one
(1) Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses, email addresses and facsimile numbers for such communications shall be:
If to the Company:
|
Tenon Medical, Inc. |
|
|
104 Cooper Court |
|
|
Los Gatos, CA 95032 |
|
|
Telephone: |
(408) 649-5760 |
|
E-mail: |
Sfoster@tenonmed.com |
|
Attention: |
Steven M. Foster |
|
|
President and Chief Executive Officer |
With a copy to (which shall not constitute
notice or service of process):
|
Carmel, Milazzo & Feil LLP |
|
|
55 West 39th Street, 18th Floor |
|
|
New York, NY 10018 |
|
|
Telephone: |
(212) 658-0458 |
|
Facsimile: |
(646) 838-1314 |
|
Attention: |
Ross D. Carmel, Esq. |
If to the Investor:
|
Lincoln Park Capital Fund, LLC |
|
|
440 North Wells, Suite 410 |
|
|
Chicago, IL 60654 |
|
|
Telephone: |
312-822-9300 |
|
Facsimile: |
312-822-9301 |
|
E-mail: |
jscheinfeld@lpcfunds.com/jcope@lpcfunds.com |
|
Attention: |
Josh Scheinfeld/Jonathan Cope |
With a copy to (which shall
not constitute notice or service of process):
|
Reed Smith LLP |
|
|
599 Lexington Avenue |
|
|
New York, NY 10022 |
|
|
Telephone: |
(212) 549-0285 |
|
Facsimile: |
(212) 521-5450 |
|
E-mail: |
amarsico@reedsmith.com |
|
Attention: |
Anthony J. Marsico, Esq. |
or at such other address and/or facsimile number
and/or to the attention of such other person as the recipient party has specified by written notice given to each other party three (3)
Business Days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine or email account containing
the time, date, recipient facsimile number or email address, as applicable, and an image of the first page of such transmission or (C)
provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.
c. The
corporate laws of the State of Delaware shall govern all issues concerning the relative rights of the Company and its stockholders. All
other questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal
laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of
Illinois or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Illinois.
Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting the State of Illinois, County
of Cook, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue
of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability
of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other
jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
d. This
Agreement and the Purchase Agreement constitute the entire agreement among the parties hereto with respect to the subject matter hereof
and thereof. There are no restrictions, promises, warranties or undertakings among the parties hereto, other than those set forth or referred
to herein and therein. This Agreement and the Purchase Agreement supersede all prior agreements and understandings among the parties hereto
with respect to the subject matter hereof and thereof.
e. This
Agreement is intended for the benefit of the parties hereto and, subject to the requirements of Section 9, their permitted successors
and assigns and, except as set forth in Sections 6 and 9, is not for the benefit of, nor may any provision hereof be enforced by, any
other Person.
f. The
headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
g. This
Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature
or signature delivered by e-mail in a “.pdf” format data file, including any electronic signature complying with the U.S.
federal ESIGN Act of 2000, e.g., www.docusign.com, www.echosign.adobe.com, etc., shall be considered due execution and shall be binding
upon the signatory thereto with the same force and effect as if the signature were an original signature.
h. 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 Agreement and the consummation of the transactions contemplated hereby.
i. The
language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of
strict construction will be applied against any party.
* * * * * *
IN WITNESS WHEREOF,
the parties have caused this Registration Rights Agreement to be duly executed as of day and year first above written.
|
THE
COMPANY: |
|
|
|
TENON MEDICAL, INC. |
|
|
|
By: |
/s/ Steven M. Foster |
|
Name: |
Steven M. Foster |
|
Title: |
President and Chief Executive Officer |
|
|
|
INVESTOR: |
|
|
|
LINCOLN PARK CAPITAL FUND, LLC |
|
BY: |
LINCOLN PARK CAPITAL, LLC |
|
BY: |
ROCKLEDGE CAPITAL CORPORATION |
|
|
|
By: |
/s/ Joshua Scheinfeld |
|
Name: |
Joshua Scheinfeld |
|
Title: |
President |
EXHIBIT A
TO REGISTRATION RIGHTS
AGREEMENT
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[Date]
Vstock Transfer, LLC
18 Lafayette Place
Woodmere, NY 11598
Attention:_____________
Re: Tenon Medical, Inc.
Ladies and Gentlemen:
We are counsel to Tenon Medical,
Inc., a Delaware corporation (the “Company”), and have represented the Company in connection with that certain Purchase
Agreement, dated as of July 24, 2023 (the “Purchase Agreement”), entered into by and between the Company and Lincoln
Park Capital Fund, LLC (the “Buyer”), pursuant to which the Company has issued to the Buyer an aggregate of [_______________]
shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), as payment of a commitment fee
for its commitment to purchase shares of Common Stock under the Purchase Agreement, and may in the future issue to the Buyer up to Ten
Million Dollars ($10,000,000) of Common Stock from time to time at the direction of the Company, upon the terms and subject to the conditions
set forth in the Purchase Agreement. In connection with the transactions contemplated by the Purchase Agreement, the Company has registered
with the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “Securities
Act”), for resale by the Buyer [____________] shares of Common Stock, consisting of:
| (1) | 989,087 shares of Common Stock that have been issued to the Buyer upon execution of the Purchase Agreement
as payment of a commitment fee (the “Commitment Shares”); and |
| (2) | [____________] shares of Common Stock to be issued to the Buyer upon purchase by the Buyer from the Company
at the Company’s direction from time to time in accordance with the terms of the Purchase Agreement (the “Purchase Shares”). |
Pursuant to the Purchase
Agreement, the Company also has entered into a Registration Rights Agreement, dated as of July 24, 2023, with the Buyer (the “Registration
Rights Agreement”) pursuant to which the Company agreed, among other things, to register the under the Securities Act the Purchase
Shares and the Commitment Shares for resale by the Buyer. In connection with the Company’s obligations under the Purchase Agreement and
the Registration Rights Agreement, on [_________], 2023, the Company filed a Registration Statement on Form S-1 (File No. 333-[_________])
(the “Registration Statement”) with the SEC for the purpose of registering under the Securities Act the resale of the
Purchase Shares and the Commitment Shares by the Buyer.
In connection with the foregoing,
we advise you that the SEC has entered an order declaring the Registration Statement effective under the Securities Act at [_____] [A.M./P.M.]
on [__________], 202[_] and we have no knowledge, after review of the stop order notification website maintained by the SEC, that any
stop order suspending its effectiveness has been issued or that any proceedings for that purpose are pending before, or threatened by,
the SEC. Therefore, you may issue the Purchase Shares and the Commitment Shares in accordance with instructions from the Company from
time to time without any restrictive legend or stop transfer orders maintained against them.
|
Very truly yours, |
|
[Company Counsel] |
|
|
|
By: |
|
cc: | Lincoln Park Capital Fund, LLC |
EXHIBIT B
TO REGISTRATION RIGHTS AGREEMENT
Information About The Investor Furnished To
The Company By The Investor
Expressly For Use In Connection With The Registration
Statement
Information With Respect to Lincoln Park Capital
As of the date of the Purchase Agreement, Lincoln
Park Capital Fund, LLC, beneficially owned 989,087 shares of our common stock. Josh Scheinfeld and Jonathan Cope, the Managing Members
of Lincoln Park Capital, LLC, the manager of Lincoln Park Capital Fund, LLC, are deemed to be beneficial owners of all of the shares of
common stock owned by Lincoln Park Capital Fund, LLC. Messrs. Cope and Scheinfeld have shared voting and investment power over the shares
being offered under the prospectus filed with the SEC in connection with the transactions contemplated under the Purchase Agreement. Neither
Lincoln Park Capital, LLC nor Lincoln Park Capital Fund, LLC is a registered broker-dealer or an affiliate of a registered broker-dealer.
v3.23.2
Cover
|
Jul. 24, 2023 |
Document Type |
8-K
|
Amendment Flag |
false
|
Document Period End Date |
Jul. 24, 2023
|
Entity File Number |
001-41364
|
Entity Registrant Name |
TENON MEDICAL, INC.
|
Entity Central Index Key |
0001560293
|
Entity Tax Identification Number |
45-5574718
|
Entity Incorporation, State or Country Code |
DE
|
Entity Address, Address Line One |
104 Cooper Court
|
Entity Address, City or Town |
Los
Gatos
|
Entity Address, State or Province |
CA
|
Entity Address, Postal Zip Code |
95032
|
City Area Code |
408
|
Local Phone Number |
649-5760
|
Written Communications |
false
|
Soliciting Material |
false
|
Pre-commencement Tender Offer |
false
|
Pre-commencement Issuer Tender Offer |
false
|
Entity Emerging Growth Company |
true
|
Elected Not To Use the Extended Transition Period |
false
|
Common Stock, par value $0.001 per share |
|
Title of 12(b) Security |
Common Stock, par value $0.001 per share
|
Trading Symbol |
TNON
|
Security Exchange Name |
NASDAQ
|
Warrants, with each having the right to purchase one share of Common Stock |
|
Title of 12(b) Security |
Warrants, with each having the right to purchase one share of Common Stock
|
Trading Symbol |
TNONW
|
Security Exchange Name |
NASDAQ
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