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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
| Date
of Report (Date of earliest event reported): |
|
December
3, 2024 |
| Algorhythm
Holdings, Inc. |
| (Exact
Name of Registrant as Specified in Charter) |
| Delaware |
|
001-41405 |
|
95-3795478 |
| (State
or Other Jurisdiction |
|
(Commission |
|
(IRS
Employer |
| of
Incorporation) |
|
File
Number) |
|
Identification
No.) |
| 6301
NW 5th Way, Suite 2900 |
|
|
| Fort
Lauderdale, FL |
|
33309 |
| (Address
of Principal Executive Offices) |
|
(Zip
Code) |
| Registrant’s
Telephone Number, Including Area Code: |
|
(954)
596-1000 |
(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 $0.01 per share |
|
RIME |
|
The
Nasdaq Stock
Market LLC (The Nasdaq Capital Market) |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§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.
Public Offering
On
December 4, 2024, Algorhythm Holdings, Inc. (the “Company”) entered into a securities purchase agreement (the “Purchase
Agreement”) in connection with the public offering (the “Offering”) of 4,200,000 shares of its common stock, par value
$0.01 per share (“Common Stock”), 51,682,352 Pre-Funded Warrants to purchase shares of common stock (the “Pre-Funded
Warrants”) in lieu of shares of Common Stock, and accompanying Series A Warrants (the “Series A Warrants”) to purchase
up to 55,882,352 shares of Common Stock (the “Series A Warrant Shares”) and Series B Warrants (the “Series B
Warrants” and together with the Series A Warrants, the “Warrants”) to purchase up to 55,882,352 shares of Common
Stock (“the “Series B Warrant Shares” and together with the Series A Warrant Shares, the “Warrant Shares”)
at a combined offering price of $0.17. Each share of Common Stock or Pre-Funded Warrant in lieu thereof was offered together with a Series
A Warrant and a Series B Warrant.
The
Series A Warrants are exercisable at a per share initial exercise price of $0.17 and will expire five (5) years from the date such Series
A Warrants become exercisable. The Series B Warrants are exercisable at a per share initial exercise price of $0.34 and will expire two
and one-half (2.5) years from the date such Series B Warrant becomes exercisable. The Pre-Funded Warrants are immediately exercisable,
have an exercise price of $0.01 per share and may be exercised at any time until all Pre-Funded Warrants are exercised in full. The Series
A Warrants and the Series B Warrants will be exercisable only upon receipt of such shareholder approval as may be required by the applicable
rules and regulations of the Nasdaq Stock Market to permit the exercise of the Warrants (the “Shareholder Approval”).
Beginning
on the date of the Shareholder Approval and ending on the fourth trading day after the Shareholder Approval, the exercise price of the
Series A and Series B Warrants will be adjusted to equal the lower of (i) the exercise price then in effect and (ii) the greater of (a)
the lowest daily volume weighted average price of the shares of Common Stock during the period commencing on the first trading day prior
to the Shareholder Approval and ending following the close of trading on the fourth trading day thereafter, and (b) if prior to Shareholder
Approval, a price equal to $0.08555, or following the Shareholder Approval, a price equal to $0.03422, and the number of shares issuable
upon exercise will be increased such that the aggregate exercise price of the Warrants on the issuance date for the Warrant Shares then
outstanding shall remain unchanged following such reset.
If
at the time a holder exercises the Warrants, a registration statement registering the issuance of the Warrant Shares is not then effective
or available, in lieu of paying the exercise price in cash, the holder may elect instead to receive upon such exercise (either in whole
or in part) the number of shares of common stock determined according to a formula set forth in the Warrants
The
holders of Series B Warrants may also effect an “alternative cashless exercise” at any time following Shareholder Approval,
pursuant to which the holder has the right to receive an aggregate number of shares equal to the product of (x) the aggregate number
of shares of Common Stock that would be issuable upon a cashless exercise of the Series B Warrant and (y) 1.0.
In
addition, subject to certain exceptions, the Series A Warrant is subject to reduction to the exercise price upon an issuance of securities
by the Company at a price per share that is less than the then exercise price. Any reduction to the exercise prices of the Series A Warrants;
provided that such adjustment in the exercise price shall be subject to a floor price as set forth in the Series A Warrant. and resulting
increase in the number of shares of common stock underlying the Warrants is subject to a floor price as set forth in the Warrants.
The
exercise price of the Series A and Series B Warrants is subject to adjustment for stock splits, share dividends, share combinations and
similar capital transactions or other such event as further described in the Series A and Series B Warrants.
The
Offering was made pursuant to that certain Registration Statement on Form S-1 (File No. 333-283178), as amended, which was originally
filed on November 12, 2024, and declared effective by the Securities and Exchange Commission on December 4, 2024.
The
closing of the Offering occurred on December 6, 2024. The Company received net proceeds of approximately $8,370,000 million from
the Offering, after deducting the estimated offering expenses payable by the Company, including the placement agent fees. The Company
intends to use the net proceeds from the Offering for working capital and other general corporate purposes and to repay the principal
amount of $2,352,941 in outstanding senior secured notes of the Company.
In
connection with the Offering, the Company entered into a Placement Agency Agreement (the “Placement Agency Agreement”) with
Univest Securities, LLC (the “Placement Agent”), as the exclusive placement agent in connection with the Offering. As compensation
to the Placement Agent, the Company paid the Placement Agent a cash fee of 7% and a non-accountable expense allowance of 1.0% of the
aggregate gross proceeds raised in the Offering and reimbursed certain expenses of the Placement Agent.
The
foregoing summaries of the Purchase Agreement, the Series A Warrant, the Series B Warrant, and the Pre-Funded Warrant and the Placement
Agency Agreement, do not purport to be complete and are subject to, and qualified in their entirety by, copies of such documents attached
as exhibits 4.1, 4.2, 4.3, 4.4, 10.1 and 10.2 to this Current Report on Form 8-K, which are incorporated by reference herein.
Stock
Repurchase Agreement
On
December 3, 2024, the Company entered into a Stock Repurchase Agreement (the “Repurchase Agreement”) with Stingray
Group, Inc., a Canadian corporation (the “Seller”), pursuant to which the Company agreed to repurchase from the Seller
an aggregate of 1,098,901 issued and outstanding shares of common stock, par value $0.01 per share, of the Company (the
“Repurchased Shares”).
The
shares of common stock to be repurchased were originally issued to the Seller on November 21, 2023, pursuant to a certain stock purchase
agreement, dated November 20, 2023.
As
consideration for the transaction contemplated by the Repurchase Agreement (the “Stock Repurchase”), at the closing, the
Company has agreed to repurchase from the Seller, and the Seller has agreed to sell, assign and transfer to the Company, all of the Seller’s
right, title and interest in and to the Repurchased Shares, at a price per share equal to the higher of: (1) the closing price of the
common stock on the last trading day immediately preceding the date of the Repurchase Agreement; or (2) the highest volume weighted average
price (VWAP) of the common stock during a pricing period of ten (10) consecutive trading days prior to the date of the Repurchase Agreement
per share (the “Purchase Price”), and the Company shall issue to the Seller a promissory note in the principal amount equal
to the Purchase Price, substantially in the form attached to the Repurchase Agreement as Exhibit A (the “Note”), and subject
to terms and conditions therein.
The
obligations of each of the Company and the Seller to consummate the closing are conditioned upon the (i) issuance by the Company to the
Seller the Note evidencing the Purchase Price and (ii) the Seller’s delivery to the Company of executed stock power with a medallion
signature guarantee.
The
Repurchase Agreement contains customary representations and warranties. The closing is expected to occur upon satisfaction of the conditions
described above, after which the Repurchased Shares will be cancelled and retired.
Mathiew
Peloquin, a director of the Company, is the Senior Vice-President, Marketing and Communications of Stingray Group, Inc.
Item
8.01 Other Events.
On
December 5, 2024, the Company issued a press release announcing the pricing of the Offering. On December 6, 2024, the Company issued
a press release announcing the closing of the Offering. Copies of the press releases are attached as Exhibit 99.1 and Exhibit 99.2, respectively,
to this Current Report on Form 8-K and are hereby incorporated by reference herein.
Item
9.01 Financial Statements and Exhibits.
(d)
Exhibits
The
following exhibits are being filed herewith:
Item
9.01 Financial Statements and Exhibits
SIGNATURE
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:
December 6, 2024 |
Algorhythm
Holdings, Inc. |
| |
|
|
| |
By: |
/s/
Gary Atkinson |
| |
Name: |
Gary
Atkinson |
| |
Title: |
Chief
Executive Officer |
Exhibit
4.1
SERIES
A COMMON STOCK PURCHASE WARRANT
ALGORHYTHM
HOLDINGS, INC.
| Warrant
Shares: [*] |
|
Issuance
Date: December 6, 2024 |
THIS
SERIES A COMMON STOCK PURCHASE WARRANT (“Warrant”) certifies that, for value received, ______________ or its assigns
(the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter
set forth, at any time on or after the Shareholder Approval Date (as defined below) (such date, the “Initial Exercise Date”)
and on or prior to 5:00 p.m. (New York, New York time) on the five year anniversary of the Initial Exercise Date, provided that
if such date is not a Trading Day, the immediately following Trading Day (the “Termination Date”) but not thereafter,
to subscribe for and purchase from Algorhythm Holdings, Inc., a Delaware corporation (the “Company”), up to ______
shares Common Stock, the (“Warrant Shares”), subject to adjustment hereunder. The purchase price of one share of Common
Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section
1. Definitions. In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated
in this Section 1. Capitalized word and terms used and not otherwise defined herein shall have the meanings set forth in that
certain Securities Purchase Agreement (the “Purchase Agreement”), dated December 4, 2024, among the Company and the
purchasers signatory thereto.
“Adjustment
Period” shall have the meaning set forth in Section 3(i).
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Alternate
Consideration” shall have the meaning set forth in Section 3(d).
“Applicable
Price” shall have the meaning set forth in Section 3(i).
“Attribution
Parties” shall have the meaning set forth in Section 2(e).
“Base
Share Price” shall have the meaning set forth in Section 3(i).
“Bid
Price” means, for any date, the price determined by the first of the following clauses that applies: (i) if the Common Stock
is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m.
(New York, New York time) to 4:02 p.m. (New York, New York time)), (ii) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (iii) if the Common
Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open
Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of
the Common Stock so reported, or (iv) in all other cases, the fair market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable
to the Company, the fees and expenses of which shall be paid by the Company.
“Black
Scholes Value” shall have the meaning set forth in Section 3(d).
“Bloomberg”
means Bloomberg L.P., or any successor thereto.
“Board
of Directors” means the board of directors of the Company.
“Buy-In”
shall have the meaning set forth in Section 2(d)(iv).
“Business
Day” means any day other than Saturday, Sunday, or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed.
“Bylaws”
means the Amended and Restated Bylaws of the Company.
“Certificate
of Incorporation” means the Certificate of Incorporation, as amended, of the Company.
“Common
Stock” means the common stock of the Company, par value $0.01 per share, and any other class of securities into which such
securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant, or other instrument that
is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Company”
shall have the meaning set forth in the Preamble.
“Convertible
Securities” shall have the meaning set forth in Section 3(i)(1).
“Convertible
Securities Shares” shall have the meaning set forth in Section 3(i)(1).
“Distribution”
shall have the meaning set forth in Section 3(c).
“DWAC”
shall have the meaning set forth in Section 2(d)(i).
“Dilutive
Issuance” shall have the meaning set forth in Section 3(i).
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exercise
Price” shall have the meaning set forth in Section 2(b).
“Floor
Price” means (A) prior to the Shareholder Approval Date, a price equal to $0.08555 per share, and (B) effective beginning on
the Shareholder Approval Date, a price equal to $0.03422 per share; which in each case shall be appropriately adjusted for any stock
dividend, stock split, stock combination, reclassification or similar event or transaction.
“Fundamental
Transaction” shall have the meaning set forth in Section 3(d).
“Holder”
shall have the meaning set forth in the Preamble.
“Initial
Exercise Date” shall have the meaning set forth in the Preamble.
“Issuance
Date” means the issuance date of this Warrant as set forth on the first page hereof.
“New
Issuance Price” shall have the meaning set forth in Section 3(i).
“Notice
of Exercise” shall have the meaning set forth in Section 2(a).
“Option”
means any rights, warrants, or options to subscribe for or purchase Common Stock or Convertible Securities.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof), or other entity of any kind.
“Primary
Security” shall have the meaning set forth in Section 3(i)(4).
“Purchase
Agreement” shall have the meaning set forth in Section 1.
“Purchase
Rights” shall have the meaning set forth in Section 3(b).
“Redemption
Date” shall have the meaning set forth in Section 2(f)(ii).
“Redemption
Price” shall have the meaning set forth in Section 2(f)(ii).
“Redemption
Notice” shall have the meaning set forth in Section 2(f)(iii).
“Redemption
Notice Date” shall have the meaning set forth in Section 2(f)(iii).
“Registration
Statement” means the Company’s registration statement on Form S-1, as amended (File No. 333-283178).
“Required
Holders” shall have the meaning set forth in Section 3(d).
“Reset
Date” means the fourth (4th) Trading Day following the Shareholder Approval Date.
“Reset
Period” means the period commencing on the first Trading Day prior to the Shareholder Approval Date and ending following the
close of trading on the fourth (4th) Trading Day thereafter.
“Reset
Price” means the greater of (i) the lowest daily VWAP during the Reset Period and (ii) the Floor Price in effect.
“SEC”
means the United States Securities and Exchange Commission.
“Secondary
Securities” shall have the meaning set forth in Section 3(i)(4).
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Shareholder
Approval” means such approval as may be required by the applicable rules and regulations of The Nasdaq Stock Market LLC (or
any successor entity) from the shareholders of the Company with respect to issuance of all of the Warrant Shares upon the exercise of
the Warrants, including, without limitation, to render inapplicable clause (A) of the definition of the Floor Price, thereby giving full
effect to the adjustment to the Exercise Price and/or number of shares of Common Stock underlying the Warrants following any Dilutive
Issuance or Reset Date.
“Shareholder
Approval Date” means the Trading Day that Shareholder Approval is received and deemed effective. Notwithstanding anything to
the contrary, such notice shall be deemed to be given by a public filing with the SEC disclosing the effectiveness of the Shareholder
Approval.
“Standard
Settlement Period” shall have the meaning set forth in Section 2(d)(i).
“Subsidiary”
means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed
or acquired after the date hereof.
“Successor
Entity” shall have the meaning set forth in Section 3(d).
“Termination
Date” shall have the meaning set forth in the Preamble.
“Trading
Day” means a day on which the Trading Market is open for trading.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: The Nasdaq Capital Market, The Nasdaq Global Market, The Nasdaq Global Select Market, the New York Stock Exchange, or the
NYSE American, (or any successors to any of the foregoing).
“Trading
Value” means, with respect to the Company’s Common Stock, the daily trading volume on the Company’s primary Trading
Market as reported by Bloomberg multiplied by the closing price of the Common Stock on such date.
“Transfer
Agent” means Continental Stock Transfer & Trust Company, the current transfer agent of the Company, with a mailing address
1 State Street, 30th Floor, New York, NY 10004-1561 and a phone number of (212) 509-4000, and any successor transfer agent of the Company.
“Trigger
Date” shall have the meaning set forth in Section 5(a).
“Unit”
shall have the meaning set forth in Section 3(i)(4).
“Valuation
Event” shall have the meaning set forth in Section 3(i)(4).
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (i) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m.
(New York, New York time) to 4:02 p.m. (New York, New York time)), (ii) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (iii) if the Common
Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open
Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of
the Common Stock so reported, or (iv) in all other cases, the fair market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the holders of a majority in interest of the Warrants then outstanding and reasonably acceptable
to the Company, the fees and expenses of which shall be paid by the Company.
“Warrant
Register” shall have the meaning set forth in Section 4(c).
“Warrant
Share Delivery Date” shall have the meaning set forth in Section 2(d)(i).
“Warrant
Shares” shall have the meaning set forth in the Preamble.
“Warrants”
means this Warrant and other Series A Common Stock purchase warrants issued by the Company pursuant to the Registration Statement.
Section
2. Exercise.
(a)
Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time
or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile
copy or PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form attached hereto as Exhibit A
(the “Notice of Exercise”). Within the earlier of (i) one (1) Trading Day and (ii) such earlier time comprising the
Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall
deliver the aggregate Exercise Price for the number of Warrant Shares specified in the applicable Notice of Exercise by wire transfer
or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below
is applicable and specified in the attached Notice of Exercise. The Company shall have no obligation to inquire with respect to or otherwise
confirm the authenticity of the signature(s) contained on any Notice of Exercise nor the authority of the person so executing such Notice
of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization)
of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically
surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has
been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading
Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases
of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant
Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall
maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection
to any Notice of Exercise within one (1) Trading Day of receipt of such notice. The Holder and any assignee, by acceptance of this
Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant
Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated
on the face hereof.
(b)
Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $0.17, subject to adjustment hereunder
(the “Exercise Price”).
(c)
Cashless Exercise. If and only if at the time of any exercise hereof there is no effective registration statement registering,
or the prospectus contained therein is not available for the issuance of the Warrant Shares to the Holder, then this Warrant may be exercised,
in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number
of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
(A)
= as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of
Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed
and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as
defined in Rule 600(b) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) the Bid Price of the
Common Stock on the principal Trading Market as reported by Bloomberg as of the time of the Holder’s execution of the applicable
Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered
within two hours thereafter (including until two hours after the close of “regular trading hours” on a Trading Day) pursuant
to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise
is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of
“regular trading hours” on such Trading Day;
(B)
= the Exercise Price of this Warrant, as adjusted hereunder; and
(X)
= the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such
exercise were by means of a cash exercise rather than a cashless exercise.
If
Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the
Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The Company agrees not
to take any position contrary to this Section 2(c).
(d)
Mechanics of Exercise.
(i)
Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by
the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository
Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant
in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale
of the Warrant Shares by the Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery
of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant
Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by
the date that is the earlier of (i) one (1) Trading Day after delivery of the Notice of Exercise and the aggregate Exercise Price (other
than in the case of a cashless exercise) to the Company and (ii) the number of days comprising the Standard Settlement Period after the
delivery to the Company of the Notice of Exercise and the aggregate Exercise Price (other than in the case of a cashless exercise) (such
date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for
all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised,
irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the
case of a cashless exercise) is received by the Warrant Share Delivery Date. If the Company fails for any reason to deliver to the Holder
the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date following payment of the aggregate Exercise Price
by the Holder (other than in the case of cashless exercise is received by the Company by such date), the Company shall pay to the Holder,
in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of
the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth
(5th) Trading Day after the Warrant Share Delivery Date) for each Trading Day after such Warrant Share Delivery Date until such Warrant
Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST
program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period”
means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect
to the Common Stock as in effect on the date of delivery of the Notice of Exercise.
(ii)
Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of
a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in
all other respects be identical with this Warrant.
(iii)
Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section
2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise by delivering written notice
to the Company at any time prior to the delivery of such Warrant Shares.
(iv)
Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to
the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions
of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date (other than a failure caused by
incorrect or incomplete information provided by the Holder to the Company), and if after such date the Holder is required by its broker
to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock
to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a
“Buy-In”), then the Company shall (A) provided that if the Common Stock is then listed or quoted on the Trading
Market or any over-the-counter market (including OTC Pink or any successor) such price set forth in (y)(2) of this clause (A) is reasonably
comparable to a market price or prices in purchases and sales of the Common Stock occurring in the market on or close in time to the
Trading Day on which the Holder’s purchase occurred taking into account the volume of the Holder’s purchase, pay in cash
to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for
the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company
was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise
to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent
number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to
the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery
obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with
respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000,
under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide
the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence
of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s
failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof. The obligation
of the Company to pay compensation for Buy-In under this Section 2(d)(iv) is subject to delivery by the Holder of the aggregate
Exercise Price in accordance with the terms of Section 2(a).
(v)
No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company
shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole share.
(vi)
Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax
or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company,
and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided,
however, that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the assignment form substantially in the form attached hereto as Exhibit B duly
executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer
tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and
all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day
electronic delivery of the Warrant Shares.
(vii)
Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise
of this Warrant, pursuant to the terms hereof.
(e)
Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the
right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such
issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and
any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution
Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the
foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties
shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is
being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised
portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion
of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock
Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the
Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section
2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation
is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in
accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this
Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and
of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise
shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned
by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case
subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination
and shall have no liability for exercises of the Warrant that are not in compliance with the Beneficial Ownership Limitation, except
to the extent the Holder relies on a number of outstanding shares of Common Stock that was provided by the Company. In addition, a determination
as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common
Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic
or annual report filed with the SEC, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written
notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written request
of a Holder, the Company shall within one (1) Trading Day confirm orally and in writing to the Holder the number of shares of Common
Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the
conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since
the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation”
shall be 4.99% (or, upon election by a Holder prior to the issuance of any Warrants, 9.99%) of the number of shares of Common Stock outstanding
immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon written
notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided
that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of
this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the
61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented
in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion
hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes
or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply
to a successor holder of this Warrant. If the Warrant is unexercisable as a result of the Holder’s Beneficial Ownership Limitation,
no alternate consideration is owing to the Holder.
(f)
Redemption Right.
(i)
Beginning on the Initial Exercise Date, this Warrant may be redeemed at the option of the Company, in whole or in part, by giving not
less than thirty (30) days’ prior notice, which notice may not be given before, but may be given at any time after the date on
which (i) the VWAP exceeded $0.34 for ten (10) consecutive Trading Days and (ii) the average daily Trading Value of the Common Stock
for such ten (10) Trading Day period referred to in this Section 2(f)(i) exceeded $150,000.
(ii)
The price at which this Warrant may be redeemed (the “Redemption Price”) is $0.01 per Warrant Share. On and after
the date upon which such Warrant is redeemed by the Company (the “Redemption Date”), the Holder of a redeemed Warrant
shall be entitled to payment of the Redemption Price upon surrender of the Warrant to the Company.
(iii)
Notice of redemption of this Warrant (the “Redemption Notice”) shall be given at least thirty (30) days prior to the
Redemption Date (the “Redemption Notice Date”) by the Company (i) providing notice to the Holder as provided in Section
5(i), (ii) notifying the Holders of such redemption via publication of a press release and (iii) taking such other steps as may be
required under applicable law.
(iv)
From and after the Redemption Date, any Warrant Shares noticed for redemption that have not theretofore been exercised by the Holder
shall cease to represent the right to purchase any shares of Common Stock and shall be deemed canceled and void and of no further force
or effect without any further act or deed on the part of the Company.
(v)
By acceptance of this Warrant, the Holder undertakes to return the certificate representing any redeemed Warrant to the Company upon
their redemption and to indemnify the Company with respect to any losses, claims, damages, or liabilities arising from the Holder’s
failure to return such certificate. In the event the certificate so returned represents a number of Warrant Shares in excess of the number
being redeemed, the Company shall as promptly as practicable issue to the Holder a new certificate in book-entry form for the number
of unredeemed Warrant Shares.
(vi)
Notwithstanding anything to the contrary set forth in this Warrant, the Company may not require the cancellation of this Warrant (and
any related Redemption Notice shall be void), unless, from the beginning of the Redemption Notice Date through the Redemption Date, (1)
the Company shall have honored in accordance with the terms of this Warrant all Notices of Exercise delivered by 6:30 p.m. (New York,
New York time) on the Redemption Date, (2) a registration statement shall be effective as to all Warrant Shares and the prospectus thereunder
available for use by the Company for the sale of all such Warrant Shares to the Holder, (3) the Common Stock shall be listed or quoted
for trading on the Trading Market, (4) there is a sufficient number of authorized shares of Common Stock for issuance of all Warrant
Shares, and (5) the issuance of all Warrant Shares subject to a Redemption Notice shall not cause a breach of any provision of Section
2(e) herein. The Company’s right to call the Warrants under this Section 2(f) shall be exercised ratably among the Holders
based on each Holder’s ownership of outstanding Warrants.
Section
3. Certain Adjustments.
(a)
Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares
of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the
Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which
the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of
shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant
shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after
the effective date in the case of a subdivision, combination or re-classification.
(b)
Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time that this Warrant
is outstanding the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or
other property pro rata to all of the record holders of any class of shares of Common Stock (the “Purchase Rights”),
then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the
Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant
(without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately
before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, that, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder
exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent
(or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to
such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding
the Beneficial Ownership Limitation).
(c)
Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend,
spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial
Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided,
however, that, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder
exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent
(or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such
Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result
in the Holder exceeding the Beneficial Ownership Limitation). To the extent that this Warrant has not been partially or completely exercised
at the time of such Distribution, such portion of the Distribution shall be held in abeyance for the benefit of the Holder until the
Holder has exercised this Warrant.
(d)
Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or
more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly
or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of
its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer
(whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property and has been accepted by the holders of greater than 50% of the outstanding Common
Stock or greater than 50% of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one or
more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other
than a stock split or stock dividend), or (v) the Company, directly or indirectly, in one or more related transactions consummates a
stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off,
merger or scheme of arrangement (other than a stock split or stock dividend) with another Person or group of Persons whereby such other
Person or group acquires greater than 50% of the outstanding shares of Common Stock or greater than 50% of the voting power of the common
equity of the Company (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the
Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to
the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e)
on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if
it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a
result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately
prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For
purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and
the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value
of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash
or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the
event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable
at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction (or, if later, the date of the
public announcement of the applicable Fundamental Transaction), purchase this Warrant from the Holder by paying to the Holder an amount
of cash equal to the Black Scholes Value (as defined below) of the remaining unexercised portion of this Warrant on the date of the consummation
of such Fundamental Transaction; provided, however, that, if the Fundamental Transaction is not within the Company’s
control, including not approved by the Board of Directors, the Holder shall only be entitled to receive from the Company or any Successor
Entity the same type or form of consideration (and in the same proportion), at the Black Scholes Value of the unexercised portion of
this Warrant, that is being offered and paid to the holders of Common Stock of the Company in connection with the Fundamental Transaction,
whether that consideration be in the form of cash, stock or any combination thereof, or whether the holders of Common Stock are given
the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction; provided,
further, that if holders of Common Stock of the Company are not offered or paid any consideration in such Fundamental Transaction,
such holders of Common Stock will be deemed to have received shares of common stock of the Successor Entity (which Successor Entity may
be the Company following such Fundamental Transaction) in such Fundamental Transaction. “Black Scholes Value” means
the value of this Warrant based on the Black-Scholes Option Pricing Model obtained from the “OV” function on Bloomberg determined
as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest
rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable
contemplated Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of (1) the 30 day volatility,
(2) the 100 day volatility or (3) the 365 day volatility, each of clauses (1)-(3) as obtained from the HVT function on Bloomberg (determined
utilizing a 365 day annualization factor) as of the Trading Day immediately following the public announcement of the applicable contemplated
Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the greater of (i) the sum of the price
per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction
and (ii) the VWAP immediately preceding the public announcement of the applicable contemplated Fundamental Transaction (or the consummation
of the applicable Fundamental Transaction, if earlier), (D) the sum of the remaining option time equal to the time between the date of
the public announcement of the applicable contemplated Fundamental Transaction and the Termination Date and (E) a zero cost of borrow.
The payment of the Black Scholes Value will be made by wire transfer of immediately available funds (or such other consideration) within
the later of (i) five Business Days of the Holder’s election and (ii) the date of consummation of the Fundamental Transaction.
The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor
Entity”) to assume in writing all of the obligations of the Company under this Warrant in accordance with the provisions of
this Section 3(d) pursuant to written agreements in form and substance reasonably satisfactory to the holders of Warrants representing
at least a majority of the shares of Common Stock underlying the Warrants then outstanding without giving effect to any beneficial ownership
limitations (the “Required Holders”) and approved by the Required Holders (without unreasonable delay) prior to such
Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the
Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for
a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common
Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior
to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock
(but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in
form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall be added to the
term “Company” under this Warrant (so that from and after the occurrence or consummation of such Fundamental Transaction,
each and every provision of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead
to each of the Company and the Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor
Entities, jointly and severally with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity
or Successor Entities shall assume all of the obligations of the Company prior thereto under this Warrant and the other Transaction Documents
with the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named as the
Company herein. For the avoidance of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(d)
regardless of (i) whether the Company has sufficient authorized shares of Common Stock for the issuance of Warrant Shares and/or (ii)
whether a Fundamental Transaction occurs prior to the Initial Exercise Date.
(e)
Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as
of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
(f)
Notice to Holder.
(i)
Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the
Company shall promptly deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting
adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment; provided, however,
that the Company may satisfy the notice requirement in this Section 3(f) by filing such information with the Commission on its
Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system pursuant to a Current Report on Form 8-K, Quarterly Report on Form
10-Q or Annual Report on Form 10-K.
(ii)
Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form other
than a stock split or stock dividend) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock (excluding any granting or issuance of rights to all of the Company’s stockholders pursuant to a
stockholder rights plan), (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe
for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall
be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company (or any of
its Subsidiaries) is a party, any sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby
the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by
facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company,
at least ten (10) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date
on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not
to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share
exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record
shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in
the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that
any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries,
the Company shall simultaneously file such notice with the SEC pursuant to a Current Report on Form 8-K. The Holder shall remain entitled
to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice
except as may otherwise be expressly set forth herein.
(g)
Voluntary Adjustment By Company. Subject to the rules and regulations of the Trading Market, the Company may at any time during
the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Company’s
Board of Directors.
(h)
Shareholder Approval. The Company shall hold a meeting of shareholders for, or obtain through written consent, the Shareholder
Approval as soon as practicable following the Issuance Date. After obtaining the Shareholder Approval through such meeting or vote, the
Company shall comply with all applicable rules and regulations of the SEC and applicable state laws and provisions of its Certificate
of Incorporation and Bylaws with respect to the Shareholder Approval, and shall use its best efforts to cause the minimal amount of time
therefor to apply before the Shareholder Approval takes effect in accordance with such rules and regulations, laws, and provisions. Without
limiting the generality of the foregoing, the Company shall prepare and file with the SEC any necessary materials or disclosures with
the SEC with respect to the shareholder vote for Shareholder Approval and shall ensure these materials are provided to shareholders of
the Company as soon as practicable thereafter in accordance with the rules and regulations of the SEC. The Company shall promptly provide
responses to the SEC with respect to any comments received from the SEC regarding these materials filed in accordance with this Section
3(h), and will take all required actions to facilitate the shareholder vote and use reasonable efforts to ensure Shareholder Approval
is obtained in a timely manner.
(i)
Subsequent Equity Sales. If, at any time while this Warrant is outstanding (such period, the “Adjustment Period”),
the Company issues, sells, enters into an agreement to sell, or grants any option to purchase, or sells, enters into an agreement to
sell, or grants any right to reprice, or otherwise disposes of or issues (or announces any offer, sale, grant, or any option to purchase
or other disposition), or, in accordance with this Section 3(i), is deemed to have issued or sold, any shares of Common Stock
or Common Stock Equivalents for a consideration per share (the “New Issuance Price”) less than a price equal to the
Exercise Price in effect immediately prior to such issue or sale or deemed issuance or sale (such Exercise Price then in effect is referred
to as the “Applicable Price”) (the foregoing a “Dilutive Issuance”), then simultaneously with the
consummation (or, if earlier, the announcement) of such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an amount
(the “New Exercise Price”) equal to the lower of (A) the New Issuance Price and (B) the lowest VWAP during the five
(5) consecutive Trading Days immediately following the Dilutive Issuance (such lower price, the “Base Share Price”)
and the number of Warrant Shares issuable hereunder shall be proportionately increased such that the aggregate Exercise Price of this
Warrant on the Issuance Date for the Warrant Shares then outstanding shall remain unchanged; provided that the Base Share Price
shall not be less than the Floor Price and any adjustment shall be consistent with maintaining equity classification under applicable
accounting guidance. Notwithstanding the foregoing, if one or more Dilutive Issuances occur prior to the Shareholder Approval Date such
that the reduction of the Exercise Price was limited by clause (A) in the definition of the Floor Price, then effective on the Shareholder
Approval Date, the Exercise Price will automatically be reduced to equal the greater of (x) lowest Base Share Price with respect to any
Dilutive Issuance that occurred prior to the Shareholder Approval Date and (B) the Floor Price determined in reference to clause (B)
of the definition of the Floor Price, and in any such event the number of Warrant Shares issuable hereunder shall be increased such that
the aggregate Exercise Price of this Warrant on the Issuance Date for the Warrant Shares then outstanding shall remain unchanged. If
the Company enters into a Variable Rate Transaction (as defined in the Purchase Agreement; provided, that, with respect to a Variable
Rate Transaction that is an equity line of credit or an “at-the-market offering”, this Section 3(i) shall apply to
any issuances of Common Stock or Common Stock Equivalents thereunder rather than the entry into the agreement with respect thereto),
the Company shall be deemed to have issued shares of Common Stock or Common Stock Equivalents at the lowest possible price, conversion
price, or exercise price at which such securities may be issued, converted, or exercised. Notwithstanding the foregoing, no adjustments
shall be made, paid, or issued under this Section 3(i) in respect of an Exempt Issuance (as defined in the Purchase Agreement).
For the avoidance of doubt, in the event the Exercise Price has been adjusted pursuant to this Section 3(i) and the Dilutive Issuance
that triggered such adjustment does not occur, is not consummated, is unwound, or is canceled after the facts for any reason whatsoever,
in no event shall the Exercise Price be readjusted to the Exercise Price that would have been in effect if such Dilutive Issuance had
not occurred or been consummated. For all purposes of the foregoing, the following shall be applicable:
(1)
Issuance of Options. If, during the Adjustment Period, the Company in any manner grants or sells any Options and the lowest price
per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise, or exchange
of any convertible securities (“Convertible Securities”) issuable upon exercise of any such Option (such shares of
Common Stock issuable upon such exercise of any Option or upon conversion, exercise, or exchange of any Convertible Securities, the “Convertible
Securities Shares”) is less than the Applicable Price, then such shares of Common Stock shall be deemed to be outstanding and
to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes
of this Section 3(i)(1), the “lowest price per share for which one share of Common Stock is issuable upon the exercise of
any such Option or upon conversion, exercise, or exchange of any Convertible Securities issuable upon exercise of any such Option”
shall be equal to (A) the sum of (1) the lowest amount of consideration (if any) received or receivable by the Company with respect to
any one Convertible Securities Share upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise,
or exchange of any Convertible Security issuable upon exercise of such Option and (2) the lowest exercise price set forth in such Option
for which one Convertible Securities Share is issuable upon the exercise of any such Option or upon conversion, exercise, or exchange
of any Convertible Securities issuable upon exercise of any such Option, minus (B) the sum of all amounts paid or payable to the holder
of such Option (or any other Person), with respect to any one Convertible Securities Share, upon the granting or sale of such Option,
upon exercise of such Option and upon conversion, exercise, or exchange of any Convertible Security issuable upon exercise of such Option
plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Option (or any other
Person), with respect to any one Convertible Securities Share. Except as contemplated below, no further adjustment of the Exercise Price
shall be made upon the actual issuance of such Convertible Securities Share or of such Convertible Securities upon the exercise of such
Options or upon the actual issuance of such Convertible Securities Share upon conversion, exercise, or exchange of such Convertible Securities.
(2)
Issuance of Convertible Securities. If, during the Adjustment Period, the Company in any manner issues or sells any Convertible
Securities and the lowest price per share for which one Convertible Securities Share is issuable upon the conversion, exercise, or exchange
thereof is less than the Applicable Price, then such Convertible Securities Share shall be deemed to be outstanding and to have been
issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes
of this Section 3(i)(2), the “lowest price per share for which one Convertible Securities Share is issuable upon the conversion,
exercise or exchange thereof” shall be equal to (A) the sum of (1) the lowest amount of consideration (if any) received or receivable
by the Company with respect to one Convertible Securities Share upon the issuance or sale of the Convertible Security and upon conversion,
exercise, or exchange of such Convertible Security and (2) the lowest conversion price set forth in such Convertible Security for which
one Convertible Securities Share is issuable upon conversion, exercise, or exchange thereof, minus (B) the sum of all amounts paid or
payable to the holder of such Convertible Security (or any other Person), with respect to any one Convertible Securities Share, upon
the issuance or sale of such Convertible Security plus the value of any other consideration received or receivable by, or benefit conferred
on, the holder of such Convertible Security (or any other Person), with respect to any one Convertible Securities Share. Except as contemplated
below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such Convertible Securities Share upon conversion,
exercise, or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise
of any Options for which adjustment of the Exercise Price has been or is to be made pursuant to other provisions of this Section 3(i)(2),
except as contemplated below, no further adjustment of the Exercise Price shall be made by reason of such issue or sale.
(3)
Change in Option Price or Rate of Conversion. If, during the Adjustment Period, the purchase or exercise price provided for in
any Options, the additional consideration, if any, payable upon the issue, conversion, exercise, or exchange of any Convertible Securities,
or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases
or decreases at any time (other than proportional changes in conversion or exercise prices, as applicable, in connection with an event
referred to in Section 3(a), the Exercise Price in effect at the time of such increase or decrease shall be adjusted to the Exercise
Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased
purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted,
issued, or sold. For purposes of this Section 3(i)(3), if the terms of any Option or Convertible Security that was outstanding
as of the date of issuance of this Warrant are increased or decreased in the manner described in the immediately preceding sentence,
then such Option or Convertible Security and the Convertible Securities Share deemed issuable upon exercise, conversion, or exchange
thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 3(i)(3)
shall be made if such adjustment would result in an increase of the Exercise Price then in effect.
(4)
Calculation of Consideration Received. If any Option or Convertible Security is issued in connection with the issuance or sale
or deemed issuance or sale of any other securities of the Company (the “Primary Security,” and such Option or Convertible
Security, the “Secondary Securities” and together with the Primary Security, each a “Unit”), together
comprising one integrated transaction, the aggregate consideration per share with respect to such Primary Security shall be deemed to
be the lowest of (x) the purchase price of such Unit, (y) if such Primary Security is an Option and/or Convertible Security, the lowest
price per share for which one share of Common Stock is at any time issuable upon the exercise or conversion of the Primary Security in
accordance with Section 3(i)(1) or 3(i)(2) above and (z) the lowest VWAP of the shares of Common Stock on any Trading Day
during the five (5) consecutive Trading Days immediately following the consummation (or, if applicable, the announcement) of such Dilutive
Issuance (for the avoidance of doubt, if such public announcement, if applicable, is released prior to the opening of the Principal Market
on a Trading Day, such Trading Day shall be the first Trading Day in such five (5) Trading Day period and if this Warrant is exercised
on any given Exercise Date during any such period, the Holder may elect to earlier end such period (including, solely with respect to
such portion of this Warrant exercised on such applicable Exercise Date)). If any shares of Common Stock, Options, or Convertible Securities
are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount
of cash received by the Company therefor. If any shares of Common Stock, Options, or Convertible Securities are issued or sold for a
consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration,
except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company
for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding
the date of receipt. If any shares of Common Stock, Options, or Convertible Securities are issued to the owners of the non-surviving
entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed
to be the fair market value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares
of Common Stock, Options or Convertible Securities (as the case may be). The fair market value of any consideration other than cash or
publicly traded securities will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within
ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair market value
of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an
independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and
binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.
(5)
Record Date. If, during the Adjustment Period, the Company takes a record of stockholders for the purpose of entitling them (A)
to receive a dividend or other distribution payable in shares of Common Stock, Options, or in Convertible Securities or (B) to subscribe
for or purchase shares of Common Stock, Options, or Convertible Securities, then such record date will be deemed to be the date of the
issue or sale of shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such right of subscription or purchase (as the case may be).
(k)
Reset. Beginning on the Shareholder Approval Date and ending on the Reset Date, the Exercise Price shall be adjusted to equal
the lower of (i) the Exercise Price then in effect and (ii) the Reset Price determined as of the date of determination. Upon such reset
of the Exercise Price pursuant to this Section 3(k), the number of Warrant Shares issuable hereunder shall be increased such that the
aggregate Exercise Price of this Warrant on the Issuance Date for the Warrant Shares then outstanding shall remain unchanged following
such reset. Notwithstanding the foregoing, if a Holder requests to exercise this Warrant in whole or in part on any given date prior
to the Reset Date, solely with respect to such portion of this Warrant being exercised on such applicable Exercise Date, (a) such applicable
Reset Date shall be deemed to mean the Exercise Date, (b) such applicable Reset Period shall be deemed to have ended on the Trading Day
immediately prior to the Exercise Date and (c) the applicable Reset Price for such exercised Warrants shall be calculated pursuant to
this Section 3(k). For the avoidance of doubt, following the calculation of the Reset Price pursuant to this Section 3(k), the Company’s
obligations with regard to such exercised Warrants shall be deemed satisfied and no additional Reset Price shall apply to such exercised
Warrants.
Section
4. Transfer of Warrant.
(a)
Transferability. Subject to compliance with any applicable securities laws, this Warrant and all rights hereunder (including,
without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office
of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto
as Exhibit B duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon
the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant
or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument
of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant
shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender
this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant
to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning this
Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant
Shares without having a new Warrant issued.
(b)
New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of
the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by
the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be
divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Issuance Date of
this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
(c)
Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the
“Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder,
and for all other purposes, absent actual notice to the contrary.
Section
5. Miscellaneous.
(a)
Reverse Stock Split. If at any time this Warrant is outstanding and the Company receives notice from the Trading Market that the
Company is failing to satisfy the Trading Market’s minimum bid price requirement (the “Trigger Date”), then
the Company shall use reasonable efforts to obtain the necessary consents and approvals to undertake a reverse stock split after such
Trigger Date and to prior to the effectiveness of any delisting notice issued by the Trading Market, effect such reverse stock split.
(b)
No Rights as Stockholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights,
dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except
as expressly set forth in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise”
pursuant to Section 2(c) or to receive cash payments pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, in
no event shall the Company be required to net cash settle an exercise of this Warrant.
(c)
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares,
and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant,
shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the
Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant
or stock certificate.
(d)
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Trading
Day.
(e)
Authorized Shares.
The
Company covenants that, from the Initial Exercise Date and thereafter during the period the Warrant is outstanding, it will reserve from
its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise
of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority
to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under
this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as
provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common
Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance
herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the
Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale
of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary
or appropriate to protect the rights of Holder as set forth in this Warrant against impairment (it being understood that this Warrant
shall not in any case prevent the Company from effecting any such amendment, reorganization, transfer, consolidation, merger, dissolution,
issuance or sale). Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares
above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may
be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon
the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under
this Warrant.
Before
taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from
any public regulatory body or bodies having jurisdiction thereof.
(f)
Governing Law; Exclusive Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of
this Warrant shall be determined in accordance with the provisions of the Purchase Agreement, and any action relating to this Warrant
shall only be brought as provided in the Purchase Agreement.
(g)
Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered will
have restrictions upon resale imposed by state and federal securities laws.
(h)
Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall
operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that
the right to exercise this Warrant terminates on the Termination Date. Without limiting any other provision of this Warrant, if the Company
willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the
Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable
attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto
or in otherwise enforcing any of its rights, powers or remedies hereunder.
(i)
Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall
be delivered in accordance with the notice provisions of the Purchase Agreement.
(j)
Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant
to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of
the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.
(k)
Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will
be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law would be adequate.
(l)
Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall
inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns
of the Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and
shall be enforceable by the Holder or holder of Warrant Shares.
(m)
Amendment and Waiver. Except as otherwise provided herein, the provisions of this Warrant may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the
written consent of the Required Holders. Any such amendment shall apply to all Warrants outstanding and be binding upon all registered
holders of such Warrants.
(n)
Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining
provisions of this Warrant.
(o)
Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed
a part of this Warrant.
********************
(Signature
Page Follows)
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above
indicated.
| Algorhythm
Holdings, Inc. |
|
| |
|
|
| By: |
|
|
| Name: |
|
|
| Title: |
|
|
EXHIBIT
A
NOTICE
OF EXERCISE
TO:
ALGORHYTHM HOLDINGS, INC.
(1)
The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only
if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2)
Payment shall take the form of (check applicable box):
☐
in lawful money of the United States; or
☐
if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection
2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure
set forth in subsection 2(c).
(3)
Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
Name
of Investing Entity:
________________________________________________________________________
Signature
of Authorized Signatory of Investing Entity:
_________________________________________________
Name
of Authorized Signatory:
___________________________________________________________________
Title
of Authorized Signatory:
____________________________________________________________________
Date:
___________________________________________________________________________
EXHIBIT
B
ASSIGNMENT
FORM
(To
assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
| Name: |
______________________________________ |
|
(Please
Print)
|
| Address: |
______________________________________ |
Phone
Number:
Email
Address:
|
(Please
Print)
______________________________________
______________________________________
|
Dated:
_______________ __, ______
|
|
Holder’s
Signature: ___________________
|
|
Holder’s
Address: ____________________
|
|
Exhibit
4.2
SERIES
B COMMON STOCK PURCHASE WARRANT
ALGORHYTHM
HOLDINGS, INC.
| Warrant
Shares: [*] |
Issuance
Date: December 6, 2024 |
THIS
SERIES B COMMON STOCK PURCHASE WARRANT (“Warrant”) certifies that, for value received, ______________ or its assigns
(the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter
set forth, at any time on or after the Shareholder Approval Date (as defined below) (such date, the “Initial Exercise Date”)
and on or prior to 5:00 p.m. (New York, New York time) on the two and one-half (2.5) year anniversary of the Initial Exercise Date, provided
that if such date is not a Trading Day, the immediately following Trading Day (the “Termination Date”) but not
thereafter, to subscribe for and purchase from Algorhythm Holdings, Inc., a Delaware corporation (the “Company”),
up to ______ shares Common Stock, the (“Warrant Shares”), subject to adjustment hereunder. The purchase price of one
share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section
1. Definitions. In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated
in this Section 1. Capitalized word and terms used and not otherwise defined herein shall have the meanings set forth in that
certain Securities Purchase Agreement (the “Purchase Agreement”), dated December 4, 2024, among the Company and the
purchasers signatory thereto.
“Adjustment
Period” shall have the meaning set forth in Section 3(i).
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Alternate
Consideration” shall have the meaning set forth in Section 3(d).
“Attribution
Parties” shall have the meaning set forth in Section 2(e).
“Bid
Price” means, for any date, the price determined by the first of the following clauses that applies: (i) if the Common Stock
is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m.
(New York, New York time) to 4:02 p.m. (New York, New York time)), (ii) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (iii) if the Common
Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open
Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of
the Common Stock so reported, or (iv) in all other cases, the fair market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable
to the Company, the fees and expenses of which shall be paid by the Company.
“Black
Scholes Value” shall have the meaning set forth in Section 3(d).
“Bloomberg”
means Bloomberg L.P., or any successor thereto.
“Board
of Directors” means the board of directors of the Company.
“Buy-In”
shall have the meaning set forth in Section 2(d)(iv).
“Business
Day” means any day other than Saturday, Sunday, or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed.
“Bylaws”
means the Amended and Restated Bylaws of the Company.
“Certificate
of Incorporation” means the Certificate of Incorporation, as amended, of the Company.
“Common
Stock” means the common stock of the Company, par value $0.01 per share, and any other class of securities into which such
securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant, or other instrument that
is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Company”
shall have the meaning set forth in the Preamble.
“Distribution”
shall have the meaning set forth in Section 3(c).
“DWAC”
shall have the meaning set forth in Section 2(d)(i).
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exercise
Price” shall have the meaning set forth in Section 2(b).
“Floor
Price” means (A) prior to the Shareholder Approval Date, a price equal to $0.08555 per share, and (B) effective beginning on
the Shareholder Approval Date, a price equal to $0.03422 per share; which in each case shall be appropriately adjusted for any stock
dividend, stock split, stock combination, reclassification or similar event or transaction.
“Fundamental
Transaction” shall have the meaning set forth in Section 3(d).
“Holder”
shall have the meaning set forth in the Preamble.
“Initial
Exercise Date” shall have the meaning set forth in the Preamble.
“Issuance
Date” means the issuance date of this Warrant as set forth on the first page hereof.
“Notice
of Exercise” shall have the meaning set forth in Section 2(a).
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof), or other entity of any kind.
“Purchase
Agreement” shall have the meaning set forth in Section 1.
“Purchase
Rights” shall have the meaning set forth in Section 3(b).
“Redemption
Date” shall have the meaning set forth in Section 2(f)(ii).
“Redemption
Price” shall have the meaning set forth in Section 2(f)(ii).
“Redemption
Notice” shall have the meaning set forth in Section 2(f)(iii).
“Redemption
Notice Date” shall have the meaning set forth in Section 2(f)(iii).
“Registration
Statement” means the Company’s registration statement on Form S-1, as amended (File No. 333-283178).
“Required
Holders” shall have the meaning set forth in Section 3(d).
“Reset
Date” means the fourth (4th) Trading Day following the Shareholder Approval Date.
“Reset
Period” means the period commencing on the first Trading Day prior to the Shareholder Approval Date and ending following the
close of trading on the fourth (4th) Trading Day thereafter.
“Reset
Price” means the greater of (i) the lowest daily VWAP during the Reset Period and (ii) the Floor Price in effect.
“SEC”
means the United States Securities and Exchange Commission.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Shareholder
Approval” means such approval as may be required by the applicable rules and regulations of The Nasdaq Stock Market LLC (or
any successor entity) from the shareholders of the Company with respect to issuance of all of the Warrant Shares upon the exercise of
the Warrants, including, without limitation, to render inapplicable clause (A) of the definition of the Floor Price, thereby giving full
effect to the alternative cashless exercises pursuant to Section 2(c) hereof and the adjustment to the Exercise Price and/or number
of shares of Common Stock underlying the Warrants following any Reset Date.
“Shareholder
Approval Date” means the Trading Day that Shareholder Approval is received and deemed effective. Notwithstanding anything to
the contrary, such notice shall be deemed to be given by a public filing with the SEC disclosing the effectiveness of the Shareholder
Approval.
“Standard
Settlement Period” shall have the meaning set forth in Section 2(d)(i).
“Subsidiary”
means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed
or acquired after the date hereof.
“Successor
Entity” shall have the meaning set forth in Section 3(d).
“Termination
Date” shall have the meaning set forth in the Preamble.
“Trading
Day” means a day on which the Trading Market is open for trading.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: The Nasdaq Capital Market, The Nasdaq Global Market, The Nasdaq Global Select Market, the New York Stock Exchange, or the
NYSE American, (or any successors to any of the foregoing).
“Trading
Value” means, with respect to the Company’s Common Stock, the daily trading volume on the Company’s primary Trading
Market as reported by Bloomberg multiplied by the closing price of the Common Stock on such date.
“Transfer
Agent” means Continental Stock Transfer & Trust Company, the current transfer agent of the Company, with a mailing address
1 State Street, 30th Floor, New York, NY 10004-1561 and a phone number of (212) 509-4000, and any successor transfer agent of the Company.
“Trigger
Date” shall have the meaning set forth in Section 5(a).
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (i) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m.
(New York, New York time) to 4:02 p.m. (New York, New York time)), (ii) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (iii) if the Common
Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open
Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of
the Common Stock so reported, or (iv) in all other cases, the fair market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the holders of a majority in interest of the Warrants then outstanding and reasonably acceptable
to the Company, the fees and expenses of which shall be paid by the Company.
“Warrant
Register” shall have the meaning set forth in Section 4(c).
“Warrant
Share Delivery Date” shall have the meaning set forth in Section 2(d)(i).
“Warrant
Shares” shall have the meaning set forth in the Preamble.
“Warrants”
means this Warrant and other Series B Common Stock purchase warrants issued by the Company pursuant to the Registration Statement.
Section
2. Exercise.
(a)
Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time
or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile
copy or PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form attached hereto as Exhibit A
(the “Notice of Exercise”). Within the earlier of (i) one (1) Trading Day and (ii) such earlier time comprising the
Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall
deliver the aggregate Exercise Price for the number of Warrant Shares specified in the applicable Notice of Exercise by wire transfer
or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below
is applicable and specified in the attached Notice of Exercise. For the avoidance of doubt, any reference to cashless exercise herein
shall include a reference to alternative cashless exercise. The Company shall have no obligation to inquire with respect to or otherwise
confirm the authenticity of the signature(s) contained on any Notice of Exercise nor the authority of the person so executing such Notice
of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization)
of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically
surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has
been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading
Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases
of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant
Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall
maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection
to any Notice of Exercise within one (1) Trading Day of receipt of such notice. The Holder and any assignee, by acceptance of this
Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant
Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated
on the face hereof.
(b)
Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $0.34, subject to adjustment hereunder
and shall not exceed 200% of the Minimum Price as defined by the rules of The Nasdaq Stock Market (the “Exercise Price”).
(c)
Cashless Exercise. If and only if at the time of any exercise hereof there is no effective registration statement registering,
or the prospectus contained therein is not available for the issuance of the Warrant Shares to the Holder, then this Warrant may be exercised,
in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number
of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
(A)
= as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of
Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed
and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as
defined in Rule 600(b) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) the Bid Price of the
Common Stock on the principal Trading Market as reported by Bloomberg as of the time of the Holder’s execution of the applicable
Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered
within two hours thereafter (including until two hours after the close of “regular trading hours” on a Trading Day) pursuant
to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise
is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of
“regular trading hours” on such Trading Day;
(B)
= the Exercise Price of this Warrant, as adjusted hereunder; and
(X)
= the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such
exercise were by means of a cash exercise rather than a cashless exercise.
Whether
or not an effective registration statement or prospectus is available, the Holder may also effect an “alternative cashless exercise”
at any time on or after the Shareholder Approval Date. In such event, the aggregate number of Warrant Shares issuable in such alternative
cashless exercise pursuant to any given Notice of Exercise electing to effect an alternative cashless exercise shall equal the product
of (i) the aggregate number of Warrant Shares that would be issuable upon exercise of this Warrant if such exercise were by means of
a cash exercise rather than a cashless exercise, multiplied by (ii) 1.0. Such number of aggregate Warrant Shares issuable in such alternative
cashless exercise shall be proportionally adjusted in the event of any stock split, dividend, reclassification or any other adjustment
provided in Section 3(a) hereof. Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall
be automatically exercised via cashless exercise pursuant to this Section 2(c), provided that the Shareholder Approval
Date shall have occurred.
If
Warrant Shares are issued in any cashless exercise provided for under this Section 2(c), the parties acknowledge and agree that
in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants
being exercised. The Company agrees not to take any position contrary to this Section 2(c).
(d)
Mechanics of Exercise.
(i)
Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by
the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository
Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant
in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale
of the Warrant Shares by the Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery
of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant
Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by
the date that is the earlier of (i) one (1) Trading Day after delivery of the Notice of Exercise and the aggregate Exercise Price (other
than in the case of a cashless exercise) to the Company and (ii) the number of days comprising the Standard Settlement Period after the
delivery to the Company of the Notice of Exercise and the aggregate Exercise Price (other than in the case of a cashless exercise) (such
date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for
all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised,
irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than
in the case of a cashless exercise) is received by the Warrant Share Delivery Date. If the Company fails for any reason to deliver to
the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date following payment of the aggregate Exercise
Price by the Holder (other than in the case of cashless exercise is received by the Company by such date), the Company shall pay to the
Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the
VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on
the fifth (5th) Trading Day after the Warrant Share Delivery Date) for each Trading Day after such Warrant Share Delivery Date until
such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant
in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period”
means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect
to the Common Stock as in effect on the date of delivery of the Notice of Exercise.
(ii)
Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of
a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in
all other respects be identical with this Warrant.
(iii)
Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section
2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise by delivering written notice
to the Company at any time prior to the delivery of such Warrant Shares.
(iv)
Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to
the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions
of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date (other than a failure caused by
incorrect or incomplete information provided by the Holder to the Company), and if after such date the Holder is required by its broker
to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock
to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a
“Buy-In”), then the Company shall (A) provided that if the Common Stock is then listed or quoted on the Trading
Market or any over-the-counter market (including OTC Pink or any successor) such price set forth in (y)(2) of this clause (A) is reasonably
comparable to a market price or prices in purchases and sales of the Common Stock occurring in the market on or close in time to the
Trading Day on which the Holder’s purchase occurred taking into account the volume of the Holder’s purchase, pay in cash
to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for
the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company
was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise
to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent
number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to
the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery
obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with
respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000,
under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide
the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence
of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s
failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof. The obligation
of the Company to pay compensation for Buy-In under this Section 2(d)(iv) is subject to delivery by the Holder of the aggregate
Exercise Price in accordance with the terms of Section 2(a).
(v)
No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company
shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole share.
(vi)
Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax
or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company,
and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided,
however, that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the assignment form substantially in the form attached hereto as Exhibit B duly
executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer
tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and
all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day
electronic delivery of the Warrant Shares.
(vii)
Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise
of this Warrant, pursuant to the terms hereof.
(e)
Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the
right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such
issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and
any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution
Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the
foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties
shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is
being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised
portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion
of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock
Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the
Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section
2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation
is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in
accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this
Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and
of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise
shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned
by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case
subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination
and shall have no liability for exercises of the Warrant that are not in compliance with the Beneficial Ownership Limitation, except
to the extent the Holder relies on a number of outstanding shares of Common Stock that was provided by the Company. In addition, a determination
as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common
Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic
or annual report filed with the SEC, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written
notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written request
of a Holder, the Company shall within one (1) Trading Day confirm orally and in writing to the Holder the number of shares of Common
Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the
conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since
the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation”
shall be 4.99% (or, upon election by a Holder prior to the issuance of any Warrants, 9.99%) of the number of shares of Common Stock outstanding
immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon written
notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided
that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of
this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the
61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented
in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion
hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes
or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply
to a successor holder of this Warrant. If the Warrant is unexercisable as a result of the Holder’s Beneficial Ownership Limitation,
no alternate consideration is owing to the Holder.
(f)
Redemption Right.
(i)
Beginning on the Initial Exercise Date, this Warrant may be redeemed at the option of the Company, in whole or in part, by giving not
less than thirty (30) days’ prior notice, which notice may not be given before, but may be given at any time after the date on
which (i) the VWAP exceeded $0.34 for ten (10) consecutive Trading Days and (ii) the average daily Trading Value of the Common Stock
for such ten (10) Trading Day period referred to in this Section 2(f)(i) exceeded $150,000.
(ii)
The price at which this Warrant may be redeemed (the “Redemption Price”) is $0.01 per Warrant Share. On and after
the date upon which such Warrant is redeemed by the Company (the “Redemption Date”), the Holder of a redeemed Warrant
shall be entitled to payment of the Redemption Price upon surrender of the Warrant to the Company.
(iii)
Notice of redemption of this Warrant (the “Redemption Notice”) shall be given at least thirty (30) days prior to the
Redemption Date (the “Redemption Notice Date”) by the Company (i) providing notice to the Holder as provided in Section
5(i), (ii) notifying the Holders of such redemption via publication of a press release and (iii) taking such other steps as may be
required under applicable law.
(iv)
From and after the Redemption Date, any Warrant Shares noticed for redemption that have not theretofore been exercised by the Holder
shall cease to represent the right to purchase any shares of Common Stock and shall be deemed canceled and void and of no further force
or effect without any further act or deed on the part of the Company.
(v)
By acceptance of this Warrant, the Holder undertakes to return the certificate representing any redeemed Warrant to the Company upon
their redemption and to indemnify the Company with respect to any losses, claims, damages, or liabilities arising from the Holder’s
failure to return such certificate. In the event the certificate so returned represents a number of Warrant Shares in excess of the number
being redeemed, the Company shall as promptly as practicable issue to the Holder a new certificate in book-entry form for the number
of unredeemed Warrant Shares.
(vi)
Notwithstanding anything to the contrary set forth in this Warrant, the Company may not require the cancellation of this Warrant (and
any related Redemption Notice shall be void), unless, from the beginning of the Redemption Notice Date through the Redemption Date, (1)
the Company shall have honored in accordance with the terms of this Warrant all Notices of Exercise delivered by 6:30 p.m. (New York,
New York time) on the Redemption Date, (2) a registration statement shall be effective as to all Warrant Shares and the prospectus thereunder
available for use by the Company for the sale of all such Warrant Shares to the Holder, (3) the Common Stock shall be listed or quoted
for trading on the Trading Market, (4) there is a sufficient number of authorized shares of Common Stock for issuance of all Warrant
Shares, and (5) the issuance of all Warrant Shares subject to a Redemption Notice shall not cause a breach of any provision of Section
2(e) herein. The Company’s right to call the Warrants under this Section 2(f) shall be exercised ratably among the Holders
based on each Holder’s initial purchase of Warrants.
Section
3. Certain Adjustments.
(a)
Stock Dividends and Splits. In addition to any adjustment provided under Section 2(c), if the Company, at any time while
this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock
or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include
any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into
a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller
number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in
each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common
Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately
adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section
3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend
or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
(b)
Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time that this Warrant
is outstanding the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or
other property pro rata to all of the record holders of any class of shares of Common Stock (the “Purchase Rights”),
then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the
Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant
(without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately
before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, that, to the extent that the Holder’s right to participate in any such Purchase Right would result
in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right
to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase
Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the
Holder exceeding the Beneficial Ownership Limitation).
(c)
Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend,
spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial
Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided,
however, that, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder
exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent
(or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such
Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result
in the Holder exceeding the Beneficial Ownership Limitation). To the extent that this Warrant has not been partially or completely exercised
at the time of such Distribution, such portion of the Distribution shall be held in abeyance for the benefit of the Holder until the
Holder has exercised this Warrant.
(d)
Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or
more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly
or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of
its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer
(whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property and has been accepted by the holders of greater than 50% of the outstanding Common
Stock or greater than 50% of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one or
more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other
than a stock split or stock dividend), or (v) the Company, directly or indirectly, in one or more related transactions consummates a
stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off,
merger or scheme of arrangement (other than a stock split or stock dividend) with another Person or group of Persons whereby such other
Person or group acquires greater than 50% of the outstanding shares of Common Stock or greater than 50% of the voting power of the common
equity of the Company (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the
Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to
the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e)
on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if
it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a
result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately
prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For
purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and
the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value
of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash
or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the
event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable
at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction (or, if later, the date of the
public announcement of the applicable Fundamental Transaction), purchase this Warrant from the Holder by paying to the Holder an amount
of cash equal to the Black Scholes Value (as defined below) of the remaining unexercised portion of this Warrant on the date of the consummation
of such Fundamental Transaction; provided, however, that, if the Fundamental Transaction is not within the Company’s
control, including not approved by the Board of Directors, the Holder shall only be entitled to receive from the Company or any Successor
Entity the same type or form of consideration (and in the same proportion), at the Black Scholes Value of the unexercised portion of
this Warrant, that is being offered and paid to the holders of Common Stock of the Company in connection with the Fundamental Transaction,
whether that consideration be in the form of cash, stock or any combination thereof, or whether the holders of Common Stock are given
the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction; provided,
further, that if holders of Common Stock of the Company are not offered or paid any consideration in such Fundamental Transaction,
such holders of Common Stock will be deemed to have received shares of common stock of the Successor Entity (which Successor Entity may
be the Company following such Fundamental Transaction) in such Fundamental Transaction. “Black Scholes Value” means
the value of this Warrant based on the Black-Scholes Option Pricing Model obtained from the “OV” function on Bloomberg determined
as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest
rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable
contemplated Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of (1) the 30 day volatility,
(2) the 100 day volatility or (3) the 365 day volatility, each of clauses (1)-(3) as obtained from the HVT function on Bloomberg (determined
utilizing a 365 day annualization factor) as of the Trading Day immediately following the public announcement of the applicable contemplated
Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the greater of (i) the sum of the price
per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction
and (ii) the VWAP immediately preceding the public announcement of the applicable contemplated Fundamental Transaction (or the consummation
of the applicable Fundamental Transaction, if earlier), (D) the sum of the remaining option time equal to the time between the date of
the public announcement of the applicable contemplated Fundamental Transaction and the Termination Date and (E) a zero cost of borrow.
The payment of the Black Scholes Value will be made by wire transfer of immediately available funds (or such other consideration) within
the later of (i) five Business Days of the Holder’s election and (ii) the date of consummation of the Fundamental Transaction.
The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor
Entity”) to assume in writing all of the obligations of the Company under this Warrant in accordance with the provisions of
this Section 3(d) pursuant to written agreements in form and substance reasonably satisfactory to the holders of Warrants representing
at least a majority of the shares of Common Stock underlying the Warrants then outstanding without giving effect to any beneficial ownership
limitations (the “Required Holders”) and approved by the Required Holders (without unreasonable delay) prior to such
Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the
Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for
a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common
Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior
to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock
(but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in
form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall be added to the
term “Company” under this Warrant (so that from and after the occurrence or consummation of such Fundamental Transaction,
each and every provision of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead
to each of the Company and the Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor
Entities, jointly and severally with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity
or Successor Entities shall assume all of the obligations of the Company prior thereto under this Warrant and the other Transaction Documents
with the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named as the
Company herein. For the avoidance of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(d)
regardless of (i) whether the Company has sufficient authorized shares of Common Stock for the issuance of Warrant Shares and/or (ii)
whether a Fundamental Transaction occurs prior to the Initial Exercise Date.
(e)
Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as
of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
(f)
Notice to Holder.
(i)
Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the
Company shall promptly deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting
adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment; provided,
however, that the Company may satisfy the notice requirement in this Section 3(f) by filing such information with the Commission
on its Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system pursuant to a Current Report on Form 8-K, Quarterly Report on
Form 10-Q or Annual Report on Form 10-K.
(ii)
Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form other
than a stock split or stock dividend) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock (excluding any granting or issuance of rights to all of the Company’s stockholders pursuant to a
stockholder rights plan), (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe
for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall
be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company (or any of
its Subsidiaries) is a party, any sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby
the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by
facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company,
at least ten (10) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date
on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not
to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share
exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record
shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein
or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent
that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the
Subsidiaries, the Company shall simultaneously file such notice with the SEC pursuant to a Current Report on Form 8-K. The Holder shall
remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering
such notice except as may otherwise be expressly set forth herein.
(g)
Voluntary Adjustment By Company. Subject to the rules and regulations of the Trading Market, the Company may at any time during
the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Company’s
Board of Directors.
(h)
Shareholder Approval. The Company shall hold a meeting of shareholders for, or obtain through written consent, the Shareholder
Approval as soon as practicable following the Issuance Date. After obtaining the Shareholder Approval through such vote, the Company
shall comply with all applicable rules and regulations of the SEC and applicable state laws and provisions of its Certificate of Incorporation
and Bylaws with respect to the Shareholder Approval, and shall use its best efforts to cause the minimal amount of time therefor to apply
before the Shareholder Approval takes effect in accordance with such rules and regulations, laws, and provisions. Without limiting the
generality of the foregoing, the Company shall prepare and file with the SEC any necessary materials or disclosures with the SEC with
respect to the shareholder vote for Shareholder Approval and shall ensure these materials are provided to shareholders of the Company
as soon as practicable thereafter in accordance with the rules and regulations of the SEC. The Company shall promptly provide responses
to the SEC with respect to any comments received from the SEC regarding these materials filed in accordance with this Section 3(h),
and will use reasonable efforts to facilitate the shareholder vote and ensure Shareholder Approval is obtained in a timely manner.
(i)
Reset. Beginning on the Shareholder Approval Date and ending on the Reset Date, the Exercise Price shall be adjusted to equal
the lower of (i) the Exercise Price then in effect and (ii) the Reset Price determined as of the date of determination. Upon such reset
of the Exercise Price pursuant to this Section 3(j), the number of Warrant Shares issuable hereunder shall be increased such that the
aggregate Exercise Price of this Warrant on the Issuance Date for the Warrant Shares then outstanding shall remain unchanged following
such reset. Notwithstanding the foregoing, if a Holder requests to exercise this Warrant in whole or in part on any given date prior
to the Reset Date, solely with respect to such portion of this Warrant being exercised on such applicable Exercise Date, (a) such applicable
Reset Date shall be deemed to mean the Exercise Date, (b) such applicable Reset Period shall be deemed to have ended on the Trading Day
immediately prior to the Exercise Date and (c) the applicable Reset Price for such exercised Warrants shall be calculated pursuant to
this Section 3(j). For the avoidance of doubt, following the calculation of the Reset Price pursuant to this Section 3(j), the Company’s
obligations with regard to such exercised Warrants shall be deemed satisfied and no additional Reset Price shall apply to such exercised
Warrants.
Section
4. Transfer of Warrant.
(a)
Transferability. Subject to compliance with any applicable securities laws, this Warrant and all rights hereunder (including,
without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office
of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto
as Exhibit B duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon
the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant
or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument
of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant
shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender
this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant
to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning this
Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant
Shares without having a new Warrant issued.
(b)
New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of
the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by
the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be
divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Issuance Date of
this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
(c)
Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the
“Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder,
and for all other purposes, absent actual notice to the contrary.
Section
5. Miscellaneous.
(a)
Reverse Stock Split. If at any time this Warrant is outstanding and the Company receives notice from the Trading Market that the
Company is failing to satisfy the Trading Market’s minimum bid price requirement (the “Trigger Date”), then
the Company shall use reasonable efforts to obtain the necessary consents and approvals to undertake a reverse stock split after such
Trigger Date and shall, prior to the effectiveness of any delisting notice issued by the Trading Market, effect such reverse stock split.
(b)
No Rights as Stockholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights,
dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except
as expressly set forth in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise”
pursuant to Section 2(c) or to receive cash payments pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, in
no event shall the Company be required to net cash settle an exercise of this Warrant.
(c)
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares,
and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant,
shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the
Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant
or stock certificate.
(d)
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Trading
Day.
(e)
Authorized Shares.
The
Company covenants that, from the Initial Exercise Date and thereafter during the period the Warrant is outstanding, it will reserve from
its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise
of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority
to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under
this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as
provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common
Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance
herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the
Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale
of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary
or appropriate to protect the rights of Holder as set forth in this Warrant against impairment (it being understood that this Warrant
shall not in any case prevent the Company from effecting any such amendment, reorganization, transfer, consolidation, merger, dissolution,
issuance or sale). Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares
above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may
be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon
the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under
this Warrant.
Before
taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from
any public regulatory body or bodies having jurisdiction thereof.
(f)
Governing Law; Exclusive Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of
this Warrant shall be determined in accordance with the provisions of the Purchase Agreement, and any action relating to this Warrant
shall only be brought as provided in the Purchase Agreement.
(g)
Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and
the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
(h)
Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall
operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that
the right to exercise this Warrant terminates on the Termination Date. Without limiting any other provision of this Warrant, if the Company
willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the
Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable
attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto
or in otherwise enforcing any of its rights, powers or remedies hereunder.
(i)
Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall
be delivered in accordance with the notice provisions of the Purchase Agreement.
(j)
Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant
to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of
the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.
(k)
Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will
be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law would be adequate.
(l)
Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall
inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns
of the Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and
shall be enforceable by the Holder or holder of Warrant Shares.
(m)
Amendment and Waiver. Except as otherwise provided herein, the provisions of this Warrant may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the
written consent of the Required Holders. Any such amendment shall apply to all Warrants outstanding and be binding upon all registered
holders of such Warrants.
(n)
Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining
provisions of this Warrant.
(o)
Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed
a part of this Warrant.
********************
(Signature
Page Follows)
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above
indicated.
| ALGORHYTHM HOLDINGS, INC. |
|
| |
|
|
| By: |
|
|
| Name: |
|
|
| Title: |
|
|
EXHIBIT
A
NOTICE
OF EXERCISE
TO:
ALGORHYTHM HOLDINGS, INC.
(1)
The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only
if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2)
Payment shall take the form of (check applicable box):
☐
in lawful money of the United States; or
☐
if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection
2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure
set forth in subsection 2(c).
(3)
Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
Name
of Investing Entity:
________________________________________________________________________
Signature
of Authorized Signatory of Investing Entity:
_________________________________________________
Name
of Authorized Signatory:
___________________________________________________________________
Title
of Authorized Signatory:
____________________________________________________________________
Date:
___________________________________________________________________________
EXHIBIT
B
ASSIGNMENT
FORM
(To
assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
| Name: |
______________________________________ |
|
(Please
Print)
|
| Address: |
______________________________________ |
Phone
Number:
Email
Address:
|
(Please
Print)
______________________________________
______________________________________
|
Dated:
_______________ __, ______
|
|
Holder’s
Signature: ___________________
|
|
Holder’s
Address: ____________________
|
|
Exhibit
4.3
PRE-FUNDED
COMMON STOCK PURCHASE WARRANT
ALGORHYTHM
HOLDINGS, INC.
| Warrant
Shares: [*] |
Initial
Issuance Date: December 6, 2024 |
THIS
PRE-FUNDED COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, ______________ or its
assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter
set forth at any time on or after the date hereof (such date, the “Initial Exercise Date”) until the date this Warrant
is exercised in full (the “Termination Date”) but not thereafter, to subscribe for and purchase from Algorhythm Holdings,
Inc., a Delaware corporation (the “Company”), up to ______ shares (the “Warrant Shares”) of common
stock, par value $0.01 per share, of the Company (“Common Stock”), subject to adjustment hereunder. The purchase price
of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section
1. Definitions. In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated
in this Section 1. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities
Purchase Agreement (the “Purchase Agreement”), dated December 4, 2024, among the Company and the purchasers signatory
thereto.
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Alternate
Consideration” shall have the meaning set forth in Section 3(d).
“Attribution
Parties” shall have the meaning set forth in Section 2(e).
“Beneficial
Ownership Limitation” shall have the meaning set forth in Section 2(e).
“Bid
Price” means, for any date, the price determined by the first of the following clauses that applies: (i) if the Common Stock
is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m.
(New York, New York time) to 4:02 p.m. (New York, New York time)), (ii) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (iii) if the Common
Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open
Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of
the Common Stock so reported, or (iv) in all other cases, the fair market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable
to the Company, the fees and expenses of which shall be paid by the Company.
“Bloomberg”
means Bloomberg L.P., or any successor thereto.
“Board
of Directors” means the board of directors of the Company.
“Business
Day” means any day other than Saturday, Sunday, or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed.
“Buy-In”
shall have the meaning set forth in Section 2(d)(iv).
“Common
Stock” shall have the meaning set forth in the Preamble.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant, or other instrument that
is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Company”
shall have the meaning set forth in the Preamble.
“Distribution”
shall have the meaning set forth in Section 3(c).
“DWAC”
shall have the meaning set forth in Section 2(d)(i).
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exercise
Price” shall have the meaning set forth in Section 2(b).
“Fundamental
Transaction” shall have the meaning set forth in Section 3(d).
“Holder”
shall have the meaning set forth in the Preamble.
“Initial
Exercise Date” shall have the meaning set forth in the Preamble.
“Notice
of Exercise” shall have the meaning set forth in Section 2(a).
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof), or other entity of any kind.
“Placement
Agency Agreement” means the placement agency agreement, dated as of December 4, 2024, by and between the Company and Univest
Securities, LLC.
“Purchase
Agreement” shall have the meaning set forth in Section 1.
“Purchase
Rights” shall have the meaning set forth in Section 3(b).
“Registration
Statement” means the Company’s registration statement on Form S-1, as amended (File No. 333283178).
“SEC”
means the United States Securities and Exchange Commission.
“Securities
Act” means the Securities Act of 1933 and the rules and regulations promulgated thereunder.
“Standard
Settlement Period” shall have the meaning set forth in Section 2(d)(i).
“Subsidiary”
means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed
or acquired after the date hereof.
“Successor
Entity” shall have the meaning set forth in Section 3(d).
“Termination
Date” shall have the meaning set forth in the Preamble.
“Trading
Day” means a day on which the Trading Market is open for trading.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: The Nasdaq Capital Market, The Nasdaq Global Market, The Nasdaq Global Select Market, the New York Stock Exchange, or the
NYSE American, (or any successors to any of the foregoing).
“Transfer
Agent” means Continental Stock Transfer & Trust Company, the current transfer agent of the Company, with a mailing address
of 1 State Street, 30th Floor, New York, NY 10004-1561 and a phone number of (212) 509-4000, and any successor transfer agent of the
Company.
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (i) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m.
(New York, New York time) to 4:02 p.m. (New York, New York time)), (ii) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (iii) if the Common
Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open
Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of
the Common Stock so reported, or (iv) in all other cases, the fair market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the holders of a majority in interest of the Warrants then outstanding and reasonably acceptable
to the Company, the fees and expenses of which shall be paid by the Company.
“Warrants”
means this Warrant and other Pre-Funded Common Stock purchase warrants issued by the Company pursuant to the Registration Statement.
“Warrant
Register” shall have the meaning set forth in Section 4(c).
“Warrant
Share Delivery Date” shall have the meaning set forth in Section 2(d)(i).
“Warrant
Shares” shall have the meaning set forth in the Preamble.
Section
2. Exercise.
| a) |
Exercise
of Warrant. Subject to the terms and conditions hereof, exercise of the purchase rights represented by this Warrant may be made,
in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery
to the Company of a duly executed facsimile copy or PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise
substantially in the form attached hereto as Exhibit A (the “Notice of Exercise”). Within the earlier of
(i) one (1) Trading Day and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i)
herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the number of
Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States
bank unless the cashless exercise procedure specified in Section 2(c) below is applicable and specified in the attached Notice
of Exercise. The Company shall have no obligation to inquire with respect to or otherwise confirm the authenticity of the signature(s)
contained on any Notice of Exercise nor the authority of the person so executing such Notice of Exercise. No ink-original Notice
of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise
be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant
to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in
full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the
date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases
of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of
Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the
Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver
any objection to any Notice of Exercise within one (1) Trading Day of receipt of such notice. The Holder and any assignee, by
acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of
a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be
less than the amount stated on the face hereof. |
| b) |
Exercise
Price. The aggregate exercise price of this Warrant, except for a nominal exercise price of $0.01 per Warrant Share, was pre-funded
to the Company on or prior to the Initial Exercise Date and, consequently, no additional consideration (other than the nominal exercise
price of $0.01 per Warrant Share) shall be required to be paid by the Holder to any Person to effect any exercise of this Warrant.
The Holder shall not be entitled to the return or refund of all, or any portion, of such pre-paid aggregate exercise price under
any circumstance or for any reason whatsoever, including in the event this Warrant shall not have been exercised prior to the Termination
Date. The remaining unpaid exercise price per share of Common Stock under this Warrant shall be $0.01, subject to adjustment hereunder
(the “Exercise Price”). |
| c) |
Cashless
Exercise. This Warrant may be exercised, in whole or in part, at such time by means of a “cashless exercise” in which
the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A),
where: |
| |
(A)
= |
as
applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of
Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both
executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours”
(as defined in Rule 600(b)(68) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) the VWAP
on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (iii) the VWAP on the date of the applicable
Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered
pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day; |
| |
(B)
= |
the
Exercise Price of this Warrant, as adjusted hereunder; and |
| |
(X)
= |
the
number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such
exercise were by means of a cash exercise rather than a cashless exercise. |
If
Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the
Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The Company agrees not
to take any position contrary to this Section 2(c).
d)
Mechanics of Exercise.
i.
Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by
the Transfer Agent by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company
through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system
and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant
Shares by the Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery of a certificate,
registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which
the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is
the earliest of (i) one (1) Trading Day after the delivery of the Notice of Exercise to the Company, (ii) one (1) Trading Day after delivery
of the aggregate Exercise Price to the Company, and (iii) the number of days comprising the Standard Settlement Period after the delivery
to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”) provided that payment of the
aggregate Exercise Price (other than in the instance of a cashless exercise) is received by the Company by such date. Upon delivery of
the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares
with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment
of the aggregate Exercise Price (other than in the case of a cashless exercise) is received by the Warrant Share Delivery Date. If the
Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery
Date, provided that payment of the aggregate Exercise Price (other than in the instance of a cashless exercise) is received by the Company
by such date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares
subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day
(increasing to $20 per Trading Day on the fifth Trading Day after the Warrant Share Delivery Date) for each Trading Day after such Warrant
Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer
agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard
Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary
Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise. Notwithstanding the foregoing,
with respect to any Notice(s) of Exercise delivered on or prior to 12:00 p.m. (New York, NY time) on the Initial Exercise Date, which
may be delivered at any time after the time of execution of the Purchase Agreement, the Company agrees to deliver the Warrant Shares
subject to such notice(s) by 4:00 p.m. (New York, NY time) on the Initial Exercise Date and the Initial Exercise Date shall be the Warrant
Share Delivery Date for purposes hereunder, provided that payment of the aggregate Exercise Price (other than in the case of a cashless
exercise) is received by such Warrant Share Delivery Date.
ii.
Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of
a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in
all other respects be identical with this Warrant.
iii.
Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section
2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv.
Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to
the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions
of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, (other than a failure caused by
incorrect or incomplete information provided by the Holder to the Company), and if after such date the Holder is required by its broker
to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock
to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a
“Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained
by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise
at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the
Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in
which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been
issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of Warrants with an aggregate
sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall
be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder
in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s
right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise
of the Warrant as required pursuant to the terms hereof.
v.
No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company
shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole share.
vi.
Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax
or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company,
and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided,
however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the assignment form attached hereto as Exhibit B duly executed by the Holder
and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental
thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the
Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic
delivery of the Warrant Shares.
vii.
Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise
of this Warrant, pursuant to the terms hereof.
| e) |
Holder’s
Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise
any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after
exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other
Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)),
would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence,
the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the
number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but
shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion
of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion
of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common
Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned
by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this
Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that
such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required
to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination
of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution
Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of
a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to
other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is
exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm
the accuracy of such determination and shall have no liability for exercises of the Warrant that are not in compliance with the Beneficial
Ownership Limitation, except to the extent the Holder relies on a number of outstanding shares of Common Stock that was provided
by the Company. In addition, a determination as to any group status as contemplated above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, and the Company shall have no obligation
to verify or confirm the accuracy of such determination and shall have no liability for exercises of the Warrant that are not in
compliance with the Beneficial Ownership Limitation, except to the extent the Holder relies on the number of outstanding shares of
Common Stock that was provided by the Company. For purposes of this Section 2(e), in determining the number of outstanding
shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s
most recent periodic or annual report filed with the SEC, as the case may be, (B) a more recent public announcement by the Company
or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.
Upon the written request of a Holder, the Company shall within one (1) Trading Day confirm orally and in writing to the Holder the
number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined
after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates
or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial
Ownership Limitation” shall be 4.99% (or, upon election by a Holder prior to the issuance of any Warrants, 9.99%) of the
number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon
exercise of this Warrant. The Holder, upon written notice to the Company, may increase or decrease the Beneficial Ownership Limitation
provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number
of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of
this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial
Ownership Limitation will not be effective until the sixty-first (61st) day after such notice is delivered to the Company. The provisions
of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section
2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership
Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a successor holder of this Warrant. If the Warrant is unexercisable as
a result of the Holder’s Beneficial Ownership Limitation, no alternate consideration is owing to the Holder. |
Section
3. Certain Adjustments.
a)
Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares
of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the
Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which
the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of
shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant
shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after
the effective date in the case of a subdivision, combination or re-classification.
b)
Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time while this Warrant
is outstanding the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or
other property pro rata to all of the record holders of any class of shares of Common Stock (the “Purchase Rights”),
then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the
Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant
(without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately
before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, that to the extent that the Holder’s right to participate in any such Purchase Right would result
in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right
to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase
Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the
Holder exceeding the Beneficial Ownership Limitation).
c)
Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend,
spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial
Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided,
however, that to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding
the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in
the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution
shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation). To the extent that this Warrant has not been partially or completely exercised at the
time of such Distribution, such portion of the Distribution shall be held in abeyance for the benefit of the Holder until the Holder
has exercised this Warrant.
d)
Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or
more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly
or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of
its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer
(whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property and has been accepted by the holders of greater than 50% of the outstanding Common
Stock or greater than 50% of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one or
more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other
than a stock split or stock dividend), or (v) the Company, directly or indirectly, in one or more related transactions consummates a
stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off,
merger or scheme of arrangement (other than a stock split or stock dividend)) with another Person or group of Persons whereby such other
Person or group acquires greater than 50% of the outstanding shares of Common Stock or greater than 50% of the voting power of the common
equity of the Company (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the
Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to
the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e)
on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if
it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a
result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately
prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For
purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and
the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value
of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash
or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in
a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all
of the obligations of the Company under this Warrant in accordance with the provisions of this Section 3(d) pursuant to written
agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior
to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security
of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable
for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common
Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior
to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock
(but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in
form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall be added to the
term “Company” under this Warrant (so that from and after the occurrence or consummation of such Fundamental Transaction,
the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to each
of the Company and the Successor Entity, or Successor Entities, jointly and severally), and the Successor Entity or Successor Entities,
jointly and severally with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity or Successor
Entities shall assume all of the obligations of the Company prior thereto under this Warrant and the other Transaction Documents with
the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named as the Company
herein. For the avoidance of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(d) regardless
of (i) whether the Company has sufficient authorized shares of Common Stock for the issuance of Warrant Shares and/or (ii) whether a
Fundamental Transaction occurs prior to the Initial Exercise Date.
e)
Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as
of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
f)
Notice to Holder.
(i)
Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the
Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and
any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment;
provided, however, that the Company may satisfy this notice requirement in this Section 3(f) by filing such notice with the SEC
pursuant to a Current Report on Form 8-K, Quarterly Report on Form 10-Q or Annual Report on Form 10-K.
(ii)
Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form other
than a stock split or stock dividend) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to
subscribe for or purchase any shares of capital stock of any class or of any rights (excluding any granting or issuance of rights to
all of the Company’s shareholders pursuant to a shareholder rights plan), (D) the approval of any stockholders of the Company shall
be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party,
any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation
or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the
Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least twenty (20)
calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record
is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the
date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants
are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected
to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation,
merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof
shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided
in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company
shall simultaneously file such notice with the SEC pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise
this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except
as may otherwise be expressly set forth herein.
g)
Voluntary Adjustment by Company. Subject to the rules and regulations of the Trading Market, the Company may at any time during
the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board
of Directors.
Section
4. Transfer of Warrant.
a)
Transferability. Subject to compliance with any applicable securities laws, this Warrant and all rights hereunder (including,
without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office
of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto
duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.
Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall
issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.
Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company
unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three
(3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning this Warrant in full. The Warrant,
if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new
Warrant issued.
b)
New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of
the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by
the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be
divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise
Date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c)
Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the
“Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder,
and for all other purposes, absent actual notice to the contrary.
Section
5. Miscellaneous.
a)
No Rights as Stockholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights,
dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except
as expressly set forth in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise”
pursuant to Section 2(c) or to receive cash payments pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, in
no event shall the Company be required to net cash settle an exercise of this Warrant.
b)
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares,
and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant,
shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the
Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant
or stock certificate.
c)
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Trading
Day.
d)
Authorized Shares. The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized
and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase
rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers
who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The
Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be
listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this
Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith,
be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in
respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale
of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary
or appropriate to protect the rights of Holder as set forth in this Warrant against impairment (it being understood that this Warrant
shall not in any case prevent the Company from effecting any such amendment, reorganization, transfer, consolidation, merger, dissolution,
issuance or sale). Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares
above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may
be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon
the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under
this Warrant.
Before
taking any action, which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from
any public regulatory body or bodies having jurisdiction thereof.
e)
Governing Law; Exclusive Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of
this Warrant shall be determined in accordance with the provisions of the Purchase Agreement, and any action relating to this Warrant
shall only be brought as provided in the Purchase Agreement.
f)
Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and
the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
g)
Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall
operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that
the right to exercise this Warrant terminates on the Termination Date. Without limiting any other provision of this Warrant, if the Company
willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the
Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable
attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto
or in otherwise enforcing any of its rights, powers or remedies hereunder.
h)
Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall
be delivered in accordance with the notice provisions of the Purchase Agreement.
i)
Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant
to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of
the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.
j)
Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will
be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law would be adequate.
k)
Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall
inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns
of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall
be enforceable by the Holder or holder of Warrant Shares.
l)
Amendment and Waiver. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the
Company, on the one hand, and the Holder or the beneficial owner of this Warrant, on the other hand.
m)
Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining
provisions of this Warrant.
n)
Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed
a part of this Warrant.
********************
(Signature
Page Follows)
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above
indicated.
| Algorhythm holdings, INC. |
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| By: |
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| Name: |
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| Title: |
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NOTICE
OF EXERCISE
TO:
ALGORHYTHM HOLDINGS, INC.
(1)
The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only
if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2)
Payment shall take the form of (check applicable box):
☐
in lawful money of the United States; or
☐
if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection
2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure
set forth in subsection 2(c).
(3)
Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
Name
of Investing Entity:
________________________________________________________________________
Signature
of Authorized Signatory of Investing Entity:
_________________________________________________
Name
of Authorized Signatory:
___________________________________________________________________
Title
of Authorized Signatory:
____________________________________________________________________
Date:
___________________________________________________________________________
ASSIGNMENT
FORM
(To
assign the foregoing Warrant, execute this form and supply required information. Do not use this form to exercise the Warrant to purchase
shares.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
| Name: |
______________________________________ |
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(Please
Print)
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| Address: |
______________________________________ |
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(Please
Print) |
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| Phone
Number: |
______________________________________ |
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| Email
Address: |
______________________________________ |
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Dated:
_______________ __, ______
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Holder’s
Signature: ___________________
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Holder’s
Address: ____________________
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Exhibit
10.1
SECURITIES
PURCHASE AGREEMENT
THIS
SECURITIES PURCHASE AGREEMENT (this “Agreement”) is entered into and made effective as of December 4, 2024, between
ALGORHYTHM HOLDINGS, INC., a Delaware corporation (the “Company”), and each purchaser identified on the signature
pages hereto (each, including its successors and assigns, a “Purchaser” and collectively the “Purchasers”).
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to an effective registration statement under the Securities
Act of 1933, as amended (the “Securities Act”) as to the Shares, the Pre-Funded Warrants, the Series A Warrants, and
the Series B Warrants (each as defined herein) (collectively, the “Securities”), the Company desires to issue and
sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, the Securities of the Company
as provided in this Agreement.
NOW,
THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt
and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:
ARTICLE
I.
DEFINITIONS
1.1
Definitions. In addition to the words and terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following
words and terms have the meanings set forth in this Section 1.1:
“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.5.
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person as such terms are used in and construed under Rule 405 under the Securities Act.
“Agreement”
shall have the meaning ascribed to such term in the Preamble.
“BHCA”
shall have the meaning ascribed to such term in Section 3.1(ii).
“Board
of Directors” means the board of directors of the Company.
“Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed.
“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section 2.1.
“Closing
Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties
thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s
obligations to deliver the Securities, in each case, have been satisfied or waived, but in no event later than the first (1st) Trading
Day following the date hereof (or the second (2nd) Trading Day following the date hereof if this Agreement is signed on a day that is
not a Trading Day or after 4:00 p.m. (New York, NY time) and before midnight (New York, NY time) on a Trading Day).
“Common
Stock” means the common stock of the Company, par value $0.01 per share.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time shares of Common Stock, including, without limitation, any debt, preferred shares, right, option, warrant or other instrument
that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, shares
of Common Stock.
“Company”
shall have the meaning ascribed to such term in the Preamble.
“Company
Counsel” means Sichenzia Ross Ference Carmel LLP, counsel to the Company.
“Control”
(including the terms “Controlled by” and “under common Control with”) means the possession, directly
or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership
of voting securities, as trustee or executor, by contract or otherwise, including the ownership, directly or indirectly, of securities
having the power to elect a majority of the board of directors or similar body governing the affairs of such person or securities that
represent a majority of the outstanding voting securities of such person.
“Disclosure
Time” means, (i) if this Agreement is signed on a day that is not a Trading Day or after 9:00 a.m. (New York, NY time) and
before midnight (New York, NY time) on any Trading Day, 9:01 a.m. (New York, NY time) on the Trading Day immediately following the date
hereof, unless otherwise instructed as to an earlier time by the Placement Agent, and (ii) if this Agreement is signed between midnight
(New York, NY time) and 9:00 a.m. (New York, NY time) on any Trading Day, no later than 9:01 a.m. (New York, NY time) on the date hereof,
unless otherwise instructed as to an earlier time by the Placement Agent.
“DVP”
shall have the meaning ascribed to such term in Section 2.1.
“DWAC”
shall have the meaning ascribed to such term in Section 2.2(a)(ii).
“EDGAR”
means the Electronic Data Gathering, Analysis, and Retrieval System.
“ERISA”
shall have the meaning ascribed to such term in Section 3.2(j).
“Evaluation
Date” shall have the meaning ascribed to such term in Section 3.1(r).
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exempt
Issuance” means the issuance of (i) shares of Common Stock, restricted stock units, or options, including the shares of Common
Stock underlying the restricted stock units or options, to employees, officers, directors, or consultants of the Company pursuant to
any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority
of the members of a committee of non-employee directors established for such purpose for services rendered to the Company, (ii) Common
Stock issued upon the exercise or exchange of or conversion of any Warrants issued hereunder or Common Stock Purchase Warrants issued
to the Placement Agent in connection with the Offering and/or other securities exercisable or exchangeable for or convertible into shares
of Common Stock issued and outstanding on the date of this Agreement provided that such securities have not been amended since
the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price, or conversion
price of such securities (other than in connection with stock splits or combinations or anti-dilution provisions contained therein as
disclosed in the SEC Reports and the Prospectus) or to extend the term of such securities or securities issuable in connection with a
transaction involving the Company and existing stockholders in which the Company offers the existing stockholders the option to exchange
their shares of Common Stock for other securities of the Company, (iii), securities issued pursuant to merger, acquisition, or strategic
transactions approved by a majority of the disinterested directors of the Company, provided that such securities are issued as
“restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the filing of any
registration statement in connection therewith during the prohibition period in Section 4.11(a) herein, and provided, further
that any such issuance shall only be to a Person that (or to the equity holders of a Person) which is, itself or through its subsidiaries,
an operating company, or an owner of an asset in a business synergistic with the business of the Company and in which the Company receives
benefits in addition to any investment of funds, but shall not include a transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary business is investing in securities, (iv) securities for settlement
of outstanding payables or liabilities provided that such securities are issued as “restricted securities” (as defined
in Rule 144) and carry no registration rights that require or permit the filing of any registration statement in connection therewith
during the prohibition period in Section 4.11(a) herein, and (v) up to $10,000,000 of securities issued to other purchasers pursuant
to the Prospectus concurrently with the Closing at the Per Share Purchase Price, less the aggregate Subscription Amount pursuant to this
Agreement.
“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.
“Federal
Reserve” shall have the meaning ascribed to such term in Section 2.2(a)(ii).
“FTC”
shall have the meaning ascribed to such term in Section 3.1(l).
“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).
“GDPR”
shall have the meaning ascribed to such term in Section 3.1(nn).
“Indebtedness”
shall have the meaning ascribed to such term in Section 3.1(z).
“Issuer
Free Writing Prospectus” shall have the meaning ascribed to such term in Section 3.1(f).
“IT
Systems and Data” shall have the meaning ascribed to such term in Section 3.1(mm).
“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).
“Liens”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Lock-Up
Agreement” means the Lock-Up Agreement, dated as of the date hereof, by and among the Placement Agent and the directors, officers,
and certain 5% stockholders of the Company, substantially in the form of Exhibit A attached hereto.
“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).
“Material
Permits” shall have the meaning ascribed to such term in Section 3.1(m).
“Misconduct”
shall have the meaning ascribed to such term in Section 3.1(k).
“Money
Laundering Laws” shall have the meaning ascribed to such term in Section 3.1(jj).
“Non-cooperative
Jurisdiction” shall have the meaning ascribed to such term in Section 3.2(i).
“OFAC”
shall have the meaning ascribed to such term in Section 3.1(gg).
“Offering”
shall mean the offering of the Securities contemplated by this Agreement and the Registration Statement.
“Per
Share Purchase Price” equals $0.17, subject to adjustment for reverse and forward share splits, share dividends, share combinations
and other similar events with respect to shares of Common Stock that occur after the date of this Agreement and prior to the Closing;
provided that the purchase price per Pre-Funded Warrant shall be the Per Share Purchase Price minus $0.01.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint share company, government (or an agency or subdivision thereof) or other entity of any kind.
“Personal
Data” shall have the meaning ascribed to such term in Section 3.1(nn).
“Placement
Agency Agreement” means the Placement Agency Agreement by and between the Company and the Placement Agent dated as of December
4, 2024, as it may be amended from time to time.
“Placement
Agent” means Univest Securities, LLC.
“Policies”
shall have the meaning ascribed to such term in Section 3.1(nn).
“Pre-Funded
Warrants” means the Common Stock Purchase Warrants delivered to certain of the Purchasers at the Closing in accordance with
Section 2.2(a)(iii) hereof to the extent any Purchasers elect to receive Pre-Funded Warrants in lieu of Shares, which Pre-Funded Warrants
shall be exercisable into shares of Common Stock and shall be in the form of Exhibit B attached hereto, which Pre-Funded Warrants
shall be exercisable beginning on the Initial Exercise Date (as defined therein) until all of the Pre-Funded Warrants have been exercised,
and shall be exercisable at an exercise price of $0.01 per share.
“Preliminary
Prospectus” means the preliminary prospectus dated November 12, 2024, filed with the SEC.
“Pre-Settlement
Period” shall have the meaning set forth in Section 5.21.
“Pre-Settlement
Shares” shall have the meaning set forth in Section 5.21.
“Privacy
Laws” shall have the meaning ascribed to such term in Section 3.1(nn).
“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, a preliminary inquiry, an informal investigation
or a partial proceeding, such as a deposition), whether commenced or threatened.
“Prospectus”
means the final prospectus filed for the Registration Statement.
“Purchaser”
shall have the meaning ascribed to such term in the Preamble.
“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.8.
“Registration
Statement” means the effective registration statement on Form S-1 filed with SEC (File No. 333-283178) which registers the
sale of the Securities to the Purchasers, and shall include the Rule 462(b) Registration Statement if applicable.
“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).
“Rule
144” means Rule 144 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended or interpreted from
time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same purpose and effect as such
Rule.
“Rule
424” means Rule 424 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended or interpreted from
time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same purpose and effect as such
Rule.
“Rule
462(b) Registration Statement” means any registration statement prepared by the Company registering additional Securities,
which was filed with the SEC on or prior to the date hereof and became automatically effective pursuant to Rule 462(b) promulgated by
the SEC pursuant to the Securities Act, if applicable.
“SEC”
means the Securities and Exchange Commission.
“SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(h).
“Securities”
means the Shares and the Warrants.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Series
A Warrants” means the Common Stock Purchase Warrants delivered to the Purchasers at the Closing in accordance with Section
2.2(a)(iii) hereof, which Series A Warrants shall be exercisable into shares of Common Stock and shall be in the form of Exhibit C
attached hereto, which Series A Warrants shall be exercisable beginning on the Initial Exercise Date (as defined therein), have a
term of five years from the Series A Warrants’ Initial Exercise Date, and shall be exercisable at an exercise price of $0.17 per
share.
“Series
B Warrants” means the Common Stock Purchase Warrants delivered to the Purchasers at the Closing in accordance with Section
2.2(a)(iii) hereof, which Series B Warrants shall be exercisable into shares of Common Stock and shall be in the form of Exhibit D
attached hereto, which Series B Warrants shall be exercisable beginning on the Initial Exercise Date (as defined therein), have a
term of two and a half (2.5) years from the Series B Warrants’ Initial Exercise Date, and shall be exercisable at an exercise price
of $0.34 per share.
“Shareholder
Approval” means such approval as may be required by the applicable rules and regulations of The Nasdaq Stock Market LLC (or
any successor entity) from the shareholders of the Company with respect to (i) reduction to the applicable floor price in the Warrants
inapplicable, (ii) adjustment terms in the Warrants, (iii) issuance of all of the Warrant Shares upon the exercise the Warrants in accordance
with their terms (including adjustment provisions set forth therein), and (iv) to consent to any adjustment to the exercise price or
number of shares of Common Stock underlying the Warrants in the event of a Dilutive Issuance and Reset Date (as defined in the Warrants).
“Shareholder
Approval Date” means the first Trading Day following the Company’s notice to the Purchasers of Shareholder Approval,
which notice shall be provided within two Trading Days of the effectiveness Company’s receipt of the Shareholder Approval in accordance
with SEC rules and regulations and applicable law and provisions of the Company’s Certificate of Incorporation and Bylaws, including
the requirements with respect to filing and mailing a proxy statement on Schedule 14A. Notwithstanding anything to the contrary, such
notice shall be deemed to be given by a public filing with the SEC disclosing the effectiveness of the Shareholder Approval.
“Shares”
means the shares of Common Stock which are issuable to each Purchaser pursuant to this Agreement.
“Shell
Bank” shall have the meaning ascribed to such term in Section 3.2(h).
“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be
deemed to include locating and/or borrowing shares of Common Stock).
“Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for the Shares or Pre-Funded Warrants (in lieu of Shares)
and Warrants purchased hereunder as specified below such Purchaser’s name on the signature page of this Agreement and next to the
heading “Subscription Amount,” in United States dollars and in immediately available funds (minus, if applicable, a Purchaser’s
aggregate exercise price of the Pre-Funded Warrants, which amounts shall be paid as and when such Pre-Funded Warrants are exercised for
cash).
“Subsidiary”
of any person means any corporation, partnership, limited liability company, joint stock company, joint venture or other organization
or entity, whether incorporated or unincorporated, which is Controlled by such Person, and shall, where applicable, also include any
direct or indirect subsidiary of the Company formed or acquired after the date of this Agreement.
“Trading
Day” means a day on which the principal Trading Market is open for trading.
“Trading
Market” means any of the following markets or exchanges on which the shares of Common Stock are listed or quoted for trading
on the date in question: the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange,
or the NYSE American (or any successors to any of the foregoing).
“Transaction
Documents” means this Agreement, the Lock-Up Agreements, the Warrants, all exhibits and schedules thereto and hereto and any
other documents or agreements executed in connection with the transactions contemplated hereunder.
“Transfer
Agent” means Continental Stock Transfer & Trust Company, the current transfer agent of the Company, with a mailing address
of 1 State Street, 30th Floor, New York, NY 10004-1561 and a phone number of (212) 509-4000, and any successor transfer agent of the
Company.
“Variable
Rate Transaction” shall have the meaning ascribed to such term in Section 4.11(b).
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (i) if the shares of Common Stock are then
listed or quoted on a Trading Market, the daily volume weighted average price of a share of Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the shares of Common Stock are then listed or quoted as reported by Bloomberg L.P. (based
on a Trading Day from 9:30 a.m. (New York, NY time) to 4:02 p.m. (New York, NY time)), (ii) if the OTCQB or OTCQX is not a Trading Market,
the volume weighted average price of a share of Common Stock for such date (or the nearest preceding date) on the OTCQB or OTCQX, (iii)
if shares of Common Stock are not then listed or quoted for trading on the OTCQB or OTCQX and if prices for shares of Common Stock are
then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to
its functions of reporting prices), the most recent bid price per share of Common Stock so reported, or (iv) in all other cases, the
fair market value per share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority
in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid
by the Company.
“Warrants”
means, collectively, the Pre-Funded Warrants, the Series A Warrants and the Series B Warrants.
“Warrant
Shares” means the shares of Common Stock issuable upon exercise of the Warrants.
ARTICLE
II.
PURCHASE
AND SALE
2.1
Closing.
(a)
On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery
of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase,
up to an aggregate of $10,000,000 of the Shares and/or the Pre-Funded Warrants and the corresponding Warrants subscribed for by such
Purchaser. Notwithstanding anything herein to the contrary, to the extent that a Purchaser determines, in its sole discretion, that such
Purchaser’s Subscription Amount (together with such Purchaser’s Affiliates, and any Person acting as a group together with
such Purchaser or any of such Purchaser’s Affiliates) would cause such Purchaser’s beneficial ownership of the shares of
Common Stock to exceed the Beneficial Ownership Limitation, or as such Purchaser may otherwise choose, such Purchaser may elect to purchase
Pre-Funded Warrants in lieu of the Shares as determined pursuant to Section 2.2(a). The “Beneficial Ownership Limitation”
shall be 4.99% (or, with respect to each Purchaser, at the election of the Purchaser at Closing, 9.99%) of the number of shares of the
Common Stock outstanding immediately after giving effect to the issuance of the Shares on the Closing Date. In each case, the election
to receive Pre-Funded Warrants is solely at the option of the Purchaser. Each Purchaser’s Subscription Amount as set forth on the
signature page hereto executed by such Purchaser shall be made available for “Delivery Versus Payment” (“DVP”)
settlement with the Company or its designee. The Company shall deliver to each Purchaser its respective Shares, Pre-Funded Warrants,
Series A Warrants and Series B Warrants, as applicable and as indicated on such Purchaser’s signature page hereto and determined
based on its respective Subscription Amount and election for Shares and/or Pre-Funded Warrants, and the Company and each Purchaser shall
deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions
set forth in Sections 2.2 and 2.3, the Closing shall occur remotely by electronic transfer of the Transaction Documents
and other items deliverable hereunder. Unless otherwise directed by the Placement Agent, settlement of the Shares shall occur via DVP
(i.e., on the Closing Date, the Company shall issue the Securities registered in the Purchasers’ names and addresses, and the Shares
shall be released by the Transfer Agent directly to the account(s) at the Placement Agent identified by each Purchaser; upon receipt
of such Shares, the Placement Agent shall promptly electronically deliver such Shares to the applicable Purchaser, and payment therefor
shall be made by the Placement Agent (or its clearing firm) by wire transfer to the Company).
(b)
Each Purchaser acknowledges that, concurrently with the Closing and pursuant to the Prospectus, the Company may sell up to $10,000,000
of additional Shares or Pre-Funded Warrants in lieu thereof and Warrants to purchasers not party to this Agreement, less the aggregate
Subscription Amount pursuant to this Agreement, and will issue to such purchasers such shares of Common Stock and Warrants or Pre-Funded
Warrants in lieu thereof and Warrants in the same form and at the same Per Share Purchase Price.
2.2
Deliveries.
(a)
On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:
(i)
this Agreement duly executed by the Company;
(ii)
a copy of the irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver on an expedited basis via The
Depository Trust Company Deposit or Withdrawal at Custodian system (“DWAC”) Shares equal to such Purchaser’s
Subscription Amount divided by the Per Share Purchase Price (minus the number of shares of Common Stock issuable upon exercise of such
Purchaser’s Pre-Funded Warrant, if applicable), registered in the name of such Purchaser;
(iii)
duly executed Pre-Funded Warrants, if any, and Warrants issued and registered in the name of such Purchaser, as applicable to such Purchaser;
(iv)
a legal opinion of Company Counsel, in a form reasonably acceptable to the Placement Agent;
(v)
a good standing certificate or its equivalent of the Company and each of its active Subsidiaries in each such entity’s jurisdiction
of incorporation or formation issued by the relevant competent state or local government authority or registrar of companies or entities
as applicable, dated as of a date within ten (10) days of the Closing Date;
(vi)
a certificate executed by the Chief Executive Officer of the Company, in form and substance reasonably satisfactory to the Placement
Agent;
(vii)
a certificate executed by the Secretary of the Company, in form and substance reasonably satisfactory to the Placement Agent;
(viii)
Lock-up Agreements, in form and substance reasonably acceptable to the Placement Agent, executed by the Company and each officer, director
and greater than five percent (5%) shareholders of the Company;
(ix)
the Company’s wire instructions, on Company letterhead and executed by the Chief Executive Officer or Chief Financial Officer;
and
(x)
the Prospectus (which may be delivered in accordance with Rule 172 under the Securities Act).
(b)
On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:
(i)
this Agreement duly executed by such Purchaser; and
(ii)
such Purchaser’s Subscription Amount (minus, if applicable, a Purchasers aggregate exercise price of the Pre-Funded Warrants, which
amounts shall be paid as and when such Pre-Funded Warrants are exercised for cash), which shall be made available for DVP settlement
with the Company or its designees.
2.3
Closing Conditions.
(a)
Subject to Section 5.21 below, as applicable, the obligations of the Company hereunder in connection with the Closing are subject
to the following conditions being met:
(i)
the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse
Effect, in all respects) when made and on the Closing Date of the representations and warranties of the Purchasers contained herein (unless
such representation or warranty is as of a specific date therein in which case they shall be accurate in all material respects (or, to
the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) as of such date);
(ii)
all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been
performed; and
(iii)
the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.
(b)
Subject to Section 5.21 below, as applicable, the respective obligations of the Purchasers hereunder in connection with the Closing
are subject to the following conditions being met:
(i)
the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse
Effect, in all respects) when made and on the Closing Date of the representations and warranties of the Purchasers contained herein (unless
such representation or warranty is as of a specific date therein in which case they shall be accurate in all material respects (or, to
the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) as of such date);
(ii)
all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;
(iii)
the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;
(iv)
the Company shall have set the record date to obtain the Shareholder Approval;
(iv)
there shall have been no Material Adverse Effect with respect to the Company since the date of this Agreement and to the Closing Date;
(vi)
the Company will have submitted a Listing of Additional Shares Notification to the Trading Market with respect to the Shares and Warrant
Shares subject to Shareholder Approval with respect to the Warrant Shares e, and from the date of this Agreement to the Closing Date,
trading in the shares of Common Stock shall not have been suspended by the SEC or any Trading Market, and, at any time prior to the Closing
Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall
not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium
have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation
of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any
financial market which, in each case, in the reasonable judgment of such Purchaser, makes it impracticable or inadvisable to purchase
the Securities at the Closing; and
(vii)
no stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto has been issued under
the Securities Act.
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES
3.1
Representations and Warranties of the Company. The Company hereby makes the following representations and warranties to each Purchaser
as of the date hereof and as of the Closing Date (unless as of a specific date therein, in which case they shall be accurate as of such
date):
(a)
Subsidiaries. All of the direct and indirect Subsidiaries of the Company are set forth in the Registration Statement. The Company
owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and
all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and
free of preemptive and similar rights to subscribe for or purchase securities. If the Company has no subsidiaries, all other references
to the Subsidiaries or any of them in the Transaction Documents shall be disregarded.
(b)
Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and, if applicable under the laws of the jurisdiction in which they are formed, in good standing under the laws of the
jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and
to carry on its business as currently conducted. The Company and each of the Subsidiaries has all necessary authorizations, approvals,
orders, licenses, certificates and permits of and from all governmental regulatory officials and bodies that it needs as of the date
of this Agreement to conduct its business purpose in all material respects as described in the Registration Statement and SEC Reports
and to own or lease its properties. Neither the Company nor any Subsidiary is in violation nor default of any of the provisions of its
respective certificate or articles of incorporation or association, bylaws or other organizational or charter documents. Each of the
Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in
each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where
the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a
material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the
results of operations, assets, business or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole,
or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations
under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”); provided that a change
in the market price or trading volume of the Common Stock alone shall not be deemed, in and of itself, to constitute a Material Adverse
Effect. No Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail
such power and authority or qualification.
(c)
Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it of
the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no
further action is required by the Company, the Board of Directors, or the Company’s stockholders in connection herewith or therewith
other than in connection with the Required Approvals. This Agreement and each other Transaction Document to which it is a party has been
(or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will
constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as
limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable
law.
(d)
No Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to
which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby
do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles
of incorporation or association, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of
the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, anti-dilution or similar
adjustments, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or
other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary
is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required
Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction
of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses
(ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.
(e)
Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings
required pursuant to Section 4.4 of this Agreement, (ii) the filing with the SEC of the Prospectus, (iii) application(s) to each applicable
Trading Market for the listing of the Shares and the Warrant Shares for trading thereon in the time and manner required thereby, (iv)
such filings as are required to be made under applicable state securities laws, and (v) the filing and mailing of a proxy statement on
Schedule 14A in connection with the Shareholder Approval (collectively, the “Required Approvals”).
(f)
Issuance of the Securities; Registration. The Shares are duly authorized and, when issued and paid for in accordance with the
applicable Transaction Documents, will be duly and validly issued, fully paid and non-assessable, free and clear of all Liens imposed
by the Company. The Warrants are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents,
will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms.
The Warrant Shares are duly authorized and, when issued in accordance with the terms of the Warrants against payment therefor as provided
therein, will be validly issued, fully paid and non-assessable, free and clear of all Liens imposed by the Company. The Company has reserved
from its duly authorized capital the maximum number of shares of Common Stock issuable pursuant to this Agreement and the Warrants (without
taking into account any limitations on the exercise of the Warrants set forth therein). The Company has prepared and filed the Registration
Statement in conformity with the requirements of the Securities Act, which became effective on December 4, 2024, including the Prospectus,
and such amendments and supplements thereto as may have been required to the date of this Agreement. The Registration Statement is effective
under the Securities Act and no stop order preventing or suspending the effectiveness of the Registration Statement or suspending or
preventing the use of the Preliminary Prospectus or the Prospectus has been issued by the SEC and no Proceedings for that purpose have
been instituted or, to the knowledge of the Company, are threatened by the SEC. The Company, if required by the rules and regulations
of the SEC, shall file the Prospectus with the SEC pursuant to Rule 424(b). At the time the Registration Statement and any amendments
thereto became effective, at the date of this Agreement and at the Closing Date, the Registration Statement and any amendments thereto
conformed and will conform in all material respects to the requirements of the Securities Act and did not and will not contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein
not misleading; and the Preliminary Prospectus, the Prospectus and any amendments or supplements thereto, at the time the Preliminary
Prospectus and the Prospectus or any amendment or supplement thereto was issued and at the Closing Date, conformed and will conform in
all material respects to the requirements of the Securities Act and did not and will not contain an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they
were made, not misleading.
Any
“issuer free writing prospectus” (as defined in Rule 433 under the Securities Act) relating to the Securities is hereafter
referred to as an “Issuer Free Writing Prospectus.” Any reference herein to the Preliminary Prospectus and the Prospectus
shall be deemed to refer to and include the documents incorporated by reference therein as of the date of filing thereof; and any reference
herein to any “amendment” or “supplement” with respect to any of the Preliminary Prospectus and the Prospectus
shall be deemed to refer to and include (i) the filing of any document with the Commission incorporated or deemed to be incorporated
therein by reference after the date of filing of such Preliminary Prospectus or Prospectus and (ii) any such document so filed.
All
references in this Agreement to the Registration Statement, the Preliminary Prospectus, the Prospectus, or any Issuer Free Writing Prospectus,
or any amendments or supplements to any of the foregoing, shall be deemed to include any copy thereof filed with the Commission on EDGAR.
(g)
Capitalization. The capitalization of the Company as of the date hereof is as set forth on Schedule 3.1(g) which Schedule 3.1(g)
shall also include the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date
hereof. The Company has not issued any capital stock or Common Stock Equivalents since its most recently filed periodic report under
the Exchange Act, other than pursuant to the exercise of employee stock options or vesting and settlement of restricted stock units under
the Company’s stock option or equity incentive plans, the issuance of shares of Common Stock to employees pursuant to any employee
stock purchase plans, and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most
recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as a result of the purchase
and sale of the Securities and set forth on Schedule 3.1(g), there are no outstanding options, warrants, scrip rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or
exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock or Common Stock Equivalents
or the capital stock of any Subsidiary, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary
is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents or capital stock of any Subsidiary. The
issuance and sale of the Securities will not obligate the Company or any Subsidiary to issue shares of Common Stock or Common Stock Equivalents
or other securities to any Person (other than the Purchasers). There are no outstanding securities or instruments of the Company or any
Subsidiary with any provision that adjusts, and the issuance and sale of the Securities will not result in a right of any holder of Company
securities or instruments to adjust, the exercise, conversion, exchange or reset price under any of such securities or instruments upon
an issuance of securities by the Company or any Subsidiary. There are no outstanding securities or instruments of the Company or any
Subsidiary that contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements
by which the Company or any Subsidiary is or may become bound to redeem a security of the Company or such Subsidiary. The Company does
not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement. All of the
outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable, have been issued
in compliance with all federal and state securities laws where applicable, and none of such outstanding shares was issued in violation
of any preemptive rights or similar rights to subscribe for or purchase securities. Except for the Required Approvals, no further approval
or authorization of any shareholder, the Board of Directors or others is required for the issuance and sale of the Securities. There
are no shareholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which
the Company is a party or, to the knowledge of the Company, between or among any of the Company’s shareholders.
(h)
SEC Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof , for
the one (1) year preceding the date of this Agreement (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, together with
the Prospectus, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective
dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable,
and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made,
not misleading. The Company has never been an issuer subject to Rule 144(i) under the Securities Act. The financial statements of the
Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations
of the SEC with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United
States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements
may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and
its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. The selected financial data set forth
under the caption “Selected Financial Data” in the SEC Reports fairly present, on the basis stated in such SEC Reports, the
information included therein. The agreements and documents described in the Registration Statement and the SEC Reports conform in all
material aspects to the descriptions thereof contained therein and there are no agreements or other documents required by the Securities
Act and the rules and regulations thereunder to be described in the Registration Statement, the Prospectus or the SEC Reports or to be
filed with the SEC as exhibits to the Registration Statement, that have not been so described or filed. Each agreement or other instrument
(however characterized or described) to which the Company is a party or by which it is or may be bound or affected and (i) that is referred
to in the Registration Statement or the SEC Reports, or (ii) is material to the Company’s business, has been duly authorized and
validly executed by the Company, is in full force and effect in all material respects and is enforceable against the Company and, to
the Company’s knowledge, the other parties thereto, in accordance with its terms, except (x) as such enforceability may be limited
by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally, (y) as enforceability of any indemnification
or contribution provision may be limited under the federal and state securities laws, and (z) that the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before
which any proceeding therefore may be brought. None of such agreements or instruments has been assigned by the Company, and neither the
Company nor, to the best of the Company’s knowledge, any other party is in default thereunder and, to the best of the Company’s
knowledge, no event has occurred that, with the lapse of time or the giving of notice, or both, would constitute a default thereunder.
To the Company’s knowledge, performance by the Company of the material provisions of such agreements or instruments will not result
in a violation of any existing applicable law, rule, regulation, judgment, order or decree of any governmental agency or court, domestic
or foreign, having jurisdiction over the Company or any of its assets or businesses, including, without limitation, those relating to
environmental laws and regulations.
(i)
Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
within the SEC Reports, except as set forth in Schedule 3.1(i), (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 shareholders 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 or equity incentive plans. The Company does not have pending before the SEC any request for confidential
treatment of information. Except for the issuance of the Securities contemplated by this Agreement or as set forth in Schedule 3.1(i),
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 Trading Day prior to the date that this representation is made.
(j)
Litigation. Except as disclosed in the SEC Reports, there is no Proceeding pending or, to the knowledge of the Company, threatened
against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental
or administrative agency or regulatory authority (federal, state, county, local or foreign) 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 Proceeding involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty, which could 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.
(k)
Labor Relations. (1) 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. (2) No executive officer of the Company or any Subsidiary, to the knowledge of
the Company, 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. (3) To the Company’s knowledge, (a) no allegation of sexual harassment,
sexual misconduct or discrimination, whether such discrimination arises from race, ethnic background, sex, gender status, age or otherwise
(“Misconduct”) have been made involving any current or former director, officer, employee or independent contractor
of the Company or any of its Subsidiaries, (b) neither the Company nor any of its Subsidiaries have entered into any settlement agreements
related to allegations of Misconduct by any current or former director, officer, employee, or independent contractor of the Company or
any of its Subsidiaries. (4) The Company and its Subsidiaries are in compliance with all applicable U.S. federal, state, local and foreign
laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except
where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(l)
Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that
has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor
has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound
(whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator
or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental
authority, including without limitation all foreign, federal, state and local laws relating to the U.S. Federal Trade Commission (“FTC”),
state unfair trade practice laws and rules and foreign equivalents, 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.
(m)
Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports,
except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), 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 Registration Statement 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. The Company is
and has been in material compliance with any term of any such Material Permits, except for any violations which would not reasonably
be expected to have a Material Adverse Effect. The Company has not received notice of any Proceeding from any governmental authority
or third party alleging that any product, operation or activity is in violation of any applicable laws or regulations or Material Permits
or has any knowledge that any such entity or third party is considering any such Proceeding, nor, to the Company’s knowledge, has
there been any material noncompliance with or violation of any applicable laws or regulations by the Company that could reasonably be
expected to require the issuance of any such communication or result in an investigation, corrective action, or enforcement action by
any governmental authority.
(n)
Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them
and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries,
in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for the payment
of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and, the payment of
which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries
are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance in all
material respects.
(o)
Intellectual Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights
and similar rights necessary or required for use in connection with their respective businesses as described in the SEC Reports and which
the failure to so have 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, except as would not reasonably be expected to have a Material Adverse Effect. Neither the Company nor any Subsidiary
has received, since the date of the latest audited financial statements included within the SEC Reports, a written notice of a claim
or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except as 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.
(p)
Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including,
but not limited to, directors and officers insurance coverage. Neither the Company nor any Subsidiary has any reason to believe that
it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business without a significant increase in cost.
(q)
Transactions With Affiliates and Employees. Except as set forth in Schedule 3.1(q), none of the executive 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, executive 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 executive officer, director or such employee or, to the knowledge of the Company, any entity in which any executive officer,
director, or any such employee has a substantial interest or is an officer, director, trustee, shareholder, member or partner, in , in
each case in excess of 1% of the Company’s average total assets as of December 31, 2023 and 2022 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 equity award or option agreements under any equity incentive plan of the Company.
(r)
Sarbanes-Oxley; Internal Accounting Controls. The Company and the Subsidiaries are in material compliance with any and all applicable
requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date of this Agreement and applicable to the Company and
the Subsidiaries, and any and all applicable rules and regulations promulgated by the SEC thereunder that are effective as of the date
of this Agreement and as of the Closing Date and applicable to the Company and the Subsidiaries. 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 Company’s disclosure controls
and procedures of the Company and the Subsidiaries as of the end of the period covered by the Company’s 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 is reasonably likely to materially affect, the internal control over financial reporting of the Company and its Subsidiaries.
(s)
Certain Fees. Except as set forth in the Prospectus, no brokerage or finder’s fees or commissions are or will be payable
by the Company or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or
other Person with respect to the transactions contemplated by the Transaction Documents. Other than for Persons directly engaged by a
Purchaser, if any, the Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf
of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by
the Transaction Documents.
(t)
Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities,
will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration
under the Investment Company Act of 1940, as amended.
(u)
Registration Rights. Other than the selling stockholders listed in the resale prospectus of the Registration Statement, no Person
has any right to cause the Company or any Subsidiary to effect the registration under the Securities Act of any securities of the Company
or any Subsidiary.
(v)
Listing and Maintenance Requirements. The shares of Common Stock are registered pursuant to Section 12(b) or 12(g) of the Exchange
Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration
of the shares of Common Stock under the Exchange Act nor has the Company received any notification that the SEC is contemplating terminating
such registration. Except as set forth in Schedule 3.1(v), the Company has not, in the twelve (12) months preceding the date of this
Agreement, received notice from any Trading Market on which the shares of Common Stock are or have been listed or quoted to the effect
that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Common Stock is currently
eligible for electronic transfer through the Depository Trust Company or another established clearing corporation and the Company is
current in payment of the fees to the Depository Trust Company (or such other established clearing corporation) in connection with such
electronic transfer.
(w)
Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order
to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the
laws of its jurisdiction of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result
of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.
(x)
Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents,
the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or
counsel with any information that it believes constitutes or might constitute material, non-public information which is not otherwise
disclosed in the Prospectus. The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting
transactions in securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding
the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby is true and correct in all material
respects 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 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 no Purchaser makes
or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set
forth in Section 3.2 hereof.
(y)
No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2,
neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers
or sales of any security or solicited any offers to buy any security, under circumstances that would cause this Offering of the Securities
to be integrated with prior offerings by the Company for purposes of any applicable shareholder approval provisions of any Trading Market
on which any of the securities of the Company are listed or designated.
(z)
Solvency. Except as disclosed in the Preliminary Prospectus or the Prospectus, based on the consolidated financial condition of
the Company as of the Closing Date, after giving effect to the receipt by the Company of the proceeds from the sale of the Securities
hereunder, (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect
of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s
assets do not constitute unreasonably small capital to carry on its business as now conducted and as proposed to be conducted including
its capital needs taking into account the particular capital requirements of the business conducted by the Company, consolidated and
projected capital requirements and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds
the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would
be sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid. The Company does not
intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable
on or in respect of its debt). Except as disclosed in the Preliminary Prospectus or the Prospectus, the Company has no knowledge of any
facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization
laws of any jurisdiction within one (1) year from the Closing Date. The Preliminary Prospectus and the Prospectus sets forth as of the
date of this Agreement and as of the Closing Date, respectively, all outstanding secured and unsecured Indebtedness of the Company or
any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness”
means (x) any liabilities for borrowed money or amounts owed in excess of Fifty Thousand Dollars ($50,000) (other than trade accounts
payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of
indebtedness of others, whether or not the same are or should be reflected in the Company’s consolidated balance sheet (or the
notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary
course of business; and (z) the present value of any lease payments in excess of One Hundred Thousand Dollars ($100,000) due under leases
required to be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.
(aa)
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 franchise taxes 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.
(bb)
Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any
agent or other person acting on behalf of the Company or any Subsidiary, has (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate
funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf
of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of FCPA. 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.
(cc)
Accountants. The Company’s independent registered public accounting firm is set forth in the Preliminary Prospectus and
the Prospectus. To the knowledge of the Company, such accounting firm (i) is a registered public accounting firm as required by the Exchange
Act and (ii) shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report for
the fiscal year ending December 31, 2024.
(dd)
Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers
is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated
thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or
any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby
is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents to each Purchaser that the Company’s
decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company and its representatives.
(ee)
Acknowledgement Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding
(except for Sections 3.2(f) and 4.13 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers has been
asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the
Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified
term; (ii) past or future open market or other transactions by any Purchaser, specifically including, without limitation, Short Sales
or “derivative” transactions, before or after the closing of this or future private placement transactions, may negatively
impact the market price of the Company’s publicly-traded securities; (iii) any Purchaser, and counter-parties in “derivative”
transactions to which any such Purchaser is a party, directly or indirectly, presently may have a “short” position in the
shares of Common Stock, and (iv) each Purchaser shall not be deemed to have any affiliation with or control over any arm’s length
counter-party in any “derivative” transaction. The Company further understands and acknowledges that (y) one or more Purchasers
may engage in hedging activities at various times during the period that the Securities are outstanding, including, without limitation,
during the periods that the value of the Warrant Shares deliverable with respect to the Securities are being determined, and (z) such
hedging activities (if any) could reduce the value of the existing shareholders’ equity interests in the Company at and after the
time that the hedging activities are being conducted. The Company acknowledges that such aforementioned hedging activities do not constitute
a breach of any of the Transaction Documents.
(ff)
Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf (other than the Placement Agent,
as to which no representation is made) 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, other than, in the case of clauses (ii) and
(iii), compensation paid to the Placement Agent in connection with the placement of the Securities.
(gg)
Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director,
officer, agent, employee or Affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).
(hh)
U.S. Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within
the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Purchaser’s
request.
(ii)
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.
(jj)
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 United States federal and state and foreign money laundering statutes and applicable rules and regulations thereunder (collectively,
the “Money Laundering Laws”), and no 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.
(kk)
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.
(ll)
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 or awards prior to, or otherwise knowingly coordinate the grant of stock options
or awards with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial
results or prospects.
(mm)
Cybersecurity. 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”) that would reasonably be expected to result in, individually or in the aggregate, a Material Adverse Effect and
(i) 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 material security breach or other compromise to its IT Systems and Data; (ii) the Company and the Subsidiaries
are presently in compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator
or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy and security of IT Systems
and Data and to the protection of such IT Systems and Data from unauthorized use, access, misappropriation or modification, except as
would not, individually or in the aggregate, have a Material Adverse Effect; (iii) the Company and the Subsidiaries have implemented
and maintained commercially reasonable safeguards to maintain and protect its material confidential information and the integrity, continuous
operation, redundancy and security of all IT Systems and Data; and (iv) the Company and the Subsidiaries have implemented backup and
disaster recovery technology consistent with industry standards and practices.
(nn)
Compliance with Data Privacy Laws. (i) The Company and the Subsidiaries are, and at all times during the last three (3) years
were, in material compliance with all applicable state, federal and foreign data privacy and security laws and regulations, including,
without limitation, the European Union General Data Protection Regulation (“GDPR”) (EU 2016/679) (collectively, “Privacy
Laws”); (ii) the Company and the Subsidiaries have in place, comply with, and take appropriate steps reasonably designed to
ensure compliance with their policies and procedures relating to data privacy and security and the collection, storage, use, disclosure,
handling and analysis of Personal Data (as defined below) (the “Policies”); (iii) the Company provides accurate notice
of its applicable Policies to its customers, employees, third party vendors and representatives as required by the Privacy Laws; and
(iv) applicable Policies provide accurate and sufficient notice of the Company’s then-current privacy practices relating to its
subject matter, and do not contain any material omissions of the Company’s then-current privacy practices, as required by Privacy
Laws. “Personal Data” means (i) a natural person’s name, street address, telephone number, email address, photograph,
social security number, bank information, or customer or account number; (ii) any information which would qualify as “personally
identifying information” under the FTC, as amended; (iii) “personal data” as defined by GDPR; and (iv) any other piece
of information that allows the identification of such natural person, or his or her family, or permits the collection or analysis of
any identifiable data related to an identified person’s health or sexual orientation. (i) None of such disclosures made or contained
in any of the Policies have been inaccurate, misleading, or deceptive in violation of any Privacy Laws and (ii) the execution, delivery
and performance of the Transaction Documents will not result in a breach of any Privacy Laws or Policies. Neither the Company nor the
Subsidiaries (i) to the knowledge of the Company, has received written notice of any actual or potential liability of the Company or
the Subsidiaries under, or actual or potential violation by the Company or the Subsidiaries of, any of the Privacy Laws; (ii) is currently
conducting or paying for, in whole or in part, any investigation, remediation or other corrective action pursuant to any regulatory request
or demand pursuant to any Privacy Law; or (iii) is a party to any order, decree, or agreement by or with any court or arbitrator or governmental
or regulatory authority that imposed any obligation or liability under any Privacy Law.
3.2
Representations and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and
warrants as of the date of this Agreement and as of the Closing Date to the Company as follows (unless as of a specific date therein,
in which case they shall be accurate as of such date):
(a)
Organization; Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited
liability company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents
and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance
by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate,
partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction Document to
which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof,
will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except:
(i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited
by applicable law.
(b)
Understandings or Arrangements. Such Purchaser is acquiring the Securities as principal for its own account and has no direct
or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities (this
representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to the Registration Statement or
otherwise in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the
ordinary course of its business.
(c)
Experience of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication
and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of
an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.
(d)
Access to Information. Such Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including
all exhibits and schedules thereto), and the SEC Reports including the Prospectus and, has been afforded, (i) the opportunity to ask
such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions
of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company
and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate
its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision with respect to the investment. Such Purchaser acknowledges
and agrees that neither the Placement Agent nor any Affiliate of the Placement Agent has provided such Purchaser with any information
or advice with respect to the Securities nor is such information or advice necessary or desired. Neither the Placement Agent nor any
Affiliate has made or makes any representation as to the Company or the quality of the Securities and the Placement Agent and any Affiliate
may have acquired non-public information with respect to the Company which such Purchaser agrees need not be provided to it. In connection
with the issuance of the Securities to such Purchaser, neither the Placement Agent nor any of its Affiliates has acted as a financial
advisor or fiduciary to such Purchaser.
(e)
Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has
not, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any
purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser
first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material
pricing terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing,
in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of
such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion
of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement. Other
than to other Persons party to this Agreement or to such Purchaser’s representatives, including, without limitation, its officers,
directors, partners, legal and other advisors, employees, agents and Affiliates, such Purchaser has maintained the confidentiality of
all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding
the foregoing, for the avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions,
with respect to locating or borrowing shares in order to effect Short Sales or similar transactions in the future.
(f)
Ownership of Company Securities. Except as disclosed in writing to the Company as of the date of this Agreement, no Purchaser,
any of its Affiliates, or any other Persons whose beneficial ownership of shares of Common Stock would be aggregated with the Purchaser’s
for purposes of Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, including any “group”
of which the Purchaser is a member, directly or indirectly owns, beneficially or otherwise (including solely with respect to an economic
interest), any of the outstanding shares of Common Stock, or any other shares of capital stock, options, warrants, derivative securities,
rights or any other securities (including any securities convertible into, exchangeable for or that represent the right to receive securities)
of the Company.
(g)
Nature of Warrants. The Purchaser acknowledges that the Warrants will not be immediately exercisable upon issuance, that the Purchaser
may only exercise the Warrants beginning on the applicable Initial Exercise Date, and that the Warrants shall be subject to the Company
complying with applicable rules and regulations of the Trading Market including those relating to the Shareholder Approval Date (as defined
in the Warrants). The Purchaser further acknowledges that while the Company believes the Warrants are compliant with the rules and regulations
of the Trading Market, neither the Company nor the Placement Agent provide any representation, warranty or guarantee that the Warrants
or, based on the Warrants, the Offering are compliant with such rules and regulations and that the Trading Market may require amendment
to the terms of the Warrants in order to comply with its rules and regulations, and the Purchaser covenants and agrees to reasonably
cooperate with the Company and the Placement Agent in good faith in connection with any amendment or other action with respect to the
Warrants that may be required by the Trading Market in the event that the Warrants are deemed to be non-compliant with such rules and
regulations by the Trading Market. The Purchaser further acknowledges that the Warrants will not be listed or quoted for trading on any
securities exchange or quotation system and will not be publicly traded.
(h)
Sanctioned Persons. Purchaser is not owned or controlled by or acting on behalf of (in connection with this Agreement), a Sanctioned
Person. Purchaser is not an institution that accepts currency for deposit and that (i) has no physical presence in the jurisdiction in
which it is incorporated or in which it is operating and (ii) is unaffiliated with a regulated financial group that is subject to consolidated
supervision (a “Shell Bank”) or providing banking services to a Shell Bank. Purchaser also represents that, to the
extent required by applicable law, it maintains, either directly or through the use of a third-party administrator, policies, and procedures
reasonably designed for the screening of any investors in the Purchaser against Sanctions-related lists of blocked or restricted persons.
Purchaser further represents and warrants that (A) the funds held by Purchaser and used to purchase the Securities were not directly
or indirectly derived from or related to any activities that may contravene U.S. federal, state, or non-U.S. anti-money laundering, anti-corruption,
or Sanctions laws and regulations or activities that may otherwise be deemed criminal and (B) any returns from the Purchaser’s
investment will not be used to finance any illegal activities. For purposes of this Agreement, “Sanctioned Person”
means at any time any person or entity with whom dealings are restricted, prohibited, or sanctionable under any Sanctions (as defined
below), including as a result of being: (I) listed on any Sanctions-related list of designated or blocked or restricted persons; (II)
that is a national of, the government of, or any agency or instrumentality of the government of, or resident in, or organized under the
laws of, a country or territory that is the target of comprehensive Sanctions from time to time (as of the date of this Agreement, Cuba,
Iran, North Korea, Syria, and the Crimea region); or (III) a relationship of ownership, control, or agency with any of the foregoing.
“Sanctions” means those trade, economic and financial sanctions laws, regulations, embargoes, and restrictive measures
(in each case having the force of law) administered, enacted, or enforced from time to time by (1) the United States (including without
limitation the U.S. Department of the Treasury, Office of Foreign Assets Control, the U.S. Department of State, and the U.S. Department
of Commerce), (2) the European Union and enforced by its member states, (3) the United Nations, and (4) the United Kingdom.
(i)
Non-cooperative Jurisdiction. Purchaser is not owned or controlled by or acting on behalf of (in connection with this Agreement),
a person or entity resident in, or whose funds used to purchase the Securities are transferred from or through, a country, territory,
or entity that (i) has been designated as non-cooperative with international anti-money laundering or counter terrorist financing principles
or procedures by the United States or by an intergovernmental group or organization, such as the Financial Action Task Force, of which
the United States is a member; (ii) is the subject of an advisory issued by the Financial Crimes Enforcement Network of the U.S. Department
of the Treasury; or (iii) has been designated by the Secretary of the Treasury under Section 311 of the USA PATRIOT Act as warranting
special measures due to money laundering concerns (any such country or territory, a “Non-cooperative Jurisdiction”),
or an entity or individual that resides or has a place of business in, or is organized under the laws of, a Non-cooperative Jurisdiction.
(j)
ERISA. If Purchaser is an employee benefit plan that is subject to Title I of the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”), a plan, an individual retirement account or other arrangement that is subject to section 4975
of the Code or an employee benefit plan that is a governmental plan (as defined in section 3(32) of ERISA), a church plan (as defined
in section 3(33) of ERISA), a non-U.S. plan (as described in section 4(b)(4) of ERISA), or other plan that is not subject to the foregoing
but may be subject to provisions under any other federal, state, local, non-U.S., or other laws or regulations that are similar to such
provisions of ERISA or the Code, or an entity whose underlying assets are considered to include “plan assets” of any such
plan, account or arrangement subject to the fiduciary or prohibited transaction provisions of ERISA or section 4975 of the Code, Purchaser
represents and warrants that the acquisition and holding of the Securities will not result in a non-exempt prohibited transaction under
ERISA or Section 4975 of the Code.
The
Company acknowledges and agrees that the representations contained in this Section 3.2 shall not modify, amend or affect such Purchaser’s
right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties
contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement
or the consummation of the transactions contemplated hereby. Notwithstanding the foregoing, for the avoidance of doubt, nothing contained
herein shall constitute a representation or warranty, or preclude any actions, with respect to locating or borrowing shares in order
to effect Short Sales or similar transactions in the future.
ARTICLE
IV.
OTHER
AGREEMENTS OF THE PARTIES
4.1
Warrant Shares. If all or any portion of the Warrants are exercised at a time when there is an effective registration statement
to cover the issuance or resale of the Warrant Shares or if the Warrants are exercised via cashless exercise, the Warrant Shares issued
pursuant to any such exercise shall be issued free of all legends. If at any time following the date hereof the Registration Statement
(or any subsequent registration statement registering the sale or resale of the Warrant Shares) is not effective or is not otherwise
available for the sale or resale of the Warrant Shares, the Company shall immediately notify the holders of the Warrants in writing that
such registration statement is not then effective and thereafter shall promptly notify such holders when the registration statement is
effective again and available for the sale or resale of the Warrant Shares (it being understood and agreed that the foregoing shall not
limit the ability of the Company to issue, or any Purchaser to sell, any of the Warrant Shares in compliance with applicable federal
and state securities laws). The Company shall use best efforts to keep a registration statement (including the Registration Statement)
registering the issuance or resale of the Warrant Shares effective during the term of the Warrants.
4.2
Furnishing of Information. Until the earliest of the time that (i) no Purchaser owns Securities or (ii) the Warrants have expired,
the Company covenants to use its reasonable efforts to timely file (or obtain extensions
in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act except
in the event that the Company consummates: (A) any transaction or series of related transactions as a result of which any Person (together
with its Affiliates) acquires then outstanding securities of the Company representing more than fifty percent (50%) of the voting control
of the Company; (B) a merger or reorganization of the Company with one or more other entities in which the Company is not the surviving
entity; or (C) a sale of all or substantially all of the assets of the Company.
4.3
Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities for purposes of the
rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction
unless shareholder approval is obtained before the closing of such subsequent transaction, other than the Shareholder Approval.
4.4
Securities Laws Disclosure; Publicity. The Company shall (a) by the Disclosure Time, issue a press release disclosing the material
terms of the transactions contemplated hereby, and (b) file a Current Report on Form 8-K, including the Transaction Documents as exhibits
thereto, with the SEC within the time required by the Exchange Act. From and after the issuance of such press release, the Company represents
to the Purchasers that it shall have publicly disclosed all material, non-public information delivered to any of the Purchasers by the
Company or any of its Subsidiaries, or any of their respective officers, directors, employees, Affiliates or agents, including, without
limitation, the Placement Agent, in connection with the transactions contemplated by the Transaction Documents. In addition, effective
upon the issuance of such press release, the Company acknowledges and agrees that any and all confidentiality or similar obligations
under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors,
agents, employees, Affiliates or agents, including, without limitation, the Placement Agent, on the one hand, and any of the Purchasers
or any of their Affiliates on the other hand, shall terminate and be of no further force or effect. The Company understands and confirms
that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company. The Company and
each Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby,
and neither the Company nor any Purchaser shall issue any such press release nor otherwise make any such public statement without the
prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of each Purchaser, with
respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is
required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement
or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name
of any Purchaser in any filing with the SEC or any regulatory agency or Trading Market, without the prior written consent of such Purchaser,
except (a) as required by federal securities law in connection with the filing of final Transaction Documents with the SEC and (b) to
the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with
prior notice of such disclosure permitted under this clause (b) and reasonably cooperate with such Purchaser regarding such disclosure.
4.5
Shareholder Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person,
that any Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by
the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving
Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers.
4.6
Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, which shall be disclosed pursuant to Section 4.4, the Company covenants and agrees that neither it, nor any other Person acting
on its behalf will provide any Purchaser or its agents or counsel with any information that constitutes, or the Company reasonably believes
constitutes, material non-public information, unless prior thereto such Purchaser shall have consented to the receipt of such information
and agreed with the Company to keep such information confidential. The Company understands and confirms that each Purchaser shall be
relying on the foregoing covenant in effecting transactions in securities of the Company. To the extent that the Company delivers any
material, non-public information to a Purchaser without such Purchaser’s consent, the Company hereby covenants and agrees that
such Purchaser shall not have any duty of confidentiality to the Company, any of its Subsidiaries, or any of their respective officers,
directors, agents, employees or Affiliates, or a duty to the Company, any of its Subsidiaries or any of their respective officers, directors,
agents, employees or Affiliates not to trade on the basis of, such material, non-public information, provided that the Purchaser shall
remain subject to applicable law. To the extent that any notice provided pursuant to any Transaction Document constitutes, or contains,
material, non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the
SEC on a Current Report on Form 8-K or shall issue a press release containing such material non-public information. The Company understands
and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.
4.7
Use of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder as set forth in the Registration
Statement, and otherwise as set forth in the Registration Statement shall not use such proceeds: (a) for the satisfaction of any portion
of the Company’s debt (other than payment of trade payables in the ordinary course of the Company’s business and prior practices),
(b) for the redemption of any shares of Common Stock or Common Stock Equivalents, (c) for the settlement of any outstanding litigation
or (d) in violation of FCPA or OFAC regulations.
4.8
Indemnification of Purchasers. Subject to the provisions of this Section 4.8, the Company will indemnify and hold each Purchaser
and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser
(within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding
a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any
and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in
settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or
incur as a result of or relating to (i) any breach of any of the representations, warranties, covenants or agreements made by the Company
in this Agreement or in the other Transaction Documents, (ii) any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or Prospectus or by any omission or alleged omission to state therein a material fact necessary to make
the statements therein, in light of the circumstances under which they were made, not misleading (other than untrue statements or alleged
untrue statements in, or omissions or alleged omissions from, information relating to a Purchaser Party furnished in writing by or on
behalf of such Purchaser Party expressly for use in the Registration Statement or Prospectus), or (iii) any Proceeding instituted against
the Purchaser Parties in any capacity (including a Purchaser Party’s status as an investor), or any of them or their respective
Affiliates, by the Company or any stockholder of the Company who is not an Affiliate of such Purchaser Party, arising out of or relating
to any of the transactions contemplated by the Transaction Documents. For avoidance of doubt, the indemnification provided herein is
intended to and shall also cover, direct claims brought by the Company against the Purchaser Parties; provided, however, that such indemnification
shall not cover any loss, claim, damage or liability to the extent it is finally judicially determined to be attributable to any Purchaser
Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in any Transaction
Document or any conduct by a Purchaser Party which is finally judicially determined to constitute fraud, gross negligence or willful
misconduct. If any Proceeding shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this
Agreement, such Purchaser Party shall promptly notify the Company in writing, and, except with respect to direct claims brought by the
Company, the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the
Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such Proceeding and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the
employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period
of time to assume such defense and to employ counsel or (iii) in such Proceeding there is, in the reasonable opinion of counsel to the
applicable Purchaser Party (which may be internal counsel), a material conflict on any material issue between the position of the Company
and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more
than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement for any settlement by a Purchaser
Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed. In addition, if
any Purchaser Party takes actions to collect amounts due under any Transaction Documents or to enforce the provisions of any Transaction
Documents, then the Company shall pay the cost incurred by such Purchaser Party for such collection, enforcement or action, including,
but not limited to, attorney’s fees and disbursements. The indemnification and other payment obligations required by this Section
4.8 shall be made by periodic payments of the amount thereof during the course of the investigation, defense, collection, enforcement
or action, as and when bills are received or are incurred; provided, that if any Purchaser Party is finally judicially determined not
to be entitled to indemnification or payment under this Section 4.8, such Purchaser Party shall promptly reimburse the Company for any
payments that are advanced under this sentence. The indemnity agreements contained herein shall be in addition to any cause of action
or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law.
4.9
Reservation of Shares of Common Stock. As of the Shareholder Approval Date, , the Company shall have reserved and the Company
shall continue thereafter to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of Common
Stock for the purpose of enabling the Company to issue the Shares pursuant to this Agreement and Warrant Shares pursuant to any exercise
of the Warrants, including but not limited to, a number of shares of Common Stock sufficient to honor the issuance of the maximum number
of shares of Common Stock issuable assuming exercise in full of the Series B Warrants via an “alternative cashless exercise”
at the Floor Price (as defined thereunder) under Section 2(c) of the Series B Warrants.
4.10
Listing of Shares. The Company hereby agrees to use commercially reasonable efforts to maintain the listing or quotation of the
Shares and Warrant Shares on each Trading Market on which any shares of Common Stock are currently listed, and concurrently with the
Closing, the Company shall apply to list or quote all of the Shares and Warrant Shares on such Trading Markets and promptly secure the
listing of all of the Shares and Warrant Shares on such Trading Markets. The Company further agrees, if the Company applies to have the
shares of Common Stock traded on any other Trading Market, it will then include in such application all of the Shares and Warrant Shares,
and will take such other action as is necessary to cause all of the Shares and Warrant Shares to be listed or quoted on such other Trading
Market as promptly as possible. The Company will then take all action reasonably necessary to continue the listing and trading of its
shares of Common Stock on a Trading Market and will comply in all material respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the Trading Market. The Company agrees to maintain the eligibility of the Common Stock for electronic
transfer through the Depository Trust Company or another established clearing corporation, including, without limitation, by timely payment
of fees to the Depository Trust Company or such other established clearing corporation in connection with such electronic transfer. Notwithstanding
the foregoing, this Section 4.10 shall not apply in the event that the Company consummates: (i)
any transaction or series of related transactions as a result of which any Person (together with its Affiliates) acquires then outstanding
securities of the Company representing more than fifty percent (50%) of the voting control of the Company; (ii) a merger or reorganization
of the Company with one or more other entities in which the Company is not the surviving entity; or (iii) a sale of all or substantially
all of the assets of the Company.
4.11
Subsequent Equity Sales.
(a)
From the date hereof until ninety (90) days after the Shareholder Approval Date, neither the Company nor any Subsidiary shall (i) issue,
enter into any agreement to issue or announce the issuance or proposed issuance of any Common Stock or Common Stock Equivalents, or (ii)
file any registration statement or amendment or supplement thereto, other than with respect to the Registration Statement or a registration
statement on Form S-8, except for the Securities issued pursuant hereto or otherwise in connection with the Offering.
(b)
From the date hereof until one hundred and eighty (180) days after the Shareholder Approval Date, the Company 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 a combination of units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction”
means a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or
exercisable for, or include the right to receive additional shares of Common Stock either (A) at a conversion price, exercise price or
exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of Common Stock
at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is
subject to being reset at some future date after the initial issuance of such debt or equity security (other than in connection with
a stock split or stock dividend or similar event) or upon the occurrence of specified or contingent events directly or indirectly related
to the business of the Company or the market for the Common Stock or (ii) enters into, or effects a transaction under, any agreement,
including, but not limited to, an equity line of credit or an “at-the-market offering”, whereby the Company may issue securities
at a future determined price regardless of whether shares pursuant to such agreement have actually been issued and regardless of whether
such agreement is subsequently canceled. The Purchaser shall be entitled to obtain injunctive relief against the Company to preclude
any such issuance, which remedy shall be in addition to any right to collect damages.
(c)
Notwithstanding the foregoing, this Section 4.11 shall not apply in respect of an Exempt Issuance, except that no Variable Rate Transaction
shall be an Exempt Issuance.
4.12
Equal Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid
to any Person to amend or consent to a waiver or modification of any provision of the Transaction Documents unless the same consideration
is also offered to all of the parties to the Transaction Documents. For clarification purposes, this provision constitutes a separate
right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat
the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the
purchase, disposition or voting of Securities or otherwise.
4.13
Certain Transactions and Confidentiality. Each Purchaser, severally and not jointly, covenants that neither it nor any Affiliate
acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including Short Sales of any of the
Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the transactions
contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4. Each Purchaser,
severally and not jointly, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by
the Company pursuant to the initial press release as described in Section 4.4, such Purchaser will maintain the confidentiality of the
existence and terms of this transaction. Notwithstanding the foregoing and notwithstanding anything contained in this Agreement to the
contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that
it will not engage in effecting transactions in any securities of the Company after the time that the transactions contemplated by this
Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4, (ii) no Purchaser shall be
restricted or prohibited from effecting any transactions in any securities of the Company in accordance with applicable securities laws
from and after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press
release as described in Section 4.4 and (iii) no Purchaser shall have any duty of confidentiality or duty not to trade in the securities
of the Company to the Company, any of its Subsidiaries, or any of their respective officers, directors, employees, Affiliates, or agent,
including, without limitation, the Placement Agent after the issuance of the initial press release as described in Section 4.4. Notwithstanding
the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate
portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect
to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this
Agreement.
4.14
Exercise Procedures. The form of Notice of Exercise included in the Warrants sets forth the totality of the procedures required
of the Purchasers in order to exercise the Warrants. No additional legal opinion, other information or instructions shall be required
of the Purchasers to exercise their Warrants. Without limiting the preceding sentences, no ink-original Notice of Exercise shall be required,
nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required in order to
exercise the Warrants. The Company shall honor exercises of the Warrants and shall deliver Warrant Shares in accordance with the terms,
conditions and time periods set forth in the Transaction Documents.
4.15
Lock-Up Agreements. The Company shall not amend, modify, waive or terminate any provision of any of the Lock-Up Agreements except
to extend the term of the lock-up period and shall enforce the provisions of each Lock-Up Agreement in accordance with its terms. If
any party to a Lock-Up Agreement breaches any provision of a Lock-Up Agreement, the Company shall promptly use its reasonable efforts
to seek specific performance of the terms of such Lock-Up Agreement.
ARTICLE
V.
MISCELLANEOUS
5.1
Termination. This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without
any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the
Closing has not been consummated on or before the fifth (5th) Trading Day following the date hereof; provided, however,
that no such termination will affect the right of any party hereto to sue for any breach by any other party (or parties).
5.2
Fees and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including,
without limitation, any fees required for same-day processing of any instruction letter delivered by the Company and any exercise notice
delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.
5.3
Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, and the Prospectus, contain the
entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings,
oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
5.4
Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of: (i) the time of transmission, if such notice or communication is
delivered via facsimile at the facsimile number or email attachment at the email address as set forth on the signature pages attached
hereto at or prior to 5:30 p.m. (New York, NY time) on a Trading Day, (ii) the next Trading Day after the time of transmission, if such
notice or communication is delivered via facsimile at the facsimile number or email attachment at the email address as set forth on the
signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York, NY time) on any Trading Day, (iii)
the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon
actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as
set forth on the signature pages attached hereto. To the extent that any notice provided pursuant to any Transaction Document constitutes,
or contains, material, non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice
with the SEC pursuant to a Current Report on Form 8-K or by issuing a press release containing such material non-public information.
5.5
Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument
signed, in the case of an amendment, by the Company and Purchasers which purchased at least 50.1% in interest of the Shares based on
the Subscription Amounts hereunder (or, prior to the Closing, the Company and each Purchaser) or, in the case of a waiver, by the party
against whom enforcement of any such waived provision is sought, provided that if any amendment, modification or waiver disproportionately
and adversely impacts a Purchaser (or group of Purchasers), the consent of such disproportionately impacted Purchaser (or group of Purchasers)
shall also be required. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed
to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement
hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.
Any amendment effected in accordance with this Section 5.5 shall be binding upon each Purchaser and holder of Securities and the Company.
5.6
Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to
limit or affect any of the provisions hereof.
5.7
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and
permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent
of each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom
such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the
transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”
5.8
Third-Party Beneficiaries. The Placement Agent shall be a third-party beneficiary of the representations and warranties of the
Company in Section 3.1 and the representations and warranties of the Purchasers in Section 3.2. This Agreement is intended for the benefit
of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof
be enforced by, any other Person, except as otherwise set forth in Section 4.8 and this Section 5.8.
5.9
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents
shall be governed by and construed and enforced in accordance with the internal laws of the State of New York. Each party agrees that
all legal Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York.
Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York,
Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and
agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such
Proceeding is improper or is an inconvenient venue for such Proceeding. Each party hereby irrevocably waives personal service of process
and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by law. If any party shall commence a Proceeding to enforce any provisions
of the Transaction Documents, then, in addition to the obligations of the Company under Section 4.8, the prevailing party in such Proceeding
shall be reimbursed by the non-prevailing party for its reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such Proceeding.
5.10
Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Securities for
the applicable statute of limitations.
5.11
Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one
and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party,
it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature
page were an original thereof.
5.12
Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would
have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
5.13
Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions
of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may
rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election
in whole or in part without prejudice to its future actions and rights; provided, however, that in the case of a rescission
of an exercise of an Warrant, the applicable Purchaser shall be required to return any shares of Common Stock subject to any such rescinded
exercise notice concurrently (if such shares were delivered to the applicable Purchaser) with the return to such Purchaser of the aggregate
exercise price paid to the Company for such shares and the restoration of such Purchaser’s right to acquire such shares pursuant
to such Purchaser’s Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).
5.14
Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation),
or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to
the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also
pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.
5.15
Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages,
each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction
Documents and hereby agree to waive and not to assert in any Proceeding for specific performance of any such obligation the defense that
a remedy at law would be adequate.
5.16
Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document
or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise
or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by
or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including,
without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such enforcement or setoff had not occurred.
5.17
Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document
are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance
or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other
Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as
a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way
acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each
Purchaser shall be entitled to independently protect and enforce its rights including, without limitation, the rights arising out of
this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional
party in any Proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in its review and negotiation
of the Transaction Documents. The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the
convenience of the Company and not because it was required or requested to do so by any of the Purchasers. It is expressly understood
and agreed that each provision contained in this Agreement and in each other Transaction Document is between the Company and a Purchaser,
solely, and not between the Company and the Purchasers collectively and not between and among the Purchasers.
5.18
Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts
have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts
are due and payable shall have been canceled.
5.19
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business
Day.
5.20
Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise
the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each
and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse
and forward share splits, share dividends, share combinations and other similar events with respect to the shares of Common Stock and
Warrants that occur after the date of this Agreement.
5.21
Sales During Pre-Settlement Period. Notwithstanding anything herein to the contrary, if at any time on or after the time of execution
of this Agreement by the Company and an applicable Purchaser, through, and including the time immediately prior to a Closing (the “Pre-Settlement
Period”), such Purchaser sells to any Person all, or any portion, of any Shares to be issued hereunder to such Purchaser at
the Closing (collectively, the “Pre-Settlement Shares”), such Purchaser shall, automatically hereunder (without any
additional required actions by such Purchaser or the Company), be deemed to be unconditionally bound to purchase, and the Company shall
be deemed unconditionally bound to sell, such Pre-Settlement Shares to such Purchaser at the Closing; provided, that the Company shall
not be required to deliver any Pre-Settlement Shares to such Purchaser prior to the Company’s receipt of the purchase price of
such Pre-Settlement Shares hereunder; and provided further that the Company hereby acknowledges and agrees that the forgoing shall not
constitute a representation or covenant by such Purchaser as to whether or not during the Pre-Settlement Period such Purchaser shall
sell any Shares to any Person and that any such decision to sell any Shares by such Purchaser shall be made, in the sole discretion of
such Purchaser, at the time such Purchaser elects to effect any such sale, if any.
5.22
WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY,
THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY,
IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
(Signature
Pages Follow)
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
| ALGORHYTHM
HOLDINGS, INC. |
|
Address
for Notice: |
| |
|
6301
NW 5th Way, Suite 2900 |
| By: |
|
|
Fort
Lauderdale, FL 33309 |
| Name: |
Gary
Atkinson |
|
E-Mail:
gatkinson@algoholdings.com |
| Title: |
Chief
Executive Officer |
|
Fax:(954)
596-2000 |
With a copy to (which shall not constitute notice):
Gregory Sichenzia
1185 Avenue of the Americas, 31st Floor
New York, New York, 10036
E-Mail:
gsichenzia@srfc.law
Fax:
(212) 930-9725
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOR PURCHASER FOLLOWS]
[SIGNATURE
PAGE TO SECURITIES PURCHASE AGREEMENT]
[PURCHASER
SIGNATURE PAGES TO ALGORHYTHM HOLDINGS, inc.
SECURITIES
PURCHASE AGREEMENT]
IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories
as of the date first indicated above.
Name
of Purchaser: ________________________________________________________
Signature
of Authorized Signatory of Purchaser: _________________________________
Name
of Authorized Signatory: _______________________________________________
Title
of Authorized Signatory: ________________________________________________
Email
Address of Authorized Signatory: _________________________________________
Facsimile
Number of Authorized Signatory: __________________________________________
Address
for Notice to Purchaser (and delivery of Warrants):
Address
for Delivery of Applicable Securities to Purchaser (if not same as address for notice):
Subscription
Amount: $_________________
Shares:
(if applicable) _________________
Pre-Funded
Warrants: (if applicable)
Series
A Warrants: __________________
Series
B Warrants: __________________
EIN
Number: _______________________
[SIGNATURE
PAGE TO SECURITIES PURCHASE AGREEMENT]
Exhibit
10.2
PLACEMENT
AGENCY AGREEMENT
December
4, 2024
Univest
Securities, LLC
75
Rockefeller Plaza, Suite 18C
New
York, NY, 10019
Ladies
and Gentlemen:
Subject
to the terms and conditions of this agreement (this “Agreement”) and the Transaction Documents (as defined below),
Algorhythm Holdings, Inc. a Delaware corporation (the “Company”), hereby agrees to offer and sell up to an aggregate
of $10,000,000 of securities of the Company directly to various investors (each, an “Investor” and collectively, the
“Investors”) through Univest Securities, LLC, as placement agent (the “Placement Agent”), in each
case consisting of (i) shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”)
and/or warrants to purchase shares of Common Stock in lieu thereof (the “Pre-Funded Warrants”) as the applicable Investor
may elect, (ii) Series A warrants to purchase shares of Common Stock (each a “Series A Warrant” and collectively,
the “Series A Warrants”), and (iii) Series B warrants to purchase shares of Common Stock (each a “Series
B Warrant” and collectively, the “Series B Warrants,” and together with the Pre-Funded Warrants and Series
A Warrants, collectively, the “Warrants”). The shares of Common Stock underlying the Series A Warrants and the Series
B Warrants are referred to as the “Warrant Shares.” The Common Stock offered and sold in this Offering is defined
as the “Shares.” The Shares, the Pre-Funded Warrants, the Series A Warrants, the Series B Warrants and the Warrant
Shares are collectively referred to as the “Securities.” The documents executed and delivered by the Company and the
Investors in connection with the Offering (as defined below), including, without limitation, a securities purchase agreement to be entered
into between the Company and each Investor (the “Purchase Agreement”), shall be collectively referred to herein as
the “Transaction Documents.” The purchase price to the Investors for each Share and accompanying Series A Warrant
and Series B Warrant is $0.17 or for each Pre-Funded Warrant and accompanying Series A Warrant and Series B Warrant is $0.16, the exercise
price for each Warrant Share is $0.34, and the exercise price for each Share issuable upon exercise of each Pre-Funded Warrant is $0.01.
Notwithstanding
anything herein to the contrary, in the event that the Placement Agent determines that any of the terms provided for hereunder do not
comply with a Financial Industry Regulatory Authority (“FINRA”) rule, including but not limited to FINRA Rule 5110,
then the Company shall agree to amend this Agreement in writing upon the request of the Placement Agent to comply with any such rules;
provided that any such amendments shall not provide for terms that are less favorable to the Company than the terms of this Agreement
or terms are adverse to the Company.
The
Company hereby confirms its agreement with the Placement Agent as follows:
Section
1. Agreement to Act as Placement Agent.
(a)
On the basis of the representations, warranties and agreements of the Company herein contained, and subject to all the terms and conditions
of this Agreement, the Placement Agent shall be the exclusive placement agent in connection with the offering and sale by the Company
of the Securities pursuant to the Company’s registration statement on Form S-1 (File No. 333-283178) (the “Registration
Statement”) with the terms of such offering (the “Offering”) to be subject to market conditions and negotiations
between the Company, the Placement Agent and the prospective Investors. The Placement Agent will act on a best efforts basis and the
Company agrees and acknowledges that there is no guarantee of the successful placement of the Securities, or any portion thereof, in
the prospective Offering. Under no circumstances will the Placement Agent or any of its Affiliates (as defined below) be obligated to
underwrite or purchase any of the Securities for its own account or otherwise provide any financing. The Placement Agent shall act solely
as the Company’s agent and not as principal. The Placement Agent shall have no authority to bind the Company with respect to any
prospective offer to purchase Securities and the Company shall have the sole right to accept offers to purchase Securities and may reject
any such offer, in whole or in part. Subject to the terms and conditions hereof, payment of the purchase price for, and delivery of,
the Securities shall be made at one closing (the “Closing” and the date on which the Closing occurs, the “Closing
Date”). As compensation for services rendered, on the Closing Date, the Company shall pay to the Placement Agent the following:
(i)
a cash fee equal to seven percent (7%) of the aggregate gross proceeds received by the Company from the sale of the Securities (the “Cash
Fee”);
(ii)
a non-accountable expense allowance equal to one percent (1%) of the gross proceeds received by the Company from the sale of the Securities
at the Closing; and
(iii)
reimbursement of the Placement Agent’s reasonable travel and other out-of-pocket expenses, and any incurred out-of-pocket costs
of the escrow or clearing agent in an amount of up to $12,900.
(b)
The term of the Placement Agent’s exclusive engagement shall begin on the date hereof and continue until the earlier of (i) the
Closing Date (the “Exclusive Term”), and (ii) the date the Placement Agent or the Company terminates the engagement
according to the terms of the next sentence (such date, the “Termination Date” and the period of time during which
this Agreement remains in effect is referred to herein as the “Term”). The engagement may be terminated at any time
by either party hereto upon seven (7) days written notice to the other party, effective upon receipt of written notice to that effect
by the other party. Unless otherwise provided under this Agreement, the provisions concerning the Company’s obligation to pay any
fees actually earned pursuant to Section 1(a) hereof and to pay or reimburse the Placement Agent for any expenses incurred in
accordance with Section 6 hereof, the Company’s obligations contained in the indemnification provisions, and the provisions
concerning indemnification and contribution contained herein will survive any expiration or termination of this Agreement for any reason.
All fees and expense payments or reimbursements due to the Placement Agent shall be paid by the Company to the Placement Agent on or
before the Termination Date (in the event such fees and expenses are earned or owed as of the Termination Date). Furthermore, the Company
agrees that during the Placement Agent’s engagement hereunder, all inquiries from prospective U.S. Investors with respect to the
Offering will be referred to the Placement Agent. Additionally, except as set forth hereunder or otherwise disclosed to the Placement
Agent in writing, the Company represents, warrants and covenants that no brokerage or finder’s fees or commissions are or will
be payable by the Company or any subsidiary of the Company to any broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other third-party with respect to the Offering.
The
services provided by the Placement Agent hereunder are solely for the benefit of the Company and are not intended to confer any rights
upon any persons or entities not a party hereto (including, without limitation, security holders, employees or creditors of the Company)
as against the Placement Agent or its directors, officers, agents and employees.
Section
2. Representations, Warranties and Covenants of the Company. The Company hereby represents and warrants to the Placement Agent that
the following is true and correct as of the date hereof, and will be true and correct as of the Closing Date, and covenants and agrees
as follows:
(a)
Securities Law Filings. The Company has filed with the U.S. Securities and Exchange Commission (the “SEC”)
the Registration Statement under the Securities Act of 1933, as amended (the “Securities Act”), which was originally
filed on November 12, 2024 and declared effective on December 4, 2024 for the registration of the Securities under the Securities Act.
Following the determination of pricing among the Company and the prospective Investors introduced to the Company by the Placement Agent,
the Company will file with the SEC pursuant to Rules 424(b) and 430A under the Securities Act, and the rules and regulations (the “Rules
and Regulations”) of the SEC promulgated thereunder, a final prospectus relating to the placement of the Securities, their
respective pricings and the plan of distribution thereof and will advise the Placement Agent of all further information (financial and
other) with respect to the Company required to be set forth therein. Such registration statement, at any given time, including the exhibits
thereto filed at such time, as amended at such time, is hereinafter called the “Registration Statement”; such prospectus
in the form in which it appears in the Registration Statement at the time of effectiveness is hereinafter called the “Preliminary
Prospectus”; and the final prospectus, in the form in which it will be filed with the SEC pursuant to Rules 424(b) and/or 430A
(including the Preliminary Prospectus as it may be amended or supplemented) is hereinafter called the “Prospectus.”
If the Company files any registration statement pursuant to Rule 462(b) of the Securities Act Rules and Regulations, then after such
filing, the term “Registration Statement” shall include such registration statement filed pursuant to Rule 462(b). Any reference
in this Agreement to the Registration Statement, the Registration Statement, the Preliminary Prospectus or the Prospectus shall be deemed
to refer to and include the documents incorporated by reference therein (the “Incorporated Documents”), if any, which
were or are filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), at any given time, as
the case may be; and any reference in this Agreement to the terms “amend,” “amendment,” or “supplement”
with respect to the Registration Statement, the Registration Statement, the Preliminary Prospectus or the Prospectus shall be deemed
to refer to and include the filing of any document under the Exchange Act after the date of this Agreement, or the issue date of the
Preliminary Prospectus or the Prospectus, as the case may be, deemed to be incorporated therein by reference. All references in this
Agreement to financial statements and schedules and other information which is “contained,” “included,” “described,”
“referenced,” “set forth,” or “stated” in the Registration Statement, the Preliminary Prospectus
or the Prospectus (and all other references of like import) shall be deemed to mean and include all such financial statements and schedules
and other information which is or is deemed to be incorporated by reference in the Registration Statement, the Preliminary Prospectus
or the Prospectus, as the case may be. As used in this paragraph and elsewhere in this Agreement, “Time of Sale Disclosure Package”
means the Preliminary Prospectus, any securities purchase agreement between the Company and the Investors, the final terms of the Offering
provided to the Investors (orally or in writing) and any issuer free writing prospectus as defined in Rule 433 of the Securities Act
(each, an “Issuer Free Writing Prospectus”), if any, that the parties hereto shall hereafter expressly agree in writing
to treat as part of the Time of Sale Disclosure Package. The term “any Prospectus” shall mean, as the context requires,
the Preliminary Prospectus, the Prospectus, and any supplement to either thereof. The Company has not received any notice that the SEC
has issued or intends to issue a stop order suspending the effectiveness of the Registration Statement or the use of the Preliminary
Prospectus or any prospectus supplement or intends to commence a Proceeding for any such purpose.
(b)
Assurances. The Registration Statement, as amended, (and any further documents to be filed with the SEC) contains all exhibits
and schedules as required by the Securities Act. Each of the Registration Statement and any post-effective amendment thereto, at the
time it became effective, complied in all material respects with the Securities Act and the applicable Rules and Regulations and did
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 not misleading. The Preliminary Prospectus and the Prospectus, each as of its respective date, complies or will
comply in all material respects with the Securities Act and the applicable Rules and Regulations. Each of the Preliminary Prospectus
and the Prospectus, as amended or supplemented, did not and will not contain as of the date thereof any untrue statement of a material
fact or omit 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. The Incorporated Documents, when they were filed with the SEC, conformed in all material respects to the requirements
of the Exchange Act and the applicable Rules and Regulations promulgated thereunder, and none of such documents, when they were filed
with the SEC, contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements
therein (with respect to Incorporated Documents incorporated by reference in the Preliminary Prospectus or the Prospectus), in light
of the circumstances under which they were made not misleading. No post-effective amendment to the Registration Statement reflecting
any facts or events arising after the date thereof which represent, individually or in the aggregate, a fundamental change in the information
set forth therein is required to be filed with the SEC. Except for this Agreement and the Transaction Documents, there are no documents
required to be filed with the SEC in connection with the transaction contemplated hereby that (x) have not been filed as required pursuant
to the Securities Act or (y) will not be filed within the requisite time period. Except for this Agreement and the Transaction Documents,
there are no contracts or other documents required to be described in the Preliminary Prospectus or the Prospectus, or to be filed as
exhibits or schedules to the Registration Statement, which have not been described or filed as required.
(c)
Offering Materials. Neither the Company nor any of its directors and officers has distributed and none of them will distribute,
prior to the Closing Date, any offering material in connection with the offering and sale of the Securities other than the Time of Sale
Disclosure Package.
(d)
Subsidiaries. All of the direct and indirect subsidiaries of the Company (the “Subsidiaries”) are set forth
in the Registration Statement. The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary
free and clear of any liens, charges, security interests, encumbrances, rights of first refusal, preemptive rights or other restrictions
(collectively, “Liens”), and all of the issued and outstanding shares of capital stock of each Subsidiary are validly
issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.
(e)
Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power
and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any
Subsidiary is in violation nor in default of any of the provisions of its respective certificate or articles of incorporation, bylaws
or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be,
could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of this
Agreement, the Transaction Documents or any other agreement or instrument relating to the Offering, (ii) a material adverse effect on
the results of operations, assets, business or condition (financial or otherwise) of the Company and the Subsidiaries, or (iii) a material
adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under this Agreement
or the transactions contemplated under the Preliminary Prospectus (any of (i), (ii) or (iii), a “Material Adverse Effect”);
provided that a change in the market price or trading volume of the Common Stock alone shall not be deemed, in and of itself,
to constitute a Material Adverse Effect. No action, claim, suit, investigation or proceeding (including, without limitation, an informal
inquiry), whether commenced or threatened (“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.
(f)
Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement, the Transaction Documents and the Time of Sale Disclosure Package and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of each of this Agreement, the Transaction Documents and the Time of Sale Disclosure
Package by the Company and the consummation by it of the transactions contemplated hereby and thereby and under the Preliminary Prospectus
have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Company’s
Board of Directors or the Company’s shareholders in connection therewith other than in connection with the Required Approvals (as
defined below). This Agreement and each Transaction Document has been duly executed by the Company and, when delivered in accordance
with the terms hereof, will constitute valid and binding obligations of the Company enforceable against the Company in accordance with
their terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.
(g)
No Conflicts. The execution, delivery and performance by the Company of this Agreement and each Transaction Document and the transactions
contemplated hereby, thereby and pursuant to the Time of Sale Disclosure Package, the issuance and sale of the Securities and the consummation
by it of the transactions contemplated hereby and thereby to which it is a party do not and will not (i) conflict with or violate any
provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or
charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become
a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to
others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the
Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii)
subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal
and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except
in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.
(h)
Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company of this Agreement and the transactions contemplated
by the Preliminary Prospectus, other than: (i) the filing with the SEC of the Prospectus and such other filings as are required to be
made under applicable state securities laws, (ii) application(s) to each applicable Trading Market for the listing of the Shares and
the Warrant Shares for trading thereon in the time and manner required thereby, and (iii) the filing and mailing of a proxy statement
on Schedule 14A in connection with the Shareholder Approval (the “Required Approvals”). “Shareholder Approval”
means such approval as may be required by the applicable Rules and Regulations of The Nasdaq Capital Market (or any successor entity)
from the shareholders of the Company with respect to the issuance of all of the Shares, the Warrants and the Warrant Shares upon exercise
of the Warrants. As used herein (i) “Persons” means an individual or corporation, partnership, trust, incorporated
or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision
thereof) or other entity of any kind and (ii) “Affiliate” means any Person that, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed
under Rule 405 under the Securities Act.
(i)
Issuance of the Securities; Registration. The Shares are duly authorized and, when issued and paid for in accordance with the
Prospectus, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Warrants
are duly authorized and, when issued and paid for, will constitute valid and legally binding obligations of the Company, enforceable
against the Company in accordance with their terms. The Warrant Shares, when issued in accordance with the terms of the Warrants, respectively,
will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Company has reserved from
its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to the Prospectus.
(j)
Capitalization. The capitalization of the Company is as set forth in the Registration Statement. The Company has not issued any
capital stock or Common Stock Equivalents since its most recently filed SEC Report (as defined below), other than pursuant to the exercise
of employee stock options or vesting and settlement of restricted stock units under the Company’s stock option plans, the issuance
of shares of Common Stock to employees pursuant to any employee stock purchase plans and pursuant to the conversion and/or exercise of
securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time any Common Stock, including,
without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock (“Common Stock Equivalents”)
outstanding as of the date of the most recently filed periodic report under the Exchange Act. No Person has any right of first refusal,
preemptive right, right of participation, or any similar right to participate in the transactions contemplated by this Agreement and
the transactions contemplated pursuant to the Preliminary Prospectus or the Prospectus. Except as a result of the purchase and sale of
the Securities and except as set forth in the SEC Reports, there are no outstanding options, warrants, scrip rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or
exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock or the capital stock of any
Subsidiary, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock or Common Stock Equivalents or capital stock of any Subsidiary,. The issuance and sale of the
Securities will not obligate the Company or any Subsidiary to issue shares of Common Stock or other securities to any Person (other than
the Investors and the Placement Agent) and will not result in a right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under any of such securities. There are no outstanding securities or instruments of the Company or any Subsidiary
that contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the
Company or any Subsidiary is or may become bound to redeem a security of the Company or such Subsidiary. The Company does not have any
stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement. All of the outstanding
shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance
with all federal and state securities laws where applicable, and none of such outstanding shares was issued in violation of any preemptive
rights or similar rights to subscribe for or purchase securities. Except for the Required Approvals, no further approval or authorization
of any shareholder, the Board of Directors or others is required for the issuance and sale of the Securities. There are no shareholders
agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a
party or, to the knowledge of the Company, between or among any of the Company’s shareholders.
(k)
SEC Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the
one (1) year 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, together with the Preliminary
Prospectus, the Prospectus and any prospectus supplement, being collectively referred to herein as the “SEC Reports”)
on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration
of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities
Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company has never been an issuer subject to Rule 144(i) under the Securities
Act. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements
and the rules and regulations of the SEC with respect thereto as in effect at the time of filing. Such financial statements have been
prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved
(“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited
financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position
of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. The selected financial
data set forth under the caption “Selected Financial Data” in the SEC Reports fairly present, on the basis stated in such
SEC Reports, the information included therein. The agreements and documents described in the Registration Statement and the SEC Reports
conform in all material aspects to the descriptions thereof contained therein and there are no agreements or other documents required
by the Securities Act and the rules and regulations thereunder to be described in the Registration Statement, the Prospectus or the SEC
Reports or to be filed with the Commission as exhibits to the Registration Statement, that have not been so described or filed. Each
agreement or other instrument (however characterized or described) to which the Company is a party or by which it is or may be bound
or affected and (i) that is referred to in the Registration Statement or the SEC Reports, or (ii) is material to the Company’s
business, has been duly authorized and validly executed by the Company, is in full force and effect in all material respects and is enforceable
against the Company and, to the Company’s knowledge, the other parties thereto, in accordance with its terms, except (x) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally,
(y) as enforceability of any indemnification or contribution provision may be limited under the federal and state securities laws, and
(z) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses
and to the discretion of the court before which any proceeding therefore may be brought. None of such agreements or instruments has been
assigned by the Company, and neither the Company nor, to the best of the Company’s knowledge, any other party is in default thereunder
and, to the best of the Company’s knowledge, no event has occurred that, with the lapse of time or the giving of notice, or both,
would constitute a default thereunder. To the best of the Company’s knowledge, performance by the Company of the material provisions
of such agreements or instruments will not result in a violation of any existing applicable law, rule, regulation, judgment, order or
decree of any governmental agency or court, domestic or foreign, having jurisdiction over the Company or any of its assets or businesses,
including, without limitation, those relating to environmental laws and regulations.
(l)
Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
within the Preliminary Prospectus or the Prospectus, except as disclosed in the Preliminary Prospectus or the Prospectus, as the case
may be, (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) except as disclosed in the SEC Reports, 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 shareholders 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
equity incentive plans. The Company does not have pending before the SEC any request for confidential treatment of information. Except
for the issuance of the Securities contemplated or disclosed in the Preliminary Prospectus or the Prospectus, 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) Trading Day prior to the date that this representation is made. As used in this Agreement, “Trading
Day” means a day on which the Trading Market (as defined below) is open for trading. As used in this Agreement, “Trading
Market” means The Nasdaq Capital Market, the securities exchange on which the Common Stock is listed for trading.
(m)
Litigation. Except as disclosed in the SEC Reports, there is no Proceeding pending or, to the knowledge of the Company, threatened
against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental
or administrative agency or regulatory authority (federal, state, county, local or foreign) which (i) adversely affects or challenges
the legality, validity or enforceability of any of this Agreement, the Transaction Documents and the transactions contemplated pursuant
to the Time of Sale Disclosure Package 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 Proceeding involving a claim of violation of or liability under federal or state securities laws or a claim of
breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation
or informal inquiry by the SEC or its Staff 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.
(n)
Labor Relations. (1) No material 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. (2) No executive officer of the Company or any Subsidiary,
to the knowledge of the Company, 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. (3) To the Company’s knowledge, (a) no allegation of sexual harassment,
sexual misconduct or discrimination, whether such discrimination arises from race, ethnic background, sex, gender status, age or otherwise
(“Misconduct”) have been made involving any current or former director, officer, employee or independent contractor
of the Company or any of its Subsidiaries, (b) neither the Company nor any of its Subsidiaries have entered into any settlement agreements
related to allegations of Misconduct by any current or former director, officer, employee, or independent contractor of the Company or
any of its Subsidiaries. (4) The Company and its Subsidiaries are in compliance with all applicable U.S. federal, state, local, and foreign
laws and regulations relating to employment and employment practices, terms and conditions of employment, and wages and hours, except
where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(o)
Compliance. In addition to Section 2(n), 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 governmental authority, or (iii) is or has been in violation of any law, statute, rule, ordinance
or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to the
U.S. Food and Drug Administration (“FDA”) and comparable foreign regulators, the U.S. Federal Trade Commission (“FTC”),
state unfair trade practice laws and rules and foreign equivalents, taxes, environmental protection, occupational health and safety and
product quality matters, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.
(p)
Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the Time of
Sale Disclosure Package, except where the failure to possess such permits would not or could not reasonably be expected to result in
a Material Adverse Effect (“Material Permits”), 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 Registration Statement 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. The Company is and has been in material compliance with any term of any such Material Permits, except for any
violations which would not reasonably be expected to have a Material Adverse Effect. The Company has not received notice of any Proceeding
from any governmental authority or third party alleging that any Product, operation or activity is in violation of any applicable laws
or regulations or Material Permits or has any knowledge that any such entity or third party is considering any such Proceeding, nor,
to the Company’s knowledge, has there been any material noncompliance with or violation of any applicable laws or regulations by
the Company that could reasonably be expected to require the issuance of any such communication or result in an investigation, corrective
action, or enforcement action by any governmental authority.
(q)
Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them
and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries,
in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and Liens for the payment of
federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and, the payment of which
is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries
are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.
(r)
Patents and Trademarks. 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 material for use in connection with their respective businesses as described in the Preliminary Prospectus
and Prospectus 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 Preliminary Prospectus and the Prospectus, a notice (written or otherwise) of a claim or otherwise
has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except as would not have 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.
(s)
Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including,
but not limited to, directors and officers insurance coverage. Neither the Company nor any Subsidiary has any reason to believe that
it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business without a significant increase in cost.
(t)
Transactions With Affiliates and Employees. Except as set forth in the Time of Sale Disclosure Package, none of the executive
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, executive
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 executive officer, director or such employee or, to the knowledge of the Company, any entity in which any executive
officer, director, or any such employee has a substantial interest or is an officer, director, trustee, shareholder, member or partner,
in each case in excess of one percent (1%) of the Company’s average total assets as of December 31, 2023 and 2022 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 equity award or option agreements under any equity incentive plan or similar of the Company.
(u)
Sarbanes-Oxley; Internal Accounting Controls. The Company and the Subsidiaries are in compliance with any and all applicable requirements
of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated
by the SEC thereunder that are effective as of the date hereof and as of the Closing Date. Except as disclosed in the Preliminary Prospectus
or the Prospectus, 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 Company’s disclosure controls and procedures of the Company and the Subsidiaries as of the end of the
period covered by the Company’s 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 is reasonably likely to materially affect, the internal control
over financial reporting of the Company and its Subsidiaries.
(v)
Certain Fees. Except as set forth in the Preliminary Prospectus or the Prospectus, no brokerage or finder’s fees or commissions
are or will be payable by the Company to any broker, dealer, financial advisor or consultant, finder, placement agent, investment banker,
bank or other Person with respect to the transactions contemplated by this Agreement and the transactions contemplated pursuant to the
Preliminary Prospectus and the Prospectus. The Investors 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 2(v) that may be due in connection with the transactions
contemplated by this Agreement and the transactions contemplated pursuant to the Preliminary Prospectus and the Prospectus.
(w)
Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities,
will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration
under the Investment Company Act of 1940, as amended.
(x)
Registration Rights. Except as disclosed in the Preliminary Prospectus or the Prospectus, no Person has any right to cause the
Company or any Subsidiary to effect the registration under the Securities Act of any securities of the Company or any Subsidiary.
(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 under the Exchange Act nor has the Company received any notification that the SEC is contemplating terminating such registration.
Except as disclosed in the Preliminary Prospectus or the Prospectus, the Company has not, in the twelve (12) months preceding the date
hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company
is not in compliance with the listing or maintenance requirements of such Trading Market. Except as otherwise disclosed in the Prospectus,
the Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing
and maintenance requirements. The Common Stock is currently eligible for electronic transfer through the Depository Trust Company or
another established clearing corporation and the Company is current in payment of the fees to the Depository Trust Company (or such other
established clearing corporation) in connection with such electronic transfer.
(z)
Application of Takeover Protections. The Company and its Board of Directors have taken all necessary action, if any, in order
to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the
laws of its state of incorporation that is or could become applicable to the Investors as a result of the Investors and the Company fulfilling
their obligations or exercising their rights under this Agreement and the transactions contemplated pursuant to the Preliminary Prospectus,
including without limitation as a result of the Company’s issuance of the Securities and the Investors’ ownership of the
Securities.
(aa)
Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by this Agreement and the
transactions contemplated pursuant to the Preliminary Prospectus and the Prospectus, the Company confirms that neither it nor any other
Person acting on its behalf has provided any of the Investors or their agents or counsel with any information that it believes constitutes
or might constitute material, non-public information which is not otherwise disclosed in the Time of Sale Disclosure Package. The Company
understands and confirms that the Investors will rely on the foregoing representation in effecting transactions in securities of the
Company. All of the disclosure furnished by or on behalf of the Company to the Investors regarding the Company and, its Subsidiaries,
their respective businesses and the transactions contemplated hereby, including the Time of Sale Disclosure Package, 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 did not contain, at their respective times of issuance, 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.
(bb)
No Integrated Offering. Neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly
or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause
this offering of the Securities to be integrated with prior offerings by the Company for purposes of any applicable shareholder approval
provisions of any Trading Market on which any of the securities of the Company are listed or designated.
(cc)
Solvency. Except as disclosed in the Preliminary Prospectus or the Prospectus, based on the consolidated financial condition of
the Company as of the Closing Date, after giving effect to the receipt by the Company of the proceeds from the sale of the Securities
hereunder, (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect
of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s
assets do not constitute unreasonably small capital to carry on its business as now conducted and as proposed to be conducted including
its capital needs taking into account the particular capital requirements of the business conducted by the Company, consolidated and
projected capital requirements and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds
the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would
be sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid. The Company does not
intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable
on or in respect of its debt). Except as disclosed in the Preliminary Prospectus or the Prospectus, the Company has no knowledge of any
facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization
laws of any jurisdiction within one year from each Closing Date. The Time of Sale Disclosure Package discloses as of the date hereof
all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments.
For the purposes of this Agreement, “Indebtedness” means (x) any liabilities for borrowed money or amounts owed in
excess of Fifty Thousand Dollars ($50,000) (other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties,
endorsements, and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected
in the Company’s consolidated balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of business; and (z) the present value of any lease payments
in excess of One Hundred Thousand Dollars ($100,000) due under leases required to be capitalized in accordance with GAAP. Neither the
Company nor any Subsidiary is in default with respect to any Indebtedness.
(dd)
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 (i) has made or filed all United States federal, state and local income and
franchise 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.
(ee)
Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any
agent or other person acting on behalf of the Company or any Subsidiary, has (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate
funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any Person acting on its behalf
of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt
Practices Act of 1977 (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.
(ff)Reserved.
(gg)
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.
(hh)
Accountants. The Company’s independent registered public accounting firm is set forth in the Preliminary Prospectus and
the Prospectus. To the knowledge of the Company, such accounting firm (i) is a registered public accounting firm as required by the Exchange
Act and (ii) shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report for
the fiscal year ending December 31, 2024.
(ii)
Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf (other than the Placement Agent,
as to which no representation is made) 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, other than, in the case of clauses (ii) and
(iii), compensation paid to the Company’s placement agent in connection with the placement of the Securities.
(jj)
Office of Foreign Assets Control. Neither the Company nor any Subsidiary, 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.
(kk)
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, and the Company shall so certify upon any Investor’s request.
(ll)
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.
(mm)
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 United States federal and state and foreign money laundering statutes and applicable rules and regulations thereunder (collectively,
the “Money Laundering Laws”), and no Proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
(nn)
Certificates. Any certificate signed by an officer of the Company and delivered to the Placement Agent or to Lucosky Brookman
LLP, 101 Wood Avenue South, 5th Floor, Woodbridge, NJ 08830 (“Placement Agent’s Counsel”) shall be
deemed to be a representation and warranty by the Company to the Placement Agent as to the matters set forth therein.
(oo)
Reliance. The Company acknowledges that the Placement Agent will rely upon the accuracy and truthfulness of the foregoing representations
and warranties and hereby consents to such reliance.
(pp)
Forward-Looking Statements. No forward-looking statements (within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act) contained in the Time of Sale Disclosure Package has been made or reaffirmed without a reasonable basis or has
been disclosed other than in good faith.
(qq)
Statistical or Market-Related Data. Any statistical, industry-related and market-related data included or incorporated by reference
in the Time of Sale Disclosure Package, are based on or derived from sources that the Company reasonably and in good faith believes to
be reliable and accurate, and such data agree with the sources from which they are derived.
(rr)
FINRA Affiliations. There are no affiliations with any firm that is a member of the FINRA participating in the Offering among
the Company’s officers, directors or, to the knowledge of the Company, any 5% or greater shareholder of the Company.
(ss)
Board of Directors. The Company’s Board of Directors is comprised of the persons identified as directors of the Company
in the Preliminary Prospectus or the Prospectus under the section titled “Management.” The qualifications of the persons
serving as board members and the overall composition of the Board of Directors comply with the Sarbanes-Oxley Act of 2002 and the rules
promulgated thereunder applicable to the Company and the rules of the Trading Market. At least one member of the Board of Directors qualifies
as a “financial expert” as such term is defined under the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder
and the rules of the Trading Market. In addition, at least a majority of the persons serving on the Board of Directors qualify as “independent”
as defined under the rules of the Trading Market.
(tt)
Cybersecurity. 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”) that would reasonably be expected to result in, individually or in the aggregate, a Material Adverse Effect and
(i) 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 material security breach or other compromise to its IT Systems and Data; (ii) the Company and the Subsidiaries
are presently in compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator
or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy and security of IT Systems
and Data and to the protection of such IT Systems and Data from unauthorized use, access, misappropriation or modification, except as
would not, individually or in the aggregate, have a Material Adverse Effect; (iii) the Company and the Subsidiaries have implemented
and maintained commercially reasonable safeguards to maintain and protect its material confidential information and the integrity, continuous
operation, redundancy and security of all IT Systems and Data; and (iv) the Company and the Subsidiaries have implemented backup and
disaster recovery technology consistent with industry standards and practices.
(uu)
Compliance with Data Privacy Laws. (i) The Company and the Subsidiaries are, and at all times during the last three (3) years
were, in material compliance with all applicable state, federal and foreign data privacy and security laws and regulations, including,
without limitation, the European Union General Data Protection Regulation (“GDPR”) (EU 2016/679) (collectively, “Privacy
Laws”); (ii) the Company and the Subsidiaries have in place, comply with, and take appropriate steps reasonably designed to
ensure compliance with their policies and procedures relating to data privacy and security and the collection, storage, use, disclosure,
handling and analysis of Personal Data (as defined below) (the “Policies”); (iii) the Company provides accurate notice
of its applicable Policies to its customers, employees, third party vendors and representatives as required by the Privacy Laws; and
(iv) applicable Policies provide accurate and sufficient notice of the Company’s then-current privacy practices relating to its
subject matter, and do not contain any material omissions of the Company’s then-current privacy practices, as required by Privacy
Laws. “Personal Data” means (i) a natural person’s name, street address, telephone number, email address, photograph,
social security number, bank information, or customer or account number; (ii) any information which would qualify as “personally
identifying information” under the FTC, as amended; (iii) “personal data” as defined by GDPR; and (iv) any other piece
of information that allows the identification of such natural person, or his or her family, or permits the collection or analysis of
any identifiable data related to an identified person’s health or sexual orientation. (i) None of such disclosures made or contained
in any of the Policies have been inaccurate, misleading, or deceptive in violation of any Privacy Laws and (ii) the execution, delivery
and performance of the Transaction Documents will not result in a breach of any Privacy Laws or Policies. Neither the Company nor the
Subsidiaries (i) to the knowledge of the Company, has received written notice of any actual or potential liability of the Company or
the Subsidiaries under, or actual or potential violation by the Company or the Subsidiaries of, any of the Privacy Laws; (ii) is currently
conducting or paying for, in whole or in part, any investigation, remediation or other corrective action pursuant to any regulatory request
or demand pursuant to any Privacy Law; or (iii) is a party to any order, decree, or agreement by or with any court or arbitrator or governmental
or regulatory authority that imposed any obligation or liability under any Privacy Law.
(vv)
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.
Section
3. Delivery and Payment.
(a)
Closing for the Offering. Delivery of and payment for the Securities shall be made at or around 9:00 a.m., Eastern time, on or
before the first (1st) Trading Day following the date of the Purchase Agreement. The Closing shall take place remotely by electronic
transfer of the Closing documentation. On the Closing Date, the Company shall issue such amount of Securities sold pursuant to the Purchase
Agreement directly to the accounts designated by the Placement Agent for the applicable Investors and payment shall be made by the Investors
by wire transfer to the Company. At the Closing, the Securities which the Company shall deliver to each Investor shall consist of the
following, as applicable: (i) the number of Shares and/or Pre-Funded Warrants purchased by such Investor, (ii) a Series A Warrant registered
in the name of each Investor to purchase up to an aggregate number of Warrant Shares equal to one hundred percent (100%) of the aggregate
number of such Investor’s Shares purchased pursuant to the Offering (on an as-exercised basis without giving effect to any beneficial
ownership limitations in the case of Investors who purchased Pre-Funded Warrants) and (iii) a Series B Warrant registered in the name
of each Investor to purchase up to an aggregate number of Warrant Shares equal to 100% of the aggregate number of such Investor’s
Shares purchased pursuant to the Offering (on an as-exercised basis without giving effect to any beneficial ownership limitations in
the case of Investors who purchased Pre-Funded Warrants). Subject to the terms and conditions hereof, at the Closing, payment of the
purchase price for the Securities sold pursuant to the Purchase Agreement shall be made by federal funds wire transfer, against delivery
of the Shares (with the Series A Warrants and the Series B Warrants to follow as provided in the previous sentence), and such Securities
shall be registered in such name or names and shall be in such denominations, as the Placement Agent may request. Deliveries of the documents
with respect to the purchase of the Securities, if any, shall be made at the offices of Placement Agent’s Counsel; provided, however,
that the Company shall be deemed to have satisfied its obligations with respect to the delivery of the Series A Warrants and Series B
Warrants by making available a PDF copy of the executed Series A Warrants and Series B Warrants at the Closing and delivering the originals
thereof within five Trading Days of the Closing. All actions taken at the Closing shall be deemed to have occurred simultaneously.
(b)
Payment for the Securities. The Securities are being sold to the Investors at the public offering price as set forth in the Prospectus.
The purchase of the Securities by each of the Investors shall be evidenced by the receipt of funds in the account designated by the Company
and the Placement Agent and execution of a Purchase Agreement by each such Investor and the Company.
(c)
Delivery of the Shares, Series A Warrants and Series B Warrants. Delivery of the Shares shall be made through the facilities of
The Depository Trust Company unless the Placement Agent shall otherwise instruct. Delivery of the Series A Warrants and the Series B
Warrants shall be made as set forth in Section 3(a) above.
Section
4. Covenants and Agreements of the Company. The Company further covenants and agrees with the Placement Agent as follows:
(a)
Registration Statement Matters. During the Prospectus Delivery Period (as defined below), the Company will advise the Placement
Agent promptly after it receives notice thereof of the time when any amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus has been filed and will furnish the Placement Agent with copies thereof. During the Prospectus
Delivery Period (as defined in Section 4(c), the Company will file promptly all reports and any definitive proxy or information statements
required to be filed by the Company with the SEC pursuant to Section 13(a), 14 or 15(d) of the Exchange Act subsequent to the date of
any Prospectus. During the Prospectus Delivery Period, the Company will advise the Placement Agent, promptly after it receives notice
thereof (i) of any request by the SEC to amend the Registration Statement or to amend or supplement any Prospectus or for additional
information, and (ii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or any order directed at any Incorporated Document, if any, or any amendment or supplement thereto or
any order preventing or suspending the use of the Preliminary Prospectus or the Prospectus or any prospectus supplement or any amendment
or supplement thereto or any post-effective amendment to the Registration Statement, of the suspension of the qualification of the Securities
for offering or sale in any jurisdiction, of the institution or threatened institution of any Proceeding for any such purpose, or of
any request by the SEC for the amending or supplementing of the Registration Statement or a Prospectus or for additional information.
The Company shall use its best efforts to prevent the issuance of any such stop order or prevention or suspension of such use. If the
SEC shall enter any such stop order or order or notice of prevention or suspension at any time, the Company will use its best efforts
to obtain the lifting of such order at the earliest possible moment, or will file a new registration statement and use its best efforts
to have such new registration statement declared effective as soon as practicable. Additionally, the Company agrees that during the Prospectus
Delivery Period, it shall comply with the provisions of Rules 424(b), 430A, 430B and 430C, as applicable, under the Securities Act, including
with respect to the timely filing of documents thereunder, and will use its reasonable efforts to confirm that any filings made by the
Company under such Rule 424(b) are received in a timely manner by the SEC. The Company covenants and agrees to update the Prospectus
to include all information required to be included therein, including with respect to any SEC Reports that are filed subsequent to the
date of the Prospectus, for the period beginning on the effective date of the Registration Statement and ending on the date on which
no Warrants (including any Pre-Funded Warrants) are outstanding.
(b)
Blue Sky Compliance. The Company will qualify or register the Offering under the securities laws of applicable jurisdictions (United
States and foreign) as the Placement Agent and the Investors may reasonably request and will make such applications, file such documents,
and furnish such information as may be reasonably required for that purpose, provided the Company shall not be required to qualify as
a foreign corporation or to file a general consent to service of process in any jurisdiction where it is not now so qualified or required
to file such a consent, and provided further that the Company shall not be required to produce any new disclosure statement or
take such action as is necessary for the Offering to be made pursuant to an available exemption from qualification or registration in
applicable jurisdictions. During the Prospectus Delivery Period, the Company will, from time to time, prepare and file such statements,
reports and other documents as are or may be required to continue such qualifications in effect. During the Prospectus Delivery Period,
the Company will advise the Placement Agent promptly of the suspension of the qualification or registration of (or any such exemption
relating to) the Securities for offering, sale or trading in any jurisdiction or any initiation or threat of any Proceeding for any such
purpose, and in the event of the issuance of any order suspending such qualification, registration or exemption, the Company shall use
its best efforts to obtain the withdrawal thereof at the earliest possible moment.
(c)
Amendments and Supplements to a Prospectus and Other Matters. The Company will comply with the Securities Act and the Exchange
Act, and the rules and regulations of the SEC thereunder, so as to permit the completion of the distribution of the Securities as contemplated
in this Agreement, the Incorporated Documents and any Prospectus. If during the period in which a prospectus is required by law to be
delivered in connection with the distribution of Securities contemplated by the Incorporated Documents or any Prospectus (the “Prospectus
Delivery Period”), any event shall occur as a result of which, in the judgment of the Company or in the opinion of the Placement
Agent or Placement Agent’s Counsel, it becomes necessary to amend or supplement the Incorporated Documents or any Prospectus in
order to make the statements therein, in the light of the circumstances under which they were made, as the case may be, not misleading,
or if it is necessary at any time to amend or supplement the Incorporated Documents or any Prospectus or to file under the Exchange Act
any Incorporated Document to comply with any law, the Company will promptly prepare and file with the SEC, and furnish at its own expense
to the Placement Agent and to dealers, an appropriate amendment to the Registration Statement or supplement to the Registration Statement,
the Incorporated Documents or any Prospectus that is necessary in order to make the statements in the Incorporated Documents and any
Prospectus as so amended or supplemented, in the light of the circumstances under which they were made, as the case may be, not misleading,
or so that the Registration Statement, the Incorporated Documents or any Prospectus, as so amended or supplemented, will comply with
law. Before amending the Registration Statement or supplementing the Incorporated Documents or any Prospectus in connection with the
Offering, the Company will furnish the Placement Agent with a copy of such proposed amendment or supplement and will not file any such
amendment or supplement to which the Placement Agent reasonably objects.
(d)
Copies of any Amendments and Supplements to a Prospectus. The Company will furnish the Placement Agent, without charge, during
the period beginning on the date hereof and ending on the Closing Date of the Offering, as many copies of any Prospectus or Prospectus
supplement and any amendments and supplements thereto, as the Placement Agent may reasonably request.
(e)
Free Writing Prospectus. The Company covenants that it will not, unless it obtains the prior written consent of the Placement
Agent, make any offer relating to the Securities that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute
a “Free Writing Prospectus” (as defined in Rule 405 of the Securities Act) required to be filed by the Company with
the SEC or retained by the Company under Rule 433 of the Securities Act. In the event that the Placement Agent expressly consents in
writing to any such Free Writing Prospectus (a “Permitted Free Writing Prospectus”), the Company covenants that it
shall (i) treat each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus, and (ii) comply with the requirements of
Rule 164 and 433 of the Securities Act applicable to such Permitted Free Writing Prospectus, including in respect of timely filing with
the SEC, legending and record keeping. Notwithstanding anything herein to the contrary, in no event shall the Company make any offer
or communication relating to the Offering which meets the definition of a “Free Writing Prospectus” while the Company is
an “ineligible issuer” (as such terms are defined in Rule 405 of the Securities Act) or otherwise in contravention of the
Securities Act and the Rules and Regulations thereunder.
(f)
Transfer Agent. The Company will maintain, at its expense, a registrar and transfer agent for the Common Stock.
(g)
Earnings Statement. As soon as practicable and in accordance with applicable requirements under the Securities Act, but in any
event not later than 12 months after the Closing Date, the Company will make generally available to its security holders and to the Placement
Agent an earnings statement, covering a period of at least 12 consecutive months beginning after the Closing Date, that satisfies the
provisions of Section 11(a) and Rule 158 under the Securities Act.
(h)
Periodic Reporting Obligations. During the Prospectus Delivery Period, the Company will duly file, on a timely basis, with the
SEC and the Trading Market all reports and documents required to be filed under the Exchange Act within the time periods and in the manner
required by the Exchange Act.
(i)
Additional Documents. The Company will enter into any subscription, purchase or other customary agreements as the Placement
Agent or the Investors deem necessary or appropriate to consummate the Closing in connection with the Offering, all of which will be
in form and substance reasonably acceptable to the Placement Agent and the Investors. The Company agrees that the Placement Agent may
rely upon the representations and warranties, and applicable covenants set forth in any Transaction Document including the Purchase Agreement
entered into with Investors in connection with the Offering.
(j)
No Manipulation of Price. The Company will not take, directly or indirectly, any action designed to cause or result in,
or that has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any securities
of the Company.
(k)
Acknowledgment. The Company acknowledges that any advice given by the Placement Agent to the Company is solely for the benefit
and use of the Board of Directors of the Company and may not be used, reproduced, disseminated, quoted or referred to, without the Placement
Agent’s prior written consent.
(l)
Announcement of Offering. The Company acknowledges and agrees that the Placement Agent may, subsequent to the Closing, make public
its involvement with the Offering.
(m)
Reliance on Others. The Company confirms that it will rely on its own counsel and accountants for legal and accounting advice.
(n)
Research Matters. By entering into this Agreement, the Placement Agent provides
no promise, either explicitly or implicitly, of favorable or continued research coverage of the Company and the Company hereby acknowledges
and agrees that the Placement Agent’s selection as the placement agent for the Offering was in no way conditioned, explicitly or
implicitly, on the Placement Agent’s providing favorable or any research coverage of the Company. In accordance with FINRA Rule
2711(e), the parties acknowledge and agree that the Placement Agent has not directly or indirectly offered favorable research, a specific
rating or a specific price target, or threatened to change research, a rating or a price target, to the Company or inducement for the
receipt of business or compensation.
(o)
Lock-Up Agreements. The Company shall not amend, modify, waive or terminate any provision of any of the Lock-Up Agreements (as
defined below) except to extend the term of the lock-up period and shall enforce the provisions of each Lock-Up Agreement in accordance
with its terms. If any party to a Lock-Up Agreement breaches any provision of a Lock-Up Agreement, the Company shall promptly use its
best efforts to seek specific performance of the terms of such Lock-Up Agreement.
(p)
Subsequent Equity Sales.
(i)
From the date hereof until ninety (90) days after the Closing Date, neither the Company nor any Subsidiary shall issue, enter into any
agreement to issue or announce the issuance or proposed issuance of any Common Stock or Common Stock Equivalents, except for the securities
issued pursuant hereto.
(ii)
From the date hereof until one hundred and eighty (180) days after the Closing Date, the Company 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 a combination of units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction
in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or
include the right to receive additional shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other
price that is based upon and/or varies with the trading prices of or quotations for the Common Stock at any time after the initial issuance
of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future
date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or
indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into, or effects a transaction under,
any agreement, including, but not limited to, an equity line of credit or an “at-the-market offering”, whereby the Company
may issue securities at a future determined price regardless of whether shares pursuant to such agreement have actually been issued and
regardless of whether such agreement is subsequently canceled. The Placement Agent shall be entitled to obtain injunctive relief against
the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages.
(iii)
Notwithstanding the foregoing, Section 4(p)(i) and (ii) shall not apply in respect of an Exempt Issuance. An “Exempt Issuance”
means the issuance of (A) shares of Common Stock or options or other securities to employees, officers, directors or consultants of the
Company pursuant to any employee benefit plan, equity incentive plan or other employee compensation plan existing on the date hereof
or any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority
of the members of a committee of non-employee directors established for such purpose for services rendered to the Company, (B) Common
Stock issued upon the exercise or exchange of or conversion of any Securities issued pursuant to the Securities Purchase Agreement or
Prospectus or this Agreement and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued
and outstanding on the date of this Agreement provided that such securities have not been amended since the date of this Agreement to
increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (other
than in connection with stock splits or combinations or anti-dilution provisions contained therein as disclosed in the SEC Reports and
the Prospectus) or to extend the term of such securities, or securities issuable in connection with a transaction involving the Company
and existing stockholders in which the Company offers the existing stockholders the option to exchange their shares of Common Stock for
other securities of the Company, (C) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, provided that such securities are issued as “restricted securities” (as defined in
Rule 144) and carry no registration rights that require or permit the filing of any registration statement in connection therewith during
the prohibition period in Section 4(p)(i) herein, and provided that any such issuance shall only be to a Person (or to the equity holders
of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with
the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not
include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary
business is investing in securities, and (D) the issuance of the Securities in the Offering, and (E) the entry into and/or issuance of
shares of Common Stock pursuant to a Regulation A+ offering with the Placement Agent as sales agent.
(q)
Tail Fee.
(i)
Tail Fee. The Company and the Placement Agent agree that for a period of eighteen (18) months from (i) the Closing Date of the
Offering or (ii) if the Closing does not occur, the termination of this Agreement by the Company other than for Cause, the Placement
Agent shall be entitled to compensation commensurate with those set forth under Section 1(a) (the “Tail Fee”), from
the sale of any equity, debt and/or equity derivative instruments to any investor actually introduced by the Placement Agent to the Company,
but unknown to the Company prior to such introduction, during the period between the date of this Agreement and the Closing of the Offering
or the termination of this Agreement, as applicable (each, a “Tail Financing”), and such Tail Financing is consummated
at any time within the eighteen (18) month period from the Closing Date of the Offering or termination of this Agreement, as applicable.
(ii)
Termination for Cause. Notwithstanding anything herein to the contrary, in accordance with FINRA Rule 5110(g)(5)(B), this Section
4(q) and the Tail Fee contemplated hereby may be terminated by the Company for “Cause”, which shall mean a material breach
by the Placement Agent of this Agreement or a material failure by the Placement Agent to provide the services as contemplated by this
Agreement.
(r)
Securities Laws Disclosure; Publicity. The Company shall (i) issue a press release disclosing the material terms of the transactions
contemplated hereby at the date and time agreed upon by the Company and the Placement Agent, and (ii) file a Current Report on Form 8-K,
including the Transaction Documents as exhibits thereto, with the SEC within the time required by the Exchange Act. From and after the
issuance of such press release, the Company represents that it shall have publicly disclosed all material, non-public information delivered
by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees, Affiliates or agents, in connection
with the transactions contemplated by the Transaction Documents. The Company and the Placement Agent shall consult with each other in
issuing any other press releases with respect to the transactions contemplated hereby.
(s)
Shareholder Approval. The Company shall hold an annual or special meeting of stockholders on or prior to the date that is sixty
(60) days following the Closing Date for the purpose of obtaining Shareholder Approval, with the recommendation of the Company’s
Board of Directors that such proposals are approved, and the Company shall solicit proxies from its shareholders in connection therewith
in the same manner as all other management proposals in such proxy statement and all management-appointed proxyholders shall vote their
proxies in favor of such proposals. If the Company does not obtain Shareholder Approval at the first meeting, the Company shall use commercially
reasonable efforts to call a meeting every sixty (60) days thereafter to seek Shareholder Approval until the earlier of the Shareholder
Approval Date or the Series A Warrants and Series B Warrants are no longer outstanding. The Company shall set the record date for Shareholder
Approval prior to the Closing Date.
Section
5. Conditions of the Obligations of the Placement Agent. The obligations of the Placement Agent hereunder shall be subject to the
accuracy of the representations and warranties on the part of the Company set forth in Section 2 hereof, in each case as of the
date hereof and as of the Closing Date as though then made, to the timely performance by each of the Company of its covenants and other
obligations hereunder, and to each of the following additional conditions:
(a)
Accountants’ Comfort Letter. On the Closing Date, the Placement Agent shall have received, and the Company shall have caused
to be delivered to the Placement Agent, a letter from Marcum LLP, the independent registered public accounting firm of the Company, addressed
to the Placement Agent, dated as of the Closing Date, in form and substance satisfactory to the Placement Agent.
(b)
Compliance with Registration Requirements; No Stop Order; No Objection from FINRA. Each Prospectus (in accordance with Rule 424(b))
and Free Writing Prospectus if any, shall have been duly filed with the SEC, as appropriate; no stop order suspending the effectiveness
of the Registration Statement or any part thereof shall have been issued and no Proceeding for that purpose shall have been initiated
or threatened by the SEC; no order preventing or suspending the use of any Prospectus shall have been issued and no Proceeding for that
purpose shall have been initiated or threatened by the SEC; no order having the effect of ceasing or suspending the distribution of the
Securities or any other securities of the Company shall have been issued by any securities commission, securities regulatory authority
or stock exchange and no Proceedings for that purpose shall have been instituted or shall be pending or, to the knowledge of the Company,
contemplated by any securities commission, securities regulatory authority or stock exchange; all requests for additional information
on the part of the SEC shall have been complied with; and FINRA shall have raised no objection to the fairness and reasonableness of
the placement terms and arrangements.
(c)
Corporate Proceedings. All corporate proceedings and other legal matters in connection with this Agreement, the Registration Statement
and each Prospectus, and the registration, sale, and delivery of the Securities, shall have been completed or resolved in a manner reasonably
satisfactory to the Placement Agent’s Counsel, and such counsel shall have been furnished with such papers and information as it
may reasonably have requested to enable such counsel to pass upon the matters referred to in this Section 5.
(d)
No Material Adverse Change. Subsequent to the execution and delivery of this Agreement and prior to the Closing Date, in the Placement
Agent’s reasonable judgment after consultation with the Company, there shall not have occurred any material adverse change or development
involving a prospective material adverse change in the condition or the business activities, financial or otherwise, of the Company from
the latest dates as of which such condition is set forth in the Registration Statement and Prospectus (each, a “Material Adverse
Change”).
(e)
Opinions of Counsel for the Company.
The
Placement Agent shall have received on the Closing Date the written opinion of Sichenzia Ross Ference Carmel LLP, legal counsel to the
Company, dated as of the Closing Date and addressed to the Placement Agent, including, without limitation, a negative assurance letter
addressed to the Placement Agent and, in form and substance satisfactory to the Placement Agent.
(f)
Officers’ Certificate. The Placement Agent shall have received on the Closing Date, a certificate of the Company, dated
as of the Closing Date and which may be relied upon by the Placement Agent, signed by the Chief Executive Officer and Chief Financial
Officer of the Company, in their respective capacities as such officers only, in a form satisfactory to the Placement Agent, to the effect
that:
(i)
The representations and warranties of the Company in this Agreement are true and correct in all material respects (except such representations
and warranties which are qualified by materiality or by Material Adverse Effect, which shall be true and correct in all respects), as
if made on and as of the Closing Date, and the Company has complied with all the agreements and satisfied all the conditions on its part
to be performed or satisfied at or prior to the Closing Date;
(ii)
No stop order suspending the effectiveness of the Registration Statement or the use of any Prospectus has been issued and no Proceedings
for that purpose have been instituted or are pending or, to the Company’s knowledge, threatened under the Securities Act; no order
having the effect of ceasing or suspending the distribution of the Securities or any other securities of the Company has been issued
by any securities commission, securities regulatory authority or stock exchange in the United States and no Proceedings for that purpose
have been instituted or are pending or, to the knowledge of the Company, contemplated by any securities commission, securities regulatory
authority or stock exchange in the United States;
(iii)
When the Registration Statement became effective, at the time of sale, and at all times subsequent thereto up to the delivery of such
certificate, the Registration Statement and the Incorporated Documents, if any, when such documents became effective or were filed with
the SEC, and any Prospectus, contained all material information required to be included therein by the Securities Act and the Exchange
Act and the applicable rules and regulations of the SEC thereunder, as the case may be, and in all material respects conformed to the
requirements of the Securities Act and the Exchange Act and the applicable rules and regulations of the SEC thereunder, as the case may
be, and the Registration Statement and the Incorporated Documents, if any, and any Prospectus, did not and do not include any untrue
statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading (provided, however, that the preceding representations and
warranties contained in this paragraph (iii) shall not apply to any statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by the Placement Agent expressly for use therein) and, since the effective date of the
Registration Statement, there has occurred no event required by the Securities Act and the rules and regulations of the SEC thereunder
to be set forth in the Incorporated Documents which has not been so set forth; and
(iv)
Subsequent to the respective dates as of which information is given in the Registration Statement, the Incorporated Documents and any
Prospectus, there has not been: (i) any Material Adverse Change; (ii) any transaction that is material to the Company and the Subsidiaries
taken as a whole, except transactions entered into in the ordinary course of business; (iii) any obligation, direct or contingent, that
is material to the Company and the Subsidiaries taken as a whole, incurred by the Company or any Subsidiary, except obligations incurred
in the ordinary course of business; (iv) any material change in the capital stock (except changes thereto resulting from the exercise
of outstanding stock options or warrants) or outstanding indebtedness of the Company or any Subsidiary; (v) any dividend or distribution
of any kind declared, paid or made on the capital stock of the Company; or (vi) any loss or damage (whether or not insured) to the property
of the Company or any Subsidiary which has been sustained or will have been sustained which has a Material Adverse Effect.
(g)
Chief Financial Officer’s Certificate. The Placement Agent shall have received on the Closing Date, a certificate of the
Company, dated as of the Closing Date and which may be relied upon by the Placement Agent, signed by the Chief Financial Officer of the
Company, with respect to certain financial data contained in or incorporated by reference into the Registration Statement, in a form
satisfactory to the Placement Agent.
(h)
Secretary’s Certificate. The Placement Agent shall have received on the Closing Date, a certificate of the Company, dated
as of the Closing Date and which may be relied upon by the Placement Agent, signed by the Secretary of the Company, certifying, among
others, (i) that each of the Company’s Amended and Restated Certificate of Incorporation and Amendment No. 1 to Amended Bylaws,
and all amendments thereto, is true and complete, has not been modified and is in full force and effect; (ii) that the resolutions of
the Company’s Board of Directors relating to the Offering are in full force and effect and have not been modified; (iii) that each
of the Company and its Subsidiaries is in good standing under the laws of the jurisdiction of its incorporation or organization; (iv)
as to the accuracy and completeness of all correspondence between the Company or its counsel and the SEC; and (v) as to the incumbency
of the officers of the Company, in a form reasonably acceptable to the Placement Agent.
(i)
Exchange Act Registration and Stock Exchange Listing. The Common Stock (including the Shares and the Warrant Shares) shall be
registered under the Exchange Act and shall be listed on the Trading Market, and the Company shall not have taken any action designed
to terminate, or likely to have the effect of terminating, the registration of the Common Stock under the Exchange Act or delisting or
suspending from trading the Common Stock from the Trading Market, nor shall the Company have received any information suggesting that
the SEC or the Trading Market is contemplating terminating such registration or listing.
(j)
Lock-Up Agreement. On or prior to the date of this Agreement, the Company shall also have furnished to the Placement Agent a letter
substantially in the form of Exhibit A hereto (the “Lock-Up Agreement”) from each executive officer, director
and five percent (5%) shareholder of the Company addressed to the Placement Agent. The Company will use its best efforts to enforce the
terms of each Lock-Up Agreement and will issue stop-transfer instructions to the transfer agent for the Common Stock with respect to
any transaction or contemplated transaction that would constitute a breach of or default under the applicable Lock-Up Agreement.
(k)
Additional Documents. On or before the Closing Date, the Placement Agent and Placement Agent’s Counsel shall have received
such information and documents as they may reasonably require for the purposes of enabling them to pass upon the issuance and sale of
the Securities as contemplated herein, or in order to evidence the accuracy of any of the representations and warranties, or the satisfaction
of any of the conditions or agreements, herein contained.
If
any condition specified in this Section 5 is not satisfied when and as required to be satisfied, this Agreement may be terminated
by the Placement Agent by notice to the Company at any time on or prior to the Closing Date, which termination shall be without liability
on the part of any party to any other party, except that Section 1(a), Section 1(b), Section 6 (Payment of Expenses),
Section 7 (Indemnification and Contribution) and Section 8 (Representations and Indemnities to Survive Delivery) shall
at all times be effective and shall survive such termination.
Section
6. Payment of Fees and Expenses. Subject to compliance with FINRA Rule 5110(f)(2)(D), the Company agrees to pay all costs, fees and
expenses incurred by the Company in connection with the performance of its obligations hereunder and in connection with the transactions
contemplated hereby, including, without limitation: (i) payment to the Placement Agent of its Cash Fee and non-accountable expense allowance
(ii) all expenses incident to the issuance, delivery and qualification of the Securities (including all printing and engraving costs);
(iii) all fees and expenses of the registrar and transfer agent of the Common Stock; (iv) all necessary issue, transfer and other stamp
taxes in connection with the issuance and sale of the Securities; (v) all fees and expenses of the Company’s counsel, registered
independent public accounting firm and other advisors; (vi) all costs and expenses incurred in connection with the preparation, printing,
filing, shipping and distribution of the Registration Statement (including financial statements, exhibits, schedules, consents and certificates
of experts), the Preliminary Prospectus, the Prospectus and each Prospectus supplement, if any, and all amendments and supplements thereto,
and this Agreement; (vii) all filing fees, reasonable attorneys’ fees and expenses incurred by the Company in connection with qualifying
or registering (or obtaining exemptions from the qualification or registration of) all or any part of the Securities for offer and sale
under the state securities or blue sky laws or the securities laws of any other country; (viii) the filing fees incident to the review
and approval by FINRA of the Placement Agent’s participation in the offering and distribution of the Securities; (ix) the fees
and expenses associated with including the Shares and Warrant Shares on the Trading Market; (x) all costs and expenses incident to the
travel and accommodation of the Company’s employees on the “roadshow,” if any; (xi) the Placement Agent’s closing
costs, including the reimbursement of the out-of-pocket cost of the escrow agent or clearing agent, of up to $12,900; and (xii) all other
fees, costs and expenses referred to in Part II of the Registration Statement.
Section
7. Indemnification and Contribution.
(a)
The Company agrees to indemnify and hold harmless the Placement Agent, its Affiliates and each Person controlling the Placement Agent,
and the directors, officers, agents and employees of the Placement Agent, their respective affiliates and each such controlling person
(the Placement Agent, and each such entity or person, an “Indemnified Person”) from and against any losses, claims,
damages, judgments, assessments, costs and other liabilities (collectively, the “Liabilities”), and shall reimburse
each Indemnified Person for all fees and expenses (including the reasonable fees and expenses of one counsel for all Indemnified Persons,
except as otherwise expressly provided herein) (collectively, the “Expenses”) as they are incurred by an Indemnified
Person in investigating, preparing, pursuing or defending any Proceedings, whether or not any Indemnified Person is a party thereto,
(i) caused by, or arising out of or in connection with, any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement, any Incorporated Document, or any Prospectus or by any omission or alleged omission to state therein a
material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (other
than untrue statements or alleged untrue statements in, or omissions or alleged omissions from, information relating to an Indemnified
Person furnished in writing by or on behalf of such Indemnified Person expressly for use in the Registration Statement, any Incorporated
Document, or any Prospectus) or (ii) otherwise arising out of or in connection with advice or services rendered or to be rendered by
any Indemnified Person pursuant to this Agreement, the transactions contemplated thereby or any Indemnified Person’s actions or
inactions in connection with any such advice, services or transactions; provided, however, that, in the case of clause
(ii) only, the Company shall not be responsible for any Liabilities or Expenses of any Indemnified Person that are finally judicially
determined to have resulted solely from such Indemnified Person’s (x) gross negligence or willful misconduct in connection with
any of the advice, actions, inactions or services referred to above or (y) use of any offering materials or information concerning the
Company in connection with the offer or sale of the Securities in the Offering which were not authorized for such use by the Company
and which use constitutes gross negligence or willful misconduct. The Company also agrees to reimburse each Indemnified Person for all
Expenses as they are incurred in connection with enforcing such Indemnified Person’s rights under this Agreement.
(b)
Upon receipt by an Indemnified Person of actual notice of an Proceeding against such Indemnified Person with respect to which indemnity
may be sought under this Agreement, such Indemnified Person shall promptly notify the Company in writing; provided that failure by any
Indemnified Person so to notify the Company shall not relieve the Company from any liability which the Company may have on account of
this indemnity or otherwise to such Indemnified Person, except to the extent the Company shall have been prejudiced by such failure.
The Company shall, if requested by the Placement Agent, assume the defense of any such Proceeding including the employment of counsel
reasonably satisfactory to the Placement Agent, which counsel may also be counsel to the Company. Any Indemnified Person 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 Indemnified Person unless: (i) the Company has failed promptly to assume the defense and employ counsel
or (ii) the named parties to any such Proceeding (including any impeded parties) include such Indemnified Person and the Company, and
such Indemnified Person shall have been advised in the reasonable opinion of counsel that there is an actual conflict of interest that
prevents the counsel selected by the Company from representing both the Company (or another client of such counsel) and any Indemnified
Person; provided that the Company shall not in such event be responsible hereunder for the fees and expenses of more than one firm of
separate counsel for all Indemnified Persons in connection with any Proceeding or related Proceedings, in addition to any local counsel.
The Company shall not be liable for any settlement of any Proceeding effected without its written consent (which shall not be unreasonably
withheld). In addition, the Company shall not, without the prior written consent of the Indemnified Person (which shall not be unreasonably
withheld), settle, compromise or consent to the entry of any judgment in or otherwise seek to terminate any pending or threatened Proceeding
in respect of which indemnification or contribution may be sought hereunder (whether or not such Indemnified Person is a party thereto)
unless such settlement, compromise, consent or termination includes an unconditional release of each Indemnified Person from all Liabilities
arising out of such Proceeding for which indemnification or contribution may be sought hereunder. The indemnification required hereby
shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as such expense, loss, damage
or liability is incurred and is due and payable.
(c)
In the event that the foregoing indemnity is unavailable to an Indemnified Person other than in accordance with this Agreement, the Company
shall contribute to the Liabilities and Expenses paid or payable by such Indemnified Person in such proportion as is appropriate to reflect
(i) the relative benefits to the Company, on the one hand, and to the Placement Agent and any other Indemnified Person, on the other
hand, of the matters contemplated by this Agreement or (ii) if the allocation provided by the immediately preceding clause is not permitted
by applicable law, not only such relative benefits but also the relative fault of the Company, on the one hand, and the Placement Agent
and any other Indemnified Person, on the other hand, in connection with the matters as to which such Liabilities or Expenses relate,
as well as any other relevant equitable considerations; provided that in no event shall the Company contribute less than the amount necessary
to ensure that all Indemnified Persons, in the aggregate, are not liable for any Liabilities and Expenses in excess of the amount of
fees actually received by the Placement Agent pursuant to this Agreement. For purposes of this paragraph, the relative benefits to the
Company, on the one hand, and to the Placement Agent on the other hand, of the matters contemplated by this Agreement shall be deemed
to be in the same proportion as (a) the total value paid or contemplated to be paid to or received or contemplated to be received by
the Company in the transaction or transactions that are within the scope of this Agreement, whether or not any such transaction is consummated,
bears to (b) the fees paid to the Placement Agent under this Agreement. Notwithstanding the above, no person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the Securities Act, as amended, shall be entitled to contribution from a party who was not guilty
of fraudulent misrepresentation.
(d)
The Company also agrees that no Indemnified Person shall have any liability (whether direct or indirect, in contract or tort or otherwise)
to the Company for or in connection with advice or services rendered or to be rendered by any Indemnified Person pursuant to this Agreement,
the transactions contemplated thereby or any Indemnified Person’s actions or inactions in connection with any such advice, services
or transactions except for Liabilities (and related Expenses) of the Company that are finally judicially determined to have resulted
solely from such Indemnified Person’s gross negligence or willful misconduct in connection with any such advice, actions, inactions
or services.
(e)
The reimbursement, indemnity and contribution obligations of the Company set forth herein shall apply to any modification of this Agreement
and shall remain in full force and effect regardless of any termination of, or the completion of any Indemnified Person’s services
under or in connection with, this Agreement.
Section
8. Representations and Indemnities to Survive Delivery. The respective indemnities, agreements, representations, warranties and other
statements of the Company or any person controlling the Company, of its officers, and of the Placement Agent set forth in or made pursuant
to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Placement Agent,
the Company, or any of its or their partners, officers or directors or any controlling person, as the case may be, and will survive delivery
of and payment for the Securities sold hereunder and any termination of this Agreement. A successor to the Placement Agent, or to the
Company, its directors or officers or any person controlling the Company, shall be entitled to the benefits of the indemnity, contribution
and reimbursement agreements contained in this Agreement.
Section
9. Notices. All communications hereunder shall be in writing and shall be overnight, next business day delivery, hand delivered or
e-mailed and confirmed to the parties hereto as follows:
If
to the Placement Agent to the address set forth above, attention: Yi (Edric) Guo, Chief Executive Officer, e-mail: yguo@univest.us
With
a copy (which shall not constitute notice) to:
Lucosky
Brookman LLP
101
Wood Avenue South, 5th Floor
Woodbridge,
NJ 08830
Telephone:
(732) 395-4400
Attention:
Jorge Campos, Esq.
Email:
jcampos@lucbro.com
If
to the Company:
Algorhythm
Holdings, Inc.
3000
NW 109th Ave
Miami,
FL 33172
Attn:
Gary Atkinson
Email:
garyatkinson@singingmachine.com
With
a copy (which shall not constitute notice) to:
Sichenzia
Ross Ference Carmel LLP
1185
Avenue of the Americas, 31st Floor
New
York, New York 10036
Attn:
Gregory Sichenzia, Esq.
Fax:
(212) 930-9725
Email:
gsichenzial@srfc.law
Any
party hereto may change the address for receipt of communications by giving written notice to the others.
Section
10. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto, and to the benefit of the employees,
officers and directors and controlling persons referred to in Section 7 hereof, and to their respective successors, and personal representative,
and no other person will have any right or obligation hereunder.
Section
11. Partial Unenforceability. The invalidity or unenforceability of any section, paragraph or provision of this Agreement shall not
affect the validity or enforceability of any other section, paragraph or provision hereof. If any Section, paragraph or provision of
this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and
only such minor changes) as are necessary to make it valid and enforceable.
Section
12. Governing Law Provisions; Exclusive Jurisdiction. This Agreement and the transactions contemplated hereby shall be governed as
to validity, interpretation, construction, effect and in all other respects by the internal laws of the State of New York. Each of the
Placement Agent and the Company: (i) agrees that any legal suit, action or Proceeding arising out of or relating to this Agreement and/or
the transactions contemplated hereby shall be instituted exclusively in the New York Supreme Court, County of New York, or in the United
States District Court for the Southern District of New York, (ii) waives any objection which it may have or hereafter to the venue of
any such suit, action or Proceeding, and (iii) irrevocably consents to the jurisdiction of the New York Supreme Court, County of New
York, and the United States District Court for the Southern District of New York in any such suit, action or Proceeding. Each of the
Placement Agent and the Company further agrees to accept and acknowledge service of any and all process which may be served in any such
suit, action or Proceeding in the New York Supreme Court, County of New York, or in the United States District Court for the Southern
District of New York and agrees that service of process upon the Company mailed by certified mail to the Company’s address shall
be deemed in every respect effective service of process upon the Company, in any such suit, action or Proceeding, and service of process
upon the Placement Agent mailed by certified mail to the Placement Agent’s address shall be deemed in every respect effective service
process upon the Placement Agent, in any such suit, action or Proceeding. If either party shall commence an action or Proceeding to enforce
any provision of this Agreement, then the prevailing party in such action or Proceeding shall be reimbursed by the other party for its
reasonable attorney’s fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action
or Proceeding.
Section
13. General Provisions.
(a)
This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous
oral agreements, understandings and negotiations with respect to the subject matter hereof. Notwithstanding anything herein to the contrary,
the Engagement Agreement, dated November 8, 2024 (“Engagement Agreement”), between the Company and the Placement Agent,
shall continue to be effective, and the terms therein shall continue to survive and be enforceable by the Placement Agent in accordance
with its terms, provided that, in the event of a conflict between the terms of the Engagement Agreement and this Agreement, the terms
of this Agreement shall prevail. This Agreement may be executed in two or more counterparts, each one of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement may not be amended or modified
unless in writing by all of the parties hereto, and no condition herein (express or implied) may be waived unless waived in writing by
each party whom the condition is meant to benefit. Section headings herein are for the convenience of the parties only and shall not
affect the construction or interpretation of this Agreement. If any provision contained in this Agreement is in conflict with, or inconsistent
with, any provision in that certain Securities Purchase Agreement dated as of December 4, 2024 (the “Securities Purchase Agreement”),
by and between the Company and the purchasers listed on the signature page thereto, the terms of the Securities Purchase Agreement shall
govern and control.
(b)
The Company acknowledges that in connection with the Offering of the Securities: (i) the Placement Agent has acted at arm’s length,
is not an agent of, and owes no fiduciary duties to the Company or any other person, (ii) the Placement Agent owes the Company only those
duties and obligations set forth in this Agreement and (iii) the Placement Agent may have interests that differ from those of the Company.
The Company waives to the full extent permitted by applicable law any claims it may have against the Placement Agent arising from an
alleged breach of fiduciary duty in connection with the offering of the Securities.
[The
remainder of this page has been intentionally left blank.]
If
the foregoing is in accordance with your understanding of our agreement, please sign below whereupon this instrument, along with all
counterparts hereof, shall become a binding agreement in accordance with its terms.
| Algorhythm
Holdings, Inc. |
|
| |
|
| By: |
/s/
Gary Atkinson |
|
| Name: |
Gary
Atkinson |
|
| Title: |
Chief
Executive Officer |
|
Accepted
and agreed to as of the date first written above:
| Univest
Securities, LLC |
|
| |
|
| By: |
/s/
Yi (Edric) Guo |
|
| Name: |
Yi
(Edric) Guo |
|
| Title: |
Chief
Executive Officer |
|
Exhibit
A
Form
of Lock-Up Agreement
[Attached]
Exhibit
10.3
STOCK
REPURCHASE AGREEMENT
THIS
STOCK REPURCHASE AGREEMENT (this “Agreement”) is made and entered into as of November _____, 2024, by and between
Algorhythm Holdings, Inc., a Delaware corporation (the “Company”), and Stingray Group Inc. a Canadian Corporation
(the “Stockholder”).
WHEREAS,
apart from the Stockholder’s other shareholdings of shares of the Company’s common stock, the Stockholder is the holder of
1,098,901 shares (the “Shares”) of the Company’s common stock, par value $0.01 per share (the “Common
Stock”), which the Stockholder purchased from the Company pursuant to that certain Stock Purchase Agreement dated as of November
1, 2023 between the Company and the Stockholder.
WHEREAS,
the Stockholder desires to sell, and the Company desires to repurchase the Shares, on the terms and subject to the conditions set forth
in this Agreement (the “Repurchase”).
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 Stockholder agree as follows:
SECTION
1. REPURCHASE OF SHARES.
1.1 Repurchase.
At the Closing (as defined below), the Company hereby agrees to repurchase from the Stockholder, and the Stockholder hereby agrees
to sell, assign and transfer to the Company, all of the Stockholder’s right, title and interest in and to the Shares, at a
price per Share equal to the higher of: (1) the closing price of the Common Stock on the last trading day immediately preceding the
date of this Agreement; or (2) the highest volume weighted average price (VWAP) of the Common Stock during a pricing period of ten
(10) consecutive trading days prior to the date of this Agreement per share (the “Purchase Price”), and the
Company shall issue to the Stockholder a promissory note in the principal amount equal to the Purchase Price, substantially in the
form attached hereto as Exhibit A (the “Note”), and subject to terms and conditions therein.
1.2 Closing.
The closing of the Repurchase (the “Closing”) shall take place at the offices of the Company at 6301 NW 5TH WAY, STE
2900 FORT LAUDERDALE FL 33309, or remotely by exchange of documents and signatures (or their electronic counterparts), at such date,
time and place as the Company and the Stockholder shall mutually agree.
1.2.1
At the Closing:
| (a) | the
Company shall deliver to the Stockholder the Note evidencing the Purchase Price; and |
| (b) | the
Stockholder shall deliver to the Company an executed stock power with a medallion signature
guarantee. |
1.3 Termination
of Rights as the Stockholder. At the Closing and upon delivery of the Note, the Shares shall cease to be outstanding for any and
all purposes, and the Stockholder shall no longer have any rights as a holder of the Shares, including any rights in respect of the
Shares that the Stockholder may have had under the Company’s Certificate of Incorporation or otherwise. For greater certainty,
the foregoing termination of rights shall have no application or effect in respect of the Stockholder’s rights as a holder of
other shares of the Company’s common stock.
SECTION
2. REPRESENTATIONS AND WARRANTIES.
In
connection with the transactions provided for hereby, the Stockholder represents and warrants to the Company as follows:
2.1
Ownership of Shares. The Stockholder has good and marketable right, title and interest (legal and beneficial) in and to all of
the Shares, free and clear of all liens, pledges, security interests, charges, claims, equity or encumbrances of any kind. Upon paying
for the Shares in accordance with this Agreement, the Company will acquire good and marketable title to the Shares, free and clear of
all liens, pledges, security interests, charges, claims, equity or encumbrances of any kind.
2.2
Authorization. The Stockholder has all necessary power and authority to execute, deliver and perform the Stockholder’s obligations
under this Agreement and all agreements, instruments and documents contemplated hereby and to sell and deliver the Shares being sold
hereunder, and this Agreement constitutes a valid and binding obligation of the Stockholder.
2.3
No Conflict. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not
result in a breach by the Stockholder of, or constitute a default by the Stockholder under, any agreement, instrument, decree, judgment
or order to which the Stockholder is a party or by which the Stockholder may be bound.
2.4
Experience and Evaluation. By reason of the Stockholder’s business or financial experience or the business or financial
experience of the Stockholder’s professional advisers who are unaffiliated with the Company and who are not compensated by the
Company, the Stockholder has the capacity to protect the Stockholder’s own interests in connection with the sale of the Shares
to the Company. The Stockholder is capable of evaluating the potential risks and benefits of the sale hereunder of the Shares.
2.5
Access to Information. The Stockholder has received all of the information that the Stockholder considers necessary or appropriate
for deciding whether to sell the Shares hereunder and perform the transactions contemplated hereby. The Stockholder further represents
that the Stockholder has had an opportunity to ask questions and receive answers from the Company regarding the business, properties,
prospects and financial condition of the Company and to seek from the Company such additional information as the Stockholder has deemed
necessary to verify the accuracy of any such information furnished or otherwise made available to the Stockholder by or on behalf of
the Company.
SECTION
3. SUCCESSORS AND ASSIGNS.
Except
as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties (including transferees of any Shares). Nothing in this Agreement, express or implied, is intended
to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
SECTION
4. GOVERNING LAW.
All
questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof.
Each party agrees that all legal proceedings arising with respect to the transactions contemplated hereunder shall be commenced exclusively
in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder and
hereby irrevocably waives, and agrees not to assert in any action or proceeding, any claim that it is not personally subject to the jurisdiction
of any such court, that such action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably
waives personal service of process and consents to process being served in any such action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to
it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.
SECTION
5. ENTIRE AGREEMENT.
This
Agreement contains the entire understanding of the parties, and there are no further or other agreements or understandings, written or
oral, in effect between the parties relating to the Shares (and the purchase and sale thereof), except as expressly referred to herein.
No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall
any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.
SECTION
6. AMENDMENTS AND WAIVERS.
No
provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an
amendment, by the parties or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought.
SECTION
7. FURTHER ACTION.
Each
party hereto agrees to execute any additional documents and to take any further action as may be necessary or desirable in order to implement
the transactions contemplated by this Agreement.
SECTION
8. SURVIVAL.
The
representations and warranties herein shall survive the Closing.
SECTION
9. SEVERABILITY.
Whenever
possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but
if any provision of this Agreement shall be held to be prohibited by or invalid under applicable law, such provision shall be ineffective
only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
SECTION
10. NOTICES.
Any
and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of: (a) the time of transmission, if such notice or communication is delivered via facsimile
at the facsimile number or email at the email address as set forth on the signature page attached hereto at or prior to 5:30 p.m. (New
York City time) on a Business Day, (b) the next Business Day after the time of transmission, if such notice or communication is delivered
via facsimile at the facsimile number or email at the email address as set forth on the signature pages attached hereto on a day that
is not a Business Day or later than 5:30 p.m. (New York City time) on any Business Day, (c) the second (2nd) business day
following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party
to whom such notice is required to be given.
SECTION
11. COUNTERPARTS.
This
Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
SECTION
12. WAIVER OF JURY TRIAL
WAIVER
OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES
EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY
AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
SECTION
13. ELECTRONIC EXECUTION.
The words “execution,” “signed,” “signature,” and words of similar import in this Agreement shall
be deemed to include electronic and digital signatures and the keeping of records in electronic form, each of which shall be of the same
effect, validity, and enforceability as manually executed signatures and paper-based recordkeeping systems, to the extent and as provided
for under applicable law, including the Electronic Signatures in Global and National Commerce Act (15 U.S.C. §§ 7001-7031),
the Uniform Electronic Transactions Act (UETA), or any state law based on the UETA, including the New York Electronic Signatures and
Records Act (N.Y. State Tech. §§ 301 to 309).
[Signature
page follows]
IN
WITNESS WHEREOF, each of the parties has executed this Stock Repurchase Agreement as of the day and year first above written.
| Algorhythm
HOldings, Inc. |
|
Address for Notice: |
| |
|
|
6301 NW 5th Way, Ste
2900, Fort Lauderdale, FL 33309 |
| By: |
/s/
Gary Atkinson |
|
Email: garyatkinson@singingmachine.com |
| Name: |
Gary Atkinson |
|
|
| Title: |
Chief Executive Officer |
|
|
| STINGRAY GROUP INC. |
|
Address for Notice: |
| |
|
|
730, rue Wellington Montreal, Quebec
H3C 1T4 |
| By: |
/s/
Eric Boyko |
|
Email: eboyko@stingray.com |
| Name: |
Eric
Boyko |
|
|
| Title: |
President CEO |
|
|
| Signature Page to Stock Repurchase Agreement |
Exhibit
A
PROMISSORY
NOTE
| Principal
Amount: $_________ |
________________,
2024 |
FOR
VALUE RECEIVED, Algorhythm Holdings, Inc., a Delaware corporation (the “Borrower”) hereby unconditionally promises
to pay to the order of Stingray Group Inc. a Canadian Corporation (the “Noteholder”) the principal amount of $[LOAN
AMOUNT] (the “Loan”), together with all accrued interest thereon, as provided in this Promissory Note (this “Note”).
1. Payment
Dates.
(a) Payment
Date. The aggregate unpaid principal amount of the Loan, all accrued and unpaid interest, and all other amounts payable under this
Note shall be due and payable on demand from the Noteholder.
(b) Prepayment.
The Borrower may prepay the Loan in whole or in part at any time or from time to time without penalty or premium by paying the principal
amount to be prepaid together with accrued interest thereon to the date of the prepayment.
2. Interest.
(a) Interest
Rate. Except as provided in Section 2(c), the principal amount outstanding under this Note from time to time shall bear interest
at a rate per annum (the “Interest Rate”) equal to twelve percent (12%).
(b) Interest
Payment Dates. Interest shall be payable monthly in arrears on each Payment Date.
(c) Default
Interest. If any amount payable hereunder is not paid when due (without regard to any applicable grace period), whether at stated
maturity, by acceleration, or otherwise, such overdue amount shall bear interest at the Interest Rate plus two percent (2%) (the “Default
Rate”).
(d) Computation
of Interest. All computations of interest hereunder shall be made on the basis of a year of 365/366 days, as the case may be, and
the actual number of days elapsed. Interest shall begin to accrue on the Loan on the date of this Note. For any portion of the Loan that
is repaid, interest shall not accrue on the date on which such payment is made.
(e) Interest
Rate Limitation. If at any time the Interest Rate payable on the Loan shall exceed the maximum rate of interest permitted under applicable
law, such Interest Rate shall be reduced automatically to the maximum rate permitted.
| Signature Page to Stock Repurchase Agreement |
3. Payment
Mechanics.
(a) Manner
of Payment. All payments of principal and interest shall be made in US dollars on the date on which such payment is due. Such payments
shall be made by wire transfer of immediately available funds to the Noteholder’s account at a bank specified by the Noteholder
in writing to the Borrower from time to time.
(b) Application
of Payments. All payments shall be applied, first, to fees or charges outstanding under this Note, second, to accrued
interest, and, third, to principal outstanding under this Note.
(c) Business
Day. Whenever any payment hereunder is due on a day that is not a Business Day, such payment shall be made on the next succeeding
Business Day, and interest shall be calculated to include such extension. “Business Day” means a day other than Saturday,
Sunday, or other day on which commercial banks in New York, NY and Montreal, Quebec, Canaada are authorized or required by law to close.
4. Events
of Default. The occurrence and continuance of any of the following shall constitute an “Event of Default”
hereunder:
(a) Failure
to Pay. The Borrower fails to pay (i) any principal amount of the Loan when due; (ii) any interest on the Loan within two (2) Business
Days after the date such amount is due; or (iii) any other amount due hereunder within two (2) Business Days after such amount is due.
(b) Bankruptcy;
Insolvency.
(i) The
Borrower institutes a voluntary case seeking relief under any law relating to bankruptcy, insolvency, reorganization, or other relief
for debtors.
(ii) An
involuntary case is commenced seeking the liquidation or reorganization of the Borrower under any law relating to bankruptcy or insolvency,
and such case is not dismissed or vacated within sixty (60) days of its filing.
(iii) The
Borrower makes a general assignment for the benefit of its creditors.
(iv) The
Borrower is unable, or admits in writing its inability, to pay its debts as they become due.
(v) A
case is commenced against the Borrower or its assets seeking attachment, execution, or similar process against all or a substantial part
of its assets, and such case is not dismissed or vacated within sixty (60) days of its filing.
5. Remedies.
Upon the occurrence and during the continuance of an Event of Default, the Noteholder may, at its option, by written notice to the Borrower
declare the outstanding principal amount of the Loan, accrued and unpaid interest thereon, and all other amounts payable hereunder immediately
due and payable; provided, however, if an Event of Default described in Section 4(b(i), 4(b)(iii) or 4(b)(iv) shall occur,
the outstanding principal amount, accrued and unpaid interest, and all other amounts payable hereunder shall become immediately due and
payable without notice, declaration, or other act on the part of the Noteholder.
| Signature Page to Stock Repurchase Agreement |
6. Expenses.
The Borrower shall reimburse the Noteholder on demand for all reasonable and documented out-of-pocket costs, expenses, and fees, including
the reasonable fees and expenses of counsel, incurred by the Noteholder in connection with the negotiation, documentation, and execution
of this Note and the enforcement of the Noteholder’s rights hereunder.
7. Notices.
All notices and other communications relating to this Note shall be in writing and shall be deemed given upon the first to occur of (x)
deposit with the United States Postal Service or overnight courier service, properly addressed and postage prepaid; (y) transmittal by
electronic communication (including email, internet or intranet websites, or facsimile properly addressed (with written acknowledgment
from the intended recipient such as “return receipt requested” function, return e-mail, or other written acknowledgment));
or (z) actual receipt by an employee or agent of the other party. Notices hereunder shall be sent to the following addresses, or to such
other address as such party may specify in writing from time to time:
(a) If
to the Borrower:
Algorhythm
Holding Inc.
Attention:
Gary Atkinson, CEO
6301
NW 5th Way, Suite 2900
Fort
Lauderdale, Fl 33309
E-mail:
gatkinson@singingmachine.com
Facsimile:
(954) 596-100
Telephone:
(954) 596-2000
(b) If
to the Noteholder:
Attention:
Jean-Pierre Trahan, CFO
730
Wellington, Montreal, Quebec, Canada
E-mail:
jptrahan@stingray.com
Telephone:
____________________
8. Governing
Law. This Note and any claim, controversy, dispute, or cause of action (whether in contract, tort, or otherwise) based on,
arising out of, or relating to this Note and the transactions contemplated hereby shall be governed by and construed in accordance with
the laws of the State of New York.
9. Disputes.
(a) Submission
to Jurisdiction.
(i) The
Borrower irrevocably and unconditionally (A) agrees that any action, suit, or proceeding arising from or relating to this Note may be
brought in the courts of the State of New York sitting in New York County, and in the United States District Court for the Southern District
of New York, and (B) submits to the exclusive jurisdiction of such courts in any such action, suit, or proceeding. Final judgment against
the Borrower in any such action, suit, or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.
| Signature Page to Stock Repurchase Agreement |
(ii) Nothing
in this Section 9(a) shall affect the right of the Noteholder to bring any action, suit, or proceeding relating to this Note against
the Borrower or its properties in the courts of any other jurisdiction.
(iii) Nothing
in this Section 9(a) shall affect the right of the Noteholder to serve process upon the Borrower in any manner authorized by the laws
of any such jurisdiction.
(b) Venue.
The Borrower irrevocably and unconditionally waives, to the fullest extent permitted by law, (i) any objection that it may now or hereafter
have to the laying of venue in any action, suit, or proceeding relating to this Note in any court referred to in Section 9(a) and (ii)
the defense of inconvenient forum to the maintenance of such action, suit, or proceeding in any such court.
(c) Waiver
of Jury Trial. THE BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY,
WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER THEORY.
10. Successors
and Assigns. This Note may be assigned or transferred by the Noteholder to any individual, corporation, company, limited liability
company, trust, joint venture, association, partnership, unincorporated organization, governmental authority, or other entity.
11. Integration.
This Note constitutes the entire contract between the Borrower and the Noteholder with respect to the subject matter hereof and supersedes
all previous agreements and understandings, oral or written, with respect thereto.
12. Amendments
and Waivers. No term of this Note may be waived, modified, or amended, except by an instrument in writing signed by the Borrower
and the Noteholder. Any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given.
13. No
Waiver; Cumulative Remedies. No failure by the Noteholder to exercise and no delay in exercising any right, remedy,
or power hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, or power hereunder
preclude any other or further exercise thereof or the exercise of any other right, remedy, or power. The rights, remedies, and powers
herein provided are cumulative and not exclusive of any other rights, remedies, or powers provided by law.
14. Severability.
If any term or provision of this Note is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability
shall not affect any other term or provision of this Note or render such term or provision invalid or unenforceable in any other jurisdiction.
15. Counterparts.
This Note and any amendments, waivers, consents, or supplements hereto may be executed in counterparts, each of which shall constitute
an original, but all of which taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page
to this Note by facsimile or in electronic (“pdf” or “tif” or any other electronic means that reproduces an image
of the actual executed signature page) format shall be as effective as delivery of a manually executed counterpart of this Note.
16. Electronic
Execution. The words “execution,” “signed,” “signature,” and words of similar import in
this Note shall be deemed to include electronic and digital signatures and the keeping of records in electronic form, each of which shall
be of the same effect, validity, and enforceability as manually executed signatures and paper-based recordkeeping systems, to the extent
and as provided for under applicable law, including the Electronic Signatures in Global and National Commerce Act (15 U.S.C. §§
7001-7031), the Uniform Electronic Transactions Act (UETA), or any state law based on the UETA, including the New York Electronic Signatures
and Records Act (N.Y. State Tech. §§ 301 to 309).
[signature
page follows]
| Signature Page to Stock Repurchase Agreement |
IN
WITNESS WHEREOF, the Borrower has executed this Note as of [DATE].
| |
Algorhythm Holdings, Inc. |
| |
|
|
| |
By |
|
| |
Name: |
|
| |
Title: |
|
| Signature Page to Stock Repurchase Agreement |
Exhibit
99.1
Algorhythm
Holdings, Inc. Announces Pricing of $9.5 Million Public Offering
Fort
Lauderdale, FL, Dec. 5, 2024 — Algorhythm Holdings, Inc. (“Algorhythm” or the “Company”) (NASDAQ: RIME),
an AI-driven technology and consumer electronics holding company, announced it has priced a public offering with gross proceeds to the
Company expected to be approximately $9.5 million, before deducting placement agent fees and other estimated expenses payable by the
Company.
The
offering is comprised of 55,882,353 shares of the Company’s common stock (or pre-funded warrants in lieu of shares of common stock).
Each share of common stock or pre-funded warrant will be sold with one Series A Warrant to purchase one share of common stock at an exercise
price of $0.17 per share (the “Series A Warrants”) and one Series B Warrant to purchase one share of common stock at an exercise
price of $0.34 per share or, pursuant to an alternative cashless exercise option, one share of common stock (the “Series B Warrants”
and, together with the Series A Warrants, the “Warrants”). The Warrants will become exercisable upon the approval of its
stockholders of the issuance of the shares of common stock upon exercise of the Warrants, among other things. The Series A Warrants will
expire on the five-year anniversary of its initial exercise date and the Series B Warrants will expire on the two and one-half-year anniversary
of its initial exercise date.
The
purchase price of each share of common stock and accompanying Warrants is $0.17, and the purchase price of each pre-funded warrant and
accompanying Warrants will be equal to such price minus $0.01.
The
Company intends to use the net proceeds from this offering for working capital and other general corporate purposes, and for repayment
of certain outstanding senior secured notes. This offering is expected to close on or about December 6, 2024, subject to satisfaction
of customary closing conditions.
Univest
Securities, LLC is acting as sole placement agent for the offering.
The
securities described above are being offered by the Company pursuant to a registration statement on Form S-1 (File No. 333283178) previously
filed and declared effective by the Securities and Exchange Commission (the “SEC”). This press release shall not constitute
an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction
in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any
such state or jurisdiction. The offering is being made only by means of a written preliminary prospectus and final prospectus that
will form a part of the registration statement. A final prospectus relating to the offering will be filed with the SEC and will be available
on the SEC’s website at www.sec.gov. Electronic copies of the final prospectus relating to this offering may be obtained,
when available, by contacting Univest Securities, LLC at info@univest.us, or by calling +1 (212) 343-8888.
About
Algorhythm Holdings
Algorhythm
Holdings, Inc. is a holding company with two primary investments. First, the Company owns SemiCab Holdings, an emerging leader in the
AI-enabled global logistics industry. Second, the Company owns The Singing Machine Company, the worldwide leader in the consumer karaoke
industry.
SemiCab
is a cloud-based Collaborative Transportation Platform built to achieve the scalability required to predict and optimize millions
of loads and hundreds of thousands of trucks. To orchestrate collaboration across manufacturers, retailers, distributors, and their carriers,
SemiCab uses real-time data from API-based load tendering and pre-built integrations with TMS and ELD partners. To build fully loaded
round trips, SemiCab uses AI/ML predictions and advanced predictive optimization models. On the SemiCab platform, shippers pay less and
carriers make more while not having to change a thing.
Since
2020, SemiCab has enabled major retailers, brands and transportation providers to address these common supply-chain problems globally.
SemiCab’s Orchestrated Collaboration™ AI model has proven to increase transportation capacity, improve asset utilization,
reduce empty miles, lower logistics costs, and provide visibility into the entire transportation network. Models show the technology
has the capability of saving shippers tens of billions of dollars annually through optimization. Further, SemiCab’s technology
also has the potential to play a key role in the improved sustainability model globally. Based on its proven ability to improve truck
utilization rates from 65% to over 90%, this results in a dramatic reduction in the carbon footprint of the industry. The optimization
of existing truck utilization can add approximately 30% more trucking capacity without adding more trucks, drivers or driven miles which
addresses common problems plaguing the industry like severe driver shortage and road congestion. Trucking optimization could also eliminate
approximately 25% of CO2 emissions attributable to road freight.
For
additional information regarding SemiCab: http://www.semicab.com
The
Singing Machine Company, Inc. is the worldwide leader in consumer karaoke products. Based in Fort Lauderdale, Florida, and founded
over forty years ago, the Company designs and distributes the industry’s widest assortment of at-home and in-car karaoke entertainment
products. Their portfolio is marketed under both proprietary brands and popular licenses, including Carpool Karaoke and Sesame Street.
Singing Machine products incorporate the latest technology and provide access to over 100,000 songs for streaming through its mobile
app and select WiFi-capable products and is also developing the world’s first globally available, fully integrated in-car karaoke
system. The Company also has a new philanthropic initiative, CARE-eoke by Singing Machine, to focus on the social impact of karaoke
for children and adults of all ages who would benefit from singing. Their products are sold in over 25,000 locations worldwide, including
Amazon, Costco, Sam’s Club, Target, and Walmart. To learn more, go to www.singingmachine.com.
Investor
Relations Contact:
investors@algoholdings.com
www.algoholdings.com
Forward
Looking Statements
This
press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended, which statements are subject to considerable risks and uncertainties.
The Company intends such forward-looking statements to be covered by the safe harbor provisions contained in the Private Securities Litigation
Reform Act of 1995. All statements other than statements of historical facts included in this press release, including statements about
our beliefs and expectations, are “forward-looking statements” and should be evaluated as such. Forward-looking statements
may be identified by words such as “anticipates,” “believes,” “estimates,” “expects,”
“intends,” “may,” “plans,” “projects,” “seeks,” “should,” “suggest”,
“will,” and similar expressions. Forward-looking statements in this press release include, without limitation, statements
relating to the timing, size and expected gross proceeds of the Offering, the completion of the Offering, the satisfaction of customary
closing conditions related to the Offering and sale of securities, the Company’s ability to complete the Offering, and the intended
use of proceeds from the Offering. The Company has based these forward-looking statements on its current expectations and projections
about future events. Forward-looking statements are subject to and involve risks, uncertainties, and assumptions that may cause the Company’s
actual results, performance or achievements to be materially different from any future results, performance or achievements predicted,
assumed or implied by such forward-looking statements, including, without limitation, risks, uncertainties and assumptions related to
market conditions and the satisfaction of closing conditions related to the Offering, risks disclosed in the section titled “Risk
Factors” included in the registration statement on Form S-1 initially filed with the SEC on November 12, 2024, and risks disclosed
under item 1A. “Risk Factors” in the Company’s most recently filed Form 10-KT filed with the SEC, as updated by the
Company’s subsequent Quarterly Reports on Form 10-Q. This press release speaks as of the date indicated above. The Company undertakes
no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as
required by law. The Company expressly disclaims any obligation to update or revise any forward-looking statements found herein to reflect
any future changes in the Company’s expectations of results or any future change in events, except as required by law.
Exhibit
99.2
FOR
IMMEDIATE RELEASE
Algorhythm
Holdings, Inc. Announces Closing of $9.5 Million Public Offering
Fort
Lauderdale, FL, Dec. 6, 2024 — Algorhythm Holdings, Inc. (“Algorhythm” or the “Company”) (NASDAQ: RIME),
an AI-driven technology and consumer electronics holding company, announced today the closing of its previously announced public offering
with gross proceeds to the Company of approximately $9.5 million, before deducting placement agent fees and other estimated expenses
payable by the Company.
The
offering comprised of 55,882,352 shares of the Company’s common stock (or pre-funded warrants in lieu of shares of common stock).
Each share of common stock or pre-funded warrant was sold with one Series A Warrant to purchase one share of common stock at an exercise
price of $0.17 per share (the “Series A Warrants”) and one Series B Warrant to purchase one share of common stock at an exercise
price of $0.34 per share (the “Series B Warrants” and, together with the Series A Warrants, the “Warrants”).
The Warrants will become exercisable upon the approval of the Company’s stockholders of the issuance of the shares of common stock
issuable upon exercise of the Warrants, and certain other provisions of the Warrants. The Series A Warrants will expire on the five-year
anniversary of its initial exercise date and the Series B Warrants will expire on the two and one-half-year anniversary of its initial
exercise date.
The
purchase price of each share of common stock and accompanying Warrants was $0.17, and the purchase price of each pre-funded warrant and
accompanying Warrants was such price minus $0.01.
The
Company intends to use the net proceeds from this offering for working capital and other general corporate purposes, and for repayment
of certain outstanding senior secured notes of the Company.
Univest
Securities, LLC is acting as sole placement agent for the offering.
The
securities described above are being offered by the Company pursuant to a registration statement on Form S-1 (File No. 333283178) (the
“Registration Statement”) previously filed and declared effective by the Securities and Exchange Commission (the “SEC”).
This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these
securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification
under the securities laws of any such state or jurisdiction. The offering is being made only by means of a prospectus which is a
part of the Registration Statement. A final prospectus relating to the offering has been filed with the SEC and is available on the SEC’s
website at www.sec.gov. Electronic copies of the final prospectus relating to this offering may be obtained, when available, by
contacting Univest Securities, LLC at info@univest.us, or by calling +1 (212) 343-8888.
About
Algorhythm Holdings
Algorhythm
Holdings, Inc. is a holding company with two primary investments. First, the Company owns SemiCab Holdings, an emerging leader in the
AI-enabled global logistics industry. Second, the Company owns The Singing Machine Company, the worldwide leader in the consumer karaoke
industry.
SemiCab
is a cloud-based Collaborative Transportation Platform built to achieve the scalability required to predict and optimize millions
of loads and hundreds of thousands of trucks. To orchestrate collaboration across manufacturers, retailers, distributors, and their carriers,
SemiCab uses real-time data from API-based load tendering and pre-built integrations with TMS and ELD partners. To build fully loaded
round trips, SemiCab uses AI/ML predictions and advanced predictive optimization models. On the SemiCab platform, shippers pay less and
carriers make more while not having to change a thing.
Since
2020, SemiCab has enabled major retailers, brands and transportation providers to address these common supply-chain problems globally.
SemiCab’s Orchestrated Collaboration™ AI model has proven to increase transportation capacity, improve asset utilization,
reduce empty miles, lower logistics costs, and provide visibility into the entire transportation network. Models show the technology
has the capability of saving shippers tens of billions of dollars annually through optimization. Further, SemiCab’s technology
also has the potential to play a key role in the improved sustainability model globally. Based on its proven ability to improve truck
utilization rates from 65% to over 90%, this results in a dramatic reduction in the carbon footprint of the industry. The optimization
of existing truck utilization can add approximately 30% more trucking capacity without adding more trucks, drivers or driven miles which
addresses common problems plaguing the industry like severe driver shortage and road congestion. Trucking optimization could also eliminate
approximately 25% of CO2 emissions attributable to road freight.
For
additional information regarding SemiCab: http://www.semicab.com
The
Singing Machine Company, Inc. is the worldwide leader in consumer karaoke products. Based in Fort Lauderdale, Florida, and founded
over forty years ago, the Company designs and distributes the industry’s widest assortment of at-home and in-car karaoke entertainment
products. Their portfolio is marketed under both proprietary brands and popular licenses, including Carpool Karaoke and Sesame Street.
Singing Machine products incorporate the latest technology and provide access to over 100,000 songs for streaming through its mobile
app and select WiFi-capable products and is also developing the world’s first globally available, fully integrated in-car karaoke
system. The Company also has a new philanthropic initiative, CARE-eoke by Singing Machine, to focus on the social impact of karaoke
for children and adults of all ages who would benefit from singing. Their products are sold in over 25,000 locations worldwide, including
Amazon, Costco, Sam’s Club, Target, and Walmart. To learn more, go to www.singingmachine.com.
Investor
Relations Contact:
investors@algoholdings.com
www.algoholdings.com
Forward
Looking Statements
This
press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended, which statements are subject to considerable risks and uncertainties.
The Company intends such forward-looking statements to be covered by the safe harbor provisions contained in the Private Securities Litigation
Reform Act of 1995. All statements other than statements of historical facts included in this press release, including statements about
our beliefs and expectations, are “forward-looking statements” and should be evaluated as such. Forward-looking statements
may be identified by words such as “anticipates,” “believes,” “estimates,” “expects,”
“intends,” “may,” “plans,” “projects,” “seeks,” “should,” “suggest”,
“will,” and similar expressions. Forward-looking statements in this press release include, without limitation, statements
relating to the timing, size and expected gross proceeds of the Offering, the completion of the Offering, the satisfaction of customary
closing conditions related to the Offering and sale of securities, the Company’s ability to complete the Offering, and the intended
use of proceeds from the Offering. The Company has based these forward-looking statements on its current expectations and projections
about future events. Forward-looking statements are subject to and involve risks, uncertainties, and assumptions that may cause the Company’s
actual results, performance or achievements to be materially different from any future results, performance or achievements predicted,
assumed or implied by such forward-looking statements, including, without limitation, risks, uncertainties and assumptions related to
market conditions and the satisfaction of closing conditions related to the Offering, risks disclosed in the section titled “Risk
Factors” included in the Registration Statement on Form S-1 initially filed with the SEC on November 12, 2024, and risks disclosed
under item 1A. “Risk Factors” in the Company’s most recently filed Form 10-KT filed with the SEC and the Company’s
Quarterly Reports on Form 10-Q. This press release speaks as of the date indicated above. The Company undertakes no obligation and expressly
disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise,
except as required by law.
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Algorhythm (NASDAQ:RIME)
過去 株価チャート
から 11 2024 まで 12 2024
Algorhythm (NASDAQ:RIME)
過去 株価チャート
から 12 2023 まで 12 2024
